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Market Research Professor Lawrence Feick University of Pittsburgh Outline • • • • • Definition: what is market research? Examples of market research problems Who does market research? Glossary: types of data, studies, variables Focus on focus groups, surveys, observation, experiments • Sampling • Market research in 1998 What is market research? • Collection and organization of information to be used for marketing decision making Examples of market research problems • • • • • • Target market selection Product studies Pricing studies Distribution studies Promotion studies Sales research Who does market research? • Managers or market researchers in the firm producing the product (clients) • Market research firms (suppliers) • Advertising agencies (agencies) • Organizations that produce market research information as a byproduct of other activities The Largest Market Research Firms 1997 Firm 1997 Revenue 1997 Rank A C Nielson Corp $1,392MM 1996 Rank 1 1 2 2 3 3 4 4 5 6 6 5 (20% US) IMS Health $981MM (40% US) IRI (Information Resources Inc.) $456MM Nielson Media $359MM (80% US) (all US) VNU Marketing Info. Services $285 Research International $268MM (75% US) (9 % US) Source: Advertising Age May 25, 1998 Market research suppliers: types of services • Custom research • Syndicated research A glossary of research terms • Types of data • Types of studies • Type of variables Types of data • Secondary data – collected for another purpose – there is always relevant data available – sources of secondary data • Primary data – collected to answer the current question Types of studies • Quantitative – quantity data: amounts, means, percentages – surveys, experiments, observation methods • Qualitative – richness, depth of understanding – directional, not quantified results – depth interviews, focus groups Types of variables • Independent variable – a variable that has an effect on another – a predictor or explanatory variable • Dependent variable – a variable that is affected by another • Examples: – purchase patterns and income Focus on: Focus Groups Focus groups • • • • Most frequently used qualitative method Involves moderated group discussion Typically 1.5 hours Example usage: product concept testing, name tests Focus on: Surveys Surveys • Data collected by asking questions • Art and science of asking questions • Descriptive technique that yields: – averages: potato chip consumption – relationships: is potato chip consumption related to age? to income? Interviewer-administered questionnaires • Personal interview surveys • Telephone surveys Self-administered questionnaires • Mail surveys • Fax surveys • Computer surveys Comparing methods of collecting survey data Criterion Response rate Cost per completion Complicated questions Ability to probe Avoid question bias Avoid interviewer bias Protect respondent anonymity Mail, fax Telephone Personal Radisson Hotels Customer Satisfaction Survey Radisson Hotels Customer Satisfaction Survey Architectural Digest 1998 Rate Card Survey: First page Architectural Digest 1998 Rate Card Survey: Last page Focus on: Observation Observation • Data collected by recording information • Avoid bias from contact that influences responses • UPC scanners, Nielson Media’s black boxes, hidden cameras Focus on: Experiments Experiments • Involve manipulated independent variables – provide insight into cause and effect • Data collected with surveys and observation • Package design tests, ad copy tests, test markets Sampling: an aside • Population • Census versus sample • Types of samples – probability samples – nonprobability samples • Sampling and statistics Market research in the late 1990s: linked data • Supermarkets loyalty cards – purchase data from scanners – demographic data from membership – tailored promotions to members, neighborhoods • Reader’s Digest direct mail system – tailored mailings based on expected response and expected profitability – uses purchase data, survey data, purchased lists Market research in the late 1990s: single source data • Uses a consumer panel • Combines: – demographics from surveys – observed black box data – observed scanner data • Provides linkages among: – customer demos, media habits, purchases • Split cable experiments Market research in the late 1990s: brand anthropology • Developing new ways to understand brand meaning in consumers – collages – thick description – in-home observation Market research: the bottom line • Market research defined--reprise – Collection and organization of information to be used for marketing decision making • Market research, to be useful, – focuses on manager’s problems – answers the right questions – affects decision making