Marketing Chapter 4 - Marketing Research
Why do marketers find marketing research valuable?
1) It helps reduce some uncertainty under which they currently operate. 2) Provides a link between firms and their environments, which enables firms to be customer-oriented because they build their strategies by using customer input and continual feedback. 3) by constantly monitoring competitors, firms can anticipate & respond quickly to their moves 4) Ongoing marketing research can identify emerging opportunities and new and improved ways of satisfying consumer needs and wants from changes in the external environment.
Factors to Consider before embarking on a marketing research project
1) Will the research be useful? Will it provide new insights and reduce uncertainty? 2) is top management committed to the project and willing to abide by the results of the research? Marketing research can be very expensive, and if the results won't be useful or management does not abide by the findings, it represents a waste of money. 3) Should the marketing research project be small or large? A project might involve a simple analysis of data that the firm already has, or it could be an in-depth, expensive assessment.
The Marketing Research Process - 5 Steps
STEP 1: DEFINE THE RESEARCH PROBLEM AND OBJECTIVES STEP 2: DESIGN THE RESEARCH PROJECT STEP 3: COLLECTING (primary) DATA -> two methods STEP 4: ANALYZE DATA STEP 5: PRESENT ACTION PLAN
The Marketing Research Process STEP 5: PRESENT ACTION PLAN
• Analyst prepares the results and presents them to the appropriate decision makers, who undertake appropriate marketing actions and strategies. A typical marketing research presentation includes an executive summary, the body of the report (research objectives, methodology used, and detailed findings), the conclusions, the limitations, and supplemental tables, figures, and appendices. • Report must be short, interesting, methodical, precise, lucid, and free of errors. • Reports should use a style appropriate to the audience, devoid of technical jargon, and include recommendations that managers can actually implement.
The Marketing Research Process STEP 3: COLLECTING (primary) DATA -Conclusive (Quantitative) Research Methods
• Conclusive research is intended to verify insights and to aid decision makers in selecting a specific course of action. Conclusive research can be descriptive in nature, such as when it profiles a typical user or non-user of a particular brand according to a survey. It can also be experimental, such as when a soft-drink producer conducts a taste test to determine which formulation of a green, high-caffeine drink is preferred by customers. Conclusive research can also be collected from the merchandise that is scanned at a store, or from a group of customers, known as a panel, who record all of their purchases. In this section, we will discuss four conclusive research techniques: survey, experiment, scanner, and panel. • Survey research: most popular type of conclusive research method used in marketing. It is widely used to study consumers' attitudes, preferences, behaviours, & knowledge about products/brands. o more cost-effective than other methods for reaching a large sample of consumers. o Survey questionnaires usually yield quantitative data that can be easily analyzed by using sophisticated statistical methods to examine the relationships among variables. o Disadvantages of surveys/questionnaires Consumers may be unable to answer some of the questions, may not be able recall the info, or may even interpret the questions differently from what was intended. Some may try to answer the questions according to what they think the researchers want. Respondents answer some but not all the questions on the questionnaire o Survey: systematic means of collecting info from people that generally uses a questionnaire. o Questionnaire: form that features a set of questions designed to gather info from respondents and thereby accomplish the researchers' objectives. -> phone, mail, or fax, etc. Individual questions on a questionnaire can be either unstructured or structured. Unstructured questions: open-ended and allow respondents to answer in their own words. However, the same question could be posed to respondents in a structured format by providing a fixed set of response categories, such as price, fragrance, ability to clean, and dandruff control, and then asking respondents to rate the importance of each. Structured questions thus are closed-ended questions for which a discrete set of response alternatives, or specific answers, is provided for respondents to evaluate o Developing a questionnaire is part art and part science. The questions must be carefully designed to address the specific set of research questions. o Mail questionnaires are cheaper but not as flexible/fast as phone or personal/group interviews o Questions cannot be misleading in any fashion, and they must address only one issue at a time. They must be worded in familiar and comfortable vocab to those being surveyed. o Questions should be sequenced: general to specific, and demographic questions at the end. o layout and appearance of the questionnaire must be professional and easy to follow, with appropriate instructions in suitable places. o Online marketing surveys offer researchers the chance to develop a database quickly with many responses, whereas offline marketing surveys provide a more direct approach that includes interactions with the target market. • Experimental research is a type of quantitative research that systematically manipulates one or more variables to determine which variable(s) have a causal effect on another variable. • Scanner research: quantitative research that uses data obtained from scanner readings of UPC codes at checkout counters. The data from these purchases are likely to be acquired by leading marketing research firms who use this info to help leading consumer packaged goods firms assess what is happening in the marketplace. o Ex: a firm can determine what would happen to sales if it reduced its price by 10 percent in a given month. Did sales increase, decrease, or stay the same? • Panel research: quantitative research that involves collecting info from a group of consumers (the panel) over time. The data collected from the panellists may be from a survey or a record of purchases. This data provides consumer packaged goods firms with a comprehensive picture of what individual consumers are buying or not buying. -> Ex: The customers' responses indicate whether they think the product should be carried in the stores.
The Marketing Research Process STEP 1: DEFINE THE RESEARCH PROBLEM AND OBJECTIVES
• Correctly defining the problem is one of the most difficult of the marketing research process. ->If you define the problem incorrectly, you may get the wrong solution even though the rest of the process is done perfectly. On the contrary, if you define the problem correctly but fail to carry out the rest of the process correctly, you may end up with results that may be useless/misleading. • Then, specify the research objectives or questions to be answered. Efforts and resources are wasted if the research objectives are poorly defined. Poor design arises from 3 major sources: 1. basing research on irrelevant research questions 2. focusing on research questions that marketing research cannot answer 3. addressing research questions to which the answers are already known • define the problem and try to separate the symptoms of a problem from the actual problem. • What info is needed? How should the info be obtained? -> helps keep scope in check
The Marketing Research Process STEP 3: COLLECTING (primary) DATA - exploratory research
• Exploratory research: tries to understand the phenomenon of interest; it also provides initial info that helps the researcher more clearly formulate the research problem or objectives. o more informal and qualitative than conclusive research methods o observation, follow social media sites, in-depth interviews, focus groups, projective techniques • If the firm is ready to move beyond preliminary insights gained from exploratory research, it is likely ready to engage in conclusive research: provides the info needed to confirm those insights and which managers can use to pursue appropriate courses of action. o often quantitative -> it offers a means to confirm implicit hunches through surveys, formal studies such as specific experiments, scanner and panel data, or some combination of these o Enables researchers to test their hypothesis: predicts a relationship among multiple variables. • research projects use exploratory as the first phase of the research process and then use conclusive
The Marketing Research Process STEP 2: DESIGN THE RESEARCH PROJECT-Embedding Sustainability in the Organizational Culture
• Going green, eco-awareness, corporate social responsibility, and the triple bottom line (people, planet, and profit) are all terms used to redefine organizational strategies. • With little info on how to implement sustainability practices, organizations don't know how to make sustainability a part of their corporate culture -> Research is being conducted to provide organizations with a framework for incorporating sustainability into their corporate culture. • The project is designed so that info and data can be collected from a few organizations that are successfully implementing sustainability initiatives. The data being collected is linked to factors that contribute to the success of a sustainability strategy. • Success is largely attributed to commitment from both employees and management. • Interviews and panel discussions are conducted to gauge levels of commitment. • After the data is collected, it will be compiled, analyzed, and interpreted into useful and meaningful info. This info will be presented in a report about best sustainable practices -> report = a reference point for many organizations that are striving to make corporate sustainability a part of their culture.
The Marketing Research Process STEP 2: DESIGN THE RESEARCH PROJECT- Primary data - Research Study
• Improper execution of any of these important aspects of primary data collection could seriously reduce the reliability and validity of the research study • Reliability: extent to which you get the same result if the study is repeated in identical situations. • Validity is the extent to which the study actually measures what it is supposed to measure • Market research study must be both reliable and valid for it to be useful. • One important aspect of market research that can affect the reliability and validity of a study is the sampling plan: marketers usually select a sample, a segment or subset of the population that adequately represents the entire population of interest. • How you select the sample is also very important. 3 important questions that must be answered are (1) who should be surveyed (2) how big should the sample be (3) What types of sampling procedure to use; simple random sampling, convenience sampling, stratified sampling, or cluster sampling. Each of these sampling procedures has their advantages and disadvantages, and the decision will depend on the research objectives of the study. • Rule of thumb; sample sizes should be large enough to ensure the reliability of the study.
Marketing Research
• Marketing research: set of techniques & principles for systematically collecting, recording, analyzing, & interpreting data that can aid decision makers involved in marketing goods/services/ideas. • info that help make segmentation, positioning, product, place, price, and promotion decisions • key to understanding topics such as consumer and B2B buying behaviour, global marketing and cultural differences, new product development, branding, and customer service, and for assessing the effectiveness of pricing, promotions, and product and service delivery strategies
The Marketing Research Process Step 3: Exploratory (Qualitative) Research Methods -> usually primary
• Observation: examine purchase and consumption behaviours through personal means or the use of technology, such as video camera or other tracking devices. o Can last for a very brief period of time, or it may take days or weeks. o When consumers are unable to articulate their experiences, observation research is useful. o confirm purchase details that consumers might not be able to recall accurately o Can even be used to understand differences among consumers when they shop in retail stores • Ethnography: observational method that studies people in their daily lives and activities in their homes, work, and communities. o Use when potential respondents are unable to express in a useful way their experiences with a product or service -> insights and intimate details that respondents may not want to reveal o Require highly trained researchers to use and analyze video cameras, audio recording devices, and diaries to keep detailed records • In-depth interview: exploratory research method; trained researchers ask questions, listen to and record the answers, and then pose additional questions to clarify/expand on a particular issue. o Ex: in addition to simply watching teenagers shop for apparel (observational), interviewers might stop them one at a time in the mall to ask them a few questions, such as "We noticed that you went into and came out of Abercrombie very quickly, and without buying anything. Why o Results provide insights that help managers better understand the nature of their industry, as well as important trends and consumer preferences -> invaluable for marketing strategies o Provides a historical context for the phenomenon of interest, particularly when they include industry experts or experienced consumers. o Communicate how people really feel about a product or service at the individual level, a level that rarely emerges from other methods that use group discussions. o Use the results to develop surveys o Relatively expensive and time-consuming. One interview may cost $200 or more, depending on its length and the characteristics of the people used in the sample. -> Ex: if the sample requires medical doctors, the costs of getting interviews will be higher than intercepting teenagers • Focus groups: small group of persons (usually 8 to 12) comes together for an in-depth discussion about a particular topic. Using an unstructured method of inquiry, a trained moderator guides the conversation on the basis of a predetermined general outline of the topics of interest. o Researchers usually record the interactions on videotape or audiotape so they can carefully comb through the interviews later to catch any patterns of verbal or nonverbal responses. o gathers qualitative data about initial reactions to a new or existing product or service, opinions about different competitive offerings, or reactions to marketing stimuli, like a new ad campaign o Virtual focus groups have started to make inroads into the market researchers' toolkit • Projective technique: type of qualitative research in which subjects are provided a scenario and asked to express their thoughts and feelings about it. o Ex: consumers may be shown a cartoon that has a consumer looking at a shelf display in a supermarket with a text box above the consumer. The respondent would write in their thoughts on the issue in the text box -> visualize the situation and project their thoughts or feelings • Social media sites are a booming source of data for marketers that can aid them in their marketing research and strategy endeavours. -> Provide insights into what consumers are saying about the firm's own products or its competitor's products. o Learn about customers' likes, dislikes, and preferences not only by monitoring their past purchases, but also by monitoring their interactions with social network sites such as Facebook. o Gather the most up-to-date news about itself, its products, and its services, & competitors. o learn about customers' perceptions and resolve customer complaints they may never have heard about through other channels • Focus groups and in-depth interviews are used more than personal observations, esp. ethnography. • When picking a research method, consider the objective of the research, the cost to undertake the research, the time required, how soon the results are needed, and whether the marketer has the research expertise in-house or has to hire a market research firm to do the research, especially with methods such as ethnography and projective techniques. -> may use several methods • Data collection is really important because it's the most expensive; careful of bias & accuracy
The Marketing Research Process STEP 2: DESIGN THE RESEARCH PROJECT-Primary Data
• Primary data: collected to address the specific research needs/questions currently under investigation -> focus groups, observe consumer behaviour, in-depth interviews, and surveys • Sometimes, info needed is available only through primary data. • Help eliminate some of the problems inherent to secondary data. • Advantage: it can be tailored to fit the research questions; always relevant to your problem • Disadvantages: more costly to collect than secondary data & collection typically takes longer. o Marketers often require extensive training and experience to design and collect primary data that are unbiased, valid, and reliable. • Biased data examples: sample does not represent the entire population, researchers inject their own biases by the way they ask questions or try to get respondents to answer in specific ways, or the respondents may be the wrong people or provide answers they think researchers want to hear.
The Marketing Research Process STEP 2: DESIGN THE RESEARCH PROJECT- Primary Data- Important decisions
• Researcher must make several important decisions. 1) which methods to use 2) what types of sampling plan is best in light of the research objective 3) What types of research instruments (e.g., questionnaire, observation) to use 4) how the research instrument should be designed 5) how best to contact potential respondents (telephone, online, in-person, or mail).
The Marketing Research Process STEP 2: DESIGN THE RESEARCH PROJECT
• Researchers identify the type of data needed and determine the type of research necessary to collect it. -> Objectives of the project drive the type of data needed. • Ex: marketer of national brand of cologne wants to evaluate its position in the marketplace relative to its competitors (benchmarking project). The specific purpose is twofold: to determine the brand's current relative market share and to assess how that position will change in the next few years. o Identifying the type of data needed for determining relative market share is straightforward. ->Find company's sales during a particular time frame relative to the largest firm in industry o Identifying the type of data needed for assessing the extent to which the firm's market position will improve, stay the same, or deteriorate is not as easy to obtain. Assess customers' brand loyalty. The company's relative market share in relation to that of its competitors over time can also shed light on the future of its market position. The firm will want to know which firms have been gaining market share and which are losing. o Now decide whether the data should be obtained from secondary or primary sources.
The Marketing Research Process STEP 2: DESIGN THE RESEARCH PROJECT-Secondary Data
• Secondary Data: info collected prior to the start of focal research project; external/internal sources. -> free or very inexpensive external sources such as census data, trade associations, Internet, books, journal articles, and magazines and newspapers. Although readily accessible, these inexpensive sources may not be specific or timely enough to solve the marketer's research needs and objectives. • A marketing research project often begins with a review of the relevant secondary data. • Sometimes, secondary data are not adequate. Because the data initially were acquired for some purpose other than the research question at hand, they may not be completely relevant-> outdated. • Marketers may purchase external secondary data called syndicated data: available for a fee from commercial research firms; info about shifting brand preferences and product usage in households, which they gather from consumer panels. o For our cologne example, data available from these sources might include prices of various colognes, sales figures, growth/decline, and advertising and promotional spending. o Consumer packaged goods firms often cannot gather pertinent data directly from the retailers that sell their products to consumers-> makes syndicated data a valuable resource for them. • how was it collected -> is it trustworthy? Without knowing the research design (purpose of the research, sample size, respondents, questions asked) researchers could make wrong inferences • assess customer lifetime value (CLV): marketing metric to determine customer's value to a firm • Problems with getting info from the Internet o Info is tactical and not particularly insightful: it does not allow deep understanding of customers -> what motivates, disappoints, satisfies, frustrates, impresses, or delights customers. o not representative of the customer base; it captures the views of only consumers who participate. o The importance of eliminating bias and ensuring that quality research is being conducted is being overshadowed by the constant availability and convenience of Internet data.
The Marketing Research Process STEP 4: ANALYZE DATA
• Should be both thorough and methodical. • To generate meaningful information, researchers analyze and make use of the collected data. • Data: raw numbers or other factual information that, on their own, have limited value to marketers. • When the data are interpreted, they become information, which results from organizing, analyzing, and interpreting the data, and putting it into a form that is useful to marketing decision makers. • Ex: use secondary data to find out info about your product, analyze it to get information. Use surveys to get conclusive info to change strategy. Then, adjust your product accordingly. Pay attention to social media to learn more about consumers and their shopping behaviour. • The purpose of converting data to information is to describe, explain, predict, and/or evaluate a particular situation. For example, Wendy, the downtown Ottawabased retailer of tweens clothing, learned that her core customers live in various suburbs around downtown. This piece of data takes on new meaning when she learns that none of these customers were drawn to her store by a clever and expensive direct mail campaign. By analyzing data she collected through a survey, she discovered that her core customers are working professionals who are drawn to the store when they walk by it on their way to and from work, not people from the upscale apartments in the downtown region that she targeted with her direct mail advertisements. • It is important to analyze and interpret the data in an objective manner. They should not try to hide or colour-coat findings that are different from what they had hoped for. Misinterpreting the findings or manipulating the statistics to suit hunch could lead to the wrong decision, which could have serious consequences for marketers.