Chapter 9 - Marketing Research PDF

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Chapter 9: Marketing Research 9.1 The Role of Marketing Research  Marketing research is the process of planning, collecting, and analyzing data relevant to a marketing decision.  Marketing research plays a key role in the marketing system.  It provides decision makers with data on the effectiveness of the current marketing mix and insights for necessary changes.  Marketing research is a main data source for management information systems.  Marketing research has three roles: descriptive, diagnostic, and predictive. o Descriptive: gathering and presenting factual statements (what)  i.e. what is the historic sales trend in the industry? What are consumers’ attitudes toward the product? o Diagnostic: explaining data (why)  i.e. determining the impact on sales of a change in the design of the package. o Predictive: estimating what could happen; function is to address “what if” questions.  i.e. what is the likely impact on sales if we add a new model to the product line? A. Management Uses of Marketing Research  Importance of Marketing Research: o It improves the quality of decision making o It helps managers identify problems and sources of them o Focus on keeping existing customers and reaching new ones o Understand changes in the marketplace Overview of Marketing Research Process

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9.2 Steps In a Marketing Research Project  Virtually all firms that have adopted the marketing concept engage in some marketing research because it offers decision makers many benefits. o Some companies spend millions on marketing research; others, particularly smaller firms, conduct informal limited-scale research studies.  As changes occur in the firm’s external environment, marketing managers are faced with the questions “Should we change the existing marketing mix?” and, if so, “How?”  Marketing research may be used to evaluate product, promotion, distribution, or pricing alternatives.  The marketing research problem involves determining what information is needed and how that information can be obtained efficiently and effectively. o It is information oriented.  The marketing research objective is to provide insightful decision-making information.  The management decision problem is a broad-based problem that uses marketing research in order for managers to take proper actions. o It is action oriented.

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A. Secondary Data  A valuable tool throughout the research process is secondary data- data previously collected for any purpose other than the one at hand.  Sources of secondary data include: o Internal corporate information o Government agencies o Trade and industry associations o Business periodicals o News media  Advantages of secondary data include: o Saves time and money if they help solve the researcher’s problem. o Aids in determining direction for primary data collection/ aids in formulating the problem statement o Can pinpoint the kinds of people to approach and their locations. o Serve as a basis of comparison for other data. 

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Disadvantages of secondary data stem mainly from a mismatch between the researcher’s unique problem and the purpose for which the secondary data were originally gathered. o Disadvantages include:  May not give adequate detailed information  May not be on target with the research problem  Quality and accuracy of data may pose a problem The Incredible World of Big Data: o Big data is the exponential growth in the volume, variety, and velocity of information and the development of complex new tools to analyze and create meaning from such data.  The ability to crunch numbers means nothing, however, if humans cannot use or even access that information. o Visualization acts as an engine for bringing patterns to light. o More and more firms are using the latest technology to collect, analyze, and make strategic and tactical decisions. o Big data analytics focus very much on what.  That is, its primary purpose is to uncover what patterns and relationships exist in this database.  Often, the insights gained from what are all a marketer needs to create a strategy. o Still, marketers often do need to understand why, and that is where traditional marketing research comes into play.

B. Planning the Research Design and Gathering Primary Data  The research design specifies which research questions must be answered, how and when the data will be gathered, and how the data will be analyzed.  Primary data, or information collected for the first time, are used for solving the particular problem under investigation. o The main advantages of primary data are:  answer specific research questions that secondary data cannot answer  current data  source of data is known  Secrecy can be maintained because the information is proprietary. o disadvantages of primary data: decreasing in recent times due to technology  expensive  quality declines if interviews are lengthy  reluctance to participate in lengthy interviews  Larger companies that conduct many research projects use another cost-saving technique. o They piggyback studies, or gather data on two different projects using one questionnaire.  Nevertheless, the disadvantages of primary data gathering are usually offset by the advantages.  Survey Research:

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The most popular technique for gathering primary data is survey research, in which a researcher either interacts with people or posts a questionnaire online to obtain facts, opinions, and attitudes. o In-home personal interviews:  In-home personal interviews often provide high-quality information but they tend to be very expensive because of the interviewers’ travel time and mileage costs.  Therefore, they are disappearing from the American and European researchers’ surveys. o Mall Intercept Interviews:  The mall intercept interview is conducted in the common area of a shopping mall or in a market research office within the mall.  Interviews must be brief.  One technique used to speed the mall interview process up is computer-assisted personal interviewing, an interviewing methods in which the interviewer reads questions from a computer screen and enters the respondent’s data directly into the computer.  Another technique is computer-assisted self-interviewing, a method in which a mall interviewer intercepts and directs willing respondents to nearby computers where each respondent reads questions off a computer screen and directly keys his or her answers in. o Telephone Interviews:  Telephone interviews cost less than person interviews, but cost is rapidly increasing due to respondent refusals to participate.  Most telephone interviewing is conducted from a specially designed phone room called a centrallocation telephone (CLT) facility.  The federal “Do Not Call” law does not apply to survey research. o Mail Surveys:  Mail surveys have several benefits:  Relatively low cost  Elimination of interviewers and field supervisors  Centralized control  Actual or promised anonymity for respondents  A disadvantage is that mail questionnaires usually produce low response rates. o Executive Interviews:  An executive interview involves interviewing businesspeople at their offices concerning industrial products or services, a process that is very expensive. o Focus Groups:  A focus group is a type of personal interviewing where seven to ten people who participate in a group discussion led by a moderator. Questionnaire Design: o All forms of survey research require a questionnaire. o Questionnaires include three basic types of questions:  An open-ended question encourages an answer phrased in the respondent’s own words.  A closed-ended question asks the respondent to make a selection from a limited list of responses.  A scaled-response question is a closed-ended question designed to measure the intensity of a respondent’s answer. o A good question must be…  clear and concise  no ambiguous language  avoid leading questions  avoid 2 questions in 1 o

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Observation Research: o Observation research (ethnography) entails watching what people do or using machines to watch what people do.

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Relies on 4 types of observation: 1. People watching people 2. People watching an activity 3. Machines watching people 4. Machines watching an activity

It can be defined as the systematic process of recording the behavioral patterns of people, objects, and occurrences without questioning them.

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A market researcher using the observation technique witnesses and records information as events occur or compile evidence from records of past events. o It may be conducted by human observers or machines. o Some common forms of people-watching-people research are one-way mirror observations, mystery shoppers, and behavioral targeting.  Mystery shoppers are researchers posing as customers who gather observational data about a store.  Behavioral targeting (BT), sometimes called tracking, began as a process by placing cookies on users’ browsers to track which Web sites they visited, how long they lingered, what they searched for, and what they bought. Ethnographic Research: o Ethnographic research comes to marketing from the field of anthropology, o The technique is becoming increasingly popular in marketing research. o Ethnographic research is the study of human behavior in its natural context. o Ethnographers directly observe the population they are studying to gain richer, deeper insights into culture and behavior. Virtual Shopping: o Advances in computer technology have enabled researchers to simulate an actual retail store environment on a computer screen. o Advantages of computer-simulated environments include:  The virtual store duplicates the distracting clutter of an actual market.  Researchers can set up and alter tests very quickly.  Production costs are very low  The simulation has a high degree of flexibility. o Virtual shopping research is growing rapidly o

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Experiments: o An experiment is a method a researcher can use to gather primary data. o The researcher alters on or more variables while observing the effects of those alterations on another variable. o Variables include price, package design, shelf space, advertising theme, and advertising expenditures. o The best experiments are those in which all factors except one are held constant.

C. Specifying the Sampling Procedures  Once the researchers decide how they will collect primary data, their next step is to select the sampling procedures they will use.  A firm can seldom take a census of all possible users of a new product, nor can they all be interviewed.  A firm must select a sample of the group to be interviewed.  A sample is a subset from a larger population.  First, the population, or universe, of interest must be defined – the population from which the sample will be drawn  After the universe has been defined, the next question is whether the sample must be representative of the population  If the answer is yes, a probability sample is needed. Otherwise, a nonprobability sample might be considered.

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Probability Samples: o A probability sample is a sample in which every element in the population has a known statistical likelihood of being selected. o Its most desirable feature is that scientific rules can be used to ensure that the sample represents the population. o One type of probability sample is a random sample- a sample arranged in such a way that every element of the population has an equal change of being selected as part of the sample. o Types of probability samples include: Simple random sample, stratified sample, cluster sample, and systematic sample. Nonprobability Samples: o Any sample in which little or no attempt is made to get a representative cross section of the population can be considered a nonprobability sample. o A common form of a nonprobability sample is the convenience sample, which uses respondents who are convenient or readily accessible to the researcher- for instance, employees, friends, or relatives. o Because of their lower cost, these types of samples are sometimes used in marketing research. o Types of nonprobability samples include: Convenience sample, judgment sample, quota sample, and, snowball sample Types of Errors: o Whenever a sample is used in marketing research, two major types of errors may occur: measurement error and sampling error. o Measurement error occurs when there is a difference between the information desired by the researcher and the information provided by the measurement process.  For example, people may tell an interviewer that they purchase a certain brand when they do not. o Sampling error occurs when a sample somehow does not represent the target population.  Frame error, another type of sampling error, arises if the sample drawn from a population differs from the target population.  Random error occurs when the selected sample is an imperfect representation of the overall population.

D. Collecting the Data  Marketing research field service firms collect most primary data.  A field service firm specializes in interviewing respondents on a subcontracted basis.  Besides conducting interviews, field service firms provide focus groups, mall intercept locations, test product storage, and kitchen facilities. E. Analyzing Data  After collecting the data, the marketing researcher proceeds to the next step in the research process: data analysis.  The purpose of this analysis is to interpret and draw conclusion from the mass of collected data.  Techniques used to organize and analyze those data include: one-way frequency counts, cross-tabulations, and more sophisticated statistical analysis o One-way frequency tables simply record the responses to a question. o They provide the researcher with a general picture of the study’s results. o A cross-tabulation lets the analyst look at the responses to one question in relation to the responses to one or more other questions. F. Preparing and Presenting the Report  After data analysis has been completed, the researcher must prepare the report and communicate the conclusions and recommendations to management.  Reports should be tailored to the audience.

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They should begin with a clear consider statement of the research objectives, followed by a complete but brief and simple explanation of the research design. A summary of major findings should come next. The conclusion of the report should also present recommendations to management.

G. Following Up  The final step in the marketing research process is to follow up.  The researcher should determine why management did or did not carry out the recommendations in the report.  Researcher should ask the following questions: o Were the recommendations followed? o Was sufficient decision-making information included in the report? o What could have been done to make the report more useful to management? 9.3 The Profound Impact on the Internet on Marketing Research  Allows better and fester decision making  Improves ability to respond quickly to customer needs and market shifts  Makes follow-up studies and tracking research easier  Slashes labor and time-intensive research activities and costs  Now can access greater percentage of a population (generally) A. Advantages of Internet Surveys  The huge growth in the popularity of Internet surveys is the result of the many advantages offered by the Internet.  The specific advantages of Internet surveys include: o Rapid development, real-time reporting: Internet surveys can be broadcast to thousands of potential respondents. o Dramatically reduced costs: The Internet can cut costs by 25-40% and provide results in half the time it takes to do traditional telephone surveys. o Personalized questions and data: Internet surveys can be highly personalized for greater relevance to each respondent’s own situation, thus speeding the response process. o Improved respondent participation: Internet surveys take half as much time to complete at phone interviews; can be accomplished at the respondent’s convenience. o Contact with the hard-to-reach: Doctors, high-income professionals, and top management are among the most surveyed on the planet and the most difficult to reach. Many of these groups are well represented online. B. Uses of the Internet by Marketing Researchers  Marketing researchers use the Internet to administer surveys, conduct focus groups, and perform a variety of other types of marketing research.  There are several basic methods for conducting online surveys: Web survey systems, survey design and Web hosting sites, and online panel providers.  There are many advantages of online groups: o Better participation rates: Groups can be conducted over the course of days; they are less likely to pull out due to time conflicts. o Cost-effectiveness: Face-to-face focus groups incur costs for facility rental, airfare, hotel, and food. o Broad geographic scope: Time if flexible online; respondents can be gathered from all over the world. o Accessibility: Online focus groups allow access to individuals who otherwise might be difficult to recruit.  A Web community is a carefully selected group of consumers who agree to participate in an ongoing dialogue with a particular corporation.  Web communities: o Engage customers o Achieve customer-derived innovations o Establish brand advocates o Offer real-time results

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Texting and Blogging  Researchers can text basic questions or assignments o Quick follow-up to responders o Wide demographic reach o High feedback rates  Assign respondents to write blog entries when they use a product or service o Can span long or short time periods o Offer a closer look at consumer use o Inexpensive, allowing larger number of respondents CGM/Social Media in Marketing Research  Refined technologies allow companies to mine data available in blogs, Facebook and Twitter posts, among others  Companies can identify the most influential social media users and learn exactly what they are saying and to whom they are saying it 9.4 The Growing Importance of Mobile Research  Mobile surveys are designed to fit into the brief cracks of time.  As new & better apps make the survey experience easier & more intuitive, use of mobile surveys will continue to rise. 9.5 Scanner-Based Research  Scanner-based research is a system for gathering information from a single group of respondents by continuously monitoring the advertising, promotion, and pricing they are exposed to and the things they buy.  The two major scanner-based suppliers are SymphonyIRI Group Inc. and the Nielsen Company. o SymphonyIRI’s first product is called Behavior Scan, a research program that tracks the purchases of 3,000 households through store scanners in each research market.  Each panel member shops with an ID card, which is presented at the checkout in scanner-equipped retail locations, allowing SymphonyIRI to track electronically each household’s purchases. o SymphonyIRI’s most successful product is InfoScan, a scanner-based sales-tracking service for the consumer packaged-goods industry.  Retail sales, detailed consumer purchasing information (including measurement of store loyalt and total grocery basket expenditures), and promotional activity by manufacturers and retailers are monitored and evaluated for all bar-coded products. o Data are collected weekly from more than 70K supermarkets, drugstores, and mass merchandisers. 9.6 When Should Marketing Research Be Conducted?  When managers have several possible solutions to a problem, they should not instinctively call for marketing research.  In fact, the first decision to make is whether to conduct marketing research at all.  PPT: o Depends on managers’ perceptions of its quality, price, and timing o When the expected value of research information exceeds the cost of generating the information.

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A. Customer Relationship Management  Databases and big data play a key role in marketing decisio...