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Association for Consumer Research

Join us for an unforgettable weekend, celebrating the best and brightest in Consumer Research

Join us in paradise for AP-ACR 2024, as the best and brightest in Consumer Research travel to Bali.

Global Thought Leaders in Consumer Research

The Association for Consumer Research is a collection of academics, practitioners, and government leaders devoted to the study of consumer behavior. Together, ACR members use a variety of cutting-edge research methods to uncover consumer insights and disperse this knowledge to improve consumer, business, and social outcomes.

Conferences and Events

Championing research that deepens our understanding of consumer behavior from every angle.

Research Journal (JACR)

The Journal of the Association for Consumer Research (JACR) is a collection of the latest research findings from the world’s leading consumer research and marketing scholars.

Consumer Research Experts

ACR is a community of thought leaders representing academia, industry, and government who share a passion for understanding consumer behavior.

Recent News

Acr sheth foundation conference scholarship.

To assist PhD students with limited resources to attend the 2024 Paris ACR conference, the Association for Consumer Research in

Early Career Award: Call for Nominations

ACR members are invited to help identify potential candidates for the ACR Early Career Award for Contributions to Consumer Research.

Simonson Mentorship Award: Call for Nominations

ACR members are invited to nominate potential candidates for the Simonson Mentorship Award. The award, launched in 2023, is given

Fellows Award: Call for Nominations

ACR members are invited to submit nominations for the Fellow in Consumer Behavior Award to the Fellows Nominating Committee. The

JACR Webinar: Children and Adolescent Consumer Behavior

CHILDREN AND ADOLESCENT CONSUMER BEHAVIOR: FOUNDATIONS AND NEW RESEARCH DIRECTIONS May 24, 202411:30 am -1:00 pm EST Hosted by Deborah

JACR Pre-Submission Webinar: Issue on Language Research in Marketing

PRE-SUBMISSION WEBINAR: JACR ISSUE ON LANGUAGE RESEARCH IN MARKETING May 23, 202412:00 – 1:30 pm EST9:00 – 10:30 am PST19:00-20:30

Latest Media

Jacr webinar.

Consumer Insights Podcast

The world’s best marketing professors share their latest research insights and share tips and tricks for marketers, entrepreneurs, and business executives hoping to be at the cutting edge of marketing innovation.

The Ivory Tower can be a lonely place sometimes, but as academic journals place a premium on field studies and engagement with real consumers in actual business contexts, partnering with friendly practitioners has never been more attractive.  In this episode, our very own Kelley Cours Anderson, Ph.D., is joined by Laura Eddy , the Vice President of Research and Insights at Realtor.com.  With over 25 years of consumer insights experience with some of the world’s biggest brands – like Amazon and Walmart – Laura makes the case for the relevance of marketing research and consumer insights in a compelling way. Hear how academic research informs the work of a seasoned practitioner, and how those working in the industry can inspire our research and liven up our ivory tower in this episode of Consumer Insights 101.

For more information, please visit www.acrwebsite.org Follow us on Twitter at @JofACR and @aconsres This episode was hosted by Kelley Cours Anderson Consumer Insights 101 is a production of the Association for Consumer Research

Become a Member of ACR

Benefits of membership.

Joining ACR unlocks resources, opportunities, and access to the latest insights in consumer behavior. Membership includes access to the Journal of the Association for Consumer Research (JACR), an expert-curated collection of the most pressing topics in marketing and consumer contexts. 

Members also enjoy access to decades of conference proceedings and research findings, as well as invitations to attend conferences and events with fellow ACR members around the world. Membership opens up a network of the world’s leading consumer research experts, collaboration opportunities, and access to grants/awards to fund research. 

Stay informed about the latest advancements, enhance your expertise, and advance your career all within the supportive ACR community.

Joining ACR offers exceptional value whether you are an academic , a recent marketing graduate starting your career, a seasoned consumer expert in industry , or a government leader. ACR provides a wealth of resources, opportunities, and support to help you achieve your goals in the field of consumer research.

Quick Links

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Contact Information

• 308D LSBE 1318 Kirby Drive Duluth, MN 55812
• +1 218-726-7853
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• Library of Congress
• Research Guides

Doing Consumer Research: A Resource Guide

Introduction.

• Generations
• Books and Journals
• Government Data Sources
• Subscription Sources
• Internet Sources
• Primary Market Research
• Using the Library of Congress

Business Reference : Ask a Librarian

Have a question? Need assistance? Use our online form to ask a librarian for help.

Author: Natalie Burclaff, Business Reference Specialist, Science, Technology & Business Division

Note: Based on an earlier guide titled Market Segmentation January 2005 by Ellen Terrell, Business Reference Specialist, Science, Technology & Business Division

Created: February 1, 2020

Last Updated: February 23, 2024

Get connected to the Library’s large and diverse collections related to science, technology, and business through our Inside Adams Blog. This blog also features upcoming events and collection displays, classes and orientations, new research guides, and more.

Consumer research is done with the intention of understanding the needs or behaviors of a particular group in order to define who to best market a product or service to, also known as identifying a target market.

Customer segments can be grouped by different variables, such as demographic, geographic, psychographic (values and lifestyle), or behavioral. This guide specifically focuses on resources useful for the business to consumer (B2C) industry, where individuals are the end users of a product or service. While this guide does not cover every resource, it does highlight commonly used sources and publishers of population and consumer data.

“There is only one winning strategy. It is to carefully define the target market and direct a superior offering to that target market.” - Philip Kotler, "Father of Modern Marketing" 1

Consumer attitudes, values, habits, and preferences are often collected via interviews, surveys, and focus groups. Businesses also collect data about their customers and sales in order to make decisions about pricing, inventory, and advertising. As technology becomes more ubiquitous, the amount, speed and type of data collected by businesses and third parties has increased. This flood of information, also known as big data, is tracked, analyzed and used for business intelligence. However, there are major concerns from consumers' rights and privacy rights groups as to what information is collected, how it is obtained, what is done with the information, such as if it is shared with other organizations, and how transparent the data collection is to the consumer.

To find statistics on a specific topic or consumer group:

• Brainstorm who might collect the information, such as government agencies, trade organizations, academic researchers, or market research firms
• Consider broader variables or broader markets, especially in search terms (for example "gender" instead of "women")
• Recognize that while some data is free to access, others may require a one-time or subscription fee. The Library subscribes to many resources, which are available on-site; for other sources, check with your local public or university library. Look for freely available press releases, articles or abstracts that will summarize findings from a market research report.
• Search books and journal articles, which include statistics in the introduction to a topic or original research on consumer behavior; track any citations for further leads on data sources.

You may be interested in extremely niche information that is not collected or published by an existing source. In that case, you would need to conduct your own market research; resources on conducting primary market research or identifying firms that specialize in primary market research are included in this guide.

About the Business Section

Part of the Science & Business Reading Room  at the Library of Congress, the Business Section is the starting point for conducting research at the Library of Congress in the subject areas of business and economics. Here, reference specialists in specific subject areas of business assist patrons in formulating search strategies and gaining access to the information and materials contained in the Library's rich collections of business and economics materials.

• Philip Kotler, interview, The Events & Awards Managers of Asia and Hamlin-Iturralde Corporation, 1999. As cited in QFinance: The Ultimate Resource (Bloomberg, 2014). Back to text
• Next: Market Segments >>
• Last Updated: Jul 3, 2024 11:51 AM
• URL: https://guides.loc.gov/consumer-research

• Guide to consumer research

An Introductory Guide to Consumer Research And How to Conduct One

Consumer research is used across industries in order to gain key insights into consumer behavior and needs. In this article, we will explore the key aspects of consumer research, namely what it is and how to do it. 

What Is Consumer Research? 

Consumer research is research undertaken to gain an idea of customers' preferences, attitudes, motivations, and buying behaviors. This information can enable you to categorize customers into groups or segments, and tailor marketing efforts (or other aspects of the business, such as product development) to those who are most likely to spend their money on your product or service. 

Research can take many different forms - such as surveys, questionnaires, and interviews. All of which enable you to gain answers to questions that your business is struggling to find through other means. 

For example, most businesses have some kind of customer service department. Through consumer research, you can find out what methods of customer service are most preferred by your customers and invest more in these methods resulting in greater customer satisfaction.   

Consumer research enables you to group customers into customer segments. A customer segment is simply a collection of individuals with similar consumer data - possibly in terms of the personal demographics such as age, gender, or location, or it could be that their spending habits, AOV , and preferences are similar. 

These customer segments can be targeted in different ways, enabling you to maximize revenue from each individual.

2 Types of Consumer Research

There are two basic types of research, both of which apply to consumer research. 

Quantitative Research

Quantitative research produces quantifiable data. This means that it can be considered directly in numbers and percentages and, as a result, is usually easier to analyze. 

For example, perhaps you want to evaluate your quality assurance strategies . In order to gain quantitative data for this, you might ask yes/no questions or ask customers to rank statements on a scale from 1 to 10, such as “I frequently come across bugs in X software”. 10 would indicate all the time, and 1 would be never. The responses can then be added together to create a percentage. 

Qualitative Research

Qualitative research is often more in-depth, and questions enable responders to explore their answers in full detail. In 2021, 67% of researchers agreed that online or virtual qualitative research is helpful to consumer research. Qualitative research enables a much deeper understanding of the customer experience and opinion but is harder to analyze. 

For example, returning to our example of experiencing bugs in software, a qualitative researcher may approach this question as follows: 

Q: How often do you experience bugs when using our software? Explain in detail when and where this occurs. 

A: I only experience bugs when using the accounting tool of the application. Whenever I try to export a report of my accounts, the app glitches and deletes my data. 

This answer provides specific examples to the researcher and would make solving the problem much simpler. This is reflected in how business practices and software development intersect, as business needs are shaping new technology, a response that is driven through research. 

However, if you are dealing with hundreds of responses, getting through them all can be challenging. 

3 Benefits of Consumer Research 

1. provides valuable market insight.

Consumer research provides insights that you cannot get from analytics alone, as it gives you insight into the thoughts and feelings of the consumers. These insights are extremely valuable, as if you know how to use customer analytics , you can apply these skills to implementing the data gathered from your consumer research. 

2. Improve Marketing and Business Decisions 

Once you have gained these insights, consumer research can actually be used to inform your marketing and business decisions and can even help the creation of brand marketing reports . For example, your research could suggest that your business lacks organization across its teams. This could lead to your business investing in WFM tools and ultimately revolutionizing its reputation. 

3. Assists in Determining Market Position

Another benefit of consumer research is that it can provide insights into where your business sits within the market. You can find out whether you are preferred to your competition or vice versa, and why. It helps your business define its market position and make adjustments to improve this or solidify its brand identity. 

5 Methods of Consumer Research 

There are many different methods of conducting customer research. In this section, we will go through some of the key options available. 

Interviews are a great way to conduct consumer research. The nature of spoken conversation often enables previously unconsidered ideas to come up naturally and opens up opportunities for discussions that reveal deeper insights. Furthermore, if you have access to software offering a free video call online , these interviews no longer need to be done in person. 

• Focus Groups

Interviews can be conducted in focus groups where a select group of individuals discuss and offer their opinions on a matter together. These individuals might be from the same customer sectors or may represent different perspectives. How you choose to structure these is up to you. 

• One-on-one Interviews

Alternatively, you may prefer to approach these with one-on-one interviews. This form of interview can often lead to a more in-depth conversation but, for logical reasons, are less time-efficient and can miss out on the group dynamic spurring new ideas. 

Surveys are a written alternative to interviews and do not require a researcher to be present at the time of research. They can also be sent to a much larger group of respondents (meaning a more detailed set of data) and can be a combination of quantitative and qualitative responses. 

Analytics is nothing new to anyone working in marketing, and it can be an excellent tool for conducting consumer research. Analytics will provide quantitative insights into consumer behavior, such as conversion rates and average sale values, and can contribute to consumer research. 

Review Mining

Review mining can be a great way to gain consumer insights, and it doesn’t involve actively pursuing new research. 

Previous reviews can often provide a mixture of quantitative and qualitative research through written descriptions and “star” system reviews. However, this method limits you to what is already available, and these reviews may not specifically target areas you are keen to research. 

Secondary Research

Secondary research refers to looking at previously created research in your industry. Lots of this can be accessed online, and even if this isn’t the method you primarily choose to use, it can be a great starting point to guide your own research. 

5 Steps to Conduct Consumer Research

1. set smart research goals and objectives.

SMART goals should be set before any business pursuit. Standing for specific, measurable, agreed, realistic, and time-bounded, these goals can help guide your research and avoid going off topic.

2. Determine the Research Methodology and Audience

As previously mentioned, there are several different methods of conducting consumer research. Choosing from the list above (and you are not limited to only one method), you should cover both quantitative and qualitative data for the best insight. 

Develop a Buyer Persona

Develop a buyer persona in order to determine who your audience will be for the research. Buyer personas can be seen somewhat like “characters” in a story. They have certain wants, motivations, and behavior patterns. They make up your customer segments and who the research will target. 

3. Conduct Research and Compile Data Findings

Put the research into action: send out surveys, schedule interviews, review your google analytics. Put all your findings into a spreadsheet, and begin to group responses logically. With qualitative data, it may be useful to identify “themes” in responses and categorize them according to these. 

Once data is compiled, it is recommended to present it in a visually effective report , including charts or graphs depending on the content. 

4. Analyze and Interpret Data Results

Take your data and consider what the information is telling you. Are you seeing frequent negative responses in one area? Do customers feel like you are overpricing your service? Interpret the data and come to conclusions as to what your business may need to do. 

5. Take Action in Response to the Findings

Put your findings into action! If you are seeing consistent weaknesses in one area, this is a great time to bring the team together and brainstorm ideas to work around this and improve your business. When you implement changes that benefit the customers, you will see results coming back around to you in the form of increased engagement. 

Key Takeaway

Consumer research is a brilliant way to ensure the success of any business. Enabling you to see how your customers view your company and gain key insights into how your business can improve. Provided your research has clear goals and gathers in-depth data, there is no reason your research shouldn’t be a raging success! 

Grace Lau is the Director of Growth Content at Dialpad , an AI-powered cloud communication platform that fosters better team collaboration and boosts lead generation strategies . She has over 10 years of experience in content writing and strategy. Currently, she is responsible for leading branded and editorial content strategies, partnering with SEO and Ops teams to build and nurture content. Here is her LinkedIn .

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Top Consumer Market Research Companies

Consumer market research companies play a pivotal role in today's business landscape by providing invaluable insights into consumer behavior and preferences. These companies specialize in gathering, analyzing, and interpreting data to help businesses understand their target audience better. By leveraging consumer market research, companies can make informed decisions, develop effective marketing strategies, and ultimately drive business growth.

Understanding consumer behavior is crucial for any business looking to succeed in a competitive market. Consumer market research companies delve deep into studying how consumers think, feel, and act, enabling businesses to tailor their products and services to meet customers' needs and desires. By recognizing and adapting to changing consumer trends, companies can stay relevant and maintain a competitive edge in the market.

Learn more about consumer market research companies

The impact of market research on decision-making cannot be overstated. Through comprehensive data collection and analysis, consumer market research companies provide businesses with actionable insights that guide strategic decision-making processes. Whether it's launching a new product, entering a new market, or refining an existing service, market research forms the foundation upon which informed business decisions are made.

The evolution of the market research industry showcases a fascinating journey of innovation and adaptation. From traditional methods like surveys and focus groups to modern techniques such as big data analytics and AI-powered insights, consumer market research companies have constantly evolved to meet the changing needs of businesses. This evolution reflects the industry's commitment to staying ahead of market trends and embracing new technologies to deliver deeper and more meaningful consumer insights.

Find top consumer market research companies by checking out our directory listings below.

What is the Consumer Research Process?

What market research services do consumer research companies offer, what are the current market trends and insights in the industry.

Featured Experts in Top Consumer Market Research Companies

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Agile Research

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Artificial Intelligence / AI-Powered Platforms

Association Membership

Attitude & Usage Research

Audience Research

Australia / Pacific Rim

Automated Market Research Platforms

Automated Speech Transcription

B2B Research - General

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Brainstorming / Facilitation

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Telecommunications

Test Marketing

Test/Commercial Kitchen

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Usability Lab

User Testing

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Video Conferencing

Video Management Platforms

Video Recording

Virtual Reality / Augmented Reality

Virtual Reality / Virtual Shelf Testing

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Website Analysis / Web Analytics

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Compare Consumer Market Research Firms

Northridge, California

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Featured expert

Spotlight Research

A data collection/fieldwork management company dedicated to quality nationwide recruitment in both the qualitative & quantitative methodologies.

Why choose Spotlight Research

Boutique style recruiting

Project Manangement

Large network

Non-Traditional Methods

Automotive & Consumer

Learn more about Spotlight Research

Oakland, California

SOCIAL MEDIA

CatalystMR is a global panel and MR services leader with 55 mil+ consumers, B2B and healthcare professionals across 59 countries.

Learn more about CatalystMR

Brighton, United Kingdom

Understand and engage with your customers at the speed of social with Brandwatch, the social suite built for our fast-moving world.

Why choose Brandwatch

Social Listening

Social Media Management

Brand Monitoring

Influencer Management

Trusted by Global Brands

Learn more about Brandwatch

Los Angeles, California

BrandIQ is a Los Angeles-based consumer market research, brand strategy, and innovation firm

Why choose BrandIQ

Results & Outcomes Driven

Timely, Relevant Insights

Multidisciplinary Team

Experts in Jobs Theory

Bespoke Approach

Learn more about BrandIQ

Chicago, Illinois

P&K Research

Full-service, custom, qualitative & quantitative consumer product research, with facilities in Chicago, LA, Dallas & NY Metro.

Why choose P&K Research

Consumer Insights

Large Consumer Panel

Custom Research

Agile Methods

Learn more about P&K Research

New York, New York

Based on 1 ratings

IT'S A GREAT DAY FOR DISCOVERING WHY... Researchers find Reliable and Affordable Data from Global Survey Audiences to Significantly Improve Results

Why choose OvationMR

Deep Meaningful Insights

Research You Can Trust

Clear Compelling Stories

Less Time in the Weeds

Growth with Confidence

Learn more about OvationMR

San Francisco, California

We help orient your business around your customer to drive more meaningful human connection and design inspired products, services, and experiences.

Why choose Clearworks

Human-centered design

A collaborative bunch

More than just research

Industry agnostic

Engaging deliverables

Learn more about Clearworks

Recommended by Clients

Based on 3 ratings

Starlight Analytics

The #1 PRODUCT RESEARCH company. Let us help identify your target consumers, measure purchase intent, define pricing, and sell-in/out with confidence.

Why choose Starlight Analytics

Product Insights Experts

Deep Industry Expertise

Client Service Obsessed

Quick Turnaround Times

100% US-based Staff

Learn more about Starlight Analytics

Pickering, Ontario, Canada

Network Field

Our team has 50+ years of hands-on data collection & field management experience to meet all your Online, Quali/Quant and Face-to-Face study needs.

Why choose Network Field

Most trusted & reliable

Hands-on management

Quality assurance

Experienced & innovative

Learn more about Network Field

Cambridge, Massachusetts

City Square Associates, Inc.

A marketing research and strategic consulting practice with extensive experience conducting primary research across a range of industries and topics.

Why choose City Square Associates, Inc.

A small agile team

Bespoke research

Multi-disciplinary team

Experts in media

Collaborative approach

Learn more about City Square Associates, Inc.

Based on 9 ratings

Insight By Design

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Where Is Consumer Research Going Next?

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The rise of neuromarketing has already begun to provide companies and researchers with greater insight into consumer behaviour than consumers themselves were capable of giving. Neuromarketing tools such as facial affective recognition, eye tracking and fMRI technology can illuminate the neurobiological responses that may underlie people’s likes and dislikes. Going straight to the source, i.e. the nervous system activity during moments of thinking and decision making, often lets us see beyond the conscious rationales, biases, second-guessing and omissions that crop up in consumer survey responses.

The addition of neuroscience to the marketing toolkit also necessitates more nuanced thinking about human perception. Traditionally, the line between conscious and unconscious marketing has been considered clear and inviolable. For example, fears about subliminal messaging flare up periodically around the world , despite conflicting information as to the technique’s effectiveness. Recent neuroscientific research has found stronger evidence for the significance of a range of responses that are neither purely conscious nor unconscious. They occur regardless of our awareness and attention, but can be regulated by the conscious mind . That said, recent work by Steven Sweldens, INSEAD Distinguished Research Fellow, finds that our conscious resistance to advertising has limitations. No matter how hard we try, some messages will slip through and make an impact.

Vision neuroscience regards consciousness as a continuum between unconscious, preconscious and conscious processes that activate different key neural networks in the brain. Preconscious processes predominate when, for instance, consumers perceive, but do not consciously attend to, marketing cues promising a luxurious experience from certain products. My research on wine tasting and fMRI scans found that the exact same wine was capable of producing very different neurological responses, depending on how expensive consumers thought it was. Not only did people claim the wine tasted better when it carried a higher price tag, but their increased pleasure showed up in the scans as heightened activation of the brain’s valuation and motivation system (BVMS).

Going forward, there are several other trends in cognitive neuroscience that will eventually allow researchers – and businesses – to see below the surface of what consumers report.

A neurobiological perspective on segmenting customers

Researchers have begun to trace differences in how consumers react to products, marketing campaigns and policy interventions based on their neurobiology. For example, in the study about the influence of wine price tags, we found that people whose BVMS were especially sensitive to the prospect of winning monetary rewards in a completely different experiment were much more affected by the price tag of the wine. 

Using neurobiological markers to identify various types of decision makers offers opportunities for behavioural economists and policymakers. For marketers, it may create new ways to segment customers based on biological differences, in addition to the familiar socio-economic factors and very broad categorisations such as age and gender.

There are three additional compelling research areas that may deliver marketing breakthroughs further down the line:

Measures of gray matter volume : A 2015 paper I co-wrote found that people whose brain structure had higher gray matter volume (GMV) in regions linked to cognitive processing, and low GMV in the brain’s sensory systems, were more influenced by marketing cues. The ability to resist marketing, we surmised, was related to the reliance on external information such as price and brand labels, rather than on one’s gut feelings, when making decisions. Also, we found that people with high GMV in regions linked to reward-seeking behaviour were more affected by marketing.

Measures of brain connectivity: Another hot topic in cognitive neuroscience is the study of how brain regions are “talking” to each other, or how they are connected. Differences in brain connectivity can influence how consumers make decisions. Brain connectivity can be observed on different levels. For example, researchers have started to look at the structure of white matter that helps with long-range connectivity between different brain networks. Researchers could show that people consistently choosing smaller, immediate monetary rewards over larger, delayed ones have lower white matter connectivity between brain networks involved in self-control and those associated with reward and motivation. Another area of investigation is how connectivity during the brain’s “downtime” – when it is not busy with problems or tasks – affects personality, thought processes and decision making at rest, without our conscious awareness.

Measures of gut-brain connectivity:  A recent discovery has been that our gut forms its own independent nervous system. The enteric nervous system consists of about 500 million neurons and is often called the “second brain”. The gut is constantly sending signals to the brain and a bi-directional connectivity exists. Neuroscientists have been increasingly interested in understanding the neurobiological basis for our ' gut feelings' about a person or event, or the 'butterflies' in our stomach when something exciting happens. Researchers have shown, for example, that neural activity in the gut precedes – and, in some cases, predicts – neural activity in the brain before a symbol reaches conscious awareness.

At the forefront of this research stream are studies examining how the tens of trillions of bacteria that dwell in our gut contribute to the communication between the gut and the brain. For example, bacterial byproducts from fibre digestion have been linked to promotion of the neurotransmitter serotonin, which influences mood and mental focus, among other vital functions. Although this research is still in its infancy, especially in regard to humans, so far it seems to point to a connection between gut bacteria diversity and overall health and well-being. A 2013 study found some apparent differences in brain functions between a very small group of women who consumed probiotic yogurt every day over several weeks, and a group that did not. Viewing photos of angry and fearful faces, the women on the yogurt diet showed decreased activity in areas of the brain involved in threat and stress response.

Pooling resources

The more we learn about processes along the consciousness continuum and their key role in guiding consumer choices, the clearer the need for interdisciplinary collaboration becomes. Consumer researchers, cognitive neuroscientists and other neurobiologists could team up to explore the mechanisms at work and their potential applications.

Collaborations between business and scientists can also be mutually beneficial. Academic research would be enriched by the vast consumer-related datasets large companies have at their disposal, while businesses would receive neurobiological data to help improve their predictions.

Hilke Plassmann is an Associate Professor of Marketing at INSEAD and the INSEAD Chaired Professor of Decision Neuroscience. She is a principal investigator at the Sorbonne University’s Brain and Spine Institute, as well as the co-director of the Business Foundations Certificate (BFC) Programme at INSEAD.

Follow INSEAD Knowledge on Twitter and Facebook .

About the author(s)

Hilke plassmann.

is the Octapharma Chaired Professor of Decision Neuroscience and an Associate Professor in INSEAD’s Marketing area. She is the Co-Director of the  Business Foundations Certificate , a programme INSEAD offers in collaboration with Sorbonne Université, and the Principal Investigator of the Social Affective Neuroscience Team at Sorbonne Université’s Brain and Spine Institute.

She also co-directs a biannual  Summer School on Neuroeconomics for PhD students and a  Summer Executive Programme on how neuroscience can advance management for business executives.

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Anonymous User

22/05/2018, 07.10 pm

Marketing is evolving to ego-marketing thru what brands will touch their buyers with the unique attitude "no one on earth but them" at limited time with higher choices

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16/05/2018, 09.51 pm

I'm a wineprofessional, and would like to point out that it's impossible to taste real quality without the perception of smell. In this study, they tasted 3 wines through a tube, which totally destroys every wine and only points out sugars, tannins and alcohol.

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Home Market Research

Consumer Research: Examples, Process and Scope

What is Consumer Research?

Consumer research is a part of market research in which inclination, motivation and purchase behavior of the targeted customers are identified. Consumer research helps businesses or organizations understand customer psychology and create detailed purchasing behavior profiles.

It uses research techniques to provide systematic information about what customers need. Using this information brands can make changes in their products and services, making them more customer-centric thereby increasing customer satisfaction. This will in turn help to boost business.

LEARN ABOUT: Market research vs marketing research

An organization that has an in-depth understanding about the customer decision-making process, is most likely to design a product, put a certain price tag to it, establish distribution centers and promote a product based on consumer research insights such that it produces increased consumer interest and purchases.

For example, A consumer electronics company wants to understand, thought process of a consumer when purchasing an electronic device, which can help a company to launch new products, manage the supply of the stock, etc. Carrying out a Consumer electronics survey can be useful to understand the market demand, understand the flaws in their product and also find out research problems in the various processes that influence the purchase of their goods. A consumer electronics survey can be helpful to gather information about the shopping experiences of consumers when purchasing electronics. which can enable a company to make well-informed and wise decisions regarding their products and services.

LEARN ABOUT:  Test Market Demand

Consumer Research Objectives

When a brand is developing a new product, consumer research is conducted to understand what consumers want or need in a product, what attributes are missing and what are they looking for? An efficient survey software really makes it easy for organizations to conduct efficient research.

Consumer research is conducted to improve brand equity. A brand needs to know what consumers think when buying a product or service offered by a brand. Every good business idea needs efficient consumer research for it to be successful. Consumer insights are essential to determine brand positioning among consumers.

Consumer research is conducted to boost sales. The objective of consumer research is to look into various territories of consumer psychology and understand their buying pattern, what kind of packaging they like and other similar attributes that help brands to sell their products and services better.

LEARN ABOUT: Brand health

Consumer Research Model

According to a study conducted, till a decade ago, researchers thought differently about the consumer psychology, where little or no emphasis was put on emotions, mood or the situation that could influence a customer’s buying decision.

Many believed marketing was applied economics. Consumers always took decisions based on statistics and math and evaluated goods and services rationally and then selected items from those brands that gave them the highest customer satisfaction at the lowest cost.

However, this is no longer the situation. Consumers are very well aware of brands and their competitors. A loyal customer is the one who would not only return to repeatedly purchase from a brand but also, recommend his/her family and friends to buy from the same brand even if the prices are slightly higher but provides an exceptional customer service for products purchased or services offered.

Here is where the Net Promoter Score (NPS) helps brands identify brand loyalty and customer satisfaction with their consumers. Net Promoter Score consumer survey uses a single question that is sent to customers to identify their brand loyalty and level of customer satisfaction. Response to this question is measured on a scale between 0-10 and based on this consumers can be identified as:

Detractors: Who have given a score between 0-6.

Passives: Who have given a score between 7-8.

Promoters: Who have given a score between 9-10.

Consumer market research is based on two types of research method:

1. Qualitative Consumer Research

Qualitative research  is descriptive in nature, It’s a method that uses open-ended questions , to gain meaningful insights from respondents and heavily relies on the following market research methods:

Focus Groups: Focus groups as the name suggests is a small group of highly validated subject experts who come together to analyze a product or service. Focus group comprises of 6-10 respondents. A moderator is assigned to the focus group, who helps facilitate discussions among the members to draw meaningful insights

One-to-one Interview: This is a more conversational method, where the researcher asks open-ended questions to collect data from the respondents. This method heavily depends on the expertise of the researcher. How much the researcher is able to probe with relevant questions to get maximum insights. This is a time-consuming method and can take more than one attempt to gain the desired insights.

LEARN ABOUT: Qualitative Interview

Content/ Text Analysis: Text analysis is a qualitative research method where researchers analyze social life by decoding words and images from the documents available. Researchers analyze the context in which the images are used and draw conclusions from them. Social media is an example of text analysis. In the last decade or so, inferences are drawn based on consumer behavior on social media.

Learn More: How to conduct Qualitative Research  

2.Quantitative Consumer Research

In the age of technology and information, meaningful data is more precious than platinum. Billion dollar companies have risen and fallen on how well they have been able to collect and analyze data, to draw validated insights.

Quantitative research is all about numbers and statistics. An evolved consumer who purchases regularly can vouch for how customer-centric businesses have become today. It’s all about customer satisfaction , to gain loyal customers. With just one questions companies are able to collect data, that has the power to make or break a company. Net Promoter Score question , “On a scale from 0-10 how likely are you to recommend our brand to your family or friends?”

How organic word-of-mouth is influencing consumer behavior and how they need to spend less on advertising and invest their time and resources to make sure they provide exceptional customer service.

LEARN ABOUT: Behavioral Targeting

Online surveys , questionnaires , and polls are the preferred data collection tools. Data that is obtained from consumers is then statistically, mathematically and numerically evaluated to understand consumer preference.

Learn more: How to carry out Quantitative Research

Consumer Research Process

The process of consumer research started as an extension of the process of market research . As the findings of market research is used to improve the decision-making capacity of an organization or business, similar is with consumer research.

LEARN ABOUT:  Market research industry

The consumer research process can be broken down into the following steps:

• Develop research objectives: The first step to the consumer research process is to clearly define the research objective, the purpose of research, why is the research being conducted, to understand what? A clear statement of purpose can help emphasize the purpose.
• Collect Secondary data: Collect secondary data first, it helps in understanding if research has been conducted earlier and if there are any pieces of evidence related to the subject matter that can be used by an organization to make informed decisions regarding consumers.
• Primary Research: In primary research organizations or businesses collect their own data or employ a third party to collect data on their behalf. This research makes use of various data collection methods ( qualitative and quantitative ) that helps researchers collect data first hand.

LEARN ABOUT: Best Data Collection Tools

• Collect and analyze data: Data is collected and analyzed and inference is drawn to understand consumer behavior and purchase pattern.
• Prepare report: Finally, a report is prepared for all the findings by analyzing data collected so that organizations are able to make informed decisions and think of all probabilities related to consumer behavior. By putting the study into practice, organizations can become customer-centric and manufacture products or render services that will help them achieve excellent customer satisfaction.

LEARN ABOUT: market research trends

After Consumer Research Process

Once you have been able to successfully carry out the consumer research process , investigate and break paradigms. What consumers need should be a part of market research design and should be carried out regularly. Consumer research provides more in-depth information about the needs, wants, expectations and behavior analytics of clients.  

By identifying this information successfully, strategies that are used to attract consumers can be made better and businesses can make a profit by knowing what consumers want exactly. It is also important to understand and know thoroughly the buying behavior of consumers to know their attitude towards brands and products.

The identification of consumer needs, as well as their preferences, allows a business to adapt to new business and develop a detailed marketing plan that will surely work. The following pointers can help. Completing this process will help you:

• Attract more customers  
• Set the best price for your products  
• Create the right marketing message  
• Increase the quantity that satisfies the demand of its clients  
• Increase the frequency of visits to their clients  
• Increase your sales  
• Reduce costs  
• Refine your approach to the customer service process .

LEARN ABOUT: Behavioral Research

Consumer Research Methods

Consumers are the reason for a business to run and flourish. Gathering enough information about consumers is never going to hurt any business, in fact, it will only add up to the information a business would need to associate with its consumers and manufacture products that will help their business refine and grow.

Following are consumer research methods that ensure you are in tandem with the consumers and understand their needs:

The studies of customer satisfaction

One can determine the degree of satisfaction of consumers in relation to the quality of products through:

• Informal methods such as conversations with staff about products and services according to the dashboards.   
• Past and present questionnaires/ surveys that consumers might have filled that identify their needs.   

T he investigation of the consumer decision process

It is very interesting to know the consumer’s needs, what motivates them to buy, and how is the decision-making process carried out, though:

• Deploying relevant surveys and receiving responses from a target intended audience .

Proof of concept

Businesses can test how well accepted their marketing ideas are by:

• The use of surveys to find out if current or potential consumer see your products as a rational and useful benefit.  
• Conducting personal interviews or focus group sessions with clients to understand how they respond to marketing ideas.

Knowing your market position

You can find out how your current and potential consumers see your products, and how they compare it with your competitors by:

• Sales figures talk louder than any other aspect, once you get to know the comparison in the sales figures it is easy to understand your market position within the market segment.
• Attitudes of consumers while making a purchase also helps in understanding the market hold.      

Branding tests and user experience

You can determine how your customers feel with their brands and product names by:

• The use of focus groups and surveys designed to assess emotional responses to your products and brands.  
• The participation of researchers to study the performance of their brand in the market through existing and available brand measurement research.   

Price changes

You can investigate how your customers accept or not the price changes by using formulas that measure the revenue – multiplying the number of items you sold, by the price of each item. These tests allow you to calculate if your total income increases or decreases after making the price changes by:

• Calculation of changes in the quantities of products demanded by their customers, together with changes in the price of the product.   
• Measure the impact of the price on the demand of the product according to the needs of the client.   

Social media monitoring

Another way to measure feedback and your customer service is by controlling your commitment to social media and feedback. Social networks (especially Facebook) are becoming a common element of the commercialization of many businesses and are increasingly used by their customers to provide information on customer needs, service experiences, share and file customer complaints . It can also be used to run surveys and test concepts. If handled well, it can be one of the most powerful research tools of the client management . I also recommend reading: How to conduct market research through social networks.

Customer Research Questions

Asking the right question is the most important part of conducting research. Moreover, if it’s consumer research, questions should be asked in a manner to gather maximum insights from consumers. Here are some consumer research questions for your next research:

• Who in your household takes purchasing decisions?
• Where do you go looking for ______________ (product)?
• How long does it take you to make a buying decision?
• How far are you willing to travel to buy ___________(product)?
• What features do you look for when you purchase ____________ (product)?
• What motivates you to buy_____________ (product)?

See more consumer research survey questions:

Customer satisfaction surveys

Voice of customer surveys

Product surveys

Service evaluation surveys

Mortgage Survey Questions

Importance of Consumer Research

Launching a product or offering new services can be quite an exciting time for a brand. However, there are a lot of aspects that need to be taken into consideration while a band has something new to offer to consumers.

LEARN ABOUT: User Experience Research

Here is where consumer research plays a pivotal role. The importance of consumer research cannot be emphasized more. Following points summarizes the importance of consumer research:

• To understand market readiness: However good a product or service may be, consumers have to be ready to accept it. Creating a product requires investments which in return expect ROI from product or service purchases. However, if a market is mature enough to accept this utility, it has a low chance of succeeding by tapping into market potential . Therefore, before launching a product or service, organizations need to conduct consumer research, to understand if people are ready to spend on the utility it provides.
• Identify target consumers: By conducting consumer research, brands and organizations can understand their target market based on geographic segmentation and know who exactly is interested in buying their products. According to the data or feedback received from the consumer, research brands can even customize their marketing and branding approach to better appeal to the specific consumer segment.

LEARN ABOUT: Marketing Insight

• Product/Service updates through feedback: Conducting consumer research, provides valuable feedback from consumers about the attributes and features of products and services. This feedback enables organizations to understand consumer perception and provide a more suitable solution based on actual market needs which helps them tweak their offering to perfection.

Explore more: 300 + FREE survey templates to use for your research

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Good to Know Before You Start

• Consumer Research

Consumer research is the process of gathering data on a individuals and their relations to a market. This includes information on the current and potential customers, as well as the competitive landscape of the market.

Primary Research

This involves collecting data from the source (i.e. consumers) such as conducting surveys or focus groups. It can be very targeted, useful, time consuming, labor-intensive, and expensive.

Secondary Research

This involves using data that has already been collected (e.g. statistics or market research reports). Because you do not control how or what data is collected, there may be times where you cannot find the exact type of information you want from secondary sources.

About This Guide

This guide focuses on secondary research sources.

• Consumer Demographics : This is data on the consumer. Covering topics like age, income, ethnic origin, etc.
• Consumer Behavior : This contains more articles with a bit of data focusing on interactions between individuals, businesses and society.

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• Marketing Research by Business Librarians Last Updated Aug 5, 2024 1024 views this year
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Consumer Research: Definition, Methods and Benefits (+ Templates)

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Launching a new product? Considering whether you should offer new services or tweak the current ones? Such moments can be challenging both for established brands and those just trying to break into the market.

Whenever you have something new to offer to your customers, there are numerous factors to be taken into account if you want to make well-informed decisions that would increase the chances of a successful launch, instead of stumbling in the dark and hoping for the best.

This is where consumer research kicks in.

What is consumer research?

Consumer research is the aspect of market research that focuses on identifying the motivation, preferences, and purchase behavior of (potential) consumers.

Companies rely on consumer research to analyze and better understand consumer psychology so as to improve their products or services, making them more customer-oriented, and ultimately increasing customer satisfaction and the number of sales.

Having a deep understanding of consumer decision-making and purchase behavior allows brands to build products that will find their market fit more easily, put the optimal price tag onto them, and establish the right distribution and promotion channels.

Let’s say a beauty industry company wants to launch a new skincare product. In order to de-risk their production and product placement, they could launch a skincare quiz to find out what it is that their consumers actually need:

And then they could do additional market research to find out more about their ideal customer’s demographics and purchase habits. Conducting this kind of consumer research is expected to facilitate a successful launch for the new product and ensure that there’s actual demand for such a product on the market.

Before we dig any deeper into consumer research, here’s a survey template you could easily use to do your own market research.

Consumer research survey template

Just here for an easy way to conduct your own consumer research? No worries, we’ve got you covered – grab this market research template and learn more about your consumers right now.

If you would like to learn more about how and why you should conduct the research using the template above, keep on reading.

Why you should conduct consumer research

Often, people do research just because they’ve been told to do so. But if you’re looking to better understand your consumers and their needs, you need to know why you should be conducting consumer research in the first place. Even though there are plenty of benefits, here are the top three I’d like to point out:

Understand market readiness

No matter how good you think your products or services are, there’s a fair chance you’re not completely objective nor representative of your ideal target consumer.

When launching a new product, there’s a lot of investments going around and, naturally, you’d expect adequate ROI. However, if there’s not enough market potential, your investment might fail. This is where consumer research kicks in.

Identify target consumers

Another important benefit of conducting consumer research is the ability to identify and analyze your target customers. In other words, this allows you to determine who might be interested in buying your products or using your services.

For example, you can use a demographic survey  to obtain various information on your customers such as age, gender, geographic location, employment, marital status, and more. Or you can rely on different types of market segmentation  to reach your ideal customer. This would allow you to customize your marketing efforts to better appeal to particular customer sets.

Get feedback on existing products or services

Finally, consumer research can help you obtain valuable feedback on your current business offer. Such feedback can help you update or improve your current products based on the valuable information from the actual consumers.

Getting feedback is important because it helps brands and businesses better understand the consumers’ standing point and come up with an improved product that would help address the challenges they’ve been having and fully meet the actual market needs and requirements.

Main consumer research methods

There are two main types of consumer research – quantitative and qualitative . Both types rely on different research techniques that we’ll explore in more detail down below.

Quantitative consumer research

By 2025, the global data pool is expected to rise up to 175 zettabytes . That’s why meaningful data has become more valuable than ever and the way companies collect data  can either make or break their business success.

Quantitative research is a data collection method that revolves around numbers and stats. It’s an essential part of consumer research that can provide businesses with measurable data on their customers. Such data can be mathematically and statistically analyzed in order to gain more insight into consumer behavior.

The most effective and most popular techniques for obtaining quantitative data are different types of online questionnaires such as surveys and polls.

Surveys and polls

Nowadays, the easiest way to obtain consumer data is through online surveys, questionnaires, and polls. Thanks to highly-advanced and intuitive survey tools , it’s now easier than ever to create your own data collectors, either from scratch or using professionally written templates.

All the LeadQuizzes users, for example, gain free access to 78 professionally written and beautifully designed survey, quiz, and form templates. This includes market and consumer research survey templates such as the ones shown in the image below:

To access the LeadQuizzes templates, just log in to your account (or sign up for a free trial  if you don’t have an account yet) and select your preferred template from the selection of pre-made templates . You can use the templates as they are or easily customize them to meet your specific needs.

One of the easiest ways to obtain quantitative customer data is by using an NPS (Net Promoter Score) survey . This customer research technique allows you to easily evaluate the satisfaction of your current users and express it through numbers for easy analysis. With just one single question – “How likely are you to refer our business?” – you can easily measure consumer satisfaction and loyalty.

To preview (or use) an NPS survey template, just click on the image below:

Qualitative consumer research

Unlike quantitative research, which relies on numbers, qualitative consumer research is descriptive in nature. To obtain qualitative data, you need to be using open-ended questions with no predefined answer options. While this means that you can still be using online surveys to obtain qualitative data as well, there are a few more options to choose from.

Focus Groups

A focus group is a small group of people who are experts on a particular subject matter and whose job is to analyze a particular aspect of consumer research – e.g. a new update, feature, product, and so on.

Ideally, focus groups contain somewhere between 3-10 people, including an obligatory moderator. Depending on the research topic and goal, the members of a focus group should be brought together around certain common denominators.

For example, if you’re doing research on the use of birth control pills, all the members of your focus group need to be sexually active females. The remaining parameters like age, education, employment, and so on, may or may not be relevant here.

1-to-1 interviews

In most cases, this is a conversational method that presupposes an interviewer and an interviewee. During this type of consumer research, the researcher (the interviewer) asks questions (that are equivalent to the open-ended survey questions) related to products and services.

There are two main limitations to this method. Firstly, it’s very time consuming and might become overwhelming if you have to interview an excessively large number of consumers. And secondly, it very much relies on the researcher’s expertise and ability to extract the relevant information from interviewees.

Social media monitoring

This type of consumer research could also be described as content or text analysis but, in recent years, it primarily refers to the analysis of consumer behavior on social media. Here, the researchers analyze consumers’ social life by decoding their social media posts and interactions to draw inferences related to their consumer behavior and habits.

After the research

Above, we’ve introduced you to consumer research – what it is, why you need to conduct it, and what are some of the best ways to do so. Once you’ve managed to conduct your research, gather the necessary data, analyze it, and come to certain conclusions, you should have a better insight into the exact needs and pain points of your customers.

This will allow you to adapt your business, update, tweak or completely revamp your products and services, and develop a better marketing plan that would allow you to attract more consumers, determine the optimal price, increase the number of sales, and reduce costs.

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• Consumer research tools give insight about demographics and psychographics (like attitudes, behaviors, interests, and values).
• Some tools focus on location-based analysis, allowing strategic insight about where to place brick-and-mortar businesses relative to competitors and potential consumers. These tools can also drive decisions about where to place digital advertising.

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Easy Consumer Research by Product Category or Topic

• iPoll Databank at the Roper Center Over 800,000 questions and answers from US public opinion polls. The polls originate from major news organizations (CNN, Fox News, etc.), public opinion research centers (Gallup, Harris, Pew, etc.), and major academic and commercial pollsters. Questions can be searched by keyword, topic, date, or source. Coverage 1935-present.

Location and Consumer Research

• "Datasets" (top menu) > "Source" (left menu) > "Claritas" > "Claritas Consumer Profiles" > [select year] > "PRIZM Premier"
• Estimated Consumer Count = Adults/households by consumer behavior, by segment
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• Market Potential Index = Ranking consumer segments by consumer behavior against a median of 100
• Segment Distributions = Geographic distribution of consumer segments

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The University of Chicago The Law School

Innovation clinic—significant achievements for 2023-24.

The Innovation Clinic continued its track record of success during the 2023-2024 school year, facing unprecedented demand for our pro bono services as our reputation for providing high caliber transactional and regulatory representation spread. The overwhelming number of assistance requests we received from the University of Chicago, City of Chicago, and even national startup and venture capital communities enabled our students to cherry-pick the most interesting, pedagogically valuable assignments offered to them. Our focus on serving startups, rather than all small- to medium-sized businesses, and our specialization in the needs and considerations that these companies have, which differ substantially from the needs of more traditional small businesses, has proven to be a strong differentiator for the program both in terms of business development and prospective and current student interest, as has our further focus on tackling idiosyncratic, complex regulatory challenges for first-of-their kind startups. We are also beginning to enjoy more long-term relationships with clients who repeatedly engage us for multiple projects over the course of a year or more as their legal needs develop.

This year’s twelve students completed over twenty projects and represented clients in a very broad range of industries: mental health and wellbeing, content creation, medical education, biotech and drug discovery, chemistry, food and beverage, art, personal finance, renewable energy, fintech, consumer products and services, artificial intelligence (“AI”), and others. The matters that the students handled gave them an unparalleled view into the emerging companies and venture capital space, at a level of complexity and agency that most junior lawyers will not experience until several years into their careers.

Representative Engagements

While the Innovation Clinic’s engagements are highly confidential and cannot be described in detail, a high-level description of a representative sample of projects undertaken by the Innovation Clinic this year includes:

Transactional/Commercial Work

• A previous client developing a symptom-tracking wellness app for chronic disease sufferers engaged the Innovation Clinic again, this time to restructure its cap table by moving one founder’s interest in the company to a foreign holding company and subjecting the holding company to appropriate protections in favor of the startup.
• Another client with whom the Innovation Clinic had already worked several times engaged us for several new projects, including (1) restructuring their cap table and issuing equity to an additional, new founder, (2) drafting several different forms of license agreements that the company could use when generating content for the platform, covering situations in which the company would license existing content from other providers, jointly develop new content together with contractors or specialists that would then be jointly owned by all creators, or commission contractors to make content solely owned by the company, (3) drafting simple agreements for future equity (“Safes”) for the company to use in its seed stage fundraising round, and (4) drafting terms of service and a privacy policy for the platform.
• Yet another repeat client, an internet platform that supports independent artists by creating short films featuring the artists to promote their work and facilitates sales of the artists’ art through its platform, retained us this year to draft a form of independent contractor agreement that could be used when the company hires artists to be featured in content that the company’s Fortune 500 brand partners commission from the company, and to create capsule art collections that could be sold by these Fortune 500 brand partners in conjunction with the content promotion.
• We worked with a platform using AI to accelerate the Investigational New Drug (IND) approval and application process to draft a form of license agreement for use with its customers and an NDA for prospective investors.
• A novel personal finance platform for young, high-earning individuals engaged the Innovation Clinic to form an entity for the platform, including helping the founders to negotiate a deal among them with respect to roles and equity, terms that the equity would be subject to, and other post-incorporation matters, as well as to draft terms of service and a privacy policy for the platform.
• Students also formed an entity for a biotech therapeutics company founded by University of Chicago faculty members and an AI-powered legal billing management platform founded by University of Chicago students.
• A founder the Innovation Clinic had represented in connection with one venture engaged us on behalf of his other venture team to draft an equity incentive plan for the company as well as other required implementing documentation. His venture with which we previously worked also engaged us this year to draft Safes to be used with over twenty investors in a seed financing round.

More information regarding other types of transactional projects that we typically take on can be found here .

Regulatory Research and Advice

• A team of Innovation Clinic students invested a substantial portion of our regulatory time this year performing highly detailed and complicated research into public utilities laws of several states to advise a groundbreaking renewable energy technology company as to how its product might be regulated in these states and its clearest path to market. This project involved a review of not only the relevant state statutes but also an analysis of the interplay between state and federal statutes as it relates to public utilities law, the administrative codes of the relevant state executive branch agencies, and binding and non-binding administrative orders, decisions and guidance from such agencies in other contexts that could shed light on how such states would regulate this never-before-seen product that their laws clearly never contemplated could exist. The highly varied approach to utilities regulation in all states examined led to a nuanced set of analysis and recommendations for the client.
• In another significant research project, a separate team of Innovation Clinic students undertook a comprehensive review of all settlement orders and court decisions related to actions brought by the Consumer Financial Protection Bureau for violations of the prohibition on unfair, deceptive, or abusive acts and practices under the Consumer Financial Protection Act, as well as selected relevant settlement orders, court decisions, and other formal and informal guidance documents related to actions brought by the Federal Trade Commission for violations of the prohibition on unfair or deceptive acts or practices under Section 5 of the Federal Trade Commission Act, to assemble a playbook for a fintech company regarding compliance. This playbook, which distilled very complicated, voluminous legal decisions and concepts into a series of bullet points with clear, easy-to-follow rules and best practices, designed to be distributed to non-lawyers in many different facets of this business, covered all aspects of operations that could subject a company like this one to liability under the laws examined, including with respect to asset purchase transactions, marketing and consumer onboarding, usage of certain terms of art in advertising, disclosure requirements, fee structures, communications with customers, legal documentation requirements, customer service and support, debt collection practices, arrangements with third parties who act on the company’s behalf, and more.

Miscellaneous

• Last year’s students built upon the Innovation Clinic’s progress in shaping the rules promulgated by the Financial Crimes Enforcement Network (“FinCEN”) pursuant to the Corporate Transparency Act to create a client alert summarizing the final rule, its impact on startups, and what startups need to know in order to comply. When FinCEN issued additional guidance with respect to that final rule and changed portions of the final rule including timelines for compliance, this year’s students updated the alert, then distributed it to current and former clients to notify them of the need to comply. The final bulletin is available here .
• In furtherance of that work, additional Innovation Clinic students this year analyzed the impact of the final rule not just on the Innovation Clinic’s clients but also its impact on the Innovation Clinic, and how the Innovation Clinic should change its practices to ensure compliance and minimize risk to the Innovation Clinic. This also involved putting together a comprehensive filing guide for companies that are ready to file their certificates of incorporation to show them procedurally how to do so and explain the choices they must make during the filing process, so that the Innovation Clinic would not be involved in directing or controlling the filings and thus would not be considered a “company applicant” on any client’s Corporate Transparency Act filings with FinCEN.
• The Innovation Clinic also began producing thought leadership pieces regarding AI, leveraging our distinct and uniquely University of Chicago expertise in structuring early-stage companies and analyzing complex regulatory issues with a law and economics lens to add our voice to those speaking on this important topic. One student wrote about whether non-profits are really the most desirable form of entity for mitigating risks associated with AI development, and another team of students prepared an analysis of the EU’s AI Act, comparing it to the Executive Order on AI from President Biden, and recommended a path forward for an AI regulatory environment in the United States. Both pieces can be found here , with more to come!

Innovation Trek

Thanks to another generous gift from Douglas Clark, ’89, and managing partner of Wilson, Sonsini, Goodrich & Rosati, we were able to operationalize the second Innovation Trek over Spring Break 2024. The Innovation Trek provides University of Chicago Law School students with a rare opportunity to explore the innovation and venture capital ecosystem in its epicenter, Silicon Valley. The program enables participating students to learn from business and legal experts in a variety of different industries and roles within the ecosystem to see how the law and economics principles that students learn about in the classroom play out in the real world, and facilitates meaningful connections between alumni, students, and other speakers who are leaders in their fields. This year, we took twenty-three students (as opposed to twelve during the first Trek) and expanded the offering to include not just Innovation Clinic students but also interested students from our JD/MBA Program and Doctoroff Business Leadership Program. We also enjoyed four jam-packed days in Silicon Valley, expanding the trip from the two and a half days that we spent in the Bay Area during our 2022 Trek.

The substantive sessions of the Trek were varied and impactful, and enabled in no small part thanks to substantial contributions from numerous alumni of the Law School. Students were fortunate to visit Coinbase’s Mountain View headquarters to learn from legal leaders at the company on all things Coinbase, crypto, and in-house, Plug & Play Tech Center’s Sunnyvale location to learn more about its investment thesis and accelerator programming, and Google’s Moonshot Factory, X, where we heard from lawyers at a number of different Alphabet companies about their lives as in-house counsel and the varied roles that in-house lawyers can have. We were also hosted by Wilson, Sonsini, Goodrich & Rosati and Fenwick & West LLP where we held sessions featuring lawyers from those firms, alumni from within and outside of those firms, and non-lawyer industry experts on topics such as artificial intelligence, climate tech and renewables, intellectual property, biotech, investing in Silicon Valley, and growth stage companies, and general advice on career trajectories and strategies. We further held a young alumni roundtable, where our students got to speak with alumni who graduated in the past five years for intimate, candid discussions about life as junior associates. In total, our students heard from more than forty speakers, including over twenty University of Chicago alumni from various divisions.

The Trek didn’t stop with education, though. Throughout the week students also had the opportunity to network with speakers to learn more from them outside the confines of panel presentations and to grow their networks. We had a networking dinner with Kirkland & Ellis, a closing dinner with all Trek participants, and for the first time hosted an event for admitted students, Trek participants, and alumni to come together to share experiences and recruit the next generation of Law School students. Several speakers and students stayed in touch following the Trek, and this resulted not just in meaningful relationships but also in employment for some students who attended.

More information on the purposes of the Trek is available here , the full itinerary is available here , and one student participant’s story describing her reflections on and descriptions of her experience on the Trek is available here .

The Innovation Clinic is grateful to all of its clients for continuing to provide its students with challenging, high-quality legal work, and to the many alumni who engage with us for providing an irreplaceable client pipeline and for sharing their time and energy with our students. Our clients are breaking the mold and bringing innovations to market that will improve the lives of people around the world in numerous ways. We are glad to aid in their success in any way that we can. We look forward to another productive year in 2024-2025!

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Cash-back Fees

Executive summary, cash-back transactions, benefits and costs to merchants.

Access to cash is a necessary component of a resilient financial system and dynamic economy. Many people rely on cash for day-to-day transactions due its privacy and reliability, and cash accessibility is particularly critical in the case of a disruption or outage of digital payment systems. While people use various means of getting cash, one common method is to get “cash back” at a store when making a purchase with a debit or prepaid card. This option may be particularly important in banking deserts and in areas where banks and ATM operators charge significant fees. Retailers are essentially filling a void in access to cash, which has historically been supplied by banks and credit unions in an affordable way.

Providing cash back is valuable to consumers and merchants. Survey data show that it is a popular method to get money via consumers’ bank debit or prepaid cards. Merchants offer cash back to attract customers and reduce their cash handling costs. In its recent engagement and market monitoring, the CFPB observed that some retailers charge a fee for this transaction.

This spotlight provides an overview of consumers’ use of cash back, the benefits and costs of such transactions to merchants, and the practices of other market actors which do not charge fees for this service. The CFPB also analyzed the cash-back fees of a sample of national retailers.

Fees for cash back may serve as a barrier and reduce people’s access to cash when they need it. The CFPB will continue to monitor developments related to the fees consumers pay for accessing cash, and the underlying failure of banks and credit unions to adequately supply cash throughout the country in an affordable manner.

Key Findings

• Cash-back fees are costing consumers millions of dollars . The CFPB found that three companies in the sample charge cash-back fees and estimates that they collect over $90 million in fees annually for people to access their cash. The CFPB also estimates that the marginal cost to merchants for processing each transaction may be a few pennies, compared to the much higher fees charged by these retailers to consumers. While there may be other costs related to cash handling, these are generally reduced by the provision of cash back, as it reduces merchants’ cash on hand.
• Three major firms charge cash-back fees even though other competitors offer it for free. Three retail companies Dollar General, Dollar Tree, and Kroger, which also operate brands such as Family Dollar, Harris Teeter, Ralph’s, and others, charge fees for this service while other national retail companies sampled by the CFPB do not charge a fee. At the two largest dollar store corporations, cash-back fees for small withdrawal amounts are the highest in the sample ($1 or more for amounts under $50). Kroger, the country’s largest grocery chain, recently expanded cash-back fees to its Harris Teeter brand (75 cents for $100 or less), higher than those in place among its other brands (50 cents for $100 or less), in addition to higher fees for larger amounts.
• Cash-back fees are levied on low pre-set cash withdrawal amounts . Many merchants pre-determine the withdrawal amount options in a single transaction, commonly between $5 and $50. The fees charged on small, constrained amounts often constitute a high percentage of the cash withdrawal and limit consumers’ ability to spread the cost of that fee over larger amounts. It may also induce repeat withdrawals, with consumers incurring a new fee each time.
• Consumers with lower incomes or fewer banking choices may be more likely to encounter cash-back fees . Dollar stores are frequently located in small rural towns, communities of color, and low-income communities. These areas are also more likely to be places where there are fewer branch locations, and communities where people are more reliant on cash for daily transactions than others.

This section summarizes the importance of cash availability and the use of cash-back as an access point for consumers.

Cash is a critical part of a resilient payment ecosystem. Surveys show people still try to have cash on hand 1 and nearly 90 percent of people used cash in the last 30 days. 2 Cash accessibility is necessary should other types of digital payment systems experience failures, 3 such as in the event of a natural disaster or some other catastrophe, 4 or a technological malfunction at a single company. 5 Additionally, some populations are more reliant on cash than others for day-to-day transactions. For example, cash is more frequently used by people with lower incomes, racial minorities, and older Americans than other populations. 6 As discussed below, cash back is a common method for obtaining cash for many consumers.

How cash back works

Consumers may obtain cash during the completion of a purchase transaction at certain stores when using a PIN-authenticated debit card or prepaid card at the register. Some merchants also provide cash back at self-service registers. Consumers typically must choose from pre-set withdrawal amount options presented at the payment terminal at the time of the transaction. In a cash-back transaction, consumers are usually limited to a maximum withdrawal amount ranging from $5 to $50, though some merchants may allow higher amounts.

Scope of usage

CFPB analysis of data from the Diary and Survey of Consumer Payment Choice (Survey) found that from 2017 to 2022, cash withdrawals at retail locations made up 17 percent of all transactions by which people got cash from their checking account, savings account, or prepaid card. As shown in Figure 1, cash withdrawals at retail are second only to ATMs (61%) and more frequently used than bank tellers (14%). The Survey and methodology are discussed in the Tables and Notes section .

Figure 1: Instances of getting cash from bank account or prepaid card, by location, 2017 to 2022, combined

Source : CFPB tabulations of the Diary and Survey of Consumer Payment Choice.

The Survey data also show that from 2017 to 2022, cash withdrawals at a retail location (restricted to those where the source of funds was the consumer’s checking, savings, or a prepaid card) had a mean withdrawal amount of $34 (median: $20). 7 By contrast, during this same timeframe, the mean ATM withdrawal among survey participants was $126 (median: $100). 8 A study by researchers at the Federal Reserve Bank of Atlanta utilizing Survey data found that cash withdrawals at a retail store had the lowest average amount of cash withdrawal, and noted that “[t]he amount of cash received at a retail store is constrained by the store’s limits, so the amount of cash received in this way is not necessarily at the discretion of the consumer.” 9

Cash back may serve as a particularly important point of access in the absence of other banking services. A 2014 study by the Federal Reserve Bank of Richmond analyzed cash-back transactions from a national discount retail chain from 2010 to 2012. 10 Looking specifically at the Richmond bank’s district, the area with the highest frequency of cash-back transactions was in the southeastern region of South Carolina, an area “that has been subject to ‘persistent poverty’” and “has some of the sparsest dispersion of bank branches.” 11 The study also illustrated the lucrative nature of cash-back fees: During the course of this study period, the merchant introduced a fee for cash back. Data from this report indicates that the retailer collected approximately $21 million in cash-back fees in a year. 12

Merchants benefit from offering cash back at point-of-sale. First, the service may attract potential shoppers, either people making a purchase in order to get cash back or people who prefer one retail location over another in order to conveniently combine tasks. Second, it reduces merchants’ cash handling costs. 13 Dispensing cash to consumers, such as through cash-back transactions, reduces merchants’ supply of cash and therefore also reduces their cost of handling, transporting, and depositing excess cash.

Merchants incur costs for processing any type of payment transaction, including cash-back transactions. On any purchase using an electronic payment method, including a PIN-authorized debit-card or prepaid card, a merchant will incur a range of fees for processing that payment, such as interchange, network, and processing fees. While the merchant incurs these fees for a consumer’s purchase, there is an additional cost for providing cash back to the consumer.

To assess this additional transaction cost to the merchant for providing cash back, the CFPB modeled potential scenarios based on publicly available data and our market monitoring activities. The model incorporates estimates of merchant-incurred fees, such as interchange, network, processing, and fraud control fees. Methodology is discussed in detail in the Table and Figure Notes. The CFPB estimates that the additional marginal transactional cost to a merchant for processing a typical cash-back debit card transaction may range from a penny to about 20 cents (Table 1).

Table 1: Estimated additional merchant cost of a debit card cash-back transaction

Source : CFPB calculations based on public data about industry practices and averages. See Table and Figure Notes below for methodology .

This section provides an analysis of cash-back fee practices of eight national retail chains. It includes a discussion of the variation of these practices among these national chains and other actors, such as local independent grocers. The analysis is supplemented by market monitoring discussions with merchants about fees, costs, and consumer trends, both among merchants who charge cash back fees and those who do not. The CFPB also conducted consumer experience interviews and reviewed consumer complaints submitted to the CFPB. It concludes with a discussion of how these fees appear to function differently than fees for cash withdrawals at ATMs.

Current market practices

As of August 2024, there is no publicly available survey data regarding merchants’ cash-back practices or fees. To establish a baseline, the CFPB documented the fee practices of eight large retail companies. The sample consists of the two largest retail actors, measured by number of locations, across four different sectors: Dollar Stores, Grocery Stores, Drugstores, and Discount Retailers. 14 Using this approach, the eight retailers sampled are: Dollar General and Dollar Tree Inc. (Dollar Stores), Kroger Co. and Albertsons Companies (Grocery Stores), Walgreens and CVS (Drugstores), and Walmart and Target (Discount Retailers).

All retailers in our sample offer cash-back services, but only Dollar General, Dollar Tree Inc., and Kroger Co. brands charge a fee. Other retailers offer cash-back for free, even for withdrawal amounts similar to or larger than those provided by the three retailers who charge. (Table 2). Among the national chains that charge these cash-back fees, the CFPB estimates that they collect over $90 million in fees annually for people to access their cash. 15

Table 2: Cash-back fee practices, major retail companies

Source : CFPB analysis of the retail cash-back market. See Table and Figure Notes for methodology .

Beyond these national chains, there are other providers offering cash back as a free service to their customers. Through its market monitoring activities, the CFPB observed that many local independent grocers offer the service, but do not charge a fee. They do not charge a fee even though they are likely to have thinner profit margins and less bargaining power than national chains to negotiate on pricing on costs they incur from wholesalers or fees for payment processors. The U.S. Postal Service also offers cash back on debit transactions, in increments of $10 up to a $50 maximum, free of charge. 16

Cash-back fees at dollar stores

Among the merchants sampled, Dollar General and Dollar Tree Inc. charge the highest fees for withdrawal amounts under $50. These fees combined with the constrained withdrawal amount may mean that the fee takes up a hefty percentage relative to the amount of cash withdrawn, and people may be less able to limit the impact of the fee by taking out more cash.

Additionally, the geographic distribution of dollar store chains and their primary consumer base raises concerns that these fees may be borne by economically vulnerable populations and those with limited banking access. Dollar stores are prevalent in rural communities, low-income communities, and communities of color – the same communities who may also face challenges in accessing banking services. 17 For example, Dollar General noted that in 2023 “approximately 80% of [its] stores are located in towns of 20,000 or fewer people,” 18 while Dollar Tree Inc. operated at least 810 dual-brand combination stores (Family Dollar and Dollar Tree in a single building) designed specifically “for small towns and rural communities…with populations of 3,000 to 4,000 residents.” 19

Though they are open to and serve consumers of all income levels, dollar stores report that they locate stores specifically to serve their core customers: lower-income consumers. 20 In urban communities, one study shows, “proximity to dollar stores is highly associated with neighborhoods of color even when controlling for other factors.” 21 These same communities may also face challenges in accessing banking services. Low-income communities and communities of color often face barriers to access to banking services, and rural communities are 10 times more likely to meet the definition of a banking desert than urban areas. 22

Though the dollar store concept existed as far back as the 1950s, it has experienced significant expansion and consolidation since the 2000s. 23 Dollar Tree Inc. acquired Family Dollar in 2015. 24 From 2018 to 2021, nearly half of all retail locations opened in the U.S. were dollar stores. 25 In research examining the impact of dollar store expansion, studies indicate that the opening of a dollar store is associated with the closure of nearby local grocery retailers. 26

Variation of fees charged

In its scan of current market practices, the CFPB found variations in fee charges among store locations and brands owned by the same company. For example, as reflected in Table 2, Dollar Tree charges consumers $1 for cash back at Dollar Tree branded stores, but $1.50 in its Family Dollar stores. Similarly, Kroger Co. has two different fee tiers for its brands. In 2019, Kroger Co. rolled out a $0.50 cash-back fee for amounts of $100 or less, and $3.50 for amounts between $100 and $300. This took effect at brands such as Kroger, Fred Meyers, Ralph’s, QFC, Pick ‘N Save, and others. At the time of the rollout, the company noted two exceptions: Electronic benefits transfer (EBT) card users would not be charged a fee, and customers using their Kroger Plus card would not be charged for amounts under $100 but would be charged $0.50 for larger amounts. Kroger Co. acquired the southern grocery chain Harris Teeter in 2014, but it did not begin charging a cash-back fee at those stores until January 2024, at $0.75 for amounts of $100 or less, and $3 for larger amounts. 27

In its engagement with stakeholders, the CFPB learned that Dollar General’s fees appeared to vary in different locations. To better understand this potential variation, in December 2022, the CFPB mystery shopped at nine locations in one state, across a mix of rural, suburban, and urban communities. The CFPB acknowledges this is a small sample and is not intended to be representative. The data collected is based on the knowledge of the store associates at the time of each interaction.

In these findings, the CFPB learned of a range of fee variations across store locations: five of the nine respondents noted that the fee varies depending on the type of card used for the transaction. When probed for the meaning of “type of card,” most noted that it is dependent on the customer’s bank, though it is not exactly clear what fees will be triggered by what card type prior to initiating the transaction. Additionally, reported fees range from $1 to $2.50, with some stores reporting a flat fee structure of $1.50 and others reporting a range that tiered up with larger withdrawal amounts (with a cap of withdrawal amounts at $40). Most stores in this sample had a range of fees between $1.00 and $1.50, although two stores located in small, completely rural counties had a higher range of fees. The store located in the smallest and most isolated county within the sample, with only about 3,600 people, had the highest reported fee amount of $2.50.

Distinction from ATM fees

One of the market dynamics likely contributing to retailers’ ability to charge these fees is the high fees also charged to consumers for using out-of-network automated teller machines (ATMs). One source estimates that the average out-of-network ATM fee is $4.77, accounting for both the surcharge fee charged by the ATM owner and the foreign fee charged by the consumer’s financial institution. 28 By comparison, a $2 fee for cash back at a retailer may appear cheaper, and usually does not trigger an additional fee by the consumers’ financial institution or prepaid card issuer. Notwithstanding the high ATM fees, there are reasons for focused attention on the consumer risk of cash-back fees charged by retailers, primarily the amount of the fee relative to the value of the cash withdrawal and the distribution of the fee burden across income groups.

In a typical ATM transaction, a consumer has a greater ability to distribute the cost of the fee across a larger amount of cash than with cash back. There may be some exceptions to this for consumers who have only $10 or $20 in their bank account, but as shown in Table 3, low-income consumers and others withdraw greater amounts at ATMs than via cash-back, on average. In cash-back transactions, lower withdrawal limits are in place, and consumers do not have that option to withdraw larger amounts. CFPB analysis of the Diary and Survey of Consumer Payment Choice from 2017 to 2022 show that even among consumers with incomes below $50,000, the amount withdrawn at an ATM is more than double the typical cash-back withdrawal amount. Additionally, for the average and median amounts, across all incomes the ATM withdrawal amounts are larger than cash-back withdrawal amounts. (Table 3).

Table 3: Average ATM and cash-back withdrawal amounts, by income, 2017 to 2022 combined

Source: CFPB tabulations of the Diary and Survey of Consumer Payment Choice. See Table and Figure Notes for methodology .

Further, while merchants limit the amount of a single withdrawal, there is no limit on the number of withdrawals. So, if a consumer needs $100 cash at a store which limits a single withdrawal to a maximum amount of $50 with a $2 fee, the consumer would have to make two $50 withdrawals for a $4 fee plus the cost of any otherwise unwanted purchase required to access the cash-back service.

Finally, the burden of cash-back fees may be distributed differently than ATM fee burdens. The share of borrowers who pay ATM fees for cash withdrawals is relatively evenly distributed across income levels, according to a study based on the Diary and Survey of Consumer Payment Choice. 29 The study found little variation in the percentage of consumers who encountered a fee for an ATM cash withdrawal by income quintile, though the study did not look at the amount of the ATM fees paid. Analogous data are not available for cash-back fees, but a similarly even distribution across incomes is unlikely given the demographics of the consumer base served by the largest retailers which charge fees (dollar stores).

While the use of digital payment methods is on the rise, cash accessibility remains a critical component of a resilient financial infrastructure and dynamic economy. Bank mergers, branch closures, and bank fee creep have reduced the supply of free cash access points for consumers. In this void, people may be more reliant on retailers for certain financial services historically provided by banks and credit unions, such as cash access. In this context, we observe that some retailers provide cash back as a helpful service to their customers, while other retailers may be exploiting these conditions by charging fees to their consumers for accessing their cash.

This spotlight examines the presence of retailer cash-back fees and impact to consumers. Cash-back fees are being levied by just a small handful of large retail conglomerates (Dollar General, Dollar Tree Inc., and Kroger Co.) amidst a backdrop of consolidation in these segments. Meanwhile, other larger retailers continue to offer cash-back services free. The CFPB estimates cash-back fees cost consumers about $90 million a year.

The CFPB is concerned that reduced access to cash undermines the resilience of the financial system and deprives consumers of a free, reliable, and private means of engaging in day-to-day transactions. The CFPB will continue to monitor developments related to the fees consumers pay for accessing cash, and work with agencies across the federal government to ensure people have fair and meaningful access to the money that underpins our economy.

Table and Figure Notes

Notes for figure 1.

The Federal Reserve Bank of Atlanta’s annual Diary and Survey of Consumer Payment Choice (Survey) tracks consumers’ self-reported payment habits over a three-day period in October using a nationally representative sample. The survey includes a question about whether and how consumers access cash, such as where they made the withdrawal, the source of the cash, and the amount of the withdrawal. Figure 1 provides a percentage of all cash-back withdrawal transactions from a bank account, checking account, or prepaid card reported between 2017 and 2022, by location (ATM, Retail point-of-sale, Bank teller, and Other). The number of observations during this time is 192 transactions. It does not include cash-back transactions made using a credit card cash advance feature or other form of credit.

Notes for Table 1

This model assumes that 80 percent of the merchant transaction cost is due to interchange fees, 15 percent due to network fees, and 5 percent due to payment acquirer fees. It also includes a $0.01 fee for fraud protection. For regulated transactions, the interchange fees are $0.22 + 0.05% of the transaction amount. Regulated transactions are those where the debit card used is issued by a bank with more than $10 billion in assets, and subject to 15 U.S.C. § 1693o-2. Exempt transactions are those not subject to this statutory cap on interchange fees. While Mastercard does not publish its fees for exempt transactions, Visa does. This model uses Visa’s published fees as of October 2023 for card-present transactions: for the National Discount Chain, the fees for Exempt Retail Debit ($0.15 + 0.80%), and for the National Grocery Chain, Exempt Supermarket Debit ($0.30 flat fee). An October 2023 Federal Reserve report on interchange fee revenue found that in 2021, the most recent data available, 56.21 percent of debit transactions were regulated and 43.79 percent were exempt. This composition is reflected in the table.

Notes for Table 2

The storefront counts for each of the retailers come from their websites, last visited on March 28, 2024, or their most recent reports to investors. Fee information was gathered either through publicly available information such as the merchant’s website, and/or verified through the CFPB’s market monitoring activities.

Dollar Tree Inc. announced on March 13, 2024 that it will close 1,000 of its Family Dollar and Dollar Tree brands stores over the course of the year. If those closures occur, Dollar Tree, Inc. will still have over 15,000 storefronts across the country.

In October 2022, Kroger Co. and Albertsons Companies announced their proposal to merge, though on February 26, 2024, the Federal Trade Commission and nine state attorneys general sued to block this proposal, alleging that the deal is anti-competitive. On April 22, 2024, Kroger Co. and Albertsons Companies announced a revised plan in which, if the merger is approved, the combined entity would divest 579 stores to C&S Wholesalers. If the divestiture occurs, the combined entity will still have over 4,400 stores across the country.

Notes for Table 3

See above notes for Figure 1 about the Diary and Survey of Consumer Payment Choice (Survey). Table 3 provides mean and median amounts of ATM and Retail point-of-sale cash withdrawal transactions by income. In the Survey, participants were asked to report the total combined income of all family members over age 15 living in the household during the past 12 months. From these responses, we constructed five income brackets – four of $25,000 each plus a fifth bin for any respondents reporting more than $100,000 in annual household income for each respondent in each year.

See e.g., Jay Lindsay, A Fatal Cash Crash? Conditions Were Ripe for It After the Pandemic Hit, but It Didn’t Happen , Fed. Rsrv. Bank of Boston (Nov. 2, 2023), https://www.bostonfed.org/news-and-events/news/2023/11/cash-crash-pandemic-increasing-credit-card-use-diary-of-consumer-payment-choice.aspx

Kevin Foster, Claire Greene, & Joanna Stavins, The 2023 Survey and Diary of Consumer Payment Choice , Fed. Rsrv Bank of Atlanta (June 2024), https://doi.org/10.29338/rdr2024-01

See e.g., Hilary Allen, Payments Failure, Boston College Law Review, Forthcoming, American University, WCL Research Paper No. 2021- 11, (Feb. 21, 2020) available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3539797

See e.g., Scarlett Heinbuch, Cash Is Critical in Times of Crisis , Fed. Rsrv. Bank of Atlanta (Mar. 7, 2022), https://www.atlantafed.org/blogs/take-on-payments/2022/03/07/cash-in-crisis

See e.g., Carly Page, Square Says It Has Resolved Daylong Outage , TechCrunch, (Sept. 8, 2023), https://techcrunch.com/2023/09/08/square-day-long-outage-resolved/ . See also Caroline Haskins, The Global CrowdStrike Outage Triggered a Surprise Return to Cash , Wired, (July 19, 2024), https://www.wired.com/story/microsoft-crowdstrike-outage-cash/ .

See Berhan Bayeh, Emily Cubides and Shaun O’Brien, 2024 Findings from the Diary of Consumer Payment Choice , Fed. Rsrv. (May 13, 2024), https://www.frbservices.org/binaries/content/assets/crsocms/news/research/2024-diary-of-consumer-payment-choice.pdf (findings related to low-income consumers and older Americans use of cash); Emily Cubides and Shaun O’Brian, 2023 Findings from the Diary of Consumer Payment Choice , Fed. Rsrv., (May 19, 2024), https://www.frbsf.org/cash/wp-content/uploads/sites/7/2023-Findings-from-the-Diary-of-Consumer-Payment-Choice.pdf (findings related to unbanked households use of cash), and Michelle Faviero, , More Americans are Joining the ‘Cashless’ Economy ,” Pew Rsch. Ctr, (Oct. 5, 2022), https://www.pewresearch.org/short-reads/2022/10/05/more-americans-are-joining-the-cashless-economy/ (findings related to use of cash by race and other demographics).

Similarly, the average cash-back withdrawal amount was $33 in 2012, the most recent data available from the Federal Reserve Payments Study. The study was based on self-reported information from financial institutions surveyed by the Federal Reserve. Of the reported transactions, 73 percent were debit cards with an average amount of $33 and 27 percent on general purpose prepaid cards with an average withdrawal amount of $19. 2013 Federal Reserve Payments Study: Recent and Long-Term Payment Trends in the United States: 2003 – 2012 , Fed. Rsrv. Bd. (July 2014), https://www.frbservices.org/binaries/content/assets/crsocms/news/research/2013-fed-res-paymt-study-summary-rpt.pdf

The amounts in the Survey are lower than the average ATM withdrawal amounts reported in 2022 Federal Reserve Payments study, which utilizes data from surveying financial institutions. Per this study, in 2021, the average ATM withdrawal was $198. The Federal Reserve Payments Study: 2022 Triennial Initial Data Release , Fed. Rsrv. Bd. (Apr. 21, 2023), https://www.federalreserve.gov/paymentsystems/fr-payments-study.htm

Claire Green and Oz Shy, How Consumers Get Cash: Evidence from a Diary Survey , Fed. Rsrv. Bank of Atlanta, (Apr. 2019), at 5, https://www.atlantafed.org/-/media/documents/banking/consumer-payments/research-data-reports/2019/05/08/how-consumers-get-cash-evidence-from-a-diary-survey/rdr1901.pdf (finding, “For the largest amounts of cash, respondents mostly turned to employers, with an average dollar value of cash received of $227. At bank tellers and ATMs, consumers also received average dollar values greater than the overall average: $159 and $137, respectively. Consumers received smaller amounts from family or friends ($93) and, notably, cash back at a retail store ($34). All these dollar amounts are weighted. The amount of cash received at a retail store is constrained by the store’s limits, so the amount of cash received in this way is not necessarily at the discretion of the consumer.”)

Neil Mitchell and Ann Ramage, The Second Participant in the Consumer to Business Payments Study , Fed. Rsrv. Bank of Richmond (Sept. 15, 2014), https://www.richmondfed.org/~/media/richmondfedorg/banking/payments_services/understanding_payments/pdf/psg_ck_20141118.pdf

Id. at 8, Figures 7 and 8.

See e.g., Stan Sienkiewicz, The Evolution of EFT Networks from ATMs to New On-Line Debit Payment Products , Discussion Paper, Payment Cards Ctr. of the Fed. Rsrv. Bank of Philadelphia (Apr. 2002), https://www.philadelphiafed.org/-/media/frbp/assets/consumer-finance/discussion-papers/eftnetworks_042002.pdf?la=en&hash=88302801FC98A898AB167AC2F9131CE1 (“The cash back option became popular with supermarket retailers, since store owners recognized savings as a result of less cash to count at the end of the day, a chore that represented a carrying cost to the establishment.”).

These market segments and retailers for purposes of markets analysis are similar to those used in other academic literature related to dollar store locations in the context of food access or impact on other market dynamics, such as on local grocers. See e.g., El Hadi Caoui, Brett Hollenbeck, and Matthew Osbourne, The Impact of Dollar Store Expansion on Local Market Structure and Food Access ,” (June 22, 2022), available at https://ssrn.com/abstract=4163102 (finding "In 2021, there were more of these stores operating than all the Walmarts, CVS, Walgreens, and Targets combined by a large margin.”) and Yue Cao, The Welfare Impact of Dollar Stores ,” available at https://yuecao.dev/assets/pdf/YueCaoDollarStore.pdf (last visited Aug. 23, 2024) (using the categories of dollar stores, groceries, and mass merchandise (such as Walmart) for comparisons across retail segments and noting that dollar stores regard these other segments as competitors).

Estimate based on information voluntarily provided in the CFPB's market monitoring activities.

What Forms of Payment are Accepted? U.S. Postal Serv., https://faq.usps.com/s/article/What-Forms-of-Payment-are-Accepted (last visited Aug. 23, 2024).

See generally, Stacy Mitchell, Kennedy Smith, and Susan Holmberg , The Dollar Store Invasion , Inst. for Local Self Reliance (Mar. 2023), https://cdn.ilsr.org/wp-content/uploads/2023/01/ILSR-Report-The-Dollar-Store-Invasion-2023.pdf . There is also extensive research on dollar store locations in other contexts such as food access and impact on consumer spending habits. El Hadi Caoui, Brett Hollenbeck, and Matthew Osbourne, The Impact of Dollar Store Expansion on Local Market Structure and Food Access ,” at 5, (June 22, 2022), available at https://ssrn.com/abstract=4163102

Dollar General Annual Report (Form10-K) at 7 (Mar. 25. 2024), https://investor.dollargeneral.com/websites/dollargeneral/English/310010/us-sec-filing.html?format=convpdf&secFilingId=003b8c70-dfa4-4f21-bfe7-40e6d8b26f63&shortDesc=Annual%20Report .

Dollar Tree, Inc. Annual Report (Form 10-K) at 7 (Mar. 20. 2024), https://corporate.dollartree.com/investors/sec-filings/content/0000935703-23-000016/0000935703-23-000016.pdf

See e.g., Dollar General Annual Report (Form10-K) at 7 (Mar. 25. 2024) (“We generally locate our stores and plan our merchandise selections to best serve the needs of our core customers, the low and fixed income households often underserved by other retailers, and we are focused on helping them make the most of their spending dollar.” And, Dollar Tree, Inc. Annual Report (Form 10-K) at 6 (Mar. 20. 2024), (“Family Dollar primarily serves a lower than average income customer in urban and rural locations, offering great values on everyday items.”)

Dr. Jerry Shannon, Dollar Stores, Retailer Redlining, and the Metropolitan Geographies of Precarious Consumption , Ann. of the Am. Assoc. of Geographers, Vol. 111, No. 4, 1200-1218 (2021), (analyzing over 29,000 storefront locations of Dollar General, Dollar Tree, and Family Dollar locations across the three largest MSA in each of the nine U.S. Census Bureau-defined divisions.)

Kristen Broady, Mac McComas, and Amine Ouazad, An Analysis of Financial Institutions in Black-Majority Communities: Black Borrowers and Depositors Face Considerable Challenges in Accessing Banking Services ,” Brookings Inst., (Nov. 2, 2021), https://www.brookings.edu/articles/an-analysis-of-financial-institutions-in-black-majority-communities-black-borrowers-and-depositors-face-considerable-challenges-in-accessing-banking-services/ and Drew Dahl and Michelle Franke, Banking Deserts Become a Concern as Branches Dry Up , Fed. Rsrv. Bank of St. Louis, https://www.stlouisfed.org/publications/regional-economist/second-quarter-2017/banking-deserts-become-a-concern-as-branches-dry-up (July 25, 2017).

El Hadi Caoui, Brett Hollenbeck, and Matthew Osbourne, The Impact of Dollar Store Expansion on Local Market Structure and Food Access ,” (June 22, 2022), available at https://ssrn.com/abstract=4163102 .

Dollar Tree Completes Acquisition of Family Dollar , Dollar Tree Inc., (July 6, 2015), available at https://corporate.dollartree.com/news-media/press-releases/detail/120/dollar-tree-completes-acquisition-of-family-dollar

El Hadi Caoui, Brett Hollenbeck, and Matthew Osbourne, The Impact of Dollar Store Expansion on Local Market Structure and Food Access ,” (June 22, 2022), available at https://ssrn.com/abstract=4163102 and Yue Cao, The Welfare Impact of Dollar Stores, https://yuecao.dev/assets/pdf/YueCaoDollarStore.pdf (last visited Aug. 23. 2024).

Evan Moore, Harris Teeter Introduces New Fees that Have Customers Upset. What To Know Before You’re Charged , Charlotte Observer, (Mar. 14, 2024), https://amp.charlotteobserver.com/news/business/article286627340.html

Karen Bennett and Matthew Goldberg, Survey: ATM fees Reach 26-year High While Overdraft Fees Inch Back Up , Bankrate.com (Aug. 21, 2024), https://www.bankrate.com/banking/checking/checking-account-survey/

Oz Shy and Joanna Stavins, Who Is Paying All These Fees? An Empirical Analysis of Bank Account and Credit Card Fees , Fed. Rsrv. Bank of Boston, Working Paper No. 22-18, at Table 2, (Aug. 2022), https://www.bostonfed.org/publications/research-department-working-paper/2022/who-is-paying-all-these-fees-an-empirical-analysis-of-bank-account-and-credit-card-fees .

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Study: EV charging stations boost spending at nearby businesses

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Charging stations for electric vehicles are essential for cleaning up the transportation sector. A new study by MIT researchers suggests they’re good for business, too.

The study found that, in California, opening a charging station boosted annual spending at each nearby business by an average of about $1,500 in 2019 and about $400 between January 2021 and June 2023. The spending bump amounts to thousands of extra dollars annually for nearby businesses, with the increase particularly pronounced for businesses in underresourced areas.

The study’s authors hope the research paints a more holistic picture of the benefits of EV charging stations, beyond environmental factors.

“These increases are equal to a significant chunk of the cost of installing an EV charger, and I hope this study sheds light on these economic benefits,” says lead author Yunhan Zheng MCP ’21, SM ’21, PhD ’24, a postdoc at the Singapore-MIT Alliance for Research and Technology (SMART). “The findings could also diversify the income stream for charger providers and site hosts, and lead to more informed business models for EV charging stations.”

Zheng’s co-authors on the paper, which was published today in Nature Communications , are David Keith, a senior lecturer at the MIT Sloan School of Management; Jinhua Zhao, an MIT professor of cities and transportation; and alumni Shenhao Wang MCP ’17, SM ’17, PhD ’20 and Mi Diao MCP ’06, PhD ’10.

Understanding the EV effect

Increasing the number of electric vehicle charging stations is seen as a key prerequisite for the transition to a cleaner, electrified transportation sector. As such, the 2021 U.S. Infrastructure Investment and Jobs Act committed $7.5 billion to build a national network of public electric vehicle chargers across the U.S.

But a large amount of private investment will also be needed to make charging stations ubiquitous.

“The U.S. is investing a lot in EV chargers and really encouraging EV adoption, but many EV charging providers can’t make enough money at this stage, and getting to profitability is a major challenge,” Zheng says.

EV advocates have long argued that the presence of charging stations brings economic benefits to surrounding communities, but Zheng says previous studies on their impact relied on surveys or were small-scale. Her team of collaborators wanted to make advocates’ claims more empirical.

For their study, the researchers collected data from over 4,000 charging stations in California and 140,000 businesses, relying on anonymized credit and debit card transactions to measure changes in consumer spending. The researchers used data from 2019 through June of 2023, skipping the year 2020 to minimize the impact of the pandemic.

To judge whether charging stations caused customer spending increases, the researchers compared data from businesses within 500 meters of new charging stations before and after their installation. They also analyzed transactions from similar businesses in the same time frame that weren’t near charging stations.

Supercharging nearby businesses

The researchers found that installing a charging station boosted annual spending at nearby establishments by an average of 1.4 percent in 2019 and 0.8 percent from January 2021 to June 2023.

While that might sound like a small amount per business, it amounts to thousands of dollars in overall consumer spending increases. Specifically, those percentages translate to almost $23,000 in cumulative spending increases in 2019 and about $3,400 per year from 2021 through June 2023.

Zheng says the decline in spending increases over the two time periods might be due to a saturation of EV chargers, leading to lower utilization, as well as an overall decrease in spending per business after the Covid-19 pandemic and a reduced number of businesses served by each EV charging station in the second period. Despite this decline, the annual impact of a charging station on all its surrounding businesses would still cover approximately 11.2 percent of the average infrastructure and installation cost of a standard charging station.

Through both time frames, the spending increases were highest for businesses within about a football field’s distance from the new stations. They were also significant for businesses in disadvantaged and low-income areas, as designated by California and the Justice40 Initiative.

“The positive impacts of EV charging stations on businesses are not constrained solely to some high-income neighborhoods,” Wang says. “It highlights the importance for policymakers to develop EV charging stations in marginalized areas, because they not only foster a cleaner environment, but also serve as a catalyst for enhancing economic vitality.”

Zheng believes the findings hold a lesson for charging station developers seeking to improve the profitability of their projects.

“The joint gas station and convenience store business model could also be adopted to EV charging stations,” Zheng says. “Traditionally, many gas stations are affiliated with retail store chains, which enables owners to both sell fuel and attract customers to diversify their revenue stream. EV charging providers could consider a similar approach to internalize the positive impact of EV charging stations.”

Zheng also says the findings could support the creation of new funding models for charging stations, such as multiple businesses sharing the costs of construction so they can all benefit from the added spending.

Those changes could accelerate the creation of charging networks, but Zheng cautions that further research is needed to understand how much the study’s findings can be extrapolated to other areas. She encourages other researchers to study the economic effects of charging stations and hopes future research includes states beyond California and even other countries.

“A huge number of studies have focused on retail sales effects from traditional transportation infrastructure, such as rail and subway stations, bus stops, and street configurations,” Zhao says. “This research provides evidence for an important, emerging piece of transportation infrastructure and shows a consistently positive effect on local businesses, paving the way for future research in this area.”

The research was supported, in part, by the Singapore-MIT Alliance for Research and Technology (SMART) and the Singapore National Research Foundation. Diao was partially supported by the Natural Science Foundation of Shanghai and the Fundamental Research Funds for the Central Universities of China.

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