Download scanning the marketing environment - McGraw

TURNING MARKETING INFORMATION
INTO ACTION
CHAPTER CONTENTS
PAGE
MATERIALS AVAILABLE FOR LECTURE AND DISCUSSION .................................. 8-2
STUDENT LEARNING OBJECTIVES ................................................................................ 8-3
KEY TERMS AND CONCEPTS ........................................................................................... 8-3
LECTURE NOTES

Test Screenings: Listening to Consumers to Reduce Movie Risks ............................... 8-4

The Role of Marketing Research ................................................................................... 8-4

Step 1: Define the Problem ............................................................................................ 8-5

Step 2: Develop the Research Plan ................................................................................ 8-6

Step 3: Collect Relevant Information ............................................................................ 8-7

Step 4: Deliver the Final Report ................................................................................... 8-12

Sales Forecasting Techniques ....................................................................................... 8-13
ANSWERS TO “APPLYING MARKETING CONCEPTS AND PERSPECTIVES” .... 8-15
ANSWERS TO “INTERNET EXERCISE”......................................................................... 8-19
SUPPLEMENTAL LECTURE NOTE (SLN)

SLN 8-1: What is “Truth” in Reporting Survey Results? ............................................. 8-20
IN-CLASS ACTIVITY (ICA)

ICA 8-1: Websites of Interest to Marketing Students ................................................... 8-21

ICA 8-2: Pepsi vs. Coke Taste Test .............................................................................. 8-24
VIDEO CASE 8 TEACHING NOTE (TN)

Ford Consulting Group, Inc.: From Data to Actions .................................................... 8-29
POWERPOINT THUMBNAILS .......................................................................................... 8-33
8-1
Chapter 8
MATERIALS AVAILABLE FOR LECTURE AND DISCUSSION
PowerPoint
Slides1
Transparencies2
Handouts3
Textbook Figures
Figure 8-1
Four-step marketing research approach leading
to better marketing actions ...................................... 

Figure 8-2
Types of marketing information .............................. 

Figure 8-3
Nielsen ratings of the top 10 national television
programs from January 27, 2003 through
February 2, 2003 ..................................................... 

Figure 8-4
Typical problems in wording questions ................... 
Figure 8-5
Today’s marketing managers use information from
many marketing factors to increase the sales
of their products or brands ...................................... 
Figure 8-6
Presenting findings to Tony’s marketing manager
that lead to recommendations and actions .............. 
Figure 8-7
Linear trend extrapolation of sales revenues
of Xerox, made at the start of 1999......................... 
Supplemental Figures and Advertisements
Figure 8-A
Kinds of samples used in marketing research .......... 
Figure 8-B
The two stages in a marketing research study ......... 
Figure 8-C
Comparison of three kinds of surveys ..................... 
Figure 8-D
How ethical is this claim in an advertisement that
is based on a survey of doctors? ............................. 

In-Class Activity (ICA) Figures
ICA 8-1, Figure 1 Websites of Interest to Marketing Students ....... 

ICA 8-2, Figure 1 Pepsi–Coke Taste Test Questionnaire .................

1
2
3
“PowerPoint Slides” are available on a CD-ROM and appear as “PowerPoint Thumbnails” within this chapter
of the Instructor’s Manual.
100 “Transparencies” are available to textbook adopters by request of their local McGraw-Hill/Irwin sales
representative.
Instructors may choose to reproduce some figures and hand them out to each student in the class to enhance
discussion. These “Handouts” are shown with a check in the right column.
Chapter 8
8-2
STUDENT LEARNING OBJECTIVES
After reading this chapter students should be able to:

Identify a four-step marketing research approach leading to marketing actions.

Describe how secondary and primary data are used in marketing, including the uses of
questionnaires, observations, experiments, and panels.

Be able to identify and correct typical problems in designing questions for a
questionnaire.

Understand how information technology enables information systems to be used to link
massive amounts of marketing information to meaningful marketing actions.

Recognize alternative methods to forecast sales and use the lost-horse and linear trend
extrapolation methods to make a simple forecast.
KEY TERMS AND CONCEPTS
data
primary data
marketing research
questionnaire data
measures of success
sales forecast
objectives
secondary data
observational data
8-3
Chapter 8
LECTURE NOTES
Chapter Opening
Photo
CHAPTER OPENING EXAMPLE
Test Screenings: Listening to Consumers to Reduce Movie Risks
“Blockbuster” movies are essential for the competitive world of filmmaking.
Slide 8-8
What’s in a Movie Name
Many movie studios use sophisticated marketing research and analysis
techniques to change an element of a movie after a sample of target audience
consumers has viewed a test screening. Filmmakers want movie titles that are
concise, attention-getting, capture the essence of the film, and have no legal
restrictions—basically the same factors that make a good brand name.
How Filmmakers Try to Reduce Risk
The filmmakers’ challenge: Whom should they recruit for movie test
screenings? What questions should they ask to help edit or modify the title or
other aspects of a film? Marketing research is the link between marketing
strategy and decisive actions. Movie studios use market research to reduce
their risk of losses by conducting test screenings.
I. THE ROLE OF MARKETING RESEARCH
To place marketing research in perspective, we can describe (1) what it
is, (2) some difficulties in conducting it, and (3) the 4 steps marketers
use in conducting it.
A. What is Marketing Research?
1. Marketing research is the process of defining a marketing
problem and opportunity, systematically collecting and
analyzing information and recommending actions to improve an
organization’s marketing activities.
2. Marketing research can reduce risk and uncertainty to help
marketing managers take more effective marketing actions.
Fisher-Price
B. Why Good Marketing Research is Difficult
Market research
with kids?
Marketing researchers face difficulties in asking consumers
questions about new, unknown products:

Slide 8-10

Chapter 8
Do consumers really know whether they are likely to buy a product
that they probably have never thought about before?
Even if they know the answer, will they reveal it?
8-4

Will their actual purchase behavior be the same as their stated
interest or intentions (i.e. buy the same brand they say they will)?
The task of marketing research is to overcome these difficulties.
Figure 8-1
4-step marketing
research approach
Slide 8-11, T
C. Four-Step Marketing Research Approach
Marketers have developed a more formal, systematic approach to
improve the results of marketing research:
1. Define the problem carefully.
2. Develop a research plan to collect the most appropriate
information to solve the problem.
3. Collect the relevant data.
4. Develop a report to management that converts the data into
findings ad recommendations.
CONCEPT CHECK
1. What is marketing research?
Answer: Marketing research is the process of defining a marketing
problem and opportunity, systematically collecting and analyzing
information and recommending actions to improve an organization’s
marketing activities.
2. What are the four steps marketing researchers use to help develop
marketing actions?
Answer: The 4 steps are: (1) define the problem; (2) develop the research
plan; (3) collect relevant information; and (4) deliver the final report.
II. STEP 1: DEFINE THE PROBLEM
Fisher-Price’s toy testing shows how to define the problem and its two
key elements: (1) setting the research objectives and (2) identifying
marketing actions suggested by the research.
A. Set the Research Objectives
1. Objectives are specific measurable goals the decision maker
seeks to achieve in solving a problem.
2. Typical marketing objectives are:



Increase revenues and profits.
Discover what consumers are aware of and want.
Find out why a product isn’t selling well.
8-5
Chapter 8
Bear & Poo-Chi
Which did market
research turn up?
Slide 8-15
B. Identify Possible Marketing Actions
1. Measures of success are criteria used in evaluating proposed
solutions to the problem.
2. One test of whether marketing research should be undertaken is
if different outcomes will lead to different marketing actions. If
all the research outcomes lead to the same action, the research is
useless and a waste of resources.
3. Most marketing researchers would agree with the adage
“A problem well defined is half solved.” However, problem
definition is very difficult. If the objectives are too:

broad, the problem may not be researchable.

narrow, the value of the research is lessened.
III. STEP 2: DEVELOP THE RESEARCH PLAN
The second step in the marketing research process involves
(1) identifying the data needed for marketing actions, and
(2) determining how to collect the data.
A. Identify Data Needed for Marketing Actions
Often market researchers collect data that are interesting but
irrelevant for the marketing decisions that result in marketing
actions. A study must focus on collecting data that help managers
make a clear choice between alternatives.
B. Determine How to Collect Data
Two key elements in deciding how to collect data are (1) concepts
and (2) methods.
Fisher-Price
What concepts &
methods?
1. Concepts.

Concepts are ideas (a picture or verbal description) about
products or services.

A hypothesis is an idea about the relationship of two or more
factors or about what might happen in the future.
Hypotheses that lead to marketing actions can come from
many sources including: technical breakthroughs, marketing
studies, and customer suggestions.

A new-product concept is a description of a product the firm
might offer for sale.
Slide 8-17
Chapter 8
8-6
2. Methods.
Figure 8-A
Kinds of samples

Methods are the approaches that can be used to collect data.
Information on useful methods is available in marketing
research textbooks and handbooks.

So Information on useful methods is available in marketing
research trade books, textbooks. and handbooks.

Special methods vital to marketing are:
–
sampling, which involves (1)selecting a group of
distributors , customers, or prospects,(2) asking them
questions, and (3) treating their answers as typical of all
those in whom they are interested.
–
statistical inference, which is used to generalize the
results from the sample to much larger groups of
distributors, customers, or prospects to help decide on
marketing actions.
Slide 8-18
CONCEPT CHECK
1. How do research objectives relate to marketing actions?
Answer: Research objectives are specific, measurable goals the decision
maker seeks to achieve in solving a problem. Marketing research is then
conducted to identify possible marketing actions. Those implemented can
be compared to the objectives to assess their success.
2. What is the difference between concepts and methods?
Answer: Concepts are ideas about products or services, whereas methods
are approaches that can be used to collect data.
IV. STEP 3: COLLECT RELEVANT INFORMATION
Figure 8-2
Types of marketing
information
Collecting enough relevant information to make rational, informed
marketing decisions can entail collecting an enormous amount of
information at great expense.

Data are the facts and figures related to the problem, and are divided
into two main parts: secondary data and primary data.

Secondary data are facts and figures that have already been
recorded before the project at hand.

Primary data are facts and figures that are newly collected for the
project.
Slide 8-22, T
8-7
Chapter 8
A. Secondary Data: Internal
1. Secondary data divide into two parts as well—internal and
external—depending upon whether the data come from inside or
outside the organization needing the research.
2. Internal secondary data include product sales data and sales
reports on customer calls.
B. Secondary Data: External
External secondary data are published data from outside the
organization.
1. External secondary data include U.S. Census Bureau reports on
population, age, gender, and other consumer characteristics.
2. The Census Bureau also published the Economic Census, which
contains data on the number and size of establishments in the
U.S. that produce a good or service based on its NAICS code.
3. Trade associations, universities, and business periodicals provide
valuable data to marketers, much of it available via the Internet.
MNN
MARKETING NEWSNET
Online marketing
resources
Online Databases and Internet Resources Useful for Marketers
Slide 8-23
Information contained in online databases can be divided into three
categories: (1) indexes to articles in periodicals; (2) statistical or financial data
on markets, products, and organizations; and (3) Internet search engines and
portals.
ICA 8-1
Websites of
Interest to
Marketing
Students
Some of these sites are accessible only if a subscription fee has been
paid by an organization. To check out these sites, access your college or
university website, click on the icon or link for your library, and then click on
these or other useful databases your institution subscribes to.
C. Advantages and Disadvantages of Secondary Data
A general rule among marketers is to obtain secondary data first
and then collect primary data.

Advantages of secondary data are:
–
–
–
Chapter 8
Time savings if data have already been collected or exist
internally.
Low cost, such as free or inexpensive Census reports.
Greater level of detail, especially in Census data.
8-8

Disadvantages of secondary data are:
–
–
–
May be out of date, especially if Census data, which are
collected every 5 or 10 years.
The definitions or categories may not be quite right for
your project.
The data are collected for another purpose and may not
be specific enough for your project.
CONCEPT CHECK
1. What are data?
Answer: Data are the facts and figures related to the problem, and are
divided into two main parts: secondary data and primary data.
2. What is the difference between secondary and primary data?
Answer: Secondary data are facts and figures that have already been
recorded before the project at hand, whereas primary data are facts and
figures that are newly collected for the project.
3. What are some advantages and disadvantages of secondary data?
Answer: Advantages include time savings, low cost, and a greater level of
detail. Disadvantages include data may be out of date, the definitions or
categories may not be right, and not being specific enough for the project.
D. Primary Data: Observing Behavior
Two principal ways to collect new or primary data for a marketing
study are by (1) observing people and (2) asking them questions.
Figure 8-3
1. Mechanical and Electronic Observation.
Nielsen TV ratings
Slide 8-28, T
NMR people meter

Facts and figures obtained by watching, either mechanically
or in person, how people actually behave are called
observational data.

Nielsen Media Research (NMR) National TV ratings are an
example of electronic observational data collected by a
“people meter,” which is a box attached to TV sets, VCRs,
cable boxes, and satellite dishes.
Records all TV
programs watched?
–
–
Slide 8-29

A ratings point = 1% of all 106.7 million TV households.
A share point = the percentage of TV sets in use turned
to a particular program.
Nielsen//NetRatings records Internet user behavior.
8-9
Chapter 8
2. Personal Observation.
Oral B

Watching consumers in person or by videotaping them are
other observational approaches.

Observational data are both useful and flexible, but can be
costly to obtain and unreliable when different observers
report different conclusions about the same event. Also,
although observation can reveal what people do, it cannot
easily determine why they do it.
How to do market
research on this?
Slide 8-30
E. Primary Data: Questioning Consumers
Figure 8-B
2 stages in a
marketing study

Questionnaire data are facts and figures obtained by asking
people about their attitudes, awareness, intentions, and
behaviors. It is essential that the researcher concentrate on
questions directly related to the marketing problem at hand.

Many marketing researchers separate questionnaire data used for
hypothesis generation from those used for hypothesis evaluation:
1. Hypothesis Generation—Coming Up with an Idea.

Hypothesis generation involves a search for ideas that can be
evaluated in later research. Methods include:

Depth interviews, which involve a single researcher asking
questions of an individual relevant to the project that uses a
lengthy, free-flowing conversational style.

Focus groups, which are informal sessions of 6 to 10 past,
present, or prospective customers in which a discussion
leader, or moderator, asks their opinions about the firm’s and
its competitors’ products, how they use them, and special
needs that aren’t addressed by them. Often tape-recorded
and conducted in special rooms with a one-way mirror.

Unusual techniques to spot consumer trends early include
having teenagers complete a drawing (Teenage Research
Unlimited) and hiring “cool hunters,” people with tastes far
ahead of the curve (Look-Look).
Slide 8-32
Focus group room
Why would this
method be used?
Slide 8-33
3M Scotch-Brite
How to do market
research on this?
Slide 8-34
Chapter 8
Sarah: TRU
Kantrell: TRU
Skechers
How to do market
research on this?
How to do market
research on this?
How to do market
research on this?
Slide 8-35
Slide 8-36
Slide 8-37
8-10
2. Hypothesis Evaluation—Testing an Idea.

In hypothesis evaluation, the marketing researcher tests ideas
discovered in the hypothesis generation stage to help the
marketing manager recommend marketing actions. The
researcher has to make important trade-offs to balance cost
against the expected quality of the information obtained.
Some trade-offs include the following:
–
Figure 8-C
3 kinds of surveys
–
Slide 8-39
–
Figure 8-4
Problems in
wording questions
–

Slide 8-40
ICA 8-2
Pepsi
vs.
Coke
Taste Test
It is essential that marketing research questions be worded
precisely so that all respondents interpret the same question
similarly.
F. Primary Data: Panels and Experiments

A panel is a sample of consumers or stores from which
researchers take a series of measurements.

An experiment involves changing a variable factor involved in a
customer purchase and seeing what happens as a result. Ideally,
the researcher changes just one element of the marketing mix
and keeps all other variables constant.

Test markets are conducted to determine whether consumers will
buy a new product, brand, or store concept:
Wal-Mart
What kind of
research?
Slide 8-41
Personal interview surveys are flexible in asking probing
questions or getting reactions to visual materials but are
very costly to conduct.
Mail surveys are usually biased because those most
likely to respond have specially positive or negative
experiences with the product or brand.
Telephone interviews allow flexibility but respondents
are likely to hang up on the interviewer.
Fax and Internet surveys are restricted to respondents
having the technologies but the latter is expanding.
G. Advantages and Disadvantages of Primary Data

The main advantage is that primary data are more specific to the
problem being solved compare to secondary data.

The main disadvantages are that primary data are far more costly
and time consuming to collect than secondary data.
8-11
Chapter 8
CONCEPT CHECK
1. A mail questionnaire asks: “Do you regularly eat pizza?” What is the
difficulty with this question?
Answer: The word regularly is ambiguous. It means different things to
different people.
2. Which survey provides the greatest flexibility for asking probing
questions: mail, telephone, or personal interview?
Answer: personal interview survey
3. What is the difference between a panel and an experiment?
Answer: A panel is a sample of consumers or stores from which
researchers take a series of measurements. An experiment involves
changing a variable in a customer purchase and seeing what happens.
H. Making the Most of Information Technology
Figure 8-5

The Internet and the PC provide a gateway to exhaustive sources
of information on competitors, markets, and consumers, which
include internal and external data. The marketer’s task is to
convert this data into useful analyses for informed decisions.

Information technology involves designing and managing
computer and communication networks that can store and
process data to extract hidden information from large databases.

Retail stores also use a technique called data mining to find
statistical links that suggest markeitng opportunities.
Use of information
to increase sales
Slide 8-45
V. STEP 4: DELIVER THE FINAL REPORT
Marketing information have little value unless they are translated into
findings and recommendations that lead to marketing actions.
A. Analyzing Data: Clear, visual, and concise answers are a
competitive advantage to decision makers. However, clear analysis
takes time, expertise, and creativity.
Chapter 8
Tony’s Pizza
Tony’s Pizza
How to
analyze sales?
How to
analyze sales?
Slide 8-47
Slide 8-48
8-12
B. Presenting the Findings
Figure 8-6

Findings should be clear and understandable from the way the
data are presented. Therefore, the results should be delivered in
clear pictures (i.e. graphically), and if possible, in a single page.

Figures 8-6A to Figure 8-6D depict a sales analysis for Tony’s
Pizza described in the text based on Figure 8-6.
Presenting findings
graphically
Slide 8-49
Figure 8-6A
Figure 8-6B
Figure 8-6C
Figure 8-6D
Annual sales
Sales per household
Sales per
household size
Sales by
age of children
Slide 8-50
Slide 8-51
Slide 8-52
Slide 8-53
C. Making Recommendations
Data analysis and findings must lead to recommendations that
trigger marketing actions.
CONCEPT CHECK
1. How does data mining differ from traditional marketing research?
Answer: Marketing research develops a hypothesis about a variable and
then collects data to see if it’s true. In contrast, data mining extracts
hidden predictive information already collected and stored in databases.
2. In the marketing research for Tony’s Pizza, what is an example of
(a) a finding and (b) a recommendation?
Answer: (a) Figure 8-6A shows a finding that depicts annual sales from
1999 to 2002. (b) Figure 8-6D shows a finding that leads to a
recommendation to develop an ad targeting children 6 to 12 years old.
V. SALES FORECASTING TECHNIQUES

Forecasting or estimating the potential sales is often a key goal in a
marketing research study. Good sales forecasts are important for a
firm as it schedules production.

A sales forecast refers to the total sales of a product that a firm
expects to sell during a specified time period under specified
environmental conditions and its own marketing efforts.
A. Judgments of the Decision Maker
Most sales forecasts are judgments of the decision maker.
8-13
Chapter 8
Wilson tennis
racquets
How to
forecast sales?
Slide 8-57
1. A direct forecast involves estimating the value to be forecast
without any intervening steps.
2. A lost-horse forecast involves starting with the last known value
of the item being forecast, listing the factors that could affect the
forecast, assessing whether they have a positive or negative
impact, and making the final forecast.
B. Surveys of Knowledgeable Groups
Two groups commonly surveyed to develop sales forecasts are
prospective buyers and the salesforce, people who are likely to
know something about future sales.
1. A survey of buyers’ intentions forecast involves asking
prospective customers if they are likely to buy the product
during some future time period.
2. A salesforce survey forecast involves asking the firm’s
salespeople to estimate sales during a coming period.
C. Statistical Methods
Figure 8-7
Linear trend
extrapolation
Slide 8-59
1. The best-known statistical method of forecasting is trend
extrapolation, which involves extending a pattern observed in
past data into the future.
2. When the pattern is described with a straight line, it is linear
trend extrapolation. Trend extrapolation assumes that the
underlying relationships in the past will continue into the future.
CONCEPT CHECK
1. What are the three kinds of forecasting techniques?
Answer: They are (1) judgments of the decision maker, (2) surveys of
knowledgeable groups, and (3) statistical methods.
2. How do you make a lost-horse forecast?
Answer: (1) Start with the last known value of the item being forecast,
(2) list the factors that could affect the forecast, (3) assess whether they
have a positive or negative impact, and (4) make the final forecast.
3. What is linear trend extrapolation?
Answer: A linear trend extrapolation involves extending a pattern
observed in past data as a straight line into the future to generate the
forecast values for a specified time period.
Chapter 8
8-14
ANSWERS TO “APPLYING MARKETING CONCEPTS
AND PERSPECTIVES”
1.
Nielsen Media Research obtains ratings of local TV stations by having households
fill out diary questionnaires. These give information on (a) who was watching TV
and (b) what program. What are the limitations of this questionnaire method?
Answer: Using diaries to record television viewing habits has problems because most
people don't keep a continuous record of the television programs they have watched but
instead wait until the end of several days or a week and then try to reconstruct their
viewing. This usually results in serious errors. In addition, the adult who records the
family viewing may miss many of the programs watched by younger children or
members of the family who are watching TV when the adult is not present.
2.
A rich aunt has decided to set you up in a business of your own choosing. To her
delight, you decide on a service business—giving flying lessons in ultralight planes to
your fellow college students. Some questions from the first draft of a mail
questionnaire you plan to use are shown below. In terms of Figure 8-4, (a) identify
the problem with each question and (b) correct it. Note: Some questions may have
more than one problem.
a.
Have you ever flown in commercial airliners and in ultralight planes?
Yes
b.
No
Why do you think ultralights are so much safer than hang gliders?
__________________________________________________________________
c.
d.
At what age did you first know you like to fly?
Under 10
10 to 20
21 to 30
Over 30
Under 10
10 to 20
21 to 30
Over 30
How much did you spend on recreational activities last year?
$100 or less
$801 to $1,201
$101 to $400
$1,201 to $1,600
$401 to $800
$1,600 or more
8-15
Chapter 8
e.
How much would you pay for ultralight flying lessons?
__________________________________________________________________
f.
Would you sign up for a class that met regularly?
Yes
No
Answers:
a.
This question really has two questions in one. It can be corrected by asking
(1) “Have you ever flown in commercial airliners?” And then (2) “Have you ever
flown in ultralight planes?”
b.
This is a leading question. It leads the respondent into giving reasons why
ultralight planes are safer than hang gliders. A better two-part open-ended
question might be: “Which do you think is safer, ultralight planes or hang gliders?
Why?”
c.
This question is probably answerable but may not have value to you in assessing
the market for flying lessons in ultralight planes. A more useful question might
be: “How interested are you in taking ultralight flying lessons?” Then give the
respondents a scale of choices for answers, such as “very interested,” “interested,”
“slightly interested,” or “not interested.”
d.
One of the problems with this question is that choices 5 and 6 are not mutually
exclusive since someone believing he spent about $1,600 last year on recreational
activities doesn't know which of the two boxes to check. Also, most people could
not answer the question with much accuracy.
e.
Asking a pricing question in marketing research is always difficult. This one has
special problems because it isn’t clear whether the measurement is based on a
single lesson or a series of lessons required so prospective customers know
enough to fly ultralight planes.
f.
The word regularly is ambiguous. If the intent of the question is to determine
whether lessons should be weekly or meet on Tuesday nights or meet on alternate
Wednesday nights, these specific forms of the question should be asked.
Chapter 8
8-16
3.
The format in which information is presented to a harried marketing manager is
often vital. (a) If you were a marketing manager and queried your information
system, would you rather see the results in tables or charts and graphs?
(b) What are one or two strengths and weaknesses of each format?
Answers:
a.
Delivering the results in “pictures” (charts and graphs) and in a single page if
possible helps the marketing manager to see results more quickly.
b.
Tables. Strengths are allowing quantities of data to be summarized succinctly,
provided that good column heads and stubs have been selected. Data can be
presented in detail–e.g., to the nearest penny or percentage point. Weaknesses are
overwhelming the reader with quantities of data, in which key points can be lost.
Even an experienced interpreter may need time to tease out the critical
information from a table of data.
Charts and graphs. Strengths are allowing high and low points to be seen at a
glance. A line or bar graph or a pie chart will be the best choice in different
circumstances. If data points are too close together, more space can be assigned
to sharpen the picture. Weaknesses are lack of precision and backup detail.
Combining tables, charts, and graphs can overcome the weaknesses and benefit from the
strengths of each format. Whenever location is an issue, a map can be helpful in
pinpointing where to attack the problem and which people might be best able to take
action (e.g., which salespeople might call on specific accounts).
4.
Aim Toothpaste puts a cents-off coupon in the Sunday paper across the entire
country (free-standing insert, or FSI). In addition, Aim provides retailers with
incentives to set up an in-store display and advertise the toothpaste in their local
market newspapers. Using retail sales data for Aim, an analysis of sales
performance is made contrasting the retailers without displays and local ads, to the
retailers with these added promotions. Assume that the retailers who promoted
Aim with displays and ads received a special payment in the form of product
discounts of 25 percent. (a) What measures of success are appropriate?
(b) Depending on the answer to “a,” what recommendations might be made?
Answers:
a.
Measures of success. For the Aim toothpaste promotion, they are
(1) total store sales for retailers with and without displays and local ads and
(2) cost-effectiveness: total sales revenue less the coupon and in-store ad
expense.
8-17
Chapter 8
b.
Recommendations.
1.
To compare total store sales, contrast average store sales in both groups of
retailers in the weeks before the coupon was published. These will be the
sales index of 100. Next, contrast average store sales in both groups for the
week of the coupon and the week after the coupon.
The data need to be presented effectively for the marketing manager to
assess the success of the coupon and, in addition, the success of the coupon
reinforced with displays and local ads. A table showing national totals for
both groups as heads and weeks in the stub (2 weeks before, 1 week before,
week of coupon, week after coupon) and a bar graph would be a start.
It would be worth showing the data on two U.S. maps—one for retailers
without displays and local ads, the other for retailers with these added
promotions—to see immediately whether there are any regional patterns in
how the promotion was received.
2.
To assess cost effectiveness, total store sales for the two groups of retailers
need to be measured against costs of the promotion. To assign costs of the
coupon in the national FSI, divide the number of retailers who took no
additional action by the total number of retailers. If 40% of the retailers
chose to do without displays and local ads, 40% of the cost of the FSI
should be subtracted from total sales for these stores for the two weeks
during and after the promotion. The result can then be compared with store
sales for this group of retailers in the two weeks before the coupon
promotion.
If 60% of the retailers promoted Aim with displays and ads, 60% of the cost
of the FSI should be subtracted from total sales for these stores for the two
weeks during and after the promotion. In addition, the special payment in
the form of product discounts of 25% must be subtracted from the same
total. The result can then be compared with store sales for this group of
retailers in the two weeks before the coupon promotion.
Chapter 8
8-18
ANSWERS TO “INTERNET EXERCISE”
WorldOpinion calls its website “The World’s Market Research Web Site.” To
check out the latest marketing research news, job opportunities, and directories of more
than 8,500 research locations in 99 countries, go to www.worldopinion.com and do the
following:
1.
Click on the “News” link of the WorldOpinion’s home page to read about the
current news and issues facing the market research industry.
Answer: There should be several news items of interest to students.
2.
Click on the “What’s New” link for The Frame, a set of online articles published by
Survey Sampling, International.
Answer: There should be several news items of interest to students, particularly those that
may have an interest in market research as a career option.
8-19
Chapter 8
SLN 8-1: SUPPLEMENTAL LECTURE NOTE
What Is “Truth” in Reporting Survey Results?
Figure 8-D
Survey reporting
and ethics
Slide 8-67, T
Professional marketing researchers have to make ethical decisions in
collecting, using, and reporting survey data. Several possible abuses exist:
1.
Salespeople pretending to collect marketing research data when the
real objective is a sales presentation.
2.
Covering up a bad sample that has too many non-respondents.
3.
Reporting only part of the data so the client will be pleased with the
results.
4.
Using deception to collect competitive corporate intelligence.
Doctors were surveyed to find out what brand of butter substitute they
recommend for their patients concerned about cholesterol. The results:



Recommend no particular brand–80%
Recommend brand A–5%
Recommend brand B–4%
No other brand is recommended by more than 2 percent of the doctors.
The firm owning brand A runs an ad that states: “More doctors recommend
brand A than any other brand.” Is this ethical? Why or why not? What kind of
ethical guideline, if any, should be used to address this issue?
No other brand is recommended 5 percent of the time by doctors,
brand B 4 percent of the time, and no particular brand 80 percent of the time.
What kind of advertising statement or claim should the marketing manager of
brand A make?
The following statements are true:
1.
More doctors recommend brand A than any other brand.
2.
Doctors recommend brand A 25 percent more often than the second
most recommended brand.
Although both claims are true, they are deliberately deceptive. Most
people would agree that, to be ethical, complete reporting of the results would
be needed.
Source: Donald S. Tull and Del I. Hawkins, Marketing Research, Method, and Measurement, 5th ed. (New York:
Macmillan, 1990), Chapter. 23.
Chapter 8
8-20
ICA 8-1: IN-CLASS ACTIVITY
Websites of Interest to Marketing Students
Learning Objectives. To have students experience the wide variety of marketing
information that is available on the Internet and World Wide Web.
Definitions. The following marketing terms are referred to in this in-class activity (ICA):

Internet: An integrated global network of computers that gives users access to
information and documents.

World Wide Web: A part of the Internet that supports a retrieval system that formats
information and documents into Web pages.
Nature of the Activity. To have students visit three websites that have been discussed in
the text or are likely to be of interest to marketing students and then select one website they find
interesting and summarize the kinds of information that this website offers.
Estimated Class Time.

If Internet access is available in the classroom, 20 minutes of “surfing” and discussion
should be adequate.

If Internet access is not available, two class sessions—one for assigning websites to
visit and one for discussion—will be necessary.
Materials Needed.

The Core08.ppt file from the Core PowerPoint CD in the Core Instructor’s Box.

A transparency of ICA 8-1, Figure 1 (or use Slide 8-69): Websites of Interest to
Marketing Students.

Copies of ICA 8-1, Figure 1: Websites of Interest to Marketing Students if students
are assigned websites to visit outside of class.

Internet access and projection equipment the classroom that will allow the websites to
be shown on an overhead screen.
Preparation Before Class. Follow the steps below:
1. Familiarize yourself with each of the websites identified in ICA 8-1, Figure 1.
2. Make a transparency of ICA 8-1, Figure 1 (or use Slide 8-69).
3. Make copies of ICA 8-1, Figure to handout to students.
4. Review the PowerPoint slides.
8-21
Chapter 8
Instructions. Follow the steps below to conduct this ICA:
1. Ask students about their experience “surfing” the Internet. Solicit
examples of what Internet websites interest them.
ICA 8-1, Figure 1
Interesting
Websites
2. Hand out copies of ICA 8-1, Figure 1: Websites of Interest to
Marketing Students.
3. Show Slide 69 or the transparency of ICA 8-1, Figure 1.
Slide 8-69
4. If the classroom has Internet access, select 2 to 3 websites to visit,
such as the American Marketing Association’s marketingpower.com
and the U.S. government’s portal, firstgov.gov. If the classroom
does not have Internet access, assign 3 to 4 websites to (teams of)
students and ask them to visit these websites before the next class.
5. Discuss the marketing implications of the websites.
Marketing Lessons. The websites listed on ICA 8-1, Figure 1 demonstrate the wide
variety of marketing information and activities available on the Internet. The American
Marketing Association and American Advertising Federation websites are resources for
marketing students and professionals. Firstgov.gov and the Wall Street Journal Interactive
Edition websites demonstrate the growing access to marketing information. Finally, the
McGraw-Hill Higher Education website provides information about this marketing book!
Website. See those listed on ICA 8-1, Figure 1.
Chapter 8
8-22
ICA 8-1, FIGURE 1
[NOTE: “http://” is assumed before “www”]
1. The American Marketing Association
www.marketingpower.com
2. The American Advertising Federation www.aaf.org
3. Ad Forum.com (15,000 print/TV ads)
www.adforum.com
4. eBay (on-line auction)
www.ebay.com
5. McGraw-Hill Higher Education
www.mhhe.com/kerin
6. HotJobs.com (careers)
www.hotjobs.com
7. iVillage.com (portal for women)
www.ivillage.com
8. Pollstar (concert locator)
www.pollstar.com
9. The Drudge Report (political news)
www.drudgereport.com
10. Amazon.com (purchase books, CDs)
www.amazon.com
11. Business Week (business news)
www.businessweek.com
12.
Wall Street Journal
Interactive Edition
www.wsj.com
13. Yahoo! (portal)
www.yahoo.com
14. Google (search engine)
www.google.com
15.
Firstgov.gov
(U.S. government portal)
www.firstgov.gov
© McGraw-Hill Companies, Inc. 2003
8-23
Chapter 8
ICA 8-2: IN-CLASS ACTIVITY
Pepsi vs. Coke Taste Test
Learning Objectives. To have students run an experiment, collect data, and interpret the
results by replicating the “Pepsi Challenge” with Pepsi Cola and Coca-Cola.
Definitions. The following marketing terms are referred to in this in-class activity (ICA):

Data: The facts and figures related to the problem, and divided into two main parts:
primary and secondary data.

Experiment: Changing a variable factor involved in a customer purchase and seeing
what happens as a result.
Nature of the Activity. To have students conduct (and replicate a historic) an in-class
taste test experiment by comparing Pepsi and Coke.
Estimated Class Time. 30 minutes.
Materials Needed.

The Core08.ppt file from the Core PowerPoint CD in the Core Instructor’s Box.

Copies of the Pepsi vs. Coke Taste Test Questionnaire.

A sufficient number of 2-liter bottles of Pepsi Cola and Coca-Cola so that each
student in the class can participate in the experiment.

A sufficient number of 2-ounce Dixie® paper cups for each student in the class.

1 box of regular crackers (e.g. Nabisco’s Original Premium® Saltines).

A marker to write letters on the side or bottom of each cup.

1 large container of water.

A calculator or computer in the classroom with Microsoft Excel to calculate the
percentages for the survey.

[OPTIONAL: Blindfolds (depending on the size of your class) so that students cannot
see the color of the soft drink. Since each brand is a slightly different shade of green,
heavy users of these products could discern which cup contained which brand.].
Preparation Before Class. Follow the steps below:
1. Purchase a sufficient number of 2-liter bottles of Pepsi Cola and Coca-Cola.
To calculate the number of each soft drink needed, count the number of students,
multiply by 2 ounces, and then divide by 88, the number of ounces in a 2-liter bottle.
2. Purchase a package of 2-ounce Dixie paper cups and 1-2 boxes of saltine crackers.
Chapter 8
8-24
3. Write a “B” on 1/3 of the paper cups, an “N” on another 1/3 of the paper cups, and a
“W” on the last 1/3 of the paper cups with a marker.
4. Refrigerate the bottles of Pepsi and Coke until just before class.
5. Make copies of the Pepsi vs. Coke Taste Test Questionnaire.
6. Arrange for a pitcher of cool water to be brought to class on the day of the taste test.
7. [OPTIONAL: Buy or make 1 to 3 blindfolds to create a true “blind” taste test.]
8. Before class starts, set up two taste test stations at the front of the classroom that
consists of a shield (to prohibit taste-testers from identifying the soft drink brands
being evaluated), labeled cups, water, saltines, surveys, and (optional) blindfolds.
9. At the start of class, select two teams of 1- 2 students at random to manage each taste
test stations. Recruit students who are responsible to perform this task. Have them
randomly assign the letters “B” or “N” to either Pepsi or Coke.
New Pepsi
Challenge TV ad
Instructions. Follow the steps below to conduct this ICA:
1. Show Slide 8-71 and give students this background mini-lecture:
Slide 8-71
“During the late 1970s and early 1980s, Pepsi Cola conducted a
nationwide comparative taste test known as the “Pepsi Challenge.”
Pepsi set up stations on college campuses and at other public events
to have consumers compare the taste of Pepsi to Coca-Cola (the
original brand, now known as “Coca-Cola Classic”). This “blind”
taste test was conducted in the following manner:
a. Two small cups were labeled “B” and “N”. To prohibit tastetesters from identifying which cola was poured into which cup,
one was filled with Pepsi and the other one with Coke behind a
cardboard backdrop or shield.
b. Next, a taste-tester was asked to take a sip from cup “B”. Then,
the taste-tester was required to eat one saltine cracker and take a
sip of water to remove any aftertaste in his/her mouth. Lastly,
the taste-tester took a sip from cup “N”. Since both colas were
brown in color, no blindfold was necessary.
c. When finished, the taste-tester was asked to state (verbally and
on a brief survey) which tasted better: cola “B” or cola “N”.
After recording the result, the taste-tester was informed of the
identity of the cola in each cup and asked for her/his reaction.
The presumption was that since Coca-Cola had a greater market
share than Pepsi, more taste-testers would prefer Coke to Pepsi.
According to Pepsi, the results of the taste test were just the
opposite: more people preferred the taste of Pepsi because it was
sweeter than Coke.
8-25
Chapter 8
In 1985, Coca-Cola decided to conduct its own Coke Taste Test
when it compared a reformulated, sweeter “New” Coke with the
original Coca-Cola formula. Based on results obtained from blind
taste tests run on almost 200,000 people:



Consumers preferred New Coke (55%) to “Old” Coke (45%).
Consumers preferred New Coke (52%) to Pepsi Cola (48%).
However, after New Coke was introduced, new studies showed
only 30% of consumers liked New Coke.
Thus, consumers preferred the taste of “new” Coke over “old” Coke,
and more importantly, over Pepsi. As astute marketers, Coca-Cola
made the decision to pull “old” Coke from the market and replace it
with “new” Coke to reinvigorate the brand and gain market share.
However, the results of this strategy were disastrous for Coca-Cola!
During the taste test, Coca-Cola had failed to assess the impact on
the results if its customers/testers were told that “old” Coke would
be pulled off the market if consumers in general preferred the “new”
Coke to both “old” Coke and Pepsi. Brand-loyal consumers, who
highly valued both the history and somewhat bitter taste of the old
Coca Cola brand, rebelled when Coca-Cola pulled “old” Coke.
They boycotted Coca-Cola products and generated a massive writein campaign demanding that “old” Coke be reinstated. After a brief
period, Coca-Cola reintroduced the old formulation as “Coca-Cola
Classic” and ultimately removed New Coke from the market.
Today, we are going to replicate the Pepsi Challenge and Coke
Taste Test experiments.”1
Pepsi vs. Coke
Taste Challenge
Slide 8-72
2. Show Slide 8-72. Behind a shield, have Team 1 put Pepsi in cup “B
and Coke in cup “N”. Team 2 will put Coke in cup “B” and Pepsi in
cup “N”. All teams will fill the “W” cups with water.
3. To begin the taste test, have students come down by rows. Have
students from odd numbered rows go to station 1 and those from
even rows go to station 2. Then, place a blindfold on the student.
Next, take one “B”, “N”, and “W” cup from behind the shield and
place them in front of the student.
4. With a blindfold on, have each taste-tester take a sip from cup “B”.
Then, have him/her take a bite of a saltine cracker and a sip of water.
Next, have her/him repeat the process for cup “N”. When finished,
place the used cups behind the shield before you tell the tester to
remove his/her blindfold. Hand the student a copy of the Pepsi vs.
Coke Taste Test Questionnaire with the station number printed on it.
1
Robert F. Hartley, “Marketing Mistakes and Successes,” 8th edition (New York: John Wiley & Sons, 2001),
pp. 11-14.
Chapter 8
8-26
5. When finished the taste test, have each student fill out and hand in
the Pepsi vs. Coke Taste Test Questionnaire. When all students
have completed the test and turned in their surveys, take a poll by
station number as to which brand (cup “B” or cup “N”) tasted the
better and record the results on the blackboard or a blank overhead
transparency. Finally, inform them which brand was in which cup
for each station or wait until the end of (or next) class period when
the survey results have been tabulated.
6. Have someone tabulate the results on a calculator or the classroom
PC using Excel during the middle of class and discuss the results.
Some Controls Built into the Experiment. You may want to point out two controls
built into the taste test experiment:

Randomly assigning letters to the brands. This is done to eliminate students
guessing which letter would be given a particular brand. However, this does not
overcome the potential problem of a student preference for one letter in the alphabet
over another.

Eating a saltine cracker and drinking water between tastes. This is done to avoid
a possible lingering “aftertaste” that might be caused from tasting the previous brand.
Tabulating the Results. The simplest analysis is based on tabulating the taste test
results on a blank copy of the form and calculating the percentages for each question with a
calculator or Excel.
Strategy Decisions. Tabulations of Questions 1 and 2 tell how the two brands compare
with each other in paired-comparison tests. An in-class discussion led by the instructor might
initially assume that the class test results were consistent with the shares reported in the surveys.
Ask students how they might explain the discrepancy between their stated preferences and the
results from the in-class taste test experiment.
Marketing Lessons. Intentions expressed in an experiment do not always translate well
into actual practice.

The experimental condition itself can affect results (the Hawthorne effect: people
know they’re being evaluated).

Measuring only one element of the marketing mix (the “product”) does not provide
the whole marketing mix context within which consumers may evaluate products and
make purchase decisions of how consumers will react to the entire offering).
Websites. Pepsi’s website is www.pepsiworld.com. Coca-Cola’s website is www.cocacola.com.
8-27
Chapter 8
PEPSI VS. COKE TASTE TEST QUESTIONNAIRE
STATION NUMBER:
_______________
1. In comparing the tastes of brand “B” and brand “N”:
I prefer “B” .....
I am indifferent between “B” and “N” ......
I prefer “N” .....
2. Based on your station number, which soft drink brand is “B” and which is “N”?
“B” is: ________________________
“N” is: ________________________
3. Are you a “Heavy”, “Medium”, “Light” or “Non” user or consumer of soft drinks?
Heavy User......
Medium User ..
Light User .......
Non User .........
4. Which is your preferred brand: “Pepsi,” “Coca-Cola,” or “None”?
Pepsi ......................
5.
Coca-Cola .............
What is your gender: Male ..........
Female .......
© McGraw-Hill Companies, Inc. 2003
Chapter 8
8-28
None ......................
TN VIDEO CASE 8
Ford Consulting Group, Inc.: From Data to Actions
Synopsis:
Findings must be clear. Those responsible for actions want to spend their time deciding
what to do, not trying to understand what is shown. This means getting to the heart of the matter
while avoiding distracting side issues and delivering the results in “pictures” and on a single
page if possible.
The data in the case are designed to show that rigorous analysis will often result in
conflicting perspectives. At the market level, price appears to be the issue. A deeper analysis of
the accounts reveals that it is the merchandising activity that is associated with soft sales, not
price The best presentations will show this reality in a way that recognizes that firmly held
beliefs based on store visits, or superficial, analyses are not wrong, but that there is a more
correct, more detailed explanation.
Teaching Suggestions:
The instructor may wish to bring pizza (or ask students to do a quick store check prior to
class) from two or three local outlets. How much did the Tony’s Pizza cost at the convenience
store, the grocery store, and Wal-Mart? Was Tony’s on sale? How much did competitors’
pizzas cost? Were they on sale?
To introduce the case, it is important to clarify the diversity of pricing and merchandising
that exists in the marketplace. It is very common for people (including bosses and executives)
with a recent shopping experience to assume that this is what all consumers are seeing at the
shelf and to generalize incorrectly from their own “sample-of-one” experience.
The instructor should also make sure students understand the meaning of “short-hand”
terms often used in analyzing syndicated data, such as:

Distribution. For simplicity, “distribution” in the case is defined as the percent of retail
outlets carrying Tony’s Pizza. However, in most analyses of syndicated data,
“distribution” is based on “all-commodity volume” (ACV), which reflects the greater
sales importance of large-volume, high traffic, outlets.

Price gap. Tony’s average price per unit minus the average price per unit of all
competitors’ pizzas.

Promotion support. The percentage of time that Tony’s Pizza had merchandising
activity. This is a display in store, a retailer ad featuring Tony’s, and/or a discount at the
shelf. It does not include a cents-off coupon produced by the Tony’s, good anywhere
Tony’s is sold.

Promotion volume. The percentage of Tony’s Pizzas sold off of a display in store, a
retailer ad featuring Tony’s, and/or a discount at the shelf.
8-29
Chapter 8
Ford
Consulting Group
Table 1
Slide 8-74
Answers to Case Questions:
1. Study Table 1. (a) How does the situation in the Northeast
compare to the other regions in the U.S.? (b) What appears to
be the reason(s) that sales are soft? (c)Write a 150-word e-mail
with attachments to Mark Rehborg, your boss, giving your
answers to (b).
a. A quick look at the situation described in Table 1 shows that
compared to other U.S. regions, the Northeast region:





Has the lowest quarterly change in volume (up 3% vs. other
regions that are up 5% to 8%).
Has the poorest distribution (93% vs. 95% to 98%elsewhere).
Has the highest average price ($1.29, or an average 4¢ to 18¢
higher than in other regions).
Has the highest “price gap” relative to competitors’ prices,
8¢ per unit.
Has the lowest “promotion support” (7% of time brand was
promoted) and “promotion volume” (14% of volume sold on
promotion) for any region:
That’s a description of what’s going on without a lot of interpretation.
But the key focus is on “quarterly change in volume,” the variable we
are most interested in and how it is affected by the marketing “drivers,”
(distribution, price, and promotional support).
b./c. Let’s see what you, the “new marketing person” studying Tony’s
sales performance, might write Mark Rehborg, your boss at Tony’s
Pizza. Noting some “shorthand” marketing terms, here’s what your
150-word e-mail might say as to the reasons sales are soft:
Mark:
Based on Lauretta’s first table, here’s what I see:



Sales in the NE are soft relative to U.S. and other regions.
Distribution may be partially to blame. We are 4 percentage points
below the U.S. average.
PRICE and PRICE GAP—at an average 8¢ premium we appear to be
FAR MORE EXPENSIVE than competitors!
Based on this, I’d say the glaring problem is PRICE. We also have
opportunities to makes changes in distribution and promotion.
Best,
You, the new Marketing Person
Chapter 8
8-30
Ford
Consulting Group
Table 2
2. Study Table 2. (a) What do you conclude from this information?
(b) Summarize your conclusions in a 150-word e-mail with
attachments to Mark, who needs them for a meeting tomorrow with
Margaret, the Northeast region sales manager. (c) What actions
might your memo suggest?
a. This is an example of the potential “data overload” facing a
marketing or brand manager responsible for a consumer food
product. As with Table 1, the focus in Table 2 is on what is
happening with the “quarterly change in volume,” what explains
these changes, and what actions can be taken to increase sales
volume. Some preliminary conclusions:
Slide 8-76


The greatest increase in “quarterly change in volume” is at Savea-lot (5%) and Dollars-Off (8%), both of which have the highest
average prices and price gap but which also have the highest
distribution.
But note that these two chains also are promoting Tony’s Pizza
more than either of the other two chains.
b. Here’s what a 150-word e-mail from the “new marketing person” to
Mark Rehborg might say:
Mark:
Based on Lauretta’s second table that focuses on the NE accounts, I see three
different issues:



Ford
Consulting Group
Graph 1
Slide 8-78
Sales in the NE are UP where the price gap is HIGHEST!
Distribution may be partially to blame. Where distribution is LOW, we
have FLAT sales growth.
Promotion support and promotion volume are SOFT where quarterly
change in volume is DOWN.
Based on this, I’d say the glaring problem is PROMOTION at Food-Fast and
Get-Fresh. We also have opportunities with distribution at these accounts.
A secondary issue is the price gap at Save-a-lot and Dollars-Off. But at these
accounts we don’t have a volume problem (yet).
To highlight the relationships between quarterly change in volume and
(1) price gap and (2) promotion volume, here are two plots (show Slide 8-78
and Slide 8-79):
Ford
Consulting Group
Graph 2
c. The memo concludes with these action recommendations:
Slide 8-79
8-31
Chapter 8
ACTIONS
We need to talk with Margaret and ask for help to find out:


Why PROMOTIONS are SOFT at these accounts.
Determine why we don’t have HIGHER DISTRIBUTION.
Margaret is likely to ask for more dollars to do some extra-promotion spend and
get another flavor on the shelf—this will help us get fuller distribution.
Best,
You, the new Marketing Person
Epilogue:
An interesting issue is whether more data would give further profitable insights. Drilling
deeper into store level data, or the household market baskets could be valuable. Or would it?
One of the common student insights is that transaction detail data (from shopper card files or the
like) should be used. They assume that more data are going to be more valuable.
In the abstract, where clever computers could determine what is meaningful, this would
be true. But in the absence of computers that did the work, the alternative is people time. And
the payback on detailed analysis is important. Action is expensive, so insights need to be spread
across enough sales to make the action profitable. If we find through a clever analysis that six
customers a week would buy a 12-pack of Coke when buying chips, is it really worth the
printing, time, and incentive to put stickers on every bag of chips to gain six sales of $4 each
week? If it took a market researcher all day looking at purchase behaviors to dig out this nugget
of value, and the company pays a fully-loaded cost of $50 an hour for the researcher’s desk,
phone, benefits, training, and salary, this makes no sense.
The idea of clever computers doing the work is a common falsehood. Clever people
design, test, and implement clever calculations. Data are expensive, software is expensive, and
the people who do the work are expensive. Building a clever system for high value added
transactions in banking and airlines makes sense in these industries. A bank loan or airline ticket
can create thousands of dollars in revenue or profit as a result. When looking at consumer
transactions in a grocery store or Wal-Mart, the reality is that one-to-one marketing doesn’t have
the obvious profit potential. Even if Tony’s incented its customer to buy one more product, how
much clever programming and data and marketing would be necessary to generate that $2 in
additional retail revenue? The related experience will outweigh the added revenues.
Because one-to-one marketing is still in its infancy for grocery products, the investment
is more difficult for product and brand managers to approve than a decision to launch a new ad
campaign, do a coupon, or add a new product.
Chapter 8
8-32
POWERPOINT THUMBNAILS
Slide 8-1
Slide 8-2
Slide 8-3
Slide 8-4
Slide 8-5
Slide 8-6
Slide 8-7
Slide 8-8
Slide 8-9
Slide 8-10
Slide 8-11
Slide 8-12
8-33
Chapter 8
Chapter 8
Slide 8-13
Slide 8-14
Slide 8-15
Slide 8-16
Slide 8-17
Slide 8-18
Slide 8-19
Slide 8-20
Slide 8-21
Slide 8-22
Slide 8-23
Slide 8-24
8-34
Slide 8-25
Slide 8-26
Slide 8-27
Slide 8-28
Slide 8-29
Slide 8-30
Slide 8-31
Slide 8-32
Slide 8-33
Slide 8-34
Slide 8-35
Slide 8-36
8-35
Chapter 8
Chapter 8
Slide 8-37
Slide 8-38
Slide 8-39
Slide 8-40
Slide 8-41
Slide 8-42
Slide 8-43
Slide 8-44
Slide 8-45
Slide 8-46
Slide 8-47
Slide 8-48
8-36
Slide 8-49
Slide 8-50
Slide 8-51
Slide 8-52
Slide 8-53
Slide 8-54
Slide 8-55
Slide 8-56
Slide 8-57
Slide 8-58
Slide 8-59
Slide 8-60
8-37
Chapter 8
Chapter 8
Slide 8-61
Slide 8-62
Slide 8-63
Slide 8-64
Slide 8-65
Slide 8-66
Slide 8-67
Slide 8-68
Slide 8-69
Slide 8-70
Slide 8-71
Slide 8-72
8-38
Slide 8-73
Slide 8-74
Slide 8-75
Slide 8-76
Slide 8-77
Slide 8-78
Slide 8-79
8-39
Chapter 8