Download The Marketing Research Process

Chapter 7
Marketing Research
Decision-Support
Systems, and Sales
Forecasting
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Objectives
1. Describe the development of the marketing research
function and its major activities.
2. List and explain the steps in the marketing research
process
3. Differentiate between the types and sources of primary
and secondary data.
4. Explain the different sampling techniques used by
marketing researchers.
5. Identify the methods by which marketing researchers
collect primary data.
6. Discuss the challenges of conducting marketing research
in global markets.
7. Outline important uses of computer technology and
marketing research.
8. Identify the major types of forecasting methods and
explain the steps in the forecasting process.
7-2
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In this advertisement H&R
Block uses one numerical
statistic, generated by
Marketing Research, to
make a point.
7-3
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The Marketing Research Function
 Marketing research: the process of collecting and
using information for marketing decision-making
 Development of the Marketing Research
Function
First organized marketing research project done
by N.W. Ayer in 1879
First commercial research department in the
U.S. established by Charles C. Parlin for the
Curtis Publishing Co. in 1911
Parlin counted soup cans in garbage to
convince the Campbell soup Company that
working-class families would buy canned soup
7-4
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 L'Oreal Kids
 Using Marketing
Research to Match
New Products to
Potential
Customers.
 The Tangle Free
Shampoo and the
Bottle Design
Resulted From
Research Among
Mothers and
Children.
7-5
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 Who Conducts Marketing Research
The size and organizational form of the
marketing research function is typically tied to
a given company’s structure
Many firms depend on independent marketing
research firms
7-6
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Types of
questions
Marketing
Research
can help
answer.
7-7
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Products
& Services
Info
Press
Search
MRI+
MRI
Interactive
MEMRI
Staff
Directory
“Mediamark Research offers
comprehensive demographic, lifestyle,
product usage and exposure to all forms
of advertising media collected from a
single sample.”
Source Mediamark Web Site.
7-8
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Top-Line
Reports
Age Influences on Consumption
4-1
18-24
25-34
35-44
45-54 55-64
Products
Tequila
Scotch
Laptop/notebook
Doctor visits
156
44
94
74
174
66
115
88
115
98
124
91
57
143
139
107
64
119
98
110
5
137
15
135
Activities
Barbecuing
Aerobics
Cruise ship
Volunteer work
69
171
60
75
116
140
80
96
139
118
95
117
130
99
114
121
82
28
144
97
32
18
121
82
100 = Average level of use, purchase, or consumption
Source: Mediamark Spring 1997 (New York: Mediamark Research, Inc., 1997).
7-9
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65+
Age Influences on Consumption
4-1 (II)
18-24
25-34
35-44
45-54 55-64
Shopping
Montgomery Ward
The Gap
Dominos Pizza
Marie Callenders
91
217
161
77
87
140
132
80
106
85
124
105
94
82
80
135
117
52
52
110
110
26
30
96
Media
Reader’s Digest
Rolling Stone
MTV
CNN
64
290
286
73
75
158
153
93
96
93
81
99
109
46
42
114
119
14
22
117
144
2
16
107
100 = Average level of use, purchase, or consumption
Source: Mediamark Spring 1997 (New York: Mediamark Research, Inc., 1997).
7-10
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65+
Full-Service Research Suppliers
Organizations that contract with clients to
conduct complete marketing research projects
7-11
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Limited-Service Research Suppliers
A marketing research firm that specializes in
selected activities like:
Field or telephone interviews
Data-processing
Focus groups
Customer Satisfaction Measurement Programs
Procedure for measuring customer feedback
against customer satisfaction goals and
developing a plan of action for improvement
7-12
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The
Marketing
Research
Process
7-13
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 Shell
 Shell Followed
the Marketing
Research
Process to
develop its
“Count on
Shell”
Campaign
7-14
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Did eTrade conduct research to
establish that there may be a
need for their type of service?
Based on their success it is safe
to assume they did.
7-15
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 Step 1: Define the Problem
Avoid confusing symptoms of a problem with
the problem itself
The problem(s) should be agreed upon by
all concerned parties
Doing so helps to keep everyone concerned
in agreement and to keep the project
focused on solving the problem(s)
Doing so also helps to prevent the all-toocommon tendency to spend resources
attempting to answer “interesting, but not
necessary” questions
7-16
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 Step 2: Conduct exploratory research
An Informal investigation seeking to discover
the cause of a problem by discussing it with
informed internal and external sources
Can include evaluation of company records
such as sales and profit analyses
Can also include sales and profit analyses of
competitors’ products
Using Internal Data
Three commonly available sources of
valuable internal data are sales records,
financial statements, and marketing cost
analyses.
7-17
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 Step 3: Formulate a Hypothesis
Hypothesis: a tentative explanation for
some specific event – a statement about
the relationship among variables that
carries a clear implication for testing this
relationship
Sets the stage for more in-depth research
by further clarifying what researchers need
to test
Not all marketing research tests specific
hypotheses
7-18
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 Step 4: Create a Research Design
Research design: a series of decisions
that, taken together, comprise a master
plan or model for conducting marketing
research
Must ensure that the study will measure
what the marketer intends to measure
Must also ensure an appropriate selection
of respondents
7-19
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 Step 5: Collect Data
Secondary data is data from previously
published or compiled sources (e.g. Census
data)
Two important advantages of secondary data:
Almost always less expensive to gather
Less time is usually necessary to locate
and use it
Primary data refers to data collected for the
first time specifically for a marketing research
study
Primary data can provide richer, more detailed
information than secondary data
7-20
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Primary Research Methods


Slide 1 of 2
Observation Method. Researchers view the overt actions of the subjects.
Survey Method. Ask questions to get information on attitudes, motives, and
opinions. Researchers can use either interviews or questionnaires.
A. Telephone Interviews.
– A quick and inexpensive method for obtaining a small quantity of
relatively impersonal information.
B. Personal Interviews.
– The Best means for obtaining detailed information about
consumers
C. Focus Groups.
– Brings together 8 to 12 individuals in one location to discuss a
subject of interest.
– Usually encourages a general discussion of a predetermined topic.
D. Mail Surveys.
– Cost-effective alternative and also provide anonymity.
– Help markets track consumer attitudes through ongoing research.
– Response rates are typically much lower than for personal
interviews.
– Usually takes a long time to conduct.
– Questionnaire cannot answer unanticipated questions that occur.
– Researchers must worry about bias.
7-21
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Primary Research Methods
Slide 2 of 2
 Experimental Method. Least-used method for collecting primary
data. Most common use of this method by marketers is testmarketing.
 Three Problems with test-marketing:
 Test-marketing is expensive.
 Competitors quickly learn about the new product.
 Some products are not well-suited to test-marketing.
7-22
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Levels of Measurement
 Nominal coded data: Ability to distinctly categorize, or
conversely, allows the determination of equality.
 Ordinal coded data: Allows determination of magnitude, rank,
greater or less than.
 Interval coded data: Captures the distance apart two or more
respondents are with respect to an attribute.
 Ratio data possess a natural or absolute zero, indicating a true
absence of a characteristic. Permits statements concerning
the equality of ratios.
7-23
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Objectives
 Characteristics of questionnaire items
 Distinguish between single-item measures versus
composite scales, “batteries of items.”
 Qualities of measurements
 Validity
 Sensitivity
 Reliability and error
 Examples of scales used in marketing research
7-24
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BASIC QUESTION-RESPONSE FORMATS
 Open-Ended Response Format Questions
 Unprobed
 Probed Format
 Closed-Ended Response Format Questions
 Dichotomous
 Multiple Category
 Scaled-Response Format Questions
 Labeled
 Unlabeled
7-25
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Open-Ended Response Format
 Unprobed:
Unaided awareness: “List some competing
brands of toothpaste.
Store choice: “What grocery store receives
the majority of your household’s
purchases?
 Probed:
“Can you think of anymore brands?
“Are there anymore stores where you
shop?
7-26
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Closed-Ended Response Format
 Dichotomous: Only two choices
Good for qualifying items, screening
questions
 Multiple category: More than two choices
7-27
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Closed-ended item that is nominally coded.
Who is your major wholesaler?
Affiliated Foods
•(1)
Topco
•(2)
Fleming Foods
•(3)
Other
•(4)
7-28
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Scaled-Response Format Questions
 Labeled: All positions, especially mid-point
and intermediate positions for the respondent
are marked, or bear “labels”
 Unlabeled: No intermediate points are
labeled, sometimes positions bear only
numbers.
7-29
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Likert item: Labeled
People should shop at local merchants even though the prices may
be significantly higher.
1......2 ...... 3 ...... 4 ...... 5
Strongly
disagree
Disagree
Neutral
Agree
Strongly
agree
Numeric differential item: Unlabeled
Paying higher prices at local merchants...
Shows
ignorance
1.... 2 .... 3 .... 4 .... 5
7-30
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Shows
intelligence
Single-items adequate for
measurement?
 Suppose an instructor had single-question exams?
 Suppose the ACT (or GMAT) had only 5 possible
scores (similar to A,B,C,D,F grades)?
 Suppose the ACT had only 4 questions, 1 each for
mathematics, English, reading comprehension, and
science?
These are the issues behind marketing research use of
multiple-item scales.
7-31
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Composite, or Multiple-Item Scales
 Capture the sensitivity to the continuous nature of
many subtle differences in between consumers.
 Simultaneously address concerns of:
 Accuracy: Just as a 25-question exam can ask
questions evaluating the many topics covered in a
course, multiple-item scale can ask the many
subtle aspects that underlie a consumer attitude or
behavior.
 Consistency: Though we do not administer the
same surveys repeatedly to the same consumers,
we strive to develop scales that consumers would
provide consistent responses to over time.
 All relate to larger issue of measurement error.
7-32
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Semantic Differential Scale
Indicate your impression of shopping at Dillard’s by checking the box
corresponding to your opinion for each pair of descriptions.
Good value
Unfamiliar brands
Distinctive fashion
Low quality
Helpful staff
Poor value
Best brands
No fashion
High quality
No staff
7-33
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VALIDITY AND RELIABILITY OF MEASUREMENTS
 Validity: Accuracy
 Conceptual Issue
 Face Validity
 Predictive Validity
 Reliability: Consistency
 Proportion of statistical error
 Test-Retest
 Inter-Item Correlation
 Increasing the number of questions (items) can increase both
the validity and reliability of a scale.
7-34
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 Step 6: Interpret and Present Research
Information
Findings must be presented to decisionmakers in a format that allows them to make
effective judgments
Cardinal rule of presenting marketing research
requires that it assists decision-making rather
than being an end in itself
7-35
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 The Research Report and Presentation: Linking
the Study and the Research User
7-36
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The film industry is extremely
competitive and blunders are
costly. In order to enhance the
success rate of a film producers
can turn to marketing research.
7-37
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Class Discussion
How and why can
marketing research help to
prevent failures of new
businesses and new
products?
7-38
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Marketing Research Methods
7-39
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 Secondary Data Collection
Government Data
Nation’s most important
source of marketing data
Most frequently used government statistics
Census information available at no charge
TIGER System: Topographically
Integrated Geographic Encoding and
Referencing System
The system combines topographic
features like railroads, highways, and
rivers with census data such as
household income figures
7-40
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 Persuading People to
Participate in Census
2000
7-41
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 Secondary Data Collection
Online Sources of Secondary Data
Cyberspace sometimes simplifies the
search for secondary data
A Web-based research project can cost
less, and can yield significantly faster
results than offline research
Caveat Emptor should guide Internet
searches for secondary data
7-42
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 Bureau of Labor Statistics
7-43
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 Sampling Techniques
Sampling: the process of
selecting survey respondents or other
research participants
Population (universe): total group that
researchers want to study
Census: a collection of data on all
possible members of a population or
universe
7-44
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Probability sample: sample that gives every
member of the population a known chance of
being selected
Simple random sample: basic type of
probability sample in which every individual in
the relevant universe has an equal opportunity
of selection
Stratified sample: probability sample
constructed to represent randomly selected
sub-samples of different groups within the total
sample
Cluster sample: probability sample in which
researchers select geographic areas or
clusters, and all of the chosen individuals
within this area become respondents
7-45
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Non-probability sample: arbitrary grouping
that produces data unsuited for most standard
statistical tests
Convenience sample: nonprobability
sample selected from among readily
available respondents
Quota sample: nonprobability sample
divided to insure representation of different
segments or groups in the total sample
7-46
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 Primary Research Techniques
Observation Method
Researchers actually view, or watch, the
overt actions of the research subjects
Useful in helping to understand how
consumers actually behave in certain
situations
Can be as simple as counting passing
cars or as sophisticated as people
meters recording household TV-viewing
habits
7-47
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 Observation
research results in
new products
7-48
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Survey Method
Telephone Interviews
An inexpensive and quick method for
obtaining a small quantity of relatively
impersonal information
Relatively high response rates
Limitations include:
 Only simple, clearly worded questions
draw appropriate responses
 Personal information difficult to obtain
 Respondents can’t view pictures
7-49
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Survey Method
Personal Interviews
Best means for obtaining detailed
information about consumers
Interviewer can explain confusing or
vague questions
Offer Good Flexibility
Limitations:
 Slow
 Expensive
7-50
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Survey Method
Focus Groups
A Focus Group is an information gathering
procedure in marketing research that
typically brings together 8 to 12 individuals
to discuss a given subject
Can provide quick and relatively
inexpensive insights
May not produce completely honest
responses to questions
7-51
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Survey Method
Mail Surveys
Cost Effective
Provides anonymity that may encourage
respondents to give candid answers
Limitations include:
 Typically low response rates
 Take a long time to conduct
 Questionnaires cannot answer
unanticipated questions that occur to
respondents as they complete the forms
 Complex questions may not be suitable
 Bias from nonresponse
7-52
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Survey Method
Online Surveys and Other Internet-Based
Methods
Growing number of Internet users has
sparked interest in going online to conduct
surveys . . . and even focus groups
Benefits include the lack of geographic
restrictions, faster turn-around time, and
dramatically lower costs
Growth of the Internet is creating a need for
new research techniques to measure and
capture information about website visitors
7-53
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Survey Method
Experimental Method
Scientific investigation in which a
researcher manipulates test group(s) and
compares the results with those of a
control group that did not receive the
experimental controls or manipulations
The most common use to date has been
test marketing
Major problem with controlled
experiments comes from the failure to
account for all variables in a real-life
situation
Expensive to conduct
7-54
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 Dryel
 Using the
Experimental
Primary Research
Method: P & G Test
Marketed Its New
Product Category –
Dryel Home Drycleaning in
Columbus, Ohio and
in Ireland
7-55
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 Conducting International Marketing Research
As corporations expand globally, they need to
gather knowledge about consumers in other
countries
The basic steps are the same as for domestic
studies, however, face some different challenges
A major secondary information source is the U.S.
Department of Commerce
Foreign Economic Trends and Their
Implications for the United States
Overseas Business Reports
7-56
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Computer Technology in Marketing
Research
 Marketing Information System (MIS)
A planned, computer-based system
designed to provide managers with a
continuous flow of information relevant to
their specific decisions and areas of
responsibility
7-57
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 Marketing Decision Support System (MDSS)
Consists of computer software that helps
users quickly obtain information and apply
that information in a way that supports
marketing decisions
An MDSS can create simulations or models
to illustrate the likely results of changes in
marketing strategies or marketing conditions
7-58
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 Functions
of an MDSS
7-59
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 Data Mining
The process of searching through computer
files to detect patterns
The data is stored in a huge database called
a data warehouse
Can be an efficient way to make sense of
huge amounts of data
Can help create customer profiles, pinpoint
reasons for customer loyalty or the lack
thereof, analyze the potential returns on
changes in pricing or promotion, and sales
forecasts
7-60
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Sales Forecasting
 Estimate of company revenue for a specified
future period.
Qualitative Forecasting Techniques
Quantitative Forecasting Techniques
7-61
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 Qualitative Forecasting Techniques
These techniques rely on subjective data
that repots opinions rather than exact
historical data.
Jury of Executive Opinion
Delphi Technique
Sales Force Composite
Survey of Buyer Intentions
7-62
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Techniques
Benefits
Limitations
Jury of executive
opinion
Opinions come from executives
in many different departments;
quick; inexpensive
Managers may lack sufficient
knowledge and experience to
make meaningful predictions
Delphi technique
Group of experts can accurately
predict long-term events such as
technological breakthroughs
Time-consuming; expensive
Sales force
composite
Salespeople have expert
customer, product, and
competitor knowledge; quick;
inexpensive
Inaccurate forecasts may result
from low estimates of
salespeople concerned about
their influence on quotas
Survey of buyer
intentions
Useful in predicting short-term
and intermediate sales for firms
that serve only a few customers
Intentions to buy may not result
in actual purchases; timeconsuming; expensive
7-63
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 Quantitative Forecasting Techniques
This method uses statistical computations
such as trend extensions, computer
simulations, and economic models.
Market Tests
Trend Analysis
Exponential Smoothing
7-64
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Techniques
Benefits
Limitations
Market test
Provides realistic
information on actual
purchases rather than on
intent to buy
Alerts competition to new
product plans; timeconsuming; expensive
Trend analysis
Quick; inexpensive;
effective with stable
customer demand and
environment
Assumes the future will
continue the past; ignores
environmental changes
Exponential
smoothing
Same benefits as trend
analysis, but emphasizes
more recent data
Same limitations as trend
analysis, but not as severe
due to emphasis on recent
data
7-65
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