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Chapter
7
Market Research and Market Information
McGraw-Hill/Irwin
©2007 by the McGraw-Hill Companies, Inc. All rights reserved.
Chapter Goals

Market research, the need and the forms
 Information systems increase the usefulness of data
 Growing role of technology in marketing research
 Conducting a market research project

Gathering and using information about competitors
The Marketing Research Function
 Marketing
research is needed before a product is
introduced, and on a regular basis throughout its life.
 Research
is not limited to products; it is conducted to answer
questions about potential market segments, entire stores,
brand names, advertising, prices, and every other aspect of
marketing.
Uses of Marketing Research (where
organizations use research)
Markets
Market Segments
Marketing
Mix
Expectations
Satisfaction
Competition
Uses of Marketing Research (where
organizations use research)

Market and market segments: research can be used to
clarify the need, identify and describe exactly who has it, and
determine the strength of the need in various segments.
 Marketing
mix: even when a marketer is confident that a
need exists, it is not always clear what form a product should
take to satisfy the need, at what price it will sell, how
prospects should be informed about it, or in what fashion it
should be distributed.
 Competition:
finding out what current and potential
competitors are doing and how it may affect a firm’s strategy.
 Expectations
and satisfaction: it is important to know what
customer expect and how well those expectations are being
satisfied.
Marketing Research
Consists
of all of the activities that enable an
organization to obtain the information it needs to
make decisions about its environment, marketing
mix, and present and potential customers.
Marketing Research
The development, interpretation, and
communication of decision-oriented
information to be used in all phases
of the marketing process.
Marketing Research
 This
definition has two important implications:
 1-
Research plays a role in all three phases of the
management process in marketing: planning,
implementation and evaluation.
It recognizes the researchers’ responsibility to develop
information, which includes defining problems, gathering and
analyzing data, interpreting results, and presenting the
information in such a way that it is useful to managers.
 2-
Scope of Marketing Research
Activities (Sources of information)
Syndicated
Services
Decision
Support
System
Marketing
Information
System
Marketing
Research
Activities
Marketing
Research
Project
Scope of Marketing Research
Activities ( Sources of information)
 Marketing
managers make use of four main sources of
information:
 1) Syndicated services: regularly scheduled reports that
are produced and sold by research firms. They are called
syndicated services because they are developed without a
particular client in mind, but are sold to anyone interested.
 2) Marketing information system: an internally coordinated
activity that provides continuous, scheduled reports.
Marketing information systems (MkIS) rely heavily on
internal data such as sales reports, inventory amounts and
production schedules, but they also often include information
purchased from research firms.
Scope of Marketing Research
Activities
 3)
Decision support systems: it is also internal , but it is
interactive. It permits a decision maker to interact directly
with data through a personal computer to answer a specific
question.
Marketing research project: conducted by a company’s
own staff or by an independent research firm to answer a
specific question.
 4)
Marketing Information Systems
On-going, organized procedure
to generate, analyze, disseminate,
store, and retrieve information
for use in making
marketing decisions.
Marketing Information Systems
Marketing Information Systems
Benefits of a MkIS:
 a.
Provides a fast and more complete information flow for
decision making.
 b.
Allows a wider variety of data to be collected and used.
 c.
Allows continual monitoring of marketing mix
performance.
 d.
Provides benefits to firms of all sizes.
Decision Support Systems
Computer-based
Allows
Interaction
with Data
Uses various
methods of analysis
Integrates, analyzes
interprets
information
Decision Support Systems
Decision Support Systems
 Decision
support systems (DSS)—a computer-based
procedure allowing managers to interact directly with data
using a variety of methods to integrate, analyze, and
interpret information.
 MkIS
and DSS both rely on a wide variety of data.
 They are both able to analyze data.
 Unlike a MkIS, a manager using DSS can interact directly
with data to produce customized reports.
A
DSS complements instead of replaces an MkIS by adding
speed and flexibility to the research process.
 DSS has cost as a major drawback, which currently limits its
use to large firms.
Data
DATABASE
DATA
MINING
A set of related data that are organized,
stored, and updated in a computer.
Sophisticated techniques
capable of identifying
patterns and relationships
in masses of data
Data
Major Data Sources:
 1.Internal versus external:
Internally, data can come from the sales force, sales records,
marketing, manufacturing, etc.
Externally, information is available from hundreds of research
suppliers.
 2.Retail
scanners—electronic devices at retail checkouts
that read bar codes and provide relevant information with
regard to individual and combined purchases.
Marketing Research Projects
Marketing Research Procedure
Marketing Research Procedure
1- Define the objective: Researchers need a clear idea of
what they are trying to learn – the objective of the project.
2- Conduct a situation analysis: They analyze the company,
its market, its competition, and the industry in general. The
situation analysis is a background investigation that helps
refine the research problem.
Marketing Research Procedure
3- Conduct an informal investigation: consist of gathering
readily available information from people inside and outside
the company –middleman, competitors, advertising
agencies, and consumers.
The informal investigation is a critical step in a research
project because it will determine whether further study is
necessary.
4-Plan and conduct the formal investigation: the
researcher determines what additional information is needed
and how to gather it.
Marketing Research Procedure
4- Plan and conduct the formal investigation:
1SELECT SOURCES OF INFORMATION
Primary, secondary data or both can be used in an
investigation.
 a.
Primary data—new data gathered specifically for the
purposes at hand.
 b. Secondary data—data already gathered for some other
purpose and available for present use.
Sources of Information (sources of
secondary data)
Inside the company
SECONDARY
DATA
Outside the company
SOURCES OF SECONDARY DATA
 a.Records and reports from within the firm (inside the firm)
 b.Libraries
 c.Government (provider of demographic market information)
 d.Trade, professional, and business associations
Outside
 e.Private research firms
the firm
 f.Advertising media
 g.University research programs
 h.Websites of firms
Sources of Information
Cookies
PRIMARY
DATA
Scanner
Observation
Personal
Observation
Laboratory
Experimental
Field
Test
Market
Mail
Survey
Telephone
Face
to
Face
Internet
SOURCES OF PRIMARY DATA
 a.
 b.
 c.
Firm’s sales force.
Firm’s suppliers.
Current or potential customers.
2- SELECT A PRIMARY DATA-GATHERING METHOD
 There are three widely used methods of gathering primary
data: observation, survey and experimentation.
 Because
each method has strength and weaknesses, more
than one may be used at different stages of the project.
A. Observation method

Observation method: The observation method involves
collecting data by observing the actions of a persons. In
observation research there is no direct interaction with the
subjects being studied.
Information may be gathered by personal observation (the
researcher poses as a customer) or mechanical observation
(scanners, internet cookies…etc.)

Internet Cookies are special kind of observation. A cookie
is an inactive data file placed on a person’s computer hard
drive when that person visits particular website. A cookie
can record the visitor’s activities while connected to the
site.

For example, it can keep track of which pages on the site
are opened, how long the visitor remains at the site, the
links the visitor makes to other sides, and the site from
which the visitor came. Purchases can also be recorded on
a cookie.
 The
observation method has several merits. It can provide
highly accurate data about behavior in given situations.
Usually the parties being observed are unaware that they
are being observed, so presumably they behave in a normal
fashion. Also because there is no direct interaction with the
subject, there is no limit to how many times or how long a
subject can be observed. (advantages)
 However,
observation provides only information about what
happens, it can not tell why. It can not examine motives
attitudes or opinions.(limitations)
B-Survey method
Data-gathering form
Question wording
Response format
Questionnaire layout
Pretesting
Representative
Sample
Random samples
Convenience samples
 Survey
method consists of gathering data by interweaving
people. Surveys can be conducted in persons, by
telephones, by mail, or via the Internet.
Advantage of surveys :
 The information is first-hand. (the information comes directly
from the people you are interested in)
Limitations of surveys:
 Error bias may originate in survey construction and the
interview process.
 Surveys may be expensive, time consuming, and involve
problems with respondents (non-response, inability to
respond, misleading responses, etc.).
a) Face to face interviews (Personal
interviews)
Advantages:
 Are more flexible than phone or mail interviews
 More information (in-depth information) can be obtained
Limitations:
 Shopping mall intercept and focus groups are types of
personal interviews.
 High cost and time consuming nature.
 Interviewer bias. (an interviewer’s appearance, style in
asking questions, and body language can all influence a
respondent’s answers)
b) Telephone surveys
Advantages:
 Save time.
 Are relatively low cost and easy to administer.
Limitation:
 Require survey instrument to be short.
c) Mail surveys
Mail surveys involves sending a questionnaire to potential
respondents, asking them to complete, and having them
return it.
Advantages:
 Very economical and allows wide geographic spread.
 Lack of interviewer bias.
Limitations:
 Good mailing lists may be hard to obtain.
 Low response rates and low level of control.
A similar but alternate medium is the Internet; its use in
research data collection is increasing.
C-Experimental methods
 An
experiment is a method of gathering primary data in
which the researcher is able to observe the results of
changing one variable in a situation while holding all other
condition constant.
 May
be done in the lab or the field. In marketing research, a
laboratory is an environment in which the researcher has
control over all the relevant conditions.
A common type of field experiment is test marketing.
 Test marketing: A method of demand forecasting in which a
firm markets its new product in a limited geographic area,
measures the sales, and then, projects the company’s sales
over a larger area.
 Colgate-Palmolive introduced Palmolive Optims shampoo
and conditioner in Philippines, Australia, Mexico, and Hong
Kong. When sales proved satisfactory, distribution was
expanded to large portions of Europe, Asia, Latin America,
and Africa.
3- PREPARE FORMS FOR
GATHERING DATA
Researchers use a questionnaire or form on which there are
instructions and spaces to record observations and
responses.
 Carefully choose question wording: if a question is
misunderstood, the data it produces are worthless.
 Determine response format: yes/no, multiple choice,
agree-disagree scale, open ended.
 Design questionnaire layout: begin with easier questions
then move to difficult questions.
 Pre-test selected forms/questionnaires: pretest on a
group of respondents to identify problems and make
corrections.
4-
PLAN THE SAMPLE
It is unnecessary to survey or observe every person who could
shed light on a research problem. It is sufficient to collect data
from a sample if it is representative of the entire group.
Obtaining reliable data with this method requires the right
technique in selecting the sample. Sampling techniques:
 a.Random samples—selected so that every member of the
universe has an equal chance of being included.
 b.Convenience samples—non-random samples
determined by ease of access.
5-
COLLECT THE DATA
Collecting primary data by interviewing, observation, or both
can be done by people or machines (video cameras, retail
scanners, audio tapes).
Limitations:
 Data gatherers are often part-time, inexperienced, untrained,
not motivated.
 Data gatherers may intentionally introduce false data.
5- Analyze the data and present a report:
Done by the researcher to identify relationships, trends, and
patterns in written and/or oral reports.
6- Conduct a follow-up:
Conduct a follow-up to determine if recommendations are
being used, the original problem was correctly defined, and
the project itself was on target.
Competitive Intelligence
Process of
gathering
and analyzing
public information
about competitors
Source of competitive intelligence:
 1.
Data bases created and sold by research firms.
 2.
Government reports.
 3.
Employees—your own (especially salespeople) or
those of competitors.
 4.
Observation.
 5.
The Internet.
Key Terms and Concepts

Marketing research
 Marketing information system
 Decision support system
 Database
 Data mining
 Retail scanners

Situational analysis
 Informal investigation
 Primary data
 Secondary data
 Observation method
 Cookies
 Survey
 Face-to-face interviews
Key Terms and Concepts

Focus group
 Telephone survey
 Mail survey
 Internet surveys
 Experiment
 Test marketing
 Competitive intelligence