Download Use quantitative techniques in market research

Use quantitative techniques in
marketing research
Overview of quantitative research and research design
What is quantitative research?
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Survey methods
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Experimentation methods
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Experimental research designs
Causal relationships
Key elements of an experiment
Test marketing
Uses of test marketing
Summary
Key terms for your glossary
Feedback to Activities and Check your progress exercise
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Overview of quantitative research and
research design
Activity 1: Research definitions
From your reading, note definitions for the terms listed below.
Term
Definition
quantitative
qualitative
sample
survey
computer-assisted telephone interviewing
observation
experimentation
independent variables
dependent variables
extraneous variables
test marketing
To check your answers, refer to the feedback at the end of this topic.
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What is quantitative research?
Quantitative research is a data collection procedure that can be considered as
a part of the second step of the research process.
Primary research can be classified as either one of the following:

qualitative

quantitative.
Activity 2: Review qualitative vs quantitative
research
Complete the following table to illustrate the differences between qualitative and
quantitative research.
Criteria
Qualitative
Quantitative
Objective
Sample size
Data collection
Data analysis
Outcome of research
To check your answers, refer to the feedback at the end of this topic.
Types of quantitative research
While the aim of qualitative research is to stimulate ideas and insights into a
problem situation, quantitative research is designed to explain what is
happening in the market and how often it is happening. It is normally
conducted by using a large sample of research subjects with a more formal
and structured research process.
Quantitative research techniques fall into two major categories:

descriptive—comprises surveys and observations

causal—encompasses experimentation and test marketing.
In this topic, we will look at each of these different techniques.
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Survey methods
Surveys use written questions or interviews to ask people for information.
The people who participate in a survey are called respondents. Surveys
provide a quick and efficient method of assessing information about a
market. They can be quite flexible and when properly conducted are
extremely valuable to the marketer.
There are three major ways of administering surveys:
1
person-administered surveys
2
computer-administered surveys
3
self-administered surveys.
Each of these methods has distinctive advantages and disadvantages. Your
readings outline the criteria used to assess these different survey techniques
in the chapters on survey research.
Activity 3: Assessing survey methods
What criteria can be used for assessing the appropriateness of a survey method? Try to list
between five to 10 criteria.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
To check your answers, refer to the feedback at the end of this topic.
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Activity 4: Choosing a survey technique
Read the following scenarios—and then for each scenario decide which survey technique
you could use. Ensure that you also provide your reasons for your choices.
Scenario
Possible survey technique—and reasons for choice
1 You have just received a brief for a
research project from a regional bus
company. They require the research to be
conducted within a one-week period
focused on a clearly defined target market
of 18 to 55-year-olds who live in the
regional area but work outside of this zone.
The budget is fairly limited and a
structured questionnaire is recommended
to reduce interviewer bias. Due to time
restrictions data needs to be collected and
ready for analysis very quickly.
2 A local radio station wants to know how
many residents in the local area are
listening to a particular segment. They
need the information in the next two weeks
and their budget is limited.
3 A museum wants you to conduct
research into the satisfaction level of
customers in relation to its range of
exhibits. The research has a time frame
of three months and budget is not an
issue. Some of the information sought is
sensitive in nature.
4 A retailer who sells directly through the
Internet wants some customer feedback
on the effectiveness of their website.
5 A leading soft drink manufacturer has
just launched a new product and wants
to determine the reaction to its new
advertising campaign.
To check your answers, refer to the feedback at the end of this topic.
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Experimentation methods
Imagine you are the marketing manager for a consumer paint company.
Surveys and feedback from sales representatives have told you that
consumers are confused about which types of paints and colours are best for
their particular requirements.
As a marketing manager, you have responded quickly and have developed a
number of point-of-sale displays for retail outlets. However, you are not sure
which display will work best and you want to investigate the alternatives
further.
How would you conduct this type of research? You might follow one of the
approaches below.

You might rotate the displays and use a questionnaire or observation
to determine the effectiveness of each.

You might rotate the displays and compare the sales generated by
each.

You might suggest that displays are placed in different stores and
compare the sales generated in each store.
None of these approaches is totally satisfactory. Any differences across
stores or across sites could be the result of the new display—or any of a
number of other factors that have not been controlled.
For example, paint sales tend to be seasonal so the timing of the surveys
needs to take this into account. An increase in sales could be due to the
number of new housing starts or renovations and have nothing to do with
the new point-of-sale displays. Alternatively, competitors might have cut
paint prices in one store and not in another and this, rather than the new
display, could have reduced sales.
The problem is that you can’t be sure whether the difference in sales is due
to the new display or some other factor or factors.
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Experimental research designs
There are two types of experimental environments:
1
laboratory
2
field.
A laboratory experiment allows the researcher to have direct control over
most of the crucial factors that might affect the results. However, the testing
environment tends to be unnatural—for example, watching a television ad in
a caravan rather than in a living room means there are none of the normal
kinds of distractions.
Field experiments are carried out in a more natural setting, in an
environment where the behaviour being studied would most likely occur.
Activity 5: Experimental environments
Indicate whether the following experiments are classified as field or laboratory
experimental designs.
Experiment
1
Taste testing in a supermarket (controlled environment)
2
On-air testing of ads on television
3
Testing advertising in a caravan
4
Testing concepts in a focus group
5
Testing new display for pest control products in a
supermarket
Field or laboratory?
To check your answers, refer to the feedback at the end of this topic.
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Causal relationships
As mentioned earlier in this topic, experiments are an example of a causal
research design. The major objective is to obtain evidence of cause and
effect (causal) relationships: that is, to identify how one factor (the
independent variable) can affect another factor (the dependent variable).
Key elements of an experiment
An experiment has the four key elements: independent variables; dependent
variables; experimental and control groups; and random assignment.
Independent variables
These are the variables that are manipulated in an experiment to see if they
affect the value of the dependent variable. The independent variable can be
considered the cause in an experiment. In our previous example in this topic
(under the heading ‘Experimentation methods’), the colour display is the
independent variable.
Dependent variables
These depend on the level of the independent variable. The dependent
variable is the effect or result of an experiment. In our previous example, the
sales were the dependent variable because the level of sales depended on the
type of display.
Experimental and control groups
Usually at least two groups participate in an experiment—the experimental
group and the control group.
The group that is exposed to the manipulation of the independent variable is
called the experimental group.
The group that is not exposed is called the control group.
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In medical research, for example, the experimental group would be given
the ‘real’ drug for trial and the control group would given the ‘placebo’.
Results in the experimental group are then compared to results in the control
group. The stores in which the paint display was used would be the
experimental group. The stores that do not have the display would be the
control group.
Random assignment
This kind of assignment of subjects (or test units), such as which stores are
chosen to participate in the study, should take into account those extraneous
variables that are hard to control. Random assignment attempts to spread the
influence of extraneous variables equally across groups and control for their
effects. For example, if each test store for the paint display is located in an
area where building activity is high, while the stores not selected are in areas
where building activity is low, this could potentially affect the results.
Activity 6: Dependent and independent variables
For each of the following situations, identify the:
1

independent variable

dependent variable

extraneous variable.
Which advertising messages have the greatest impact on consumer attitudes?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2
Do the features of a new mobile phone match the needs of the market?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
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3
Do coupons and discounts encourage more people to visit the store?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
4
Will upgrading amenities at a theme park increase visitor levels?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
To check your answers, refer to the feedback at the end of this topic.
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Test marketing
Test marketing is a controlled experiment. In Australia, test marketing is
usually done in selected markets, like Wollongong or Newcastle in New
South Wales or Adelaide in South Australia.
The marketing mix components like price, product, promotion and
distribution are the independent variables. These variables are varied across
the test market and sales (dependent variables) are monitored.
Uses of test marketing
Test marketing has two main uses for the marketer:

to determine the demand or acceptance of a product

to test different levels of marketing-mix variables such as price
levels, packaging or where a product is made available
Activity 7: Selecting test markets
What are some of the factors that need to be considered when selecting test markets?
(Identify five or more.)
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
To check your answers, refer to the feedback at the end of this topic.
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Activity 8: Exploring test markets
Newcastle is often used as a test market in Australia.
Visit the Internet to learn what makes Newcastle a good test market using the factors
you’ve listed in the above activity (ie, Activity 10) as a guide.
One of the easiest ways to access this information is to go to the ABS home page
www.abs.gov.au. The follow these steps:
1
Click on ‘Statistics’.
2
Scroll down to ‘Census of Population’ and ‘Housing’.
3
Click on ‘Community Profiles’.
4
Click on ‘State of NSW’ and then ‘Hunter (Statistical Division)’.
5
Click on ‘Newcastle (Statistical Division)’ and look at the information tables
available.
Once you have collected information from this site, go to www.yahoo.com and do a search
on Newcastle Australia. Click onto the Newcastle website and take a look at the following
categories:

news and media

business and shopping

community.
Now refer to the feedback at the end of this topic.
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Summary
In this topic, we looked at different types of quantitative research
techniques, namely:

survey

observations

experiments

test marketing.
Quantitative research is used for two different types of research designs:

descriptive

causal.
Descriptive research design includes surveys and observations. Causal
research design includes experimental projects, particularly test marketing.
Check your progress
Here are seven multiple-choice questions to test of your knowledge of what you should
have learned in this topic. If you answered fewer than eight out of ten questions correctly,
you should go back over the topic and re-do some of the activities.
1
Which of the following statements about surveys is false?
(a) The person who answers an interviewer’s questions is called a respondent.
(b) Surveys can obtain information about attitudes but not demographic information.
(c) A survey is a method of primary data collection.
(d) Surveys may be conducted to quantify certain factual information.
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2
Compared with personal interviews, telephone interviews generally:
(a) are not a prime method of survey research
(b) are appropriate for collecting information on personal or sensitive topics
(c) provide less representative samples
(d) All of the above.
3
When comparing telephone interviews to door-to-door personal interviews, telephone
interviews are more appropriately described by each of the following characteristics
except:
(a) faster speed of data collection
(b) greater geographic flexibility
(c) lower possibility for respondent misunderstanding
(d) easier call-back or follow-up.
4
Questionnaires that present a challenge to the marketing researcher because they rely
on the efficiency of the written word rather than the skills of the interviewer are:
(a) personal interviews
(b) self-administered questionnaires
(c) telephone enquiries
(d) face-to-face communications.
5
Which of the following devices is typically most effective in increasing marketing
research response rates in mail surveys?
(a) monetary incentive
(b) personalised cover letter
(c) type of postage used to mail the questionnaire
(d) colour of the questionnaire.
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Which method differs from other research methods because it gives the researcher a
high degree of control over the research situation?
(a) surveys
(b) experiments
(c) observation studies
(d) secondary data studies.
7
Which of the following types of content cannot be observed?
(a) physical actions and evidences such as shopping patterns
(b) verbal behaviour such as sales conversations
(c) expressive behaviour such as tone of voice or smiling
(d) attitudinal reactions such as preference.
To check your answers, refer to the feedback at the end of this topic.
Key terms for your glossary
Research terminology is often specific and frequently uses words in a
different way to their common meaning. Write up your own definitions for
these key terms and place them in your personal glossary.
quantitative
qualitative
sample
survey
computer-assisted telephone interviewing
observation
experimentation
independent variables
dependent variables
extraneous variables
test marketing
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Feedback to Activities and Check
your progress exercise
Activity 1
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Term
Definition
quantitative
involves the collection of a large body of data, usually by
survey, and making a statistical analysis of it
qualitative
gathering, analysing and interpreting data by observing what
people say and do
sample
a subset of a larger population
survey
a means of gathering data by communicating in some way
with a sample
computer-assisted telephone
interviewing
surveys conducted by telephone where the interviewer is
prompted by a computer which also gathers the responses
observation
techniques where researchers rely on their powers of
observation rather than communicating with a respondent
experimentation
manipulating an independent variable to see how it affects a
dependent variable
independent variable
a variable over which the researcher has some control—eg,
level of advertising expenditure and type of display
dependent variable
a variable over which the researcher has no control but
strong interest—eg, sales of apples
extraneous variable
a variable which can affect the dependent variable but is not
an independent variable—eg, the weather and marketing
employed by competitors
test marketing
an experiment conducted in a field setting
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Activity 2
Criteria
Qualitative
Quantitative
Objective
To gain an understanding of
the problem.
Measure the data gathered
from a sample.
Sample size
small
large
Data collection
unstructured
structured—often using a
questionnaire
Data analysis
words—based on subjective
judgement
statistical—based on figures
Outcome of research
A deeper understanding of
what is occurring.
Findings are generalised to
recommend a course of
action.
Activity 3
The criteria used to assess the different survey research methods include:

time

budget

desired quality of data

incidence rate

willingness of respondents to participate

ability of respondents to participate

diversity of respondents

complexity of tasks

amount of information required per respondent

topic sensitivity.
Activity 4
Scenario
1 You have just received a brief for a
research project from a regional bus
company. They require the research to
be conducted within a one-week period
focussed on a clearly defined target
market of 18 to 55-year-olds who live in
the regional area but work outside of
this zone. The budget is fairly limited
and a structured questionnaire is
recommended to reduce interviewer
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Possible survey technique—and reasons
for choice
A computer-assisted telephone interview
survey provides a fairly good means of
sample control, a good response rate, and
quick, inexpensive administration from
data collection right through to data
preparation.
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Scenario
Possible survey technique—and reasons
for choice
bias. Due to time restrictions data needs
to be collected and ready for analysis
very quickly.
2 A local radio station wants to know how
many residents in the local area are
listening to a particular segment. They
need the information in the next two
weeks and their budget is limited.
A computer-assisted telephone interview
would give you:

a good response rate

good sample control over the local
area

a large number of interviews in a
short space of time for relatively
little cost.
Radio listening figures from a syndicated
source might also be used in this case if
they were current and inexpensive to
obtain, remembering that the company
needs information quickly and is on a
budget.
3 A museum wants you to conduct
research into the satisfaction level of
customers in relation to its range of
exhibits. The research has a time frame
of three months and budget is not an
issue. Some of the information sought is
sensitive in nature.
You could use either of two methods—a
self-administered mail questionnaire or a
personal interview.
A self-administered mail questionnaire
would give you good sample control
without interviewer bias and a high rate of
anonymity for the respondent is
maintained. However, response rates are
likely to be poor.
A personal interview on the other hand
would give even better sample control
because you would be talking to
customers who are actually in the
museum. The response rate is likely to be
high and the flexibility of the
questionnaire will be greater. Unless the
information you are seeking is of a
sensitive nature, you will be better off
with the personal interview.
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4 A retailer who sells directly through the
Internet wants some customer feedback
on the effectiveness of their website.
As the customers are already familiar with
the Internet, a web-based survey would be
the quickest and least expensive to use.
The survey could be incorporated into the
site and would appear as the customer
logs on.
5 A leading soft drink manufacturer has
just launched a new product and wants
to determine the reaction to its new
advertising campaign.
A personal interview would give the best
results in this instance. The interviews
could be advertised and carried out in a
shopping mall. This medium would also
allow visual materials to be used and
allow for extended probing if warranted.
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Activity 5
Experiment
Field or laboratory?
1 Taste testing in a supermarket (controlled environment)
laboratory
2 On-air testing of ads on television
field
3 Testing advertising in a caravan
laboratory
4 Testing concepts in a focus group
laboratory
5 Testing new display for pest control products in a
supermarket
field
Activity 6
If consumer attitudes depend on a specific advertising message, the
dependent variable is consumer attitudes. The independent variable is the
advertising messages. Extraneous variables could be special sales
promotions by competitors, a colour advertisement that is used instead of
black and white, etc.
If the needs of the market depend on the features of a new mobile phone, the
dependent variable is the needs of the market. The independent variable is
the new mobile phone features. Extraneous variables could be the
introduction of a new paging system or a tax incentive by the government
for those who buy a new mobile phone.
If people visiting the store depend on what coupons and discounts are used,
the dependent variable is people visiting the store. The independent
variables are the coupons and discounts. Extraneous variables could be rainy
weather keeping people indoors, or a new marketplace opening down the
road.
If patronage depends on the quality of the amenities of the theme park, then
the dependent variable is the level of patronage and the independent variable
is the renovation of the amenities. Extraneous variables could include the
weather, the level of competition and the time of the year (eg, school
holidays).
Activity 7
The factors to consider in test market selection are:

population size

demographic composition and lifestyle considerations—are they
representative of the population of concern?
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
competitive situation—what similar products/services already exist
in this city?

media coverage and efficiency

media isolation

self-contained trading areas

over-used test markets

availability of scanner data.
Activity 8
The other types of information you can readily access free-of-charge include
median age, personal weekly income, percentage of full ownership of
housing and other selected characteristics. If you were purchasing
syndicated information, you could specify any required demographic areas
within your specified area of interest. Simply typing in ‘Newcastle’ into
your search engine will give you access to a wealth of information about
lifestyle, culture and business.
Using this information (together with the information available through the
Yahoo search engine), you should note the mix of population in the
Newcastle region as well as the local media coverage that makes this region
a good test market.
You can click on a number of countries for a wealth of information on
geography, government, economy, transportation, communications and
defence. Clicking on one of these options provides up-to-date information
on that particular country.
Check your progress
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(b)
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(c)
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(b)
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(a)
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(b)
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(d)
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