The Hidden Cost of Market Research: How Data Scraping and Geo-Targeting Give Unfair Advantage (and How to Level the Playing Field)

Since the dawn of the digital era, market research has transcended formal surveys and focus groups into an advanced matrix of real-time analysis, behavior tracking, and data scraping like lightning. 

Although this has freed businesses to understand their audiences more intimately and react to them more efficiently, it has also introduced moral dilemmas and competitive imbalances. 

Leading among them are data scraping and geo-targeting – they’re both very powerful methods which, if not regulated, can wreak havoc and great disadvantages on small companies, new markets, and even consumers.

The Emergence of Data Scraping and Geo-Targeting

Data scraping is when information is automatically extracted from websites, applications, and public databases. 

Companies use sophisticated bots to extract anything from price information and product availability to customer reviews and social media activity. 

Some scraping is innocuous and even beneficial – aggregating the price of hotels or comparing insurance quotes, both of which are great advantages –, but big companies also use it to monitor competitors' strategies in real time.

Geo-targeting, on the other hand, makes use of a user's location to tailor content, ads, and pricing. It allows businesses to tailor their message for a specific region, creating hyper-personalized campaigns that yield much higher conversion rates. 

But it also does so at the potential cost of discriminatory pricing, where users in what are considered “wealthier” locations pay more, and those in saturated marketplaces receive special offers not available anywhere else.

The Unfair Advantage

Although these strategies may be thought to be useful methods, they also lead to disturbing questions about equality and competitive fairness:

1 - Unbalanced use of technology

Data scraping and geo-targeting at a high level require massive infrastructure – servers, applications, skilled developers, and access to proxies and VPNs for going unnoticed. 

SMEs just can't justify or afford the investment to rival the scale and precision of multinational corporations. This results in a virtual arms race where big businesses with unlimited budgets win.

2 - Warped market forces

Companies that have the capacity to scrape their competitors' prices and availability can undercut them almost in real time.  

For example, an airline scraping the fare of a competitor might reduce its fares just enough to be more attractive – and only in specific geographies. 

This is a “race to the bottom” that pressures the competition without such capability to cut prices below a profitable margin.

3 - Consumer manipulation

Geo-targeting is not localized relevance alone – it's also about profit maximization.  

Dynamic pricing software can detect affluent areas and jack up prices, as well as withhold some discounts from users in uncompetitive markets. This manipulation erodes online pricing transparency and trust.

4 - Data privacy issues

Both practices typically rely on the collection of user data, occasionally with or without consent. IP addresses, device IDs, and geolocation data are tracked to an extent that borders on monitoring.

In this type of scenario, a startup entering Germany, for example, could employ a VPN to simulate local browsing – seeing country-specific search results, prices in euros, and localized advertising. 

These are big, extremely useful data observations for designing a market entry strategy.

Free VPNs will satisfy general requirements, but often have speed, data, and security limitations. 

Competitive intelligence teams typically buy a VPN for safer, more reliable access. However, it’s crucial to remember that even with a paid VPN service, the information gathered must be interpreted ethically and used responsibly.

Scraping public data might be legal in many places, but it doesn't automatically make it ethical to replicate a competitor's strategies verbatim. The goal is not to copy, but to understand the landscape and innovate.

How to Level the Playing Field

As the digital economy evolves, it is important to ensure that market research tools are not just powerful, but also equitable. So how do we attempt to level the playing field going forward?

1 - Regulatory oversight

Regulators and industry players need to give clearer guidance on what reasonable use of geo-targeting and data scraping entails. This is in the areas of anti-competitive conduct, consumer data rights, and ethical advertising.

2 - Open data access

Marketplaces and platforms should offer APIs and data access on equal terms, reducing the need for scraping and establishing a level playing field. 

This could involve tiered access models for different business sizes or open-source data initiatives.

3 - Transparent pricing policies

Firms are required to make promises to stick to consistent pricing policies, publishing dynamic pricing algorithm disclosures when applied. 

Full disclosure of the algorithms is not feasible due to trade secrets, but at least offering a general description of the elements going into pricing could help restore consumer trust.

4 - SMEs support

Governments and industry coalitions should also aid small businesses with the availability of a mutual analytics platform, digital marketing toolkits, and education on ethical data practices.

It tends to bring more businesses into the playing field on a level basis to compete on the bases of innovation and service, not data exploitation.

5 - Ethical tech design

Developers and data scientists must embrace ethical practices in designing scraping bots and geo-targeting algorithms. That means including fairness audits, respecting robots.txt files, and avoiding shady or predatory tactics.

Market research will continue to be a cornerstone of business planning in the era of digitization. But the tools we use must not tilt the market so heavily in favor of the large companies. 

As geo-targeting and data scraping become more pervasive, so too must our commitment to ethical innovation, fairness, and transparency.