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Unit 2: Reaching Your Market Chapter 7 Marketing Research Learning Goals Identify three areas of marketing research Give examples of five ways to collect primary data Identify five sources for secondary data Explain the bias that can occur with different types of marketing research Learning Goals Describe how information technology is used in marketing research Identify and analyze three trends that affect marketing Explain the benefit of a sales forecast Summarize reasons why marketing research might lead to wrong conclusions or actions Day 1 Response Journal What kinds of information do you think marketers want to know about you? ***Save As Oct 23 in your Response Journal Folder*** Marketing Research According to the marketing concept, the best way to make a profit is to meet customers’ needs and wants You also want to do a better job meeting those needs than your competitors do So … How do you learn about customer needs and wants? Where do you get information to decide on a target market? How do you learn about the competition? How do you learn about new opportunities to expand the business? The answer to these questions is _________________ Market Research Marketing Research Market Research is the gathering information to make marketing decisions Can range from very simple and inexpensive to very complex and costly Read the examples in paragraph 2 & 3 on page 91 Market Research is conducted in many areas This chapter will focus on research in 3 areas; 1. Customers 2. Competition 3. Opportunity Three Areas of Marketing Research Marketing Research Purpose Sample Question Customer Learn about customers so What is my customers’ that the company can favourite snack food? meet their needs Competition Learn about competition so that the company can beat the competition Does my competitor’s product have better features than mine? Opportunity Learn about new opportunities so that the company can grow Which market is growing the fastest? Types of Data Information is often called data There are two broad categories of data; 1. Primary Data Collected for and about a specific business Always collected first hand Can be qualitative or quantitative Qualitative data uses research questions that require judgment from people • Open ended questions – “Describe the taste of the pop you just sampled?” Quantitative data is based on facts and figures and can be numerically analyzed • Closed ended questions - Yes or No, Multiple Choice, Always/Sometimes/Never, etc. Types of Data 2. Secondary Data Collected for someone else or for nonmarketing reasons, but is available for all to use Secondhand data E.g. the government collects data on population that business could use Usually quicker and less expensive to gather If the info you need already exists, there is no need to go through the time and expense of collecting it yourself Collecting Primary Data There are 5 ways to collect primary data; 1. Observation 2. Interview 3. Survey 4. Diaries 5. Experiment Collecting primary data is usually expensive and time-consuming 1. Observation Involves watching customers and then recording their behaviour Read the example in the first paragraph on page 93 Video cameras are often used so that the customers don’t know they are being watched Another form of observation is the Secret Shopper a person hired by a company _________________; to visit its place of business and observe the quality of service (posing as a customer) The employees don’t know the secret shopper is observing them The secret shopper then reports back to the company, especially noting any problems 2. Interview An _____________ is a formal meeting Interview between two or more people, during which questions are asked of one person Asking in-depth questions of customers to gain insight into their thoughts, opinions, and reactions to products 2. Interview A variation of an interview is the ________________ Focus Group A focus group is a small group of consumers who discuss topics of interest with a researcher An interactive interview; the researcher observes and collects info as the members of the focus group answer questions and/or use the product A key component of the focus group is the ______________ Moderator The moderator asks questions and focuses the discussion Members of the focus are chosen to represent the target market Nike Focus Group Example 2. Interview ______ Bias is a prejudice for or against something Bias can be introduced through tone of voice, facial expressions, or body language Bias can also be introduced though the questions asked E.g. “Lots of people like protein bars. Do you like protein bars?” • An unbiased version of the above questions would be “What is your opinion of protein bars?” 3. Survey A ___________ is an organized set of Survey questions asked to a significant number of people Can be conducted in person, over the phone, by mail or through the Internet A survey is given to a sample of people chosen represent the larger market Read the example in paragraph 2 on page 94 The answers from all surveys are then statistically analyzed 4. Diaries A diary is a record of your thoughts, activities or plans Diaries are used to collect specific information that research participants keep for a ____________ (a week, a month, etc.) Set Time Researchers most often use diaries to … Study how people __________________ Use Their Time and ________________________ Spend Their Money 4. Diaries Diaries have two formats; 1. Open Format Allows participants to write their own responses Gives more feedback to researchers Labour intensive to analyze responses, and therefore too expensive for most companies to use 2. Forced-Choice Response Participants pick an answer from the alternatives outlined (similar to multiple choice) Much easier to analyze Does not allow for any additional information 5. Experiment In the experiment method, the researcher sets up an actual experiment of some kind and later compares the results Read the example in paragraph 7 on page 94 Procedures and requirements of scientific accuracy must be followed A ______________ is a common experiment Taste Test Coke Vs. Pepsi Taste Test Who Collects Primary Data? Primary data can be collected by; An individual Businesses Many businesses have their own market research departments Market research firms Businesses can also hire a market research firm to do the research for them E.g. A.C. Nielson, Ipsos Canada, etc. Day 1 Assigned Work Students please complete the following; K & U Questions #1 & 2 on page 104 Thinking Questions #1 & 2 on page 104 Application Questions #1 & 2 on page 104 *** Save As Ch 7 Day 1 in your Unit 2 folder *** Day 2 Response Journal What surveys have you taken in the past? List. Why do you believe that people aren’t always truthful when answering survey questions? ***Save As Oct 26 in your Response Journal Folder*** Surveys Closed-Ended Questions which Most surveys use _________________________ ask you to select an answer from two or more choices Pros Quick and simple for consumers to answer Easy to sort and analyze for researchers misinterpret Closed-ended questions usually take on one of the following forms; Yes/No Multiple Choice Agree/Disagree Check all the Apply Rate on Scale Surveys Closed Ended Questions – Examples Do you drink pop more than once a week? Yes No I would buy Tide laundry detergent again. Agree Uncertain Disagree Surveys From the list of soft drinks below, circle the kind you would most prefer to drink. a) Pepsi b) Coca-Cola c) Dr. Pepper d) Bark’s Root Beer e) Other What do you look for when you shop for a DVD player? (check off all that apply). Simple remote Ease of use Plays MP3s Brand name Multi-disc Warranty Other Surveys Which brands of soap have you purchased in the last year? (check off all that apply). Dove Irish Spring Ivory Jergens Lever 2000 Other Rate our service using the following scale. Poor Cleanliness Friendly staff Value 1 1 1 Excellent 2 2 2 3 3 3 4 4 4 5 5 5 Surveys Occasionally surveys will use _______________________ Open-Ended Questions that allow the respondents to develop their own answers Because open ended questions are hard to analyze, researchers only use them in special circumstances Respondents also tend to resist open ended questions because they take more time to answer Surveys Open Ended Questions – Examples What do you like most about this flavor of soft drink? What words do you associate with each of the following flavours: Cola, Root Beer, Grape, Orange and Ginger Ale? List your top 3 soft drink flavours. Surveys When researchers conduct surveys they collect from a ____________________ of their target Random Sample market population, thereby giving each member an equal chance of being selected If a sample does not accurately represent the target market, then the results may be misleading and the sample is said to be __________ Biased If the survey sample is truly random, then the results can be projected onto the entire market Survey Examples 5. Surveys The 5 common problems that often occur when creating survey questions are asking … A leading question Two questions in one An unanswerable question An ambiguous question A nonexhaustive question Surveys Leading Question A question phrased in such a way as to suggest the desired answer Two Questions in One A question that requires two separate answers The question should be split into two Unanswerable Question A question that is impossible to answer Surveys Ambiguous Question A question that has more than one possible interpretation or meaning Nonexhaustive Question A question or answers that accompany the question is incomplete Surveys Common Problem Examples Have you ever been caught surfing inappropriate websites at work? Leading question How much time do you spend watching TV and doing housework? Two questions in one When was the first time you saw a commercial for our product? Unanswerable question Surveys Why is our product better than our competitor’s? Leading question How much do you pay for entertainment? Ambiguous question How much money do you spend on fast food weekly? $5 $10 $15 $20 Nonexhaustive question (answers) How much do you think the average customer spends monthly on clothing? Unanswerable question Surveys How much money do you spend on gas and groceries weekly? Two questions in one Where do you use All Around the House cleaner most? Bathroom Kitchen Laundry Room Nonexhaustive question (answers) Why do you think our cereal is the best tasting one on the market? Leading question Day 2 Assigned Work Students please complete the following; Create 5 closed-ended and 2 open-ended questions that would help you gather data on teenage shopping habits *** Save As Ch 7 Day 2 in your Unit 2 folder *** Day 3 Response Journal How many different frequent shopper or reward program cards can you list? Who do you believe benefits the most from these types of cards – the consumer or the company? And why? ***Save As Oct 27 in your Response Journal Folder*** Sources of Secondary Data Secondary data can be found in a variety of formats, including; Newspapers Magazines Journals Databases Websites Information technology has made it much easier to find and analyze secondary data Sources of Secondary Data A ________________ is a computerized file Database of information Database software enables you to find the information you need quickly and easily analyze it Databases are often accessible through the Internet E.g. A customer database will contain a file for each customer. Each file will contain info such as their name, address, phone number, email and a list of purchases Sources of Secondary Data There are 5 categories of sources for secondary data; 1. Business records 2. Government databases 3. Private databases 4. Libraries 5. The Internet 1. Business Records Every business collects data That data includes; Sales records Customer data Financial statements Marketing cost records Analyzing company data to find answers to questions is called ____________________ Data Mining 2. Government Databases Statistics Canada collects large amounts of data about … The economy Population Businesses Federal, Provincial, and Municipal governments also collect data Much of this data is available online 3. Private Databases The following groups collect information in private databases; Businesses Market research firms Trade associations Chambers of commerce 3. Private Databases Some businesses develop _____________________ Industry Publications An industry publication is a magazine or newsletter that focuses on a specific industry E.g. The Beverage Digest Often gathers and publishes market information 3. Private Databases A _______________________ is an Trade Association organization of people in a specific type of business The members of a trade association work together to help each other succeed Often collects data about its members and its businesses Often publishes the data in the association magazine or newsletter, or on its website 3. Private Databases Another source of information are local and provincial ________________________ Chambers of Commerce A Chamber of Commerce is a group of businesses whose primary purpose is to promote business in their area Often collects marketing information and information about other businesses in the area 4. Libraries Libraries give you access to; Databases Government data Internet sources Printed resources Such as books, business directories, magazines, journals, newsletters, and newspaper articles 5. Internet Internet search engines make all types of market research easier especially in areas of competitor research To find marketing information, visit the following types of websites; Trade associations Magazine Your competitors Sources of Secondary Data Source Examples Your business records Customer records, sales records, financial statements, promotional campaign records Government databases Statistics Canada, Industry Canada, Office of Consumer Affairs Private databases Marketing research companies, trade associations, chambers of commerce Libraries Books, industry publications Internet Search engines, company websites, trade association websites Marketing Research Process Marketing research can be conducted informally Read the examples in paragraph 6 on page 97 Marketing research can also be conducted formally The formal marketing research process is similar to scientific research Both require you to develop a _______________; Hypothesis a statement that can be tested and proved either true or false Marketing Research Process Marketing research can be organized into eight steps. 1. Define the problem 2. Conduct background research 3. State a hypothesis 4. Develop a research plan 5. Collect data 6. Analyze the data 7. Draw conclusions 8. Make recommendations See figure 7-7 on page 98 Day 3 Assigned Work Students please complete the following; K & U Questions #8 & 10 on page 104 Read the Windigo Catering Profile on pages 102 – 103 and answer the 2 corresponding questions *** Save As Ch 7 Day 3 in your Unit 2 folder *** Day 4 Response Journal In your own words, describe what you believe a fad is. List a minimum of 3 examples of products or services that you believe were/are fads. ***Save As Oct 28 in your Response Journal Folder*** Trend Research One of the major goals of marketing is to spot business opportunities One way to do this is to look for new trends In general, a __________ is a direction of Trend movement A ___________________ is direction of Marketing Trend movement of consumer behaviour Trend research often combines research on customers, competition, and opportunity in order to determine marketing trends Trend Research Trend areas of interest to marketers include; 1. Social trends 2. Demographic trends 3. Product trends The above trends affect consumer behaviour New trends bring new business opportunities Businesses that find new trends first are often the most successful 1. Social Trends Social trends are changes in ____________ Society Often lead to changes in consumer behaviour E.g. more households consisting of one person has led to greater need for more single portion convenient food 2. Demographic Trends Demographic trends are changes in the _______ Size of segments of the ____________ Population Examples; An increase in people over the age of 65 A growing immigrant population These trends lead to new consumer needs such as; More services for older Canadians • Health care, snow removal, meal delivery, etc. More publications in different languages 3. Product Trends Product trends refer to the direction of development of ____________ Products E.g. trend in electronics towards wireless, trend in TVs towards large flat screens, and trends in snack foods towards bitesized pieces 3. Product Trends A trend and a fad are NOT the same A ___________ is a significant change that Trend lasts an average of ten years and affects a large number of people A ______ Fad is something that is very popular for a short period of time then almost or completely disappears Trend Researchers Some companies specialize in giving marketing advice to businesses based on their trend research Read the example in paragraph 1 on page 100 Trend Hunters – 2015 Trend Predictions Sales Forecasting Read paragraph 2 on page 100 A _______________ Sales Forecast is a prediction of future sales based on past sales and an analysis of the market for a specific time period Requires a business to evaluate past sales, review current sales and determine future growth Sales forecasts may be … Quantitative based on facts and figures Qualitative based on judgment What Is a Sales Forecast? Both internal factors (within the company) and external factors (outside the company) can impact the sales forecast The simplest method for completing a sales forecast is to use previous sales and add a percentage of the sales increase Past Sales + Percentage increase factor = Sales Forecast Factors Impacting Sales Forecasts Internal Factors External Factors • Inventory shortages • Economy • Price changes • Political events • Problems with labour • Population changes • Changes in the • Weather distribution channels • Seasonality of the • Sales force changes business or product Is Marketing Research Always Right? Marketing research results can be either useful or misleading E.g. Misleading - customers can change their mind between the time you did your research and the time your new product reaches the market Sometimes the usefulness of marketing research depends on the person interpreting the results Is Marketing Research Always Right? Some reasons why market research can be misleading are: Error in estimating target population Stating the target market as larger or smaller than it actually is Error in selecting population sample E.g. assuming an old telephone directory has all current business listing, when in reality new businesses will have moved in and others closed Survey errors Structure errors (poor questioning) and language errors (vague, biased or assumes certain knowledge) Is Marketing Research Always Right? Errors in measurement E.g. failure to rotate answers for a question can create bias, as respondents tend to select the first few answers from a list and overlook the others Errors in data analysis E.g. simple math errors (adding numbers up incorrectly) Reporting errors Improperly representing the research findings in the report Day 4 Assigned Work Students please complete the following; Complete the Fad or Trend? Activity Worksheet Instructions for this activity are posted on ClassNet under Tasks A hard copy of the student worksheet will be provided to you