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Lamb, Hair, McDaniel

Chapter 9

Marketing Research

2012-2013

Chapter 9 Decision Support Systems and Marketing Research

Whether a research project costs $200 or $2 million, the same general process should be followed.

Explain the concept and purpose of a marketing decision support system

Define marketing research and explain its importance to marketing decision making

Describe the steps involved in conducting a marketing research project

Chapter 9 Decision Support Systems and Marketing Research

Discuss the profound impact of the Internet on marketing research

Discuss the growing importance of scanner-based research

Explain when marketing research should be conducted

Explain the concept of competitive intelligence

Chapter 9 Decision Support Systems and Marketing Research

Explain the concept
and purpose of a
marketing decision
support system

Marketing Decision Support Systems

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Marketing decision making relies on accurate and timely information. Good information is used to maximize sales, to use scarce company resources efficiently, and to prepare and adjust marketing plans.
The system most commonly used for gathering marketing information is called a marketing decision support system.

Marketing Decision
Support Systems

An interactive, flexible computerized information system that enables managers to obtain and manipulate information as they are making decisions.

Characteristics:

Interactive

Flexible

Discovery Oriented

Accessible

Chapter 9 Decision Support Systems and Marketing Research

Database Marketing

The creation of a large computerized file of customers’ and potential customers’ profiles and purchase patterns.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

The fastest-growing use of DSSs is for database marketing. It is usually the key tool for successful one-to-one marketing, which relies on very specific information about a market.

Define marketing research and explain its importance to marketing decision making

The Role of
Marketing Research

Chapter 9 Decision Support Systems and Marketing Research

The Role of
Marketing Research

Marketing research is the process of planning, collecting, and analyzing data relevant to a marketing decision.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Marketing research plays a key role in the marketing system. It provides data on the effectiveness of the marketing mix and insights for necessary changes.
Marketing research is a main data source for management information systems and DSS.

The Role of
Marketing Research

Diagnostic

Predictive

Descriptive

Gathering and presenting factual statements

Explaining data

Address “what if” questions

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Marketing research has three roles: descriptive, diagnostic, and predictive.

Descriptive: What is the historic sales trend in the industry? What are consumers’ attitudes toward a product?

Diagnostic: What was the impact on sales after a change in the package design?

Predictive: “What if questions,” such as how can descriptive and diagnostic research be used to predict the results of a planned marketing decision?

Management Uses of Marketing Research

Improve the quality of decision making

Trace problems

Focus on keeping existing customers

Understand the marketplace

Alert them to marketplace

trends

Gauge the value of goods

and services, and the level

of customer satisfaction

Chapter 9 Decision Support Systems and Marketing Research

Describe the

steps involved

in conducting

a marketing

research project

Steps in a Marketing
Research Project

Chapter 9 Decision Support Systems and Marketing Research

Exhibit 9.1
The Marketing Research Process

Collect

Data

Specify

Sampling

Procedure

Plan Design/

Primary Data

Define

Problem

Analyze

Data

Prepare/

Present

Report

Follow Up

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Exhibit 9.1 traces the steps in the marketing research process.

As changes occur in the firm’s external environment, marketing managers must decide on changes to the existing marketing mix.

The Marketing Research Project

Marketing Research Problem

Marketing Research Objective

Management Decision Problem

Determining what information is needed and how that information can be obtained efficiently and effectively.

The specific information needed to solve a marketing research problem; the objective should be to provide insightful decision-making information.

A broad-based problem that uses marketing research in order for managers to take proper actions.

Chapter 9 Decision Support Systems and Marketing Research

Sources of
Secondary Data

Government Agencies

Trade and Industry Associations

Business Periodicals

News Media

Internal Corporate Information

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Secondary data is data previously collected for any purpose other than the one at hand.

Advantages of
Secondary Data

Saves time and money if on target

Aids in determining direction for primary data collection

Pinpoints the kinds of people to approach

Serves as a basis of comparison for other data

Chapter 9 Decision Support Systems and Marketing Research

Disadvantages of
Secondary Data

May not give adequate detailed information

May not be on target with the research problem

Quality and accuracy of data may pose a problem

Chapter 9 Decision Support Systems and Marketing Research

The New Age of Secondary Information: The Internet

The rapid development of the Internet has eliminated much of the drudgery associated with the collection of secondary data.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Gathering secondary data has traditionally been a tedious boring job.

The researcher often had to write to government agencies, trade associations, or other secondary data providers and then wait days or weeks for a reply that might never come.

Marketing Research Aggregators

Acquire, catalog, reformat, segment, and resell reports already published by large and small marketing research firms.

Databases are getting bigger, more comprehensive, and easier to search.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

The marketing research aggregator industry is a $120 million business that is growing about 6 percent a year.

Planning the Research Design

Which research
questions
must be answered?

How and when
will data be
gathered?

How will
the data
be analyzed?

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Research design specifies which research questions must be answered, how and when the data will be gathered, and how the data will be analyzed.

Primary Data

Information collected for the first time. Used for solving the particular problem under investigation.

Advantages:

Answers a specific research question

Data are current

Source of data is known

Secrecy can be maintained

Chapter 9 Decision Support Systems and Marketing Research

Notes:

The main advantage of primary data is that they will answer a specific research question that secondary data cannot answer.
Primary data are current and the source of data is known.
Moreover, the information is proprietary.

Disadvantages of
Primary Data

Primary data can be very expensive.

Disadvantages are usually offset by the advantages of primary data.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

The cost of primary data may range from a few thousand dollars for a limited survey to several million for a nationwide study.

To save money, firms may cut back on the number of interviews, use Internet studies instead, or use piggyback studies by gathering data on two different projects using one questionnaire.

Survey Research

The most popular technique for gathering primary data, in which a researcher interacts with people to obtain facts, opinions, and attitudes.

Chapter 9 Decision Support Systems and Marketing Research

Forms of Survey Research

Focus Groups

Executive Interviews

Mail Surveys

Telephone Interviews

Mall Intercept Interviews

In-Home Interviews

Chapter 9 Decision Support Systems and Marketing Research

Notes:

In-home personal interviews: Provide high-quality information, but are expensive because of travel time and mileage costs for the interviewer. Not a popular survey tool in the U.S. and Europe.
Mall Intercept interviews: Conducted in shopping malls or in a marketing research office in the mall. Surveys must be brief. It is hard to get a representative sample of the population. However, probing is possible.
Telephone interviews: Cost less and provide one of the best samples of any traditional survey procedure. Many facilities for telephone interviews utilize computer-assisted interviewing, where information is directly input into a computer application. The federal “Do Not Call” law does not apply to survey research.
Mail Surveys: Benefits are the low cost, elimination of interviews, centralized control, and anonymity for respondents. However, mail questionnaires usually produce low response rates. Consequently, the resulting sample may not represent the surveyed population. However, mail panels, consisting of a sample of households recruited to participate for a given period, yield response rates of 70 percent.
Executive interviews: Involves interviewing businesspeople at their offices regarding industrial products or services. This type of interviewing is expensive, due to the process of finding, qualifying, and interviewing respondents.
Focus groups: A type of personal interviewing, characterized by seven to ten people gathered in a meeting place. The interaction provides group dynamics, with an interplay of responses yielding richer information than individual interviews.

Questionnaire Design

Open-Ended

Question

Closed-Ended

Question

Scaled-
Response

Question

An interview question that encourages an answer phrased in the respondent’s own words.

An interview question that asks

the respondent to make a selection from a limited list of responses.

A closed-ended question

designed to measure the intensity

of a respondent’s answer.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Questionnaires contain three basic types of questions:

Open-ended questions
Closed-ended questions
Scaled-response questions.

Questionnaire Design

Clear and concise

No ambiguous language

Avoid two questions in one

Avoid leading questions

Chapter 9 Decision Support Systems and Marketing Research

Online

CreateSurvey.com

Design a marketing questionnaire to post on your class Web site using the tools offered by Create Survey. Visit the demo polls on the site for ideas and tips.

Observation Research

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Observation research is the systematic process of recording the behavioral patterns of people, objects, and occurrences without questioning them.

Exhibit 9.3
Observational Situations

Situation	Example
People watching people	Observers stationed in supermarkets watch consumers select frozen Mexican dinners; the purpose is to see how much comparison shopping people do at the point of purchase.
People watching phenomena	Observer stationed at an intersection counts traffic moving in various directions.
Machines watching people	Movie or videotape cameras record behavior as in the people-watching-people example above.
Machines watching phenomena	Traffic counting machines monitor traffic flow.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Observation research depends on watching what people do. It may be conducted by human observers or machines.

Observational Research

Mystery Shoppers

Behavioral Targeting (BT)

Researchers posing as customers who gather observational data about a store.

A form of observation marketing research that uses data mining coupled with identifying Web surfers by the IP addresses.

Notes:

Two common forms of people-watching-people research are one-way mirror observations and mystery shoppers.

Behavioral Targeting (BT) began by placing cookies on users’ browsers to track which Web sites they visited and ultimately match the user with ads they would most likely investigate. Now, BT combines a consumer’s online activity with psychographic and demographic profiles.

Chapter 9 Decision Support Systems and Marketing Research

Ethnographic Research

The study of human behavior in its natural context; involves observation of behavior and
physical setting.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Ethnographic research comes from the field of anthropology, and is becoming popular in commercial marketing research. Ethnographers directly observe the population they are studying to gain richer insights into the culture and behavior of people.

Virtual Shopping

Advantages of virtual shopping:

Creates an environment with a realistic level of complexity and variety.
Allows quick set up and altering of tests.
Low production costs.
High flexibility.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Advances in computer technology have enabled researchers to simulate an actual retail store environment a computer screen.

Experiments

Experiments are used by researchers to gather primary data.

Experiment Variables

Price

Package design

Shelf space

Advertising theme

Advertising expenditures

Chapter 9 Decision Support Systems and Marketing Research

Sampling Procedure

Universe

Sample

Probability Samples

Non-Probability Samples

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Once the researchers decide how to collect primary data, the next step is to select the sampling procedures being used. Not all possible users of a new product can be interviewed, therefore a firm must select a sample or a subset of the larger population.

The population or universe must first be defined. Then it is determined if the sample must be representative of the population. If the answer is yes, a probability sample is needed.

Types of Samples

Simple Random Sample

Stratified
Sample

Cluster
Sample

Systematic
Sample

Probability Samples

Non-Probability Samples

Convenience
Sample

Judgment
Sample

Quota
Sample

Snowball
Sample

Notes:

Exhibit 9.4 describes each of these types of probability and nonprobability samples.

Chapter 9 Decision Support Systems and Marketing Research

Probability Samples

Probability

Sample

A sample in which every element in the population has a known statistical likelihood of being selected.

Random

Sample

A sample arranged so that every element of the population has an equal chance of being selected.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

The most desirable feature of a probability sample is that statistical rules can be used to ensure that the sample represents the population.

One type of probability sample is the random sample—where every element of the population has an equal chance of being selected as part of the sample.

Nonprobability Samples

Nonprobability

Sample

Convenience

Sample

Any sample in which little or

no attempt is made to get a representative cross-section of the population.

A form of nonprobability sample

using respondents who are

convenient or readily

accessible to the researcher.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

A nonprobability sample is a sample where little or no attempt is made to get a representative cross section of the population.

A common form of nonprobability sample is the convenience sample, a selection of convenient respondents such as employees, relatives, or friends. Because of their lower cost, nonprobability samples are the basis of much marketing research.

Types of Errors

Sampling

Error

Error when a sample somehow does not represent the target population.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Whenever a sample is used in marketing research, major types of errors may occur: measurement error and sampling error.

Frame error arises if the sample drawn from a population differs from the target population.

Random error occurs when the selected sample is an imperfect representation of the overall population.

Collecting the Data

Focus group facilities

Mall intercept locations

Test product storage

Kitchen facilities

Field Service Firms provide:

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Most primary data is collected by marketing research field service firms.
Field service firms conduct interviews, provide focus-group facilities, mall intercept locations, test product stores, and kitchen facilities to prepare test food products.

Analyzing the Data

Chapter 9 Decision Support Systems and Marketing Research

Notes:

After data is collected, the next step is to analyze data. The purpose of data analysis is to interpret and draw conclusions from the collected data.

Data is organized by one-way frequency counts, cross-tabulations, and more sophisticated statistical analysis.

One-way frequency tables record the responses to a question. They provide a general picture of the study’s results.

A cross-tabulation looks at the associations between certain responses, such as association between gender and product choice.

Preparing and
Presenting the Report

Concise statement of the research objectives

Explanation of research design

Summary of major findings

Conclusion with recommendations

Chapter 9 Decision Support Systems and Marketing Research

Notes:

After data analysis is completed, the report is prepared, and conclusions and recommendations are communicated to management.

The report should be tailored to the audience, beginning with a statement of research objectives, followed by a brief explanation of the research design. A summary of major findings is next, followed by a conclusion with recommendations.

Following Up

Were the recommendations followed?

Was sufficient decision-making information included in the report?

What could have been done to make the report more useful to management?

Chapter 9 Decision Support Systems and Marketing Research

Notes:

The final step in the marketing research process is to follow up. The researcher should determine why management did or did not carry out the recommendations of the report.

Discuss the profound impact of the Internet on marketing research

The Profound Impact of the Internet

On Marketing Research

Chapter 9 Decision Support Systems and Marketing Research

Impact of the Internet

Under appropriate conditions, can represent the entire population

Has replaced computer-assisted telephone interviewing

Rated as having the greatest potential for further growth

Chapter 9 Decision Support Systems and Marketing Research

Notes:

More than 90 percent of America’s marketing research companies conduct some form of online research.

The reasons for its success are shown on this slide.

Advantages of
Internet Surveys

Contact with the

hard-to-reach

Improved respondent

participation

Personalized questions

and data

Reduced costs

Rapid development,

Real-time reporting

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Rapid development, real-time reporting: Survey results can be tabulated and broadcast in a much shorter time frame.
Reduced costs: Costs can be cut by 25 to 40 percent and results provided in half the time required for traditional telephone surveys.
Personalized questions and data: Personalization allows relevance to each respondent’s own situation, thus speeding the response process.
Improved respondent participation: Internet surveys take half as much time to complete as phone interviews and can be accomplished at the respondent’s convenience.
Contact with the hard-to-reach: Doctors, management, and high-income professionals are among the most surveyed and the most difficult to reach. Many of these groups are well represented online.

Uses of the Internet by
Marketing Researchers

Other types of marketing research

Conduct focus groups

Administer surveys

Chapter 9 Decision Support Systems and Marketing Research

Methods of Collecting Online Surveys

Web Survey Systems
Survey Design and Web Hosting Sites
Online Panel Providers

Chapter 9 Decision Support Systems and Marketing Research

Advantages of Online
Focus Groups

Better participation rates

Cost-effectiveness

Broad geographic scope

Accessibility

Honesty

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Better participation rates: conducted over the course of days, participants less likely to pull out.

Cost-effectiveness: face-to-face groups incur costs for facility rental, airfare, hotel, food, etc.

Broad geographic scope: time is flexible online, providing a world-wide respondent pool.

Accessibility: give access to participants who might otherwise be difficult to recruit.

Honesty: anonymity makes respondents tend to talk more freely.

Web Community Research

A carefully selected group of consumers who agree to participate in an ongoing dialogue with a particular corporation.

Web communities:

Engage customers
Achieve customer-derived innovations
Establish brand advocates
Offer real-time results

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Additionally, Web communities help companies create a customer-focused organization by putting employees into direct contact with consumers, as well as providing cost effective, flexible research.

Text Message-Based Research

Allows researchers to text a basic question

Quick follow-up to responders
Wide demographic reach
High feedback rates

Blogging Assignments

Marketers assign respondents to write blog entries when they use the assigned product.

Can span long or short time periods
Offer a closer look at consumer use
Inexpensive, allowing larger numbers of respondents

Role of Consumer-Generated Media in Marketing Research

CGM comes from various sources: blogs, message boards, review sites, podcasts, etc.

CGM is trusted more than traditional advertising.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Consumer-generated media (CGM) Is that media that consumers generate themselves and share among themselves.

Discuss the growing importance of

scanner-based research

Scanner-Based Research

Chapter 9 Decision Support Systems and Marketing Research

Scanner-Based Research

A system for gathering information from a single group of respondents by continuously monitoring the advertising, promotion, and pricing they are exposed to and the things they buy.

BehaviorScan

InfoScan

Research program that tracks the purchases of 3,000 households through store scanners in each research market

Sales-tracking service for the consumer packaged-goods industry

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Scanner-based research is used for gathering information by monitoring the marketing mix and purchase behavior of a single group of respondents.

The two major scanner-based suppliers are Information Resources, Inc. and the A.C. Nielson Company. IRI’s first product is called BehaviorScan, which uses assigned ID cards to track grocery and drugstore purchases of household panel participants.

InfoScan is IRI’s tracking service for consumer goods. Data are collected weekly from more than 70,000 supermarkets, drugstores, and mass merchandisers.

Scanner-Based Research

BehaviorScan

With such a measure of household purchasing, it is possible to manipulate marketing variables, such as television advertising or consumer promotions, or to introduce a new product and analyze real changes in consumer buying behavior.

InfoScan

Retail sales, detailed consumer purchasing information (including measurement of store loyalty and total grocery basket expenditures), and promotional activity by manufacturers and retailers are monitored and evaluated for all bar-coded products.

Data are collected weekly from more than 70,000 supermarkets, drugstores, and mass merchandisers.

Chapter 9 Decision Support Systems and Marketing Research

Explain when marketing research should be conducted

When Should Marketing Research Be Conducted?

Chapter 9 Decision Support Systems and Marketing Research

When Should Marketing
Research Be Conducted?

Depends on managers’ perceptions of its quality, price, and timing

When the expected value of research information exceeds the cost of generating the information

Chapter 9 Decision Support Systems and Marketing Research

Identify customer relationships

Store and integrate
customer data using IT

Capture customer data
based on interactions

Identify best customers

Understand interactions
with current customer base

Leverage customer
information

Exhibit 9.6
A Simple Flow Model of the Customer Relationship Management System

Chapter 21 Customer Relationship Management (CRM)

Notes:

While CRM appears to be a simplistic customer service strategy, it is only a small part of an integrated, holistic approach to building customer relationships. CRM is described as a closed-looped system that builds relationships with customers. Exhibit 9.6 illustrates this closed-loop system, one that is continuous and circular with no defined starting or end point.

The CRM cycle is initiated by identifying customer relationships within the organization.
Next the company must understand the interaction each customer has with the company, building on the initial information collected and developing a useful database.
Based on knowledge of the customer and his/her interaction with the company, the company can then acquire and capture all relevant information about the customer.
Technology plays a critical part in a CRM system. Technology is used to store and integrate customer data.
Not all customers are equally important to a business. Consequently, the company must use data mining to determine its profitable and unprofitable customer segments.
Once the customer data are analyzed, they are leveraged. Data are transformed into information and disseminated throughout the organization—to the right person in the right place at the right time.

Explain the concept

of competitive intelligence

Competitive Intelligence

Chapter 9 Decision Support Systems and Marketing Research

Competitive Intelligence (CI)

An intelligence system that helps managers assess their competition and vendors in order to become more efficient and effective competitors.

Chapter 9 Decision Support Systems and Marketing Research

Notes:

Specifically, competitive intelligence can help identify the advantage and play a major role in determining how it is achieved.

Sources of
Competitive Intelligence

Internet

Company Salespeople

Industry Experts

CI Consultants

Government Agencies

UCC Filings

Suppliers

Periodicals

Yellow Pages

Trade Shows

Chapter 9 Decision Support Systems and Marketing Research

Chapter 9 Video

The Nederlander Organization

The Nederlander Organization is at the forefront of using technology to understand its customers and the ways that those theatregoers purchase tickets. This video clip discusses specific ways the Nederlander Organization collects data and then leverages that information to the benefit of the customer.

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Part 2 Video

Scripps Networks Interactive

Target Market Solutions

Scripps Networks Interactive discusses how social media allows them to very specifically understand who their target markets and demographics are for their various channels. Based on the information provided by customers on social media, Scripps is able to develop targeted marketing messages and programming that is highly tailored to its customers.

CLICK TO PLAY VIDEO