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Marketing: An Introduction

Thirteenth Edition

Chapter 4

Managing Marketing Information to Gain Customer Insights

Learning Objectives (1 of 4)

4-1. Explain the importance of information in gaining insights about the marketplace and customers.

4-2. Define the marketing information system and discuss its parts.

4-3. Outline the steps in the marketing research process.

This chapter explains the importance of information in gaining insights about the marketplace and customers, defines the marketing information system, and discusses its parts. It also outlines the steps in the marketing research process.

Learning Objectives (2 of 4)

4-4. Explain how companies analyze and use marketing information.

4-5. Discuss the special issues some marketing researchers face, including public policy and ethics issues.

The chapter also explains how companies analyze and use marketing information and discusses the special issues some marketing researchers face, such as public policy and ethics issues.

First Stop: The LEGO Group Digging Out Fresh Customer Insights

The LEGO Group’s marketing research helped the brand to recast its classic, colorful bricks into modern, tech-rich play experiences.

The LEGO Group’s innovative marketing research produced lots of “Aha! Moments,” helping the brand to recast its classic, colorful bricks into modern, tech-rich play experiences for children around the world.

The LEGO Group uses marketing research- lots and lots of it - to dig out fresh customer insights, then uses the insights to create irresistible play experiences for children around the world. LEGO is now the world’s number-one toy maker.

Thus, over the past decade, thanks to customer insight-driven marketing research, The LEGO Group has reconnected with both its customers and the times.

As one analyst concludes, “In the last 10 years, LEGO has grown into nothing less than the Apple of Toys: a profit-generating, design-driven miracle built around premium, intuitive, highly covetable [play experiences that its young] fans can’t get enough of.”

Learning Objective 4-1

Explain the importance of information in gaining insights about the marketplace and customers.

Marketing Information

Customer needs and motives for buying are difficult to determine.

Required by companies to obtain customer and market insights

Generated in great quantities with the help of information technology and online sources

Most marketing managers are overloaded with data and often overwhelmed by it. Marketers don’t need more information; they need better information. And they need to make better use of the information they already have.

The real value of marketing research and marketing information lies in how it is used—in the customer insights that it provides.

Today’s “Big Data”

Big data refers to the huge and complex data sets generated by today’s sophisticated information generation, collection, storage, and analysis technologies.

Big data presents marketers with both big opportunities and big challenges. Companies that effectively tap this glut of big data can gain rich, timely customer insights.

Far from lacking information, most marketing managers are overloaded with data. Accessing and sifting through so much data is a daunting task. For example, when a large consumer brand such as Coca-Cola or Apple monitors online discussions about its brand in Tweets, blogs, social media posts, and other sources, it might take in a stunning 6 million public conversations a day, more than 2 billion a year.

Customer Insights (1 of 2)

Fresh marketing information-based understandings of customers and the marketplace

Become the basis for creating customer value, engagement, and relationships

Customer insights teams collect customer and market information from a wide variety of sources.

Many companies are now restructuring their marketing research and information functions. They are creating customer insights teams which collect customer and market information from a wide variety of sources, ranging from traditional marketing research studies to mingling with and observing consumers to monitoring consumer online conversations about the company and its products. This information is then used to develop important customer insights from which the company can create more value for its customers.

Customer Insights (2 of 2)

Key customer insights have helped make social scrapbooking site, Pinterest, wildly successful with its 70 million users.

Pinterest’s research uncovered a key customer insight: Many people want more than just Twitter- or Facebook-like places to swap messages and pictures.

Thanks to this unique customer insight, Pinterest has been wildly popular. Today, more than 70 million Pinterest users collectively pin more than 5 million articles a day and view more than 2.5 billion Pinterest pages a month. In turn, more than a half-million businesses use Pinterest to engage and inspire their customer communities.

Marketing Information System (MIS)

Consists of people and procedures to

Assess information needs

Develop the needed information

Help decision makers use the information to generate and validate actionable customer and market insights

It is essential for companies to design effective marketing information systems that give managers the right information, in the right form, at the right time and help them to use this information to create customer value, engagement and stronger customer relationships.

Learning Objective 4-1 Summary

Marketing process starts with a complete understanding of the marketplace and consumer needs and wants

Turn consumer information into customer insights

Marketing Information System

Big Data

The marketing process starts with a complete understanding of the marketplace and consumer needs and wants. Thus, the company needs to turn sound consumer information into meaningful customer insights by which it can produce superior value for its customers. The company also requires information on competitors, resellers, and other actors and forces in the marketplace. Increasingly, marketers are viewing information not only as an input for making better decisions but also as an important strategic asset and marketing tool.

Learning Objective 4-2

Define the marketing information system and discuss its parts.

Figure 4.1 - The Marketing Information System

This figure shows that the MIS begins and ends with information users.

The information users are marketing managers, internal and external partners, and others who need marketing information. Marketers start by assessing user information needs. Next, they develop needed information using internal company databases, marketing intelligence activities, and marketing research. Finally, the MIS helps users to analyze and use the information to develop customer insights, make marketing decisions, and manage customer engagement and relationships.

Assessing Marketing Information Needs

A good MIS balances the information users would like to have against

What they really need

What is feasible to offer

Obtaining, analyzing, storing, and delivering information is costly.

Firms must decide whether the value of the insight is worth the cost.

Too much information can be as harmful as too little. Some managers will ask for whatever information they can get without thinking carefully about what they really need. Other managers may omit things they ought to know, or they may not know to ask for some types of information they should have.

The MIS must monitor the marketing environment to provide decision makers with information they should have to better understand customers and make key marketing decisions. It is important for firms to decide whether the value of the insights gained from the additional information is worth the cost of providing it. However, it is difficult to assess the value and cost.

Developing Marketing Information

Information needed can be obtained from

Internal databases

Competitive marketing intelligence

Marketing research

Marketers can obtain the needed marketing information from internal data, marketing intelligence, and marketing research. Each of these sources are discussed in greater depth in the following slides.

Internal Databases (1 of 2)

Macy’s customer database provides insights to personalize its customers’ shopping experiences.

Macy’s has assembled a vast shopper database containing reams of information on 33 million customer households and 500 million shopper transactions a year. Individual customer data include demographics, in-store and online purchases, style preferences, personal motivations, and even browsing patterns at Macy’s Web, mobile, and social media sites.

Internal Databases (2 of 2)

Internal databases are collections of consumer and market information obtained from data sources within the company network.

Internal databases usually can be accessed more quickly and cheaply than other information sources, but they also present some problems. Because internal information is often collected for other purposes, it may be incomplete or in the wrong form for making marketing decisions. Data also ages quickly; keeping the database current requires a major effort. Finally, managing and mining the mountains of information that a large company produces requires highly sophisticated equipment and techniques.

Competitive Marketing Intelligence (1 of 2)

Systematic monitoring, collection, and analysis of information

About consumers, competitors, and developments in the marketing environment

Techniques

Observing consumers firsthand

Quizzing the company’s own employees

Benchmarking competitors’ products

Conducting online research

Monitoring social media buzz

The goal of competitive marketing intelligence is to improve strategic decision making by understanding the consumer environment, assessing and tracking competitors’ actions, and providing early warnings of opportunities and threats.

Good marketing intelligence can help marketers gain insights into how consumers talk about and engage with their brands. Many companies send out teams of trained observers to mix and mingle personally with customers as they use and talk about the company’s products. Other companies, like MasterCard, have set up sophisticated digital command centers that routinely monitor brand-related online consumer and marketplace activity.

Competitive Marketing Intelligence (2 of 2)

Offers insights about consumer opinions and their association with the brand

Provides early warnings of competitor strategies and potential competitive strengths and weaknesses

Helps firms to protect their own information

Raises ethical issues

Companies can monitor competitors’ Web sites and use the Internet to search specific competitor names, events, or trends and see what turns up. Tracking consumer conversations about competing brands is often as revealing as tracking conversations about the company’s own brands.

Companies can obtain important intelligence information from suppliers, resellers, and key customers. Intelligence seekers can pour through any of the thousands of online databases. For example, the U.S. Security and Exchange Commission’s database provides a huge stockpile of financial information on public competitors, and the U.S. Patent Office and Trademark database reveals patents that competitors have filed.

Some intelligence gathering techniques may involve questionable ethics. With all the legitimate intelligence sources now available, a company does not need to break the law or accepted codes of ethics to get good intelligence.

Learning Objective 4-2 Summary

Marketing information system (MIS)

Assess information needs

Develop information

Internal databases, marketing intelligence, and market research

Analyze and use the information

The marketing information system (MIS) consists of people and procedures for assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights. A well-designed information system begins and ends with users.

The MIS first assesses information needs. The MIS primarily serves the company’s marketing and other managers, but it may also provide information to external partners. Then, the MIS develops information from internal databases, marketing intelligence activities, and marketing research. Internal databases provide information on the company’s own operations and departments. Such data can be obtained quickly and cheaply but often need to be adapted for marketing decisions. Marketing intelligence activities supply everyday information about developments in the external marketing environment, including listening and responding to the vast and complex digital environment. Market research consists of collecting information relevant to a specific marketing problem faced by the company.

Finally, the marketing information system helps users analyze and use the information to develop customer insights, make marketing decisions, and manage customer relationships.

Learning Objective 4-3

Outline the steps in the marketing research process.

Marketing Research

Systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization

Approaches followed by firms:

Use own research departments

Hire outside research specialists

Purchase data collected by outside firms

Companies use marketing research in a wide variety of situations. For example, marketing research gives marketers insights into customer motivations, purchase behavior, and satisfaction. It can help them to assess market potential and market share or measure the effectiveness of pricing, product, distribution, and promotion activities.

Figure 4.2 - The Marketing Research Process

Marketing research follows a process that has four steps: defining the problem and research objectives; developing the research plan; implementing the research plan; and interpreting and reporting the findings. Each of these stages is discussed in detail in the following slides.

Defining the Problem and Research Objectives

Exploratory research

Used to gather preliminary information

Helps to define problems and suggest hypotheses

Descriptive research

Used to better describe the market potential for a product or the demographics and attitudes of consumers

Causal research

Used to test hypotheses about cause-and-effect relationships

Marketing managers and researchers must work together closely to define the problem and agree on research objectives. The manager best understands the decision for which information is needed, whereas the researcher best understands marketing research and how to obtain the information. Defining the problem and research objectives is often the hardest step in the research process.

After the problem has been defined carefully, the manager and the researcher must set the research objectives.

Managers often start with exploratory research and later follow with descriptive or causal research. The statement of the problem and research objectives guides the entire research process. The manager and the researcher should put the statement in writing to be certain that they agree on the purpose and expected results of the research.

Research Plan (1 of 2)

Outlines sources of existing data

Spells out

Specific research approaches

Contact methods

Sampling plans

Instruments that researchers will use to gather new data

Once researchers have defined the research problem and objectives, they must determine the exact information needed, develop a plan for gathering information efficiently, and present the plan to management.

Research objectives must be translated into specific information needs. For example, suppose that Chipotle Mexican Grill wants to know how consumers would react to the addition of drive-thru service to its restaurants. The proposed research might call for the following specific information:

Demographic, economic, and lifestyle characteristics of current Chipotle customers

Characteristics and usage patterns of the broader population of fast-food and fast-casual diners

Impact on the Chipotle customer experience

Chipotle employee reactions to drive-thru service

Forecasts of both inside and drive-thru sales and profits

Research Plan (2 of 2)

Should be presented in a written proposal

Topics covered in a research plan:

Problems and research objectives

Information to be obtained

How results will help decision making

Estimated research costs

Type of data required

The research plan should be presented in a written proposal. A written proposal is important when the research project is large and complex or when an outside firm carries it out.

The proposal should cover the management problems addressed, the research objectives, the information to be obtained, and how the results will help management’s decision making. The proposal should also include estimated research costs.

To meet the manager’s information needs, the research plan can call for gathering secondary data, primary data, or both.

Secondary Data (1 of 2)

Information that already exists

Collected for another purpose

Sources:

Company’s internal database

Purchased from outside suppliers

Commercial online databases

Internet search engines

Researchers usually start by gathering secondary data. The company’s internal database provides a good starting point. Companies can buy secondary data from outside firms that supply high-quality data to suit a wide variety of marketing information needs.

The company can also utilize the wide assortment of external information sources. Using commercial online databases, marketing researchers can conduct their own searches of secondary data sources. Internet search engines can also help in locating relevant secondary information sources. However, they can also be very frustrating and inefficient.

Secondary Data (2 of 2)

Advantages

Low cost

Obtained quickly

Cannot collect otherwise

Disadvantages

Potentially Irrelevant

Inaccurate

Dated

Biased

Secondary data can usually be obtained more quickly and at a lower cost than primary data. Also, secondary sources can sometimes provide data an individual company cannot collect on its own, like data that is not available directly or would be too expensive to collect. For example, it would be too expensive for Red Bull’s marketers to conduct a continuing retail store audit to find out about the market shares, prices, and displays of competitors’ brands.

However, secondary data can also present problems. Researchers can rarely obtain all the data they need from secondary sources. For example, Chipotle will not find existing information regarding consumer reactions about new drive-thru service that it has not yet installed. Even when data can be found, the information might not be very usable.

The researcher must evaluate secondary information carefully to make certain it is relevant, accurate, up-to-date, and impartial.

Table 4.1 - Planning Primary Data Collection

Research Approaches	Contact Methods	Sampling Plan	Research Instruments
Observation	Mail	Sampling unit	Questionnaire
Survey	Telephone	Sample size	Mechanical instruments
Experiment	Personal	Sampling procedure	Blank
Blank	Online	Blank	Blank

This table shows that designing a plan for primary data collection calls for a number of decisions on research approaches, contact methods, the sampling plan, and research instruments. The following slides discuss each of these decisions in detail.

Research Approaches

Observational research

Gathering primary data by observing relevant people, actions, and situations

Ethnographic research: Sending trained observers to watch and interact with consumers in their natural environments

Survey research

Asking people questions about their knowledge, attitudes, preferences, and buying behavior

Experimental research

Selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses

Observational and ethnographic research yield the kinds of details that don’t emerge from traditional research questionnaires or focus groups. For instance, Fisher-Price has established an observation lab in which it can observe the reactions children have to new toys.

A wide range of companies now use ethnographic research. For example, Coors insights teams frequent bars and other locations in a top-secret, small-town location—they call it the “Outpost”—within a day’s drive of Chicago. The researchers use the town as a real-life lab.

Survey research is the approach best suited for gathering descriptive information. The major advantage of survey research is its flexibility. Surveys addressing almost any marketing question or decision can be conducted by phone or mail, in person, or online. The disadvantages of survey research are that people may be unwilling to respond to unknown interviewers or answer questions about topics they consider private.

Whereas observation is best suited for exploratory research and surveys for descriptive research, experimental research is best suited for gathering causal information. Experimental research tries to explain cause-and-effect relationships. For example, before adding a new sandwich to its menu, McDonald’s might use experiments to test the effects on sales of two different prices it might charge.

Primary Data

Landor researchers visit families, peeking into their refrigerators and diving deeply into their food shopping behaviors and opinions.

Landor researchers also shop with the families at their local supermarkets and look over their shoulders while they shop online. The families furnish monthly online reports detailing their shopping behaviors and opinions.

The Landor Families study provides rich behavioral insights for Landor clients such as Danone, Kraft Foods, and Procter & Gamble.

Mail, Telephone, and Personal Interviewing

Mail questionnaires are used to collect large amounts of information at a low cost per respondent.

Telephone interviewing gathers information quickly, while providing flexibility.

Personal interviewing methods include

Individual interviewing

Group interviewing

Mail questionnaires can be used to collect large amounts of information at a low cost per respondent. Respondents may give more honest answers to more personal questions on a mail questionnaire than to an unknown interviewer. However, mail questionnaires are not very flexible.

Telephone interviewing is one of the best methods for gathering information quickly, and it provides greater flexibility than mail questionnaires. Interviewers can explain difficult questions and, depending on the answers they receive, skip some questions or probe on others. However, the method introduces interviewer bias, which is the way interviewers talk, how they ask questions, and other differences that may affect respondents’ answers.

Personal interviewing takes two forms: individual interviewing and group interviewing. Individual interviewing involves talking with people in their homes or offices, on the street, or in shopping malls. Such interviewing is flexible. Group interviewing consists of inviting 6 to 10 people to meet with a trained moderator to talk about a product, service, or organization. Group interviewing is also referred to as focus group interviewing.

Some companies use immersion groups, which are small groups of consumers who interact directly and informally with product designers without a focus group moderator present. For example, The Mom Complex uses “Mom Immersion Sessions” to help brand marketers understand and connect directly with their “mom customers” on important brand issues.

Table 4.2 - Strengths and Weaknesses of Contact Methods

Blank	Mail	Telephone	Personal	Online
Flexibility	Poor	Good	Excellent	Good
Quantity of data that can be collected	Good	Fair	Excellent	Good
Control of interviewer effects	Excellent	Fair	Poor	Fair
Control of sample	Fair	Excellent	Good	Excellent
Speed of data collection	Poor	Excellent	Good	Excellent
Response rate	Poor	Poor	Good	blank
Cost	Good	Fair	Poor	Excellent

Source: Based on Donald S. Tull and Del I. Hawkins, Marketing Research: Measurement and Method, 7th ed.

(New York: Macmillan Publishing Company, 1993). Adapted with permission of the authors.

Online Marketing Research

Data is collected through

Internet surveys

Online focus groups

Web-based experiments

Tracking consumers’ online behavior

Increasingly, researchers are collecting primary data through online marketing research. The Internet is especially well suited to quantitative research. Advantages of Internet-based surveys are speed and low costs. Researchers can quickly and easily distribute surveys to thousands of respondents and responses can be almost instantaneous. Internet-based surveys also tend to be more interactive and engaging, easier to complete, and less intrusive.

A primary qualitative Internet-based research approach is online focus groups. For example, FocusVision’s InterVu service lets focus group participants at remote locations see, hear, and react to each other in real-time, face-to-face discussions.

Both quantitative and qualitative Internet-based research have some drawbacks. One major problem is controlling who’s in the online sample. To overcome such sample and context problems, many online research firms use opt-in communities and respondent panels. Alternatively, many companies are now developing their own custom social networks and using them to gain customer inputs and insights.

Online Behavioral and Social Tracking and Targeting

Online listening

Provides valuable insights into what consumers are saying or feeling about a brand

Behavioral targeting

Uses online consumer tracking data to target advertisements and marketing offers to specific consumers

Social targeting

Mines individual online social connections and conversations from social networking sites

Tracking consumers online might be as simple as scanning customer reviews and comments on the company’s brand site or on shopping sites such as Amazon.com. Or, it might mean using sophisticated online-analysis tools to deeply analyze the mountains of consumer brand-related comments and messages found in blogs or on social media sites. Online listening provides the passion and spontaneity of unsolicited consumer opinions.

In a practice called behavioral targeting, marketers use online data to target ads and offers to specific consumers. For example, if you place an Apple iPad in your Amazon.com shopping cart but don’t buy it, you might expect to see some ads for that very type of device the next time you visit your favorite ESPN site to catch up on the latest sports scores. Whereas behavioral targeting tracks consumer movements across online sites, social targeting mines individual online social connections and conversations from social networking sites. Instead of just having a Zappos.com ad for running shoes pop up because you’ve recently searched online for running shoes (behavioral targeting), an ad for a specific pair of running shoes pops up because a friend that you’re connected to via Twitter just bought those shoes from Zappos.com last week (social targeting).

Sampling Plan

A sample is a segment of the population selected to represent the population as a whole.

Decisions required for sampling design:

Sampling unit - People to be studied

Sample size - Number of people to be studied

Sampling procedure - Method of choosing the people to be studied

Marketing researchers usually draw conclusions about large groups of consumers by studying a small sample of the total consumer population. The sample should be representative of the population so that the researcher can make accurate estimates. Designing the sample requires three decisions. First, who is to be studied (unit)? Second, how many people should be included (size)? Finally, how should the people in the sample be chosen (procedure)?

Types of Samples

Probability samples:

Simple random sample

Stratified random sample

Cluster (area) sample

Nonprobability samples:

Convenience sample

Judgment sample

Quota sample

The different types of samples fall under two basic categories: probability samples and nonprobability samples.

Probability samples include the following.

Simple random sample: Every member of the population has a known and equal chance of selection.

Stratified random sample: The population is divided into mutually exclusive groups (such as age groups), and random samples are drawn

from each group.

Cluster (area) sample: The population is divided into mutually exclusive groups (such as blocks), and the researcher draws a sample

of the groups to interview.

Nonprobability samples include the following.

Convenience sample: The researcher selects the easiest population members from which to obtain information.

Judgment sample: The researcher uses his or her judgment to select population members who are good prospects for accurate

information.

Quota sample: The researcher finds and interviews a prescribed number of people in each of several categories.

When probability sampling costs too much or takes too much time, marketing researchers take nonprobability samples, even though their sampling error cannot be measured. The best method to use depends on the needs of the research project.

Research Instruments (1 of 2)

Questionnaires can be administered in person, by phone, by e-mail, or online.

Closed-ended questions

Open-ended questions

Mechanical instruments include

People meters

Checkout scanners

Neuromarketing

In collecting primary data, marketing researchers have a choice of two main research instruments: questionnaires and mechanical instruments.

A questionnaire is by far the most common instrument used for research. Closed-ended questions include all the possible answers, and subjects make choices among them. Open-ended questions allow respondents to answer in their own words. Open-ended questions are especially useful in exploratory research, when the researcher is trying to find out what people think but is not measuring how many people think in a certain way. Closed-ended questions, on the other hand, provide answers that are easier to interpret and tabulate. Researchers should use care in the wording and ordering of questions.

Mechanical instruments are used to monitor consumer behavior. For example, Time Warner’s MediaLab uses high-tech observation to capture the changing ways that today’s viewers are using and reacting to television and Web content.

Some researchers are applying neuromarketing, which involves measuring brain activity to learn how consumers feel and respond. For example, PepsiCo’s Frito-Lay worked with Nielsen’s NeuroFocus to assess consumer motivations underlying the success of its Cheetos snack brand.

Research Instruments (2 of 2)

Supermarket “smart shelves” track shopper demographics and purchases.

In collecting primary data, marketing researchers have a choice of two main research instruments: questionnaires and mechanical instruments.

Implementing the Research Plan

Data collection

Researchers should guard against various problems.

Techniques and technologies

Data quality

Timeliness

Processing the data

Check for accuracy

Code for analysis

Analyzing the data

Tabulate results

Compute statistical measures

The researcher next puts the marketing research plan into action. This involves collecting, processing, and analyzing the information. Data collection can be carried out by the company’s marketing research staff or outside firms. Researchers make sure that the plan is implemented correctly and must guard against problems with data collection techniques and technologies, data quality, and timeliness.

Researchers must also process and analyze the collected data to isolate important information and insights. They need to check data for accuracy and completeness and code it for analysis. The researchers then tabulate the results and compute statistical measures.

Interpreting and Reporting Findings

Responsibilities of the market researcher:

Interpret the findings

Draw conclusions

Report findings to management

Responsibilities of managers and researchers:

Work together closely when interpreting research results

Share responsibility for the research process and resulting decisions

The market researcher must interpret the findings, draw conclusions, and report them to management. The researcher should present important findings and insights that are useful in the major decisions faced by management.

The best research means little if the manager blindly accepts faulty interpretations from the researcher. In many cases, findings can be interpreted in different ways, and discussions between researchers and managers will help point to the best interpretations. Thus, managers and researchers must work together closely when interpreting research results, and both must share responsibility for the research process and resulting decisions.

Learning Objective 4-3 Summary

Marketing research process

Define problem

Set objectives

Develop and implement a research plan

Interpret and report findings

Secondary data – internal and external

Primary data collection

Observational

Survey

Experimental

The first step in the marketing research process involves defining the problem and setting the research objectives, which may be exploratory, descriptive, or causal research. The second step consists of developing a research plan for collecting data from primary and secondary sources. The third step calls for implementing the marketing research plan by gathering, processing, and analyzing the information. The fourth step consists of interpreting and reporting the findings. Additional information analysis helps marketing managers apply the information and provides them with sophisticated statistical procedures and models from which to develop more rigorous findings.

Both internal and external secondary data sources often provide information more quickly and at a lower cost than primary data sources, and they can sometimes yield information that a company cannot collect by itself. However, needed information might not exist in secondary sources. Researchers must also evaluate secondary information to ensure that it is relevant, accurate, current, and impartial. Primary research must also be evaluated for these features. Each primary data collection method—observational, survey, and experimental—has its own advantages and disadvantages. Similarly, each of the various research contact methods—mail, telephone, personal interview, and online—has its own advantages and drawbacks.

Learning Objective 4-4

Explain how companies analyze and use marketing information.

Customer Relationship Management (CRM) (1 of 2)

Managing detailed information about individual customers

Carefully managing customer touch points to maximize customer loyalty

Consists of software and analysis tools that

Integrate customer information from all sources

Analyze data in depth

Apply the results

Customer relationship management (CRM) is used to manage detailed information about individual customers and carefully manage customer touch points to maximize customer loyalty. CRM consists of sophisticated software and analysis tools from companies such as Salesforce.com, Oracle, Microsoft, and SAS that integrate customer information from all sources, analyze it in depth, and apply the results to build stronger customer relationships.

By using CRM to understand customers better, companies can provide higher levels of customer service and develop deeper customer relationships. CRM provides a 360-degree view of the customer relationship. Firms can use CRM to pinpoint high-value customers, target them more effectively, cross-sell the company’s products, and create offers tailored to specific customer requirements.

Big Data and Marketing Analytics

Marketing analytics consists of the analysis tools, technologies, and processes by which marketers dig out meaningful patterns in big data to gain customer insights and gauge marketing performance.

Customer Relationship Management (CRM) (2 of 2)

Kraft collects data from customers, then applies high-level marketing analytics.

Food products giant Kraft reaps a treasure trove of data from customers of its classic brands, then applies high-level marketing analytics to mine nuggets of customer insights. Marketers then use these insights to develop marketing strategies and tactics - from developing new products to creating more focused and personalized Web, mobile, and social media content.

Distributing and Using Marketing Information

MIS must make information readily available for decision making.

Routine information for decision making

Non-routine information for special situations

Intranets and extranets facilitate the information-sharing process.

The marketing information system must make information readily available to managers and others who need it, when they need it. In some cases, this means providing managers with routine information such as performance reports, intelligence updates, and reports on the results of research studies. But, marketing managers also require non-routine information to make on-the-spot decisions. For example, a sales manager having trouble with a large customer may want a summary of the account’s sales and profitability over the past year.

Many firms use company intranet and internal CRM systems to facilitate the distribution and use of marketing information. Companies are also increasingly allowing key customers and value-network members to access account, product, and other data on demand through extranets.

Learning Objective 4-4 Summary

Customer relationship management

Integrate, analyze, and apply individual customer data to build stronger relationships

Marketing analytics

Analysis, tools, technologies, and processes to gain customer insights

Information gathered in internal databases and through marketing intelligence and marketing research usually requires more analysis. To analyze individual customer data, many companies have now acquired or developed special software and analysis techniques—called customer relationship management (CRM)—that integrate, analyze, and apply mountains of individual customer data to gain a 360-degree view of customers and build stronger customer relationships. They apply marketing analytics to dig out meaningful patterns in big data, gain customer insights, and gauge marketing performance.

Marketing information has no value until it is used to make better marketing decisions. Thus, the MIS must make the information available to managers and others who make marketing decisions or deal with customers. In some cases, this means providing regular reports and updates; in other cases, it means making non-routine information available for special situations and on-the-spot decisions. Many firms use company intranets and extranets to facilitate this process. Thanks to modern technology, today’s marketing managers can gain direct access to marketing information at any time and from virtually any location.

Learning Objective 4-5 (1 of 2)

Discuss the special issues some marketing researchers face, including public policy and ethics issues.

Marketing Research in Small Businesses and Nonprofit Organizations

Obtaining good marketing insights

Secondary data collection

Observation

Surveys

Experiments

Responsibility of managers

Think carefully about the research objectives

Formulate questions in advance

Recognize the biases introduced by smaller samples and less skilled researchers

Conduct the research systematically

Just like larger firms, small organizations need market information and the customer insights that it can provide. Many marketing research techniques can be used by smaller organizations in a less formal manner and at little or no expense.

Small businesses and not-for-profit organizations can obtain good marketing insights through observation or informal surveys using small convenience samples. They can collect a considerable amount of information at very little cost online. They can scour competitor and customer Web sites and use Internet search engines to research specific companies and issues.

Although these informal research methods are less complex and less costly, they still must be conducted with care. Managers must think carefully about the objectives of the research, formulate questions in advance, recognize the biases introduced by smaller samples and less skilled researchers, and conduct the research systematically.

International Marketing Research

The problems faced include

Dealing with diverse markets

Finding good secondary data in foreign markets

Developing good samples

Reaching respondents

Handling differences in culture, language, and attitudes toward marketing research

The cost of research is high, but the cost of not doing it is higher.

International researchers follow the same steps as domestic researchers, from defining the research problem and developing a research plan to interpreting and reporting the results. However, they often face more and different problems.

In many foreign markets, the international researcher may have a difficult time finding good secondary data. Because of the scarcity of good secondary data, international researchers must collect their own primary data, and reaching respondents is not always easy in other parts of the world.

Cultural differences from country to country cause additional problems for international researchers. Language is the most obvious obstacle. Consumers in different countries also vary in their attitudes toward marketing research. Customs in some countries may prohibit people from talking with strangers.

Although the costs and problems associated with international research may be high, the costs of not doing it might be even higher. Once recognized, many of the problems associated with international marketing research can be overcome or avoided.

Intrusions on Consumer Privacy (1 of 2)

Failure to address privacy issues results in

Angry, less cooperative consumers

Increased government intervention

Best approaches for researchers:

Asking only for the information needed

Using the information responsibly to provide customer value

Avoiding sharing the information without the customer’s permission

Even though many customers feel positive about marketing research and believe that it serves a useful purpose, there are others who strongly resent or even mistrust marketing research.

Failure to address privacy issues could result in angry, less cooperative consumers and increased government intervention. As a result, the marketing research industry is considering several options for responding to intrusion and privacy issues. One example is the Marketing Research Association’s “Your Opinion Counts” and “Respondent Bill of Rights” initiatives to educate consumers about the benefits of marketing research and distinguish research from telephone selling and database building.

Most major companies have now appointed a chief privacy officer (CPO), whose job is to safeguard the privacy of consumers who do business with the company. If researchers provide value in exchange for information, customers will provide it. For example, Amazon.com customers do not mind if the firm builds a database of products they buy as a way to provide future product recommendations. The best approach is for researchers to ask only for the information they need, use it responsibly to provide customer value, and avoid sharing information without the customer’s permission.

Intrusions on Consumer Privacy (2 of 2)

Target made some customers uneasy by using their buying histories to figure out “private” things about them.

By studying the buying histories of women who’d previously signed up for its baby registries, Target found that it could develop a “pregnancy prediction” score for each customer based on her purchasing patterns across 25 product categories. It used this score to start sending personalized books of coupons for baby-related items to expectant parents, keyed to their pregnancy stages.

However, the strategy hit a snag when an angry man showed up at his local Target store, complaining that his high school–aged daughter was receiving Target coupons for cribs, strollers, and maternity clothes. “Are you trying to encourage her to get pregnant?” he demanded. The Target store manager apologized. But when he called to apologize again a few days later, he learned that Target’s marketers had, in fact, known about the young woman’s pregnancy before her father did.

Misuse of Research Findings

Few advertisers rig their research designs or deliberately misrepresent the findings.

Solutions:

Development of codes of research ethics and standards of conduct

Companies must accept responsibility to protect consumers’ best interests and their own.

Research studies can be powerful persuasion tools. But in some cases, research surveys appear to have been designed just to produce the intended effect. Few advertisers openly rig their research designs or blatantly misrepresent the findings. Most abuses are subtle stretches so as to avoid disputes over the validity and use of research findings.

Recognizing that surveys can be abused, several associations—including the American Marketing Association, the Marketing Research Association, and the Council of American Survey Research Organizations (CASRO)—have developed codes of research ethics and standards of conduct. For example, the CASRO Code of Standards and Ethics for Survey Research outlines researcher responsibilities to respondents, including confidentiality, privacy, and avoidance of harassment. Each company must accept responsibility for policing the conduct and reporting of its own marketing research to protect consumers’ best interests and its own.

Learning Objective 4-5 (2 of 2)

Marketing research for small businesses and not-for-profits

International marketing research

Intrusions on consumer privacy

Misuse of research findings

Some marketers face special marketing research situations, such as those conducting research in small business, not-for-profit, or international situations. Marketing research can be conducted effectively by small businesses and nonprofit organizations with limited budgets. International marketing researchers follow the same steps as domestic researchers but often face more and different problems. All organizations need to act responsibly concerning major public policy and ethical issues surrounding marketing research, including issues of intrusions on consumer privacy and the misuse of research findings.

Learning Objectives (3 of 4)

4-1. Explain the importance of information in gaining insights about the marketplace and customers.

4-2. Define the marketing information system and discuss its parts.

4-3. Outline the steps in the marketing research process.

Learning Objectives (4 of 4)

4-4. Explain how companies analyze and use marketing information.

4-5. Discuss the special issues some marketing researchers face, including public policy and ethics issues.