Marketing Ch4
DEVELOPING THE RESEARCH PLAN:TYPES OF PRIMARY RESEARCH
After the problem has been defined carefully, the manager and the researcher must set the research objectives. A marketing research project might have one of three types of objec- tives.
Marketing Information and Today's "Big Data"
Consumers themselves are now generating tons of marketing information. Through their smartphones, PCs, and tablets—via online browsing and blogging, apps and social media interactions, texting and video, and geolocation data—consumers now volunteer a tidal wave of bottom-up information to companies and to each other. Far from lacking information, most marketing managers are overloaded with data and often overwhelmed by it. This problem is summed up in the concept of big data. The term big data refers to the huge and complex data sets generated by today's sophisticated information generation, collection, storage, and analysis technologies. Every day, the peo- ple and systems of the world generate nearly 2.5 quintillion new bytes of data. Roughly 90 percent of the data in the world today has been created in only the past two years Big data presents marketers with both big opportunities and big challenges. Companies that effectively tap this glut of data can gain rich, timely customer insights. However, accessing and sifting through so much data is a daunting task.
OTHER INFORMATION CONSIDERATIONS
Most major companies—including Facebook, Apple, Microsoft, IBM, American Express, and even the U.S. government—have now appointed a chief privacy officer (CPO), whose job is to safeguard the privacy of customers
Experimental research
Online controlled experiments can be simple and in- expensive to run with immediate and revealing result causal research
Biased Research
Research studies can be powerful persuasion tools, however, many research studies appear to be little more than vehicles for pitching the sponsor's products. Few advertisers openly rig their research designs or blatantly misrepresent the findings—most abuses tend to be more subtle "stretches." 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.
CUSTOMER INFORMATION AND CUSTOMER INSIGHTS
The real value of marketing research and marketing information lies in how it is used in the customer insights that it provides. Firms are creating customer insights teams, headed by a senior marketing executive with representatives from all of the firm's functional areas. Companies must 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 and stronger customer relationships
DEFINING THE PROBLEM
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Observational research
Beyond conducting ethnographic research in physical consumer environments, many companies now routinely conduct Netnography research—observing consumers in a natural context on the internet and mobile space. Observational Research. Observational research involves gathering primary data by observing relevant people, actions, and situations.
Competitive Marketing Intelligence
Competitive marketing intelligence is the systematic monitoring, collection, and analysis of publicly available information about consumers, competitors, and develop- ments in the marketplace. 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. Marketing intelligence techniques range from observing consumers firsthand to quizzing the company's own employees, benchmarking competitors' products, conducting online research, and monitoring social and mobile media in real-time. 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 have set up state-of-the-art social media command centers that routinely monitor real-time brand-related online consumer and marketplace social and mobile media activity. Such centers can scour the digital environment, analyze brand- related conversations in real time to gain marketing insights, and respond quickly and appropriately. Companies also need to actively monitor competitors' activities. They can monitor competitors' web and social media sites. For example, Amazon's Competitive Intelligence arm routinely purchases merchandise from competing sites to analyze and compare their assortment, speed, and service quality. Companies can use the internet to search specific competitor names, events, or trends and see what turns up. And tracking consumer con- versations about competing brands is often as revealing as tracking conversations about the company's own brands. Firms use competitive marketing intelligence to gain early insights into competitor moves and strategies and to prepare quick responses. For example, Samsung routinely monitors real-time social media activity surrounding the introductions of Apple's latest iPhones, iPads, and other devices to quickly shape marketing responses for its own smart- phones and tablets. At the same time that Apple is unveiling the latest much-anticipated new models, Samsung marketing strategists are huddled around screens in a war room, monitoring not only each new device feature as it is presented but also the gush of online consumer commentary flooding blogs and social media channels The intelligence and monitoring game goes both ways. Facing determined competi- tive marketing intelligence efforts by competitors, most companies take steps to protect their own information. Companies should try conducting marketing intelligence investi- gations of themselves, looking for potentially damaging information leaks. They should start by "vacuuming up" everything they can find in the public record, including job post- ings, court records, company advertisements and blogs, web pages, press releases, online business reports, social media site postings by customers and employees, and other infor- mation available to inquisitive competitors. The growing use of marketing intelligence also raises ethical issues. Some intelligence- gathering techniques may involve questionable ethics. Clearly, companies should take ad- vantage of publicly available information. However, they should not stoop to snoop. 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.
INTERPRETING AND REPORTING FINDINGS
However, interpretation should not be left only to researchers. Although they are often experts in research design, statistics, and data science, the marketing manager knows more about the problem and the decisions that must be made. The best research means little if the manager blindly accepts faulty interpretations from the researcher. Similarly, managers may be biased. They might tend to accept research results that show what they expected and reject those that they did not expect or hope for.
Marketing Research OBJECTIVE 4-3 Outline the role of marketing research and the steps in the marketing research process.
In addition to marketing intelligence information about general consumer, competitor, and marketplace happenings, marketers often need formal studies that provide cus- tomer and market insights for specific marketing situations and decisions. Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization. Companies use mar- keting research in a wide variety of situations. For example, marketing research gives mar- keters 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. Some large companies have their own research departments that work with market- ing managers on marketing research projects. In addition, these companies—like their smaller counterparts—frequently hire outside research companies to consult with man- agement on specific marketing problems and to conduct marketing research studies. Sometimes firms simply purchase data collected by outside firms to aid in their decision making.
Traditional Marketing Research in Transition
In recent years, as a host of new digital data-gathering technologies have burst onto the scene, traditional marketing research has undergone a major transformation. Traditional mainstays such as research surveys and focus groups, although still prevalent and power- ful, are now giving way to newer, more agile, more immediate, and less costly digital data gathering methods. These new approaches—ranging from real-time social media, website, and online feedback monitoring to mobile device tracking—pose a threat to traditional mar- keting research Today's fast and agile decision making often calls for fast and agile marketing information and research—call it just-in- time research. In such situations, speed often matters more than research rigor and precision. "If marketing managers can, at the tap of a button, see the views, clicks, likes, and shares of a new ad campaign, as well as listen to the roar—or silence, depending upon its success—of social media comments; then why would they be willing to wait four weeks for a [market research study's] bar chart to tell them that their spontane- ous awareness has gone up?" asks an analyst. "Traditional research is in danger of being not only slower but also less insightful than other sources of information."10 Marketing re- searchers must adjust to the new pace of information. Although its role is changing, however, traditional mar- keting research is still widely used and very important. For many marketing decisions, information quality and rigor are more important than speed, convenience, and lower cost. The traditional research approaches, although often more time- consuming and expensive, can allow for deeper, more focused probing, especially into the whys and wherefores of consumer attitudes and behavior. The key for marketers is to blend the traditional and new approaches into a unified marketing information system that yields agile but deep and complete marketing informa- tion and insights. New digital approaches can provide immediate and affordable access to real-time data on the wants, whens, wheres, and hows of consumer buying activities and responses. That frees traditional marketing research approaches to dig more deeply and rigorously into the whys. "In spite of all the benefits digital approaches can deliver," says one analyst, they "should be viewed not solely as a substitute for existing methods but as a new approach that can complement and enhance what has come before."
Developing Marketing Information Marketers can obtain the needed information from internal data, marketing intelligence, and marketing research.
Internal Data Many companies build extensive internal databases, collections of consumer and mar- ket information obtained from data sources within the company's network. The market- ing department furnishes information on customer characteristics and preferences, in-store and online sales transactions and interactions, and web and social media site visits. The customer service department keeps records of customer satisfaction or service problems. The accounting department provides detailed records of sales, costs, and cash flows. Operations reports on production, shipments, and inventories. The sales force reports on reseller reactions and competitor activities, and marketing channel partners provide data on sales transactions. Developing and harnessing such information can provide powerful customer insights and competitive advantage. Internal databases usually can be accessed more quickly and cheaply than other infor- mation sources, but they also present some problems. Because much internal information is often collected for other purposes, it may be incomplete or in the wrong form for making marketing decisions. Data also age quickly; keeping the database current requires a major effort. Finally, managing and mining the mountains of information that a large company produces require highly sophisticated equipment and techniques.
OTHER INFORMATION CONSIDERATIONS
Just like larger firms, small and nonprofit organizations need market information and the customer insights that it can provide. These organizations often think that marketing research can be done only by in large companies, however, many of the marketing research techniques discussed in this chapter also can be used by smaller organizations in a less formal manner and at little or no expense. International marketing research has grown tremendously over the past decade. International researchers deal with diverse markets in many different countries. These markets often vary greatly in their levels of economic development, cultures and customs, and buying patterns. Two major public policy and ethics issues in marketing research are intrusions on consumer privacy and the misuse of research findings. Many consumers feel positive about marketing research and believe that it serves a useful purpose. Others strongly resent or even mistrust marketing research. They don't like being interrupted by researchers. They worry that marketers are building huge databases full of personal information about customers.
Contact Methods
Mail questionnaires can collect large information at a low cost per respondent and may promote honesty, but they aren't flexible, they take a long time, ad response rates are low. Telephone interviews can gather information quickly and provides more flexibility than mail questionnaires, but it is expensive per respondent and introduces interviewer bias. Do-not-call lists also complicate responses. Personal interviewing can be individual interviewing, which is flexible but expensive. Focus group interviewing involves inviting small groups of people to gather for a few hours with a trained interviewer to talk about a product, service, or organization. It can be a good way to get insights, but the group can influence the individual and people are not always honest. Personal interviewing takes two forms: individual interviewing and group interview- ing. Individual interviewing involves talking with people in their homes or offices, on the street, or in shopping malls. Such interviewing is flexible. Trained interviewers can guide interviews, explain difficult questions, and explore issues as the situation requires. They can show subjects actual products, packages, advertisements, or videos and observe reac- tions and behavior. However, individual personal interviews may cost three to four times as much as telephone interviews.
USING MARKETING INFORMATION
Many firms use company intranets and internal CRM systems to facilitate this process. These systems provide ready access to internal data, intelligence, and marketing research information; cus- tomer transaction and experience information; shared reports and documents; and more. profound than fire or electricity." That's saying a great deal (see Real Marketing 4.2).The benefits of customer relationship management, big data analytics, and artificial intelligence don't come without costs or risks. The most common mistake is to view CRM, marketing analytics, and AI as technology processes only. Managers get buried in the big data details and miss the big picture. Or they can let machines make decisions rather than In addition, companies are increasingly allowing key cus- tomers and value-network members to access account, product, and other data on demand through extranets. Suppliers, custom- ers, resellers, and select other network members may access a company's extranet to update their accounts, arrange purchases, and check orders against inventories to improve customer service.
Online behavioral and social tracking and targeting
Marketers learn from what consumers do online and use the information to add value to consumers. However, it can be creepy if overdone. Whereas traditional marketing research provides more logical consumer responses to structured and intrusive research questions, online listening provides the passion and spontaneity of unsolicited, real-time consumer opinions. Information about what consumers do while trolling the vast digital expanse—what searches they make, the online and mobile sites they visit, how they shop, and what they buy—is pure gold to marketers. And today's marketers are busy mining that gold. Then, in a practice called behavioral targeting, marketers use the online data to target ads and of- fers to specific consumers. Even further, they use social targeting, mining individual online social networking activity for the purpose of target ads and marketing efforts.
The marketing research process has four steps (see Figure 4.2): defining the prob- lem and research objectives, developing the research plan, implementing the research plan, and interpreting and reporting the findings. Defining the Problem and Research Objectives
Marketing managers and researchers must work together closely to define the problem and agree on research objectives. The manager best understands the decisions 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. The manager may know that something is wrong without knowing the specific causes. In this age of big data, marketers might be tempted to simply turn their data scien- tists loose on mountains of big data in the search for problems and insights. But effective research calls for a blend of both well-directed and open-minded analysis. On the one hand, data analytics can be more effective when directed toward well-considered prob- lems. The market researcher "must first ask smart questions, After the problem has been defined carefully, the manager and the researcher must set the research objectives. A marketing research project might have one of three types of objec- tives. The objective of exploratory research is to gather preliminary information that will help define the problem and suggest hypotheses. The objective of descriptive research is to describe things, such as the market potential for a product or the demographics and attitudes of consumers who buy the product. The objective of causal research is to test hypotheses about cause-and-effect relationships. For example, would a 10 percent decrease in tuition at a private college result in an enrollment increase sufficient to offset the re- duced tuition? Managers often start with exploratory research and later follow with de- scriptive or causal research. The statement of the problem and research objectives guides the entire research pro- cess. 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.
Developing the Research Plan
Once researchers have defined the research problem and objectives, they must determine the exact information needed, develop a plan for gathering it efficiently, and present the plan to management. The research plan outlines sources of existing data and spells out the specific research approaches, contact methods, sampling plans, and instruments that researchers will use to gather new data. The research plan should be presented in a written proposal. A written proposal is es- pecially 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 manage- ment's decision making. The proposal also should include estimated research costs. Once researchers have defined the research problem and objectives, they must determine the exact information needed, develop a plan for gathering it efficiently, and present the plan to management. The research plan outlines sources of existing data and spells out the specific research approaches, contact methods, sampling plans, and instruments that researchers will use to gather new data. Research objectives must be translated into specific information needs. To meet the manager's information needs, the research plan can call for gathering sec- ondary data, primary data, or both. Secondary data consist of information that already exists somewhere, having been collected for another purpose. Primary data consist of information collected for the specific purpose at hand.
Online marketing research
Online research usually costs much less than research conducted through mail, phone, or personal interviews. Using the internet eliminates most of the postage, phone, interviewer, and data-handling costs associated with the other approaches. Moreover, sample size has little impact on costs. Once the questionnaire is set up, there's little difference in cost between 10 respondents and 10,000 respondents on the internet. Its low cost puts online research well within the reach of almost any business, large or small. In fact, with the internet, what was once the domain of research experts is now available to almost any would-be researcher. Even smaller, less sophisticated researchers can use online survey services such as Snap Surveys (www.snapsurveys.com) and SurveyMonkey (www.surveymonkey.com) to create, publish, and distribute their own custom surveys in minutes. Internet-based surveys also tend to be more interactive and engaging, easier to complete, and less intrusive than traditional phone or mail surveys. As a result, they usually garner higher response rates.
RESEARCH INSTRUMENTS
Questionnaires are very flexible—there are many ways to ask questions. Closed-ended questions include all the possible answers, and subjects make choices among them. Examples include multiple-choice questions and scale questions. 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 also use care in the wording and ordering of questions. They should use simple, direct, and unbiased wording. Questions should be arranged in a logical order. The first question should create interest if possible, and difficult or personal questions should be asked last so that respondents do not become defensive. Researchers also use a variety of physiological and neurological measures to gauge consumers' emotions and reactions. They apply neuromarketing, using EEG and MRI technologies to track brain electrical activity to learn how consumers feel and respond. Neuromarketing measures, often combined with biometric measures (such as heart rates, respiration rates, sweat levels, and facial and eye movements), can provide compa- nies with insights into what turns consumers on and off regarding their brands and marketing. Although neuromarketing techniques can measure consumer involvement and emotional responses second by second, such brain responses can be difficult to interpret. Thus, neuromarketing is usually used in combination with other research approaches to gain a more complete picture of what goes on inside consumers' heads.
Gathering Secondary Data
Researchers usually start by gathering secondary data. The company's internal database provides a good starting point. However, the company can also tap into a wide assortment of external information sources. Companies can buy secondary data from outside suppliers. For example, Nielsen sells shopper insight information from more than 900,000 participating stores around the world. Secondary data can also present problems. Researchers can rarely obtain all the data they need from secondary sources. For example, Chick-fil-A will not find existing information regarding consumer reactions about vegan chicken tenders in the fast-food setting. Even when data can be found, the information might not be very us- able. The researcher must evaluate secondary information carefully to make certain it is relevant (fits the research project's needs), accurate (reliably collected and reported), cur- rent (up-to-date enough for current decisions), and impartial (objectively collected and reported). The InfoScan service from SymphonyIRI Group, which provides valuable information based on scanner and other data from 34,000 retail stores in markets around the nation. Secondary data can also present problems as shown in the disadvantages in the slide. In addition, researchers rarely obtain all the data they need from secondary sources.For example, Red Bull will not find existing information regarding consumer reactions about a new enhanced-water line that it has not yet placed on the market
Survey Research
Survey research, the most widely used method for primary data collection, is flexible; it can be used to obtain many different kinds of information in many different situations. However, survey research also presents some problems. unwilling/unable to respond answering survey questions even when they do not know the answer just to appear smarter or more informed giving pleasing answers. Not done by busy people best suited for descriptive research
BIG DATA, ANALYTICS AND A.I.
The benefits of customer relationship management, big data analytics, and artificial intelligence come with risks. Managers can get buried in the details and miss the big picture, or may not think about things as much because the data indicates something. 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. Marketers apply marketing analytics to the large and com- plex sets of data they collect from web, mobile, and social media tracking; customer trans- actions and engagements; and other big data sources.
Assessing Information Needs and Developing Data OBJECTIVE 4-2 Define the marketing information system and discuss its parts.
The marketing information system primarily serves the company's marketing and other managers. However, it may also provide information to external partners, such as suppliers, resellers, or marketing services agencies. For example, Walmart's Retail Link system gives key suppliers access to information on everything from customers' buying patterns A good marketing information system balances the information users would like to have against what they really need and what is feasible to offer. Some managers will ask for whatever information they can get without thinking carefully about what they really need. And in this age of big data, some managers will want to collect and store vast amounts of digital data simply because technology lets them. The MIS must monitor the marketing environment to provide deci- sion makers with information and insights they should have to make key marketing decisions. Finally, the costs of obtaining, analyzing, storing, and delivering information can mount quickly. The company must decide whether the value of insights gained from ad- ditional information is worth the costs of providing it, and both value and cost are often hard to assess.
Ethnographic research
The observers might be trained anthropolo- gists and psychologists or company researchers and man- agers. Consider Intuit, maker of Turbo Tax and QuickBooks financial software:17 Observational and ethnographic research often yield the kinds of details that just don't emerge from traditional research questionnaires or focus groups. Whereas tradi- tional quantitative research approaches seek to test known hypotheses and obtain answers to well-defined product or strategy questions, observational research can generate fresh customer and market insights that people are unwilling or unable to provide. It provides a window into customers' unconscious actions and unexpressed needs and feelings. However, some things simply cannot be observed, such as attitudes, motives, or pri- vate behavior. Long-term or infrequent behavior is also difficult to observe. Finally, obser- vations can be very difficult to interpret. Because of these limitations, researchers often use observation along with other data collection methods.
Managing Marketing Information Managers need the right information in the right form at the right time. In larger firms, this requires a Marketing Information System (MIS): the people and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers to use the information to generate and validate actionable customer and market insights.
The real value of marketing information lies in how it is used—in the customer insights that it provides. Based on such thinking, companies ranging from Unilever, PepsiCo, Starbucks, and McDonald's to Google and GEICO have restructured their marketing in- formation and research functions. They have created customer insights teams, whose job it is to develop actionable insights from marketing information and work strategically with marketing decision makers to apply those insights. Thus, companies must 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 relation- ships. A marketing information system (MIS) consists of people and procedures ded- icated to assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights. Figure 4.1 shows that the MIS begins and ends with information users— marketing managers, internal and external partners, and others who need market- ing information and insights. First, it interacts with these information users to as- sess information needs. Next, it interacts with the marketing environment to develop needed information through internal company databases, marketing intelligence ac- tivities, and marketing research. Finally, the MIS helps users to analyze and use the information to develop customer insights, make marketing decisions, and manage cus- tomer engagement and relationships.
DEVELOPING THE RESEARCH PLAN
The research plan should be presented in a written proposal. A written proposal is especially 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 also should include estimated research costs.
Marketing Information and Customer Insights OBJECTIVE 4-1 Explain the importance of information in gaining insights about the marketplace and customers.
To create value for customers and build meaningful relationships with them, marketers must first gain fresh, deep insights into what customers need and want. Such customer insights come from good marketing information. Companies use these customer insights to develop a competitive advantage. Although customer and market insights are important for building customer value and engagement, these insights can be very difficult to obtain. Customer needs and buying motives are often anything but obvious—consumers themselves usually can't tell you exactly what they need and why they buy