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9.3 Market Research for E-Commerce 267

2. Define cookies and describe their values and drawbacks. want to know why some customers are online shoppers, and
3. Define behavioral targeting and find a sample application why others are not. Major factors that are used for predicting
on the Internet. customer online purchasing behavior are (in descending
4. Define collaborative filtering and find a sample applica- order of importance): product information requested, num-
tion on the Internet. ber of related e-mails, number of orders made, products/ser-
5. Explain how one-to-one advertising is done using cookies vices ordered, and gender.
and behavioral targeting. Typical questions that online market research attempts to
answer are: What are the purchase patterns for typical indi-
viduals, and what are the patterns for specific groups? How
9.3 MARKET RESEARCH can we identify those who are real buyers from those who are
FOR E-COMMERCE just browsing? What is the optimal Web page design? Knowing
the answers to these questions can help a vendor advertise
In order to sell more effectively, it is important to conduct properly, price items, design a website, and provide appropri-
proper market research to find information and knowledge ate customer service. Online marketing research can provide
about consumers and products. The market researcher’s goal data to help answer these questions. More information about
is to identify marketing opportunities and problems, to pro- market research on the Web can be found in the tutorials at inc.
vide input for marketing planning, to find out how to influ- com/guides/biz_online/online-market-research.html.
ence the purchasing process, and to evaluate the success of
promotions and advertisements. Market research aims to
investigate the behavior of customers on the Web (see Strauss Representative Market Research Approaches
and Frost 2014). Market researchers gather information
about competition, regulations, pricing, strategies, and con- To conduct online marketing, it is necessary to know what
sumer behavior. the customer wants or needs. Such information can be col-
lected by:

Objectives and Concepts of Online • Soliciting information from customers online (e.g., via inter-
Market Research views, questionnaires, use of focus groups, or blogging).
• Observing what customers are doing on the Web by using
Investigation of EC markets can be conducted through con- transaction logs and cookies.
ventional methods (e.g., in-person surveys; focus groups) or • Using data, text, and Web mining, or collaborative filter-
it can be done by using the Internet. Internet-based market ing techniques to analyze the available data.
research is frequently faster, allowing researchers to reach
remote or diverse audiences. In addition, market researchers Data Collection and Analysis
can conduct very large studies on the Web at a much lower
price than using offline methods. Telephone surveys can cost Specific methods for collecting online data include e-mail
as much as $50 per interview and their quality may be poor. communication with individual customers, questionnaires
Such cost can accumulate to thousands of dollars when sev- placed on websites, monitoring conversations in social net-
eral hundred respondents are needed. An online survey will works, and tracking customers’ movements on the Web.
cost a fraction of a similarly sized telephone survey and can
expedite research considerably. On the other hand, the Online Surveys
increased sample size in online surveys can increase the
accuracy of the results. McDaniel and Gates (2012) provide An online survey is a major method for collecting EC data and
a comprehensive review of online market research technolo- it is considered the most cost-effective mode of survey
gies, methods, tools, issues, and ethical considerations. research. It has several other advantages, including lower
overall preparation and administration costs, better control of
What Are Marketers Looking for in EC the process of filling out the questionnaire (which may lead to
Market Research? fewer response errors, and easier follow-up), and more flexi-
bility in the questionnaire design. In addition, the cycle time
By looking at a customer’s personal profile that includes can be much shorter. However, online surveys also have some
observed behaviors on the Web, it is possible for marketers to limitations, including the lack of anonymity, data errors due to
predict online buying behavior. For example, companies non-responses, reporting biases, and poor data privacy.