Let’s Outlaw Marketing Research
by Jerry W. Thomas

  • Marketing Research

    For almost 100 years, some large corporations have used marketing research to gain an unfair advantage over their competitors.

    Companies such as Johnson & Johnson, General Mills, Procter & Gamble, Apple, and Microsoft have invested millions and millions of dollars in consumer research over the years so that their products and services are better than their competitors, as perceived by the people who buy those products and services. This is not fair, and does not lead to a fair marketplace. These “marketing research savvy” companies benefit from an “intelligence” or “informational” advantage over their competitors. The whole concept of free enterprise and free markets rests upon an assumption of fair and equal competition in a marketplace, and marketing research undermines this core principle.
 

Some media articles have argued recently that artificial intelligence and machine learning should be regulated or abolished because they pose such great threats to the concept of free markets and fair competition, or pose threats of mass unemployment, or pose threats of becoming our masters. These are major assertions for relatively new, and relatively unproven, techniques. Chances are pretty high that we don’t need to worry too much about artificial intelligence and machine learning. The assumed risks are highly speculative. In contrast, marketing research has a long and well-documented track record and poses a clear and present danger.

The concept of fairness and fair competition is well established. We see it played out every day in the sports world. Each sports competitor must follow the same rules, stay within the same boundaries, and base decisions on the same information as all other competitors. This is fairness at its very best. No one has an advantage of any type. This same fairness (or attempted fairness) is also evident in financial markets. Investors are supposed to have equal access to information about companies and markets. Those with “inside information” (i.e., knowledge that the general investing public does not have) are prohibited from trading in stocks based on that “insider” information. But there are no laws, no rules that prevent companies from using marketing research to gain “secret” or “advance” information about what their customers want. This research-based advantage violates the whole notion of fairness and equal competition.

Students in private and public schools and universities don’t get to see what questions will be on the tests, or what the correct answers are. This is a splendid example of the fairness principle in action. But, in the business world, some companies use marketing research to find out what the “test” questions are, what the correct answers are, and then use this secret information about their consumers to steal market share from their competitors. There are no state or federal laws or regulations to prevent this unfair, research-based, market-share piracy.

In the world of legal disputes and litigation, both sides of a case must share information with each other, answer interrogatories, and go through depositions, so that both sides of the case have access to all of the relevant information. There are no laws or rules that require similar practices in the business world. One company can do marketing research secretly in the dark of night to learn what motivates their customers, what drives customers to buy one brand over another, and what package graphics attract customers’ attention on a retail shelf. That company can also test the competitors’ advertising as well as its own advertising, so that it enjoys persuasion advantages over its competitors. Needless to say, the poor companies operating without the advantages of marketing research and customer intelligence will lose market share to those who are skilled in the secret, dark arts of consumer research. Again, the secret information gained through research should be prohibited by law. If fairness is good enough for our legal system, then it ought to apply to our businesses as well.

The Sherman Anti-Trust Act of 1890 firmly established the principle that markets should not be dominated by one company or a small group of companies. The concentration of market share in the hands of one or two companies leads to higher prices for the average consumer, and tends to give so much marketing muscle to the dominant companies that they can block the entry of new competitors into their industry. So, marketing research gives some companies the secret knowledge by which they can dominate a marketplace and achieve monopoly or oligopoly dominance. Market dominance leads to less competition and higher prices. Let’s make it illegal to gain unfair advantage over one’s competitors. Ignorance should be equally allocated across all companies in an industry, so the competition will be fair. Let’s outlaw marketing research.

About the Author

Jerry W. Thomas (jthomas@decisionanalyst.com) is President/CEO of Decision Analyst. He may be reached at 1-817-640-6166.

 

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