Marketing research in a transition economy of the turbulent world

Introduction

Marketing research is one of the most indispensable tools to provide business leaders with the information they need to respond effectively to the challenges of today's volatile business environment. “Marketing research is a systematized process of setting a goal, identifying the volume of objective market information, its collection and analysis; development of recommendations on any elements of the market strategy for the company to achieve high-end results in a specific market environment” (Starostina, 2017).

As experience shows, effective marketing strategy and tactics directly contribute to sales growth and improved financial performance (Barker and Milano, 2018, Angulo-Ruiz et al., 2013, Reibstein, 2015). History of developed market economies shows that the potential of marketing research is realized most fully when applied in the interests of all stakeholders. This very aspect of marketing research that takes into account specifics of the society's institutional architectonics and greatly affects the business model of companies, the role of the state in the economy and the consumer behavior, is emphasized in the currently relevant definition of marketing research highlights its role as the “function that links the consumer, customer, and public to the marketer through information” (American Marketing Association, 2017). The achievements in business development that companies demonstrate in different countries and areas of their activity provide evidence that success accompanies the business that manages to ensure the proper functioning of the aforesaid information linkage.

There can be no universal approaches that neglect specifics of the socio-economic structure of a particular country or a group of countries and the significance of the place and role of marketing research for business development. Marketing, which is the philosophy and practice of a successful business, along with marketing research is strongly influenced not only by the state of affairs in this area, global processes and trends but also by socio-economic institutions and business practices prevailing in a particular country. When considering the theory and practice of marketing research, one cannot but take into account the distinctions in their conduct for countries with different types and models of political and economic structure.

The collapse and disintegration of the Soviet Bloc led to the emergence of several European countries with the so-called “transition economies”, i.e. in the transition from the planned national economy to its market model (Fiege, 1994). Due to several objective and subjective circumstances, Ukraine failed to complete the process of building the economic foundation for a new model of society after the USSR collapsed in 1991. The model was seen as a market economy, which, along with strict respect for property rights and state protection of fair competition, uses an effective mechanism of social support for members of society.

Ukraine now operates a clan-oligarch economy under a strong ascendancy of comprador political forces (Soskin, 2014). In our country, this very circumstance makes it extremely difficult to use traditional techniques for conducting marketing research, which has proved themselves very well in the capitalist industrialized countries. In many transition economies, which, like Ukraine, are characterized by a low level of economic development, significant corruption and the dominance of interests of oligarchic groups that have subordinated the development of the national economy, marketing research should be conducted taking into account such a complex situation in the country. Marketing research methods used in developed countries are often ineffective in transition economies.

The literature about marketing research tailored to several markets and consumer segments in transition economies ¹⁸ can be considered in several tentative groups with the first of them widely covering selected issues of all marketing activities in emerging markets. Close attention is paid to the issues of bringing innovative products to emerging markets (Shankar, 2019, Kumar and Srivastava, 2019); a special focus is on the features of consumption in poor consumers’ segment (Prabhu et al., 2017) and on the middle-class consumers (Cavusgil et al., 2018); B2B digital marketing strategy is studied regarding emerging markets (Vieira, 2019) with the network relations of “dependence–independence” in the B2B market carefully explored (Dong, 2018); the effective strategies have been worked out for entering the markets of developing countries through the formation and functioning of international marketing alliances (Pedada et al., 2019); the marketing strategies have been elaborated for selected markets like that of wine (Starostina, 2016, Radovanović et al., 2017) artworks (Gürşen, 2020) organic food (Nguyen et al, 2019), and grocery ( Child et al., 2015).

Several articles explore the risks of consumers in alcohol markets (Starostina and Kravchenko, 2015) and the exotic insect-based foods (FAO, 2013); the technology adoption models (Kotabe, 2012); the immersive technology in ethnographic research (Manning and Leon, 2018; Alcañiz et al., 2019).

Secondly, some issues of marketing research are considered with a focus on individual products, sectors and consumer behavior in emerging markets. Conceptual issues of marketing research in emerging markets are related to the specifics of marketing research in different types of markets, such as C2C (Ofori, 2017) and B2B (Spoerl, 2017); cross-cultural issues and consumer behavior (Opara, 2009, Ford, 2018, Malhotra, 1988, Azmat, 2013, Kinsey, 1988, D'Andrea, 2004);  the role of relevant information in the success of international companies in emerging markets (Hansen, 2015).

Thirdly, a certain systematized outline of how the problems of marketing research in countries with transition economies were covered in the leading international journals can be traced in the meta-analysis of the publications on marketing research. Although the above issues are not presented here as a stand-alone section of the analysis of 26 journals for 1970–2001, yet there is a certain number of articles that from a comparativist position and the material of some countries, including emerging economies, cover the issues of selecting distribution channels, conducting cross-cultural comparisons of consumer behavior, analyzing the state of e-commerce (Kitzmiller and Miller, 2003). Another meta-analysis of 1722 articles in six leading journals for 1995–2015, not only displays considerable attention to the problems of emerging economies but also outlines directions for future research. In particular, this is the role of institutional factors in entering the markets of the countries under consideration, trust and loyalty of customers, specifics of communication channels (Leonidou et all, 2018). Another crucial task is to get rid of the vicious, "colonial" approach, which is still partly present in marketing research in emerging markets. A recognized marketing specialist describes this situation as follows: “The traditional colonial mind-set of the perceived superiority of the marketing practices of advanced countries, and especially among marketing services companies, such as ad agencies, and market research companies, requires the most significant change” (Sheth, 2011).

Nevertheless, Ukrainian and foreign authors do not always focus their attention on the type of environment, for example, institutional, socio-economic, cultural or other, in which marketing research is carried out, as well as on how exactly this environment affects the marketing research. Without taking into account this circumstance, it is difficult to expect the effectiveness of the marketing research, which has the potential of a driving force for economic growth in a transition economy.

This paper aims to clarify what factors and how exactly affect marketing research in the transition economy of Ukraine.

The article’s structure: 1 Introduction. 2. Methodology and research methods. 3. Factors affecting marketing research: system analysis. 4. Discussion and conclusions.

Methodology

In this research we proceed from the following hypothesis: conducting marketing research in a transition economy is affected by factors related to the global economic trends, the state of development of marketing theory and marketing research in the world, and Ukraine, as well as the characteristics of the transition economy. Provided that in marketing research it is possible to cope with threats and use the opportunities due to the three groups of factors, the marketing research can perform a function of a driver for the socio-economic development of the transition economy (Fig. 1).

Source: developed by the authors
Figure 1. Main factors affecting marketing research.

To prove the hypothesis, we will be guided by certain theoretical approaches that allow analyzing the role of the above factors. Their study was carried out through the use of general scientific methods of abstraction, a systematic approach to the study of socio-economic processes, and the involvement of relevant theoretical concepts (Starostina, 2019, Jackson, 2010, Yudin, 1978).

How negative and positive world processes and trends affect marketing research can be analyzed based on theoretical concepts that are used to study the processes of globalization and regionalization, the development of the world economy, on the one hand (Barrow, 2017, Aspers and Kohl, 2015), and a small-size open economy, on the other hand (Bazhenova and Bazhenova, 2016). We also used an interdisciplinary approach to the study of socio-economic processes, called "new normality". (Sneader and Singhal, 2020, Gerasymenko, 2020).

Regarding how theoretical developments in the field of marketing and its practice affect the state of marketing research, it is necessary to proceed from the concepts on which marketers rely, when they must obtain objective and qualitative information needed to make effective managerial decisions about certain elements of market strategy. We mean the concept of market subjects' behavior (the classical and neoclassical concept of rational behavior) (Persky, 1995) and the concept of systemic irrational behavior (Gigerenzer, 2001, Kahneman, 2003), as well as the concept of surveillance capitalism (Zuboff, 2019), and neuromarketing (Lee, et all, 2018, Sung, et all, 2019), the postmodern concept of object-oriented ontology (Lindley et al., 2020, Harman, 2015). Attention is drawn to proposals for the need to radically change the theoretical approaches and practical marketing tools for emerging markets (Sheth, 2011).

The impact of the specific socio-economic environment of Ukraine's transition economy on marketing research is analyzed based on theories of post-Soviet transition economy developed by modern Ukrainian and foreign scientists, for example, clan-oligarchic economy (Soskin, 2017), the concept of state-owned corporation and surrogate private property (Ermolaev, 2019a), superprofit of politically related firms (Balabusko, et al, 2018), political analysis of the ruling class (Ermolaev, 2019b).

Discussion

Impact factors on marketing research: system analysis

The general state of the global business environment and trends in its development.

Ukraine, from the very beginning of its revival as an independent state in 1991, began the process of integration into the global economic system. According to its characteristics, the Ukrainian economy is a small economy of the open-ended type that has been in the process of modernizing its socio-economic basis over the past three decade. According to the World Bank, its share in global GDP is small ($154 billion or 0.001% in 2019) and the share of external turnover to GDP was 100% in 2018 (Knoema, 2020). All foreign economic shocks echo in the macroeconomic situation in Ukraine, and all global negative and positive trends also directly affect Ukrainian business and consumers.

The role and importance of marketing research are changing with dynamics of all factors of the business environment (for quiet periods) or with those of the factors that come to the fore (for crisis periods) in terms of their impact on business, consumers, and society. The history of the development of the theory and practice of marketing convincingly shows that it was effective marketing research that allowed the business to successfully resolve objectively existing contradictions between the interests of producers and consumers, both in quiet and crisis periods of economic development (Starostina A, 2012). Nowadays, such a historical period has come when many crises, both global and regional, are unfolding simultaneously.

The unfolding global crisis includes political, economic and healthcare components. The first of them is related to the changing balance of forces among the world’s leading powers. The change is manifested in the increasingly dominant role of China in restoring Russia's position as a global geopolitical player, and, as a result, in the formation of a multipolar world model (Dee, 2015, Dugin, 2020). The global economic crisis is associated with the ineffectiveness of the current model for implementing achievements of the scientific and technological revolution, the large-scale involvement of the state in solving the problems of economic development through the haphazard and chaotic support for business, and also by the inevitable change of the existing model of the international monetary system, i.e. the weakening of the role of the dollar as the main currency in international settlements and the currency reserves of countries (World Bank, 2011, World Bank, 2012, Carbaugh and Hedrick, 2009).

The global financial and economic crisis of 2008–2011 forced the central banks of the advanced industrial economies to use the so-called "Quantitative Easing" mechanism in monetary policy to stimulate economic growth. From the point of view of the BRICS countries, such actions had a negative impact on their economies. BRICS countries have condemned the policies of western economies claiming that "It is critical for advanced economies to adopt responsible macro-economic and financial policies, avoid creating excessive liquidity and undertake structural reforms to lift growth" (Delhi Declaration, 2012)

Covid-19 pandemic has added a crucial health-care dimension to the overall picture of the crisis. The tendencies menacing business that emerged from Covid-19, are being investigated by consulting firms to produce recommendations (McKinsey&Company, 2020a, Euromonitor International, 2020a) Their approaches are based on the statement that “the crisis caused by the coronavirus forces to adapt ways of working, infrastructures and spaces to the companies to face the new normality; including day-to-day management, the development of various technological solutions (e.g. touchless) and the promotion of digital transformation actions to enhance online channels” (Eurecat, 2020). There is a change in the consumption pattern caused by the coronavirus pandemic – primarily in the domestic services (replacement of the so-called “household services” with the “consumer services”).

Thus, countries and companies enter a period that has already been named as New Normality and which is defined as follows: “The 'new normality' characterized by volatility, increasing chaos in the business environment, as well as a high rate of change and unpredictability, means that survival and development of organizations may need to be achieved through adopting new business model, which help deliver sustainability” (Rudavska, 2018). Businesses, including marketing, have already started looking for a new model of working in such conditions (McKinsey&Company, 2020b, Euromonitor International, 2020b, CEEMAN, 2020).

Thus, the growing political tensions between global geopolitical players, the unfolding of the economic crisis due to changes in the monetary and financial model of the world economy and the Covid-19 pandemic led to the formation of the so-called "New Normality" in socio-economic processes. Under such conditions, the need for research into changes in the markets for goods and services, new trends and patterns of consumer behavior has increased significantly. However, the implementation of such projects requires a very high level of professional training, as the dynamics of business environment factors become less predictable. Ukrainian and foreign big business will give preference to marketing agencies with considerable experience and qualified personnel. These are, as a rule, well-known foreign companies. As for the Ukrainian small and medium business, in conditions of considerable risk, it does not invest in new projects and therefore does not require detailed marketing research.

The specifics of marketing development in general and marketing research in particular

Theoretical concepts

Marketing, as an applied scientific discipline, is based primarily on the same general scientific approaches to the study of reality as other disciplines dealing with socio-economic phenomena and human behavior. In launching research projects, marketers rely on certain theoretical concepts built on the models of reality and serve as the basis for the development of certain theoretical hypotheses about socio-economic processes and consumer behavior (Eisend and Kuss, 2019). Based on the analysis of the collected information, the hypotheses are confirmed or rejected and the marketing researcher formulates the proposals regarding directions for solving certain management problems.

From the very beginning, marketing research was largely based on the concept of the rationality of behavior, the so-called homo economicus, which prevailed in neoclassical economic theory at the time. The model of the doctrine was proposed by John Stuart Mill in describing the basic principles of political economy: homo economicus is "a being who desires to possess wealth, and who is capable of judging the relative efficacy of means for obtaining that end." (Mill, 1836 (2007). The thesis about rational behavior of economic subjects trying to maximize their wealth was well supplemented by the thesis about the hierarchy of human motivations, the most famous scheme of which is the so-called Maslow's hierarchy of needs (Maslow, 1954).

Based on these concepts, marketers reasonably assumed that consumers in all types of markets behave rationally in terms of the use of available resources, trying to adhere to a certain consistency in meeting their needs, from the most common to less important. Accordingly, marketers used mass surveys of respondents, focus groups and similar methods. In all these cases, the theoretical foundations of their research gave confidence in getting the expected information, for which it was necessary to correctly define the purpose of the research, develop certain hypotheses based on relevant theoretical concepts, choose specific tools for collecting information – questionnaires, observation diaries, etc., and use them correctly.
Marketers proceeded from the assumption that a rational economic subject does not need to hide information about his/her behavior, and his/her answers adequately and reliably reflect the motives and behavior in a certain, sufficiently long period. Thus, the management of the company that orders marketing research can also develop effective management solutions for its business. And, although as a result of criticism, the homo economicus model received some restrictions, it nevertheless remained one of the main analytical tools in the "mainstream" of economic theory.

The development of economic science, along with advances in psychology and medicine, has proven that the homo economicus model conflicts with practice. In the middle of the century, the concept of limited human rationality appeared (Simon, 1978). Nobel laureates George  Akerlof, awarded in 2001 for analyzing markets with asymmetric information, and Robert Schiller, awarded in 2013 for empirical analysis of asset value, advanced the theory of "irrational start" (Akerlof and Shiller, 2009). Behavioral economics, which began to develop rapidly at the beginning of the 21st century, shows that an individual can not only act irrationally, contrary to the own interests, but does so systematically, and not as a deviation from the main, rational way (Kahneman and Tversky, 1978).

Postmodern, post-nonclassical approaches in science, which became popular in marketing in the final decades of the last century, could not but affect marketing theory and practice. The postmodern methodology is known to focus on the epistemological crisis in science in the 20th century. Postmodernist philosophers, whose views reflect the postmodernist worldview, postulate the impossibility of objective cognition and the lack of credibility criteria  (Cendrovskij, 2015). Under such an approach, it is not surprising that there is skepticism about marketing research in its classical sense, as a valuable management tool, the use of which requires a preliminary detailed and costly theoretical work and strict logic of all stages. After all, if the world around a market researcher is changeable and principally incognizable, then the results of the marketing researcher's work lose their value for the business because it is in no way possible to disclose, for example, the true motives of the customer or the impact of advertising on the buyer (Chmil and Korablova, 2018). Under such circumstances, product manufacturers and service providers are increasingly making managerial decisions about market strategy and marketing mix, not so much relying on research results but trying to impress the consumer with all kinds of creativity. The main area where post-modernism in marketing is most clearly manifested is advertising research, which is conducted in the style of the hype creative promotion of ideas of advertising appeal (Smirnov, 2019).

 Practice

A variety of factors have had an impact on the formation of the marketing research industry. On the one hand, for a long time, for example, in the U.S. until the mid-80s, full-fledged and large-scale marketing research was a rather expensive tool for obtaining the necessary information, so the marketing research developed mainly within large companies. On the other hand, small and medium businesses, whose founders were often engineers and practitioners who were well versed in production and local market conditions, did not need to use special marketing services to collect information.

The impetuous pace of globalization, scientific and technological progress, and rapid development of transition economies have radically changed the situation. Marketing research, both science and practice, has turned into a highly developed area of intellectual activity, in which a universally recognized method of conducting the research has been formed. The algorithm is widely used in companies whose specialists have received a university education. The organizations unable to attract such specialists are forced to conduct marketing research in its alleviated version that is without the proper scientific and methodological explanation.

Marketers are helped by the achievements of the Fourth Industrial Revolution, the capabilities of which inspire confidence that it is possible to do without a scientifically sound procedure for conducting marketing research. These capabilities are, primarily, artificial intelligence (AI), Internet technology and technology for collecting and analyzing large arrays of information (Big Data), and brain research. All of them have significantly influenced the components of marketing activities, including marketing research. One must take into account the regularities and trends in the development of the theory and practice of marketing and marketing research in the world and Ukraine. It is also of importance the role of such factors as the use of new technologies in this area like marketing technologies (MarTech) and the differences in the development of marketing in the world and Ukraine.

Extensive use of AI, in particular machine learning and behavior modeling of Internet buyers, has led to the rapid development and spread of digital marketing, which, in addition to its dominant focus on the use of digital channels of communication in brand promotion, has become involved in data collection and processing. Adherents of digital marketing, which makes extensive use of these technologies, believe that “in the age of surveillance capitalism, the manipulation of choice contexts and decision-making is the same as consumer empowerment” (Darmody and Zwick, 2019).

Big Data technology, in its turn, allows arranging a detailed analysis of Internet users' behavior at all stages of their life cycle (the buyer's journey) to determine conversion rates for each of them. This technology also makes it possible to analyze the behavior of potential customers and determine their expectations of the products, so a company can produce standardized recommendations and content for use at all points of contact of potential customers with the company.

The latest technologies not only provide marketers with new tools for collecting and processing primary data but also have led to the emergence of a market for commercial offers of batch data obtained and processed using these technologies. There is a situation when the focus of marketers' activities shifts from the detailed justification of the purpose of marketing research, which is necessary to solve a certain managerial problem to the rapid acquisition of data (primary or batch secondary) and their immediate application with the help of new technologies. The phenomenon of commoditization of data packages on the behavior of the target audience for sale to the interested companies was named surveillance capitalism (Zuboff, 2019; Mosco, 2015). From the point of view of the company's top management, in this case, there is no need to follow a scientifically-based approach to defining the purpose of marketing research and implementing other stages, as it takes time, which competitors can use to weaken the opponent's market position.

Evolution of marketing in Ukraine

Until 1991 Ukraine was a part of the USSR and marketing here developed differently than in the capitalist countries of Europe and the United States. World experience has shown the following order of development of marketing theory and practice. First, marketing appears in business practice as a reaction to objective regularities of market relations development. In the 30s of the 19th century, the change in the material and technical base of production owing to the scientific and technological revolution led to massive overproduction, which in turn forced businesses to look for new methods of enterprise management. Having gained experience in using marketing technologies, the first scientific works in marketing appeared to commence the formation of marketing theory with university education in the field of marketing.

In Ukraine, the formation of marketing took place differently. Here, as in other socialist countries, for the first time in the history of mankind, there was a transition from a centrally planned to a market economy, moreover to its undeveloped stage and against the background of an already high level of marketing development in the world science and practice. That is why marketing in Ukraine began to develop first within the framework of university science and education, as the Ukrainian scientists and teachers were the first who underwent training and internships within the framework of numerous programs of international cooperation and technical assistance in the world's leading universities (Starostina, 2017). Ukraine has already formed its national marketing practices, including scientific schools in the field of theory and practice of marketing research. Over the years of Ukraine’s independence, the national marketing research school was established. Its scholars placed special emphasis on improving methodology for conducting surveys and reported their outcomes in the journal of Ukrainian Marketing Association: Marketynh v Ukrayini (Marketing in Ukraine) (Ukrainian Marketing Association, 2020).

The popularity of new technologies is growing among Ukrainian marketing specialists: “with the rapid development of Big Data, AI, and ML, marketing is getting even more automated. Over the last few years, the industry of marketing technology has been booming, introducing a plethora of solutions…to cover a broader range of brand’s needs” (Mandzevych, 2019). The flip side of this attitude is often the propensity to use the latest technologies uncritically to develop and implement strategic and tactical marketing solutions. This is especially true in areas such as marketing information and digital communications tools. Fashion for technological innovations, which have not yet proved to be superior to traditional methods of obtaining information, leads to a diminishing role of the classical approach to marketing research. The traditional approach is characterized by its special attention given just to the development of the goal of marketing research.

Marketers in Ukraine are also actively promoting the methodology for developing and implementing innovations for small and medium-sized enterprises, known as the HADI cycle. It is argued that the use of this technique in marketing allows quick testing hypotheses about consumer behavior and their attitude to innovation. Yet, the question of how the researcher obtained these or those hypotheses is not raised in any way. It's simply stated that “at the first stage of the HADI cycle, we generate a hypothesis that will improve the key indicator of the project, business. … The hypothesis should solve the existing problem of the project and give a concrete result, which allows improving the economic performance of the organization” (Mingaleva et al., 2019.) However, not a word is specified about where the hypotheses under study come from.

Thus, the following factors directly influence marketing research in Ukraine: the spread of the concept of systematic irrational human behavior, the increase of post-modernist concepts among marketing researchers, the wide use of achievements of scientific and technological revolution, the development of the national school of marketing research in Ukraine and non-critical use of its latest practices in this country.

Impact of the specifics of the Ukrainian transitional economy on marketing research

Analysis of the impact of the specifics of the Ukrainian transition economy on marketing research requires a study of the current state of the market of marketing research, research of its suppliers and customers, as well as areas of marketing research and characteristics of different types of markets.

State of marketing research market in Ukraine

The marketing research market (MRM) is a dynamic business area, which, along with other sectors of the Ukrainian transition economy, is developing under the influence of global, as well as of some specific factors inherent only in Ukraine. The accurate data on the state of the Ukrainian MRM are hardly available because of the imperfect statistical records. Thus, the statistical bodies attribute activity in the field of marketing research to one big group of observations entitled “73.0 Advertising activity and market conjuncture research”, which contains two subgroups: “73.1 Advertising activities" and “73.2 Market research and public opinion polling” (State Committee of Ukraine for Technical Regulation and Consumer Policy, 2010). Marketing research and sociological studies are shown in subgroup 73.2 but it is impossible to single them out. The same mix of data is also observed in subgroup 73.10, where findings of advertising research are incorporated into market research results. Just one subgroup 73.20 taken as an example, demonstrates that the 2019 volume of records amounted to 5.0B UAH, which at an average rate of 25 UAH per one US dollar is $200M (State Statistics Service of Ukraine, 2019).

The volume of advertising research, for which no exact figure is provided by the statistical authorities, should also be taken into account. Expert opinion has shown that such costs can constitute up to 5 percent of the total turnover of expenses in the field of advertising (Association of Marketers of Ukraine, 2020). If we take into account the fact that in 2019, 1,380,000,000 dollars are listed under Advertising Activities code 73.1, then marketing research itself may amount to $70M.

Another important detail to be taken into account at evaluating the market size is that in Ukraine marketing research from its very beginning was used as a tool for tax evasion and illegal transferring non-cash funds of enterprises into cash (Eshko, 2007). Accordingly, the tax authorities, not only in Ukraine but also in Russia, are suspicious of marketing research contracts (Lermontov, 2006).

In recent years, tax evasion operations have been increasingly carried out through financial market instruments and foreign economic transactions, and consequently, marketing research is used much less than before (State Financial Monitoring Service of Ukraine, 2017). By the estimation of the Members of the Board of Association of Marketers of Ukraine, the extent of marketing research does not exceed 10 percent of the market size and was about 140M UAH in 2019 (Association of Marketers of Ukraine, 2020). Thus, the 2019 total turnover in the field of marketing and sociological research (MSR) can be evaluated as the market of services under 73.10 code (Advertising research) + the market of services under 73.20 code - (Marketing research for tax evasion) = 70 + 200 – 140 = 130M USD.

To verify the above calculations, it is possible to use the data of the Ukrainian Marketing Association (UMA), which conducts annual surveys with the UMA members that are major marketing research companies¹⁹. By UMA estimates the marketing research made US$52.9M in 2019. In 2005–2019 the market volume varied greatly from US$24.8M in 2005 to US$35–60M in 2008–2019 (Lylyk, 2020).

Thus, the size of the market of marketing research in Ukraine in 2019 was approximately $53 million – a "narrow market" (research of most firms specializing in this area) and $130 million – a "wide market" (all research carried out by both marketing agencies and departments of non-marketing companies). For comparison, the market volume in Russia was about $360 million, i.e. from three to six times more for different comparable market variants (OIPOM, 2019).  The size ratio of the markets in Russia and Ukraine roughly matches the population ratio of these countries.

The market for marketing research (MMR) has growing and falling cyclical dynamics alike the Ukrainian economy. This is evidenced by the high correlation between economic activity in the country and the market volume of marketing research (Pearson correlation coefficient = 0.792, with a significance level of 0.000) (Figure 2). The high increase of marketing research costs in 2019 is largely due to the presidential elections that year, given that some Ukrainian marketing agencies engaged in political marketing research, did not differ research activities in reporting.

Source: developed by the authors based on Lylyk, 2020 and Minfin, 2020.

Figure 2. The growth rate of the economy and MMR in Ukraine (2005–2019). Numbers 1 and 15 on the scale refer to 2005 and 2019, respectively.

The Ukrainian economy is relatively small and belongs to the open type of economy embedded in the world economic system (e.g., Yaroshevish, 2016, Grui, 2018; Bilan and Zholud, 2017). Therefore, the whole range of social production factors: capital, hired labor, and land (formally will be open for foreigners from 2024) are influenced by the processes in the world market. Since the collapse of the USSR, Ukraine has lost a significant part of its industrial potential and turned into a state with a dominant share of the service sector (24.2% in 2019) (State Statistics Service of Ukraine, 2020).

The dynamics of foreign direct investment (FDI) in Ukraine shows a steady trend towards a decline in the country's investment attractiveness to strategic investors. Compared to 2010–2013, the 2016–2019 FDI inflows to Ukraine decreased by a third (from 6.6 to 4.6 billion US dollars). Ukraine remains attractive only to speculative investors who invest in the least risky financial instruments such as government bonds. Thus, in 2019 and January–February 2020 as a result of the tight monetary policy and the follow-on high-interest rates on government borrowings and the strengthening of the hryvnia exchange rate, the volume of non-residents' investments in domestic government bonds (OVGZ) increased by 122B UAH (about US$5B at the average rate) (Danylyšyn, 2020). Under such conditions that are favourable for financial speculators and unfavorable for real investors, the demand for marketing research decreases as well.

Marketing research suppliers and clients

Marketing research in Ukraine is conducted by specialized firms, advertising agencies, manufacturers of goods and services, trading companies, university departments, etc. The most active marketing agencies are ACNielsen Ukraine, Proxima Research International & Medical Data Management, GfK Ukraine, which accounted for 55–75 percent of the total volume of customized research in 2014–2019.

Marketing research firms had 8,240 employees on permanent or temporary contracts in 2015 and contracted 6,353 employees in 2019. Almost every non-marketing company employs a marketing specialist. In Ukraine, 147 universities offer bachelor's and master's programs in marketing. In Ukraine, two professional associations unite marketers: the Ukrainian Marketing Association and the Association of Marketers of Ukraine.

Various Ukrainian and foreign enterprises, organizations, and institutions establish demand for marketing research. Among the customers, there are large Ukrainian corporations of oligarchic business that occupy strong positions in the framework of a particular political regime supported by the oligarchs. The strategic priorities for the Ukrainian economic development are subordinated to the interests of the oligarchic clans, which are characteristic of a “crony” economy (Balabusko et all, 2018) or “surrogate capitalism”, in the framework of which the legal private assets obtained as a result of privatization were merged with state assets, as well as the use of the administrative resources of the state and political power to maximize profits (Ermolaev, 2019c).

The situation leads to a breach of market laws and weakens, up to the total extinction of the basic principle of investment activity, namely, compliance of the degree of risk with the degree of remuneration for taking the risk. The oligarchic companies in Ukraine have the opportunity to earn extra profits by investing capital with a minimal level of risk. “The clan-oligarchic system that has developed in Ukraine is deforming the pattern of economic, political, and other risks. The most profitable, export-oriented areas of the economy are virtually risk-free for doing business by oligarchic clans” (Starostina and Kravchenko, 2009).

The interest of the oligarchic business is present in such areas of marketing research as a strategic analysis of the Ukrainian and foreign markets or marketing intelligence. This business forms the political and economic factors for the development of the business environment. Marketing research is usually commissioned from international research companies or their consortia with local companies.

Big neo-oligarchic business occupies its own, a rather strong position in Ukraine’s economic system. In the regions, 100–150 local economic groups have been formed, which can control local consumer markets and business markets (Potapenko, 2020). These groups are interested in identifying the development factors for their regional business environment, studies of general trends in local markets, etc. If needed, they conduct marketing research on their own or order the studies from local agencies

Small and medium-sized businesses are focused on short-term operation; consequently, they request the studies exploring particular marketing tools, especially for promotion and everything related to Internet marketing. Small business leaders suffer from a special form of modern “marketing myopia” when they focus solely on Internet promotion and research of its effectiveness using widely available tools such as Google Analytics or Yandex. The chronic scarcity of financial resources, which is typical for SMEs, does not allow ordering marketing research on a systematic basis.

According to UAM, “only 12 percent of enterprises did not conduct any marketing research while 70 percent of them used their resources, and 18 percent of businesses called on services of external organizations… National researchers criticize heavily Ukrainian companies in the area of marketing research because of lack of a clearly defined research methodology, low efficiency of the most widely-spread methods” (Tkachenko and Gromova, 2018).

Among the customers of marketing research, there are also the state authorities of Ukraine. In recent years, research into the international image of Ukraine, including the development of the state brand, was quite active. Four projects have already been prepared: in 2011, 2014 and two in 2018 (Shkil', 2018). The last version of the Ukrainian brand with the slogan Ukraine Now was based on research conducted by Ukrainian and British experts in cooperation with the British government. This research included six focus groups in the UK, Germany, and Poland, where several concepts of promoting Ukraine were tested (Ukrinform, 2018).

Areas of marketing research and distinctions of various markets

In Ukraine, marketing research is conducted in the same areas of the economy, as it is in the countries with a many-decade history of marketing research. Table 1 shows the areas of Ukrainian marketing research.

The UAM’s survey into the 2007–2019 period showed that from 60 to 75 percent of the marketing research was in the B2C market and from 25 to 40 percent in the B2B market. Food products are the main objects of research in the B2C market. They accounted for 12–17 percent of all expenses. The key focus of marketing research is the market measurement and modeling which generally provide for no compliance with a strict research objective algorithm and accounted for 60–85 percent of the total of the performed works in 2015–2017 (Lylyk І., 2020).

Table 1.
Major areas of marketing research in Ukraine.

Source: developed by the authors based on Lylyk, 2020

From year to year, large international corporations of the FMCG segment, which are present in the Ukrainian B2C market, present stable demand for marketing research. Needless to say, that the turnover of goods in the criminalized, shadow markets occur without recourse to the services of marketing agencies.

Both foreign and Ukrainian producers of goods and services are not inclined to considerable expenses for marketing research of the precariat consumer behavior. The companies proceed from two sustainable consumption patterns, inherent in the transformational economy of Ukraine, which is quite coexisting with each other in the precariat case.

In times of economic downturn, the precariat has enough income only for critical goods and services that are needed to keep its workforce at the minimum necessary level for a short period (one or two years.) In times of economic growth, however, the precariat tends to spend its higher incomes not on accumulation or rational improvement of living conditions, but on demonstrative consumption of goods and services, which should be indicative of a successful life path. Besides, cultural specifics of Ukrainian society should also be taken into account: “at the subconscious level, most citizens condemn thriftiness. Ukrainians perceive economy primarily as a humiliating necessity and a sign of disadvantage” (Kizyma et al., 2012). Since the income of the precariat is insufficient to meet fundamental needs, in particular, to invest in housing, the precariat representatives buy goods and services such as business class phones or cars. Irrational financial motives in making decisions about the purchase of goods and services are common not only among the precariat, but also among the wider Ukrainian population (Šamansʹka, 2014).

The distinctive feature of the Ukrainian B2B market is that, on the one hand, it serves the interests of businesses close to regional and all-Ukrainian power groups. The procurement of state and municipal enterprises and organizations is very often carried out from businesses whose management is in one way or another connected with these customers. And although in recent years all tenders of state organizations are conducted through the open system Prozzoro, still it was not possible to get rid of corruption in this area.

Marketing research is conducted in the B2B market as follows. First, the study is reduced to the formal writing of the marketing section for the business plan, if credit resources are used for purchases from friendly companies. Secondly, at enterprises that have no connections with the authorities, marketing research is conducted by their staff. Many technical universities in Ukraine have specialized departments of B2B marketing. In addition to marketing training, such graduates receive in-depth knowledge about the development of certain industry sectors. Thirdly, foreign companies conduct marketing research in Ukraine both on their own and through marketing agencies.

Recently, the situation in the C2C market has entered a clear legal field. A while ago, some types of services, like taxi, tutoring, rental housing, etc. have been developing spontaneously and without government attention. Now, state supervision and regulation measures are introduced for certain market players.

There is no reliable information about the volume and quality of market research in the C2S market. We can assume that provision of services with high added value is partially accompanied by preliminary market research in a certain form. Such studies are conducted by those who provide these services. In all other cases, we are not talking about marketing research in their usual business format.

Thus, there are three main directions in which the specifics of Ukraine's transitional economy influence the conduct of marketing research in the transition economy of Ukraine. The first one is the state of the marketing research market in Ukraine, including the volumes of market research market, its executors and clients. The research of the current state of the marketing research market has shown that it has the following characteristics: the market is growing, but the growth rates are cyclical with a very large variety of its values. There is also a significant correlation between growth and decline rates of market research and the Ukrainian economy in general.

The second direction of influence is the suppliers and clients of marketing research. The suppliers part is characterized by a rising amount of competing market players, an increasing quantity of companies for which MMR is not the main business area, the growing number of qualified personnel, the intensification of activities of industry associations in implementing standardization for marketing activities, and the use of new technologies in MMR. The marketing research clients are characterized by the increased leverage of oligarchic capital, augmented government support for SMEs, a growing number of SMEs in low-tech and high-tech sectors of the economy, the great concern of political parties and state authorities about researching their image.

The third direction of influence is marketing research areas and specifics of different types of markets, which manifests itself as follows. From the point of view of research areas, it is a growing share of market measurement and modeling research, a growing share of research into the COVID-19 pandemic market, and a growing share of research into innovative goods and services in the B2C market. From the point of view of different market types, these are the presence of large corporations in the FMCG sector, a considerable part of criminalized operations, a significant share of precariat in the population, the prevalence of demonstrative consumption, the spread of “friendly” procurement practices.

Conclusion

The analysis confirms our hypothesis that the conduct of marketing research in the underdeveloped oligarchic transitive economy of Ukraine is influenced by three groups of factors related to trends in the world economy, the state of development of marketing theory and marketing research, as well as features of the transitive economy. We note the main ones, which, in our opinion, can act as factors of opportunity for the development of the theory and practice of marketing research.

In terms of theory, such a factor is the formation of a "new normality" in social and economic processes, which is stipulated by the global political and economic crises, as well as by the Covid-19 and the governments' reaction to the pandemic. The actions that governments have undertaken to financially support businesses and citizens during the global economic crisis of 2008-2011 and the Covid-19 pandemic were carried out from the standpoint of inadmissibility of mass bankruptcy of companies and a sharp decline in living standards. At the same time, insufficient attention was paid to developing models with the help of which it would have been possible to predict the consequences of such a policy in terms of consumer behavior of citizens. There are some fears about the high likelihood that the result of "pandemic paternalism" will be a significant reduction in motivation to work. In such a situation there is a growing need for adequate and proved theoretical concepts regarding the behavior of market players in the new conditions, which will provide an impetus for the development of marketing theory.

Another factor that requires the development of marketing theory and marketing research is, on the one hand, the need to counteract the influence of post-modern, post-nonclassical views on the impossibility of obtaining reliable information regarding the real behavior of market actors. If this approach is widely adopted, the marketing community will no longer need (from a business point of view) to conduct scientifically based marketing research, as the value of the information received is extremely low. On the other hand, marketers should more fully incorporate the achievements of behavioral economics into their conceptual views, particularly the thesis of systemic irrationality of human behavior.

The practice of marketing research is influenced not only by theoretical developments but also by the state of their market. Based on our results, it can be assumed that, firstly, the state of the market is unstable and it lacks internal sources of development, which are due to the potential of marketing research performers. Therefore, in the near future, its condition will continue to depend on the state of affairs in the Ukrainian economy, which, in turn, having the properties of an open underdeveloped economy will depend on the global commodity markets, where Ukraine has its main export items.

We can expect that it is the suppliers of marketing research that will gradually become the main drivers of market growth, provided that they invest their resources in training personnel and create their own, original research methods that fully take into account the characteristics of the Ukrainian transition economy. In this case, the dynamics of this market will not be conditioned by the situation in the world economy as much as it is now.

Among the promising clients, whose interest in obtaining quality marketing consulting will grow, are public universities and professional specialists in various fields of activity. The first began to shift to a new model of their activities, which provides them with a much broader mandate to use assets to carry out statutory tasks. Along with strategic and financial consulting, there is a need for marketing, in particular, in the study of the motivations of applicants, improvement of existing and development of new educational and scientific services, etc. (Starostina and Kravchenko, 2018). Professionals are interested in researching the target audience to create a personal brand.

The global СOVID-19 pandemic is expected to increase the share of e-commerce and distance learning, which will bring these areas to the forefront of marketing research.

The results obtained confirm the findings of other researchers. In particular, this is true for the rapid and comprehensive formation of the business environment with the characteristics of New Normality, significant changes in labor and consumer motivations, which are due to COVID-19, the spread of post-modern approaches to marketing, the role of technological advances in marketing research.

In considering the results, there are some limitations inherent in the study. In particular, the calculation of the market size of marketing research is based on certain assumptions obtained by the expert way and may not fully reflect the real state of affairs. The article takes into account only the main, in the authors' opinion, factors of influence on marketing research. The influence of secondary factors was not considered.

The research outcome allows for taking into account the specifics of the Ukrainian type of transition economy, which should be emphasized when teaching university disciplines of marketing profile. In turn, marketing agencies can identify areas for improving their methods and procedures for marketing research, based on threats and opportunities arising from the influence of certain environmental factors.

The following studies into the problems of marketing research in the transition economy may be unfolding in several directions. A comparative analysis with other countries of transition economies, which have similar characteristics of a small open economy with a strong influence of oligarchs, will provide an opportunity to find out the specifics of influence of certain factors on market research. It is also advisable to investigate how marketing research manifests itself as a driver of the country's socio-economic development