MKTG 181 Chapter 8: Marketing Research: From Customer Insights to Actions

The Role of Marketing Research, DRAW FIGURE 8-1 AS MEMORIZATION TOOL
MARKETING RESEARCH is the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions. Although imperfect, marketers conduct marketing research to reduce the risk of and thereby improve marketing decisions

Whatever the marketing issue involved, whether discovering consumer tastes or setting the right price, good marketing research is challenging…examples…Marketing research must overcome these difficulties and obtain the information needed so that marketers can asses what consumers want and will buy

The Five Step Marketing Research Approach
A decision is a conscious choice from among two or more alternatives…no magic formula guarantees correct decisions…Managers and researchers have tried to improve the outcomes of decisions by using more formal, structured approaches to decision making, the act of consciously choosing from among alternatives…The systematic marketing research approach used to collect information to improve marketing decisions and actions described in this chapter uses five steps and is shown in FIGURE 8-1. Although the five step approach described here focuses on marketing decisions, it provides a systematic checklist for making both business and personal decisions
Step 1: Define the Problem
Involves two key elements in defining a problem: setting the research objectives and identifying possible marketing actions

Set the Research Objectives: Research objectives are specific, measurable goals the decision maker seeks to achieve in conducting marketing research…In setting research objectives, marketers have to be clear on the purpose of the research that leads to marketing actions. The three main types of marketing research, explained in more detail later in the chapter, are as follows:
1) Exploratory Research: provides ideas about a vague problem
2) Descriptive Research: generally involves trying to find the frequency with which something occurs or the extent of a relationship between two factors
3) Causal Research: tries to determine the extent to which the change in one factor changes another one

Identify Possible Marketing Actions:
Effective decision makers develop specific MEASURES OF SUCCESS, which are criteria or standards used in evaluating proposed solutions to the problem. Different research outcomes, based on the measure of success, lead to different marketing actions…example…might help if you need to know it…
Marketing researchers know that defining a problem is an incredibly difficult task. If the objectives are too broad, the problem may not be researchable. if they are too narrow, the value of the research results may be seriously lessened. This is why marketing researchers spend so much time defining a marketing problem precisely and writing a formal proposal that describes the research to be done

Step 2: Develop the Research Plan
The second step in the market research process requires that the researcher (1) specify the constraints on the marketing research activity, (2) identify the data needed for marketing actions, and (3) determine how to collect the data

Specify Constraints:
The CONSTRAINTS in a decision are the restrictions placed on potential solutions to a problem. Examples include the limitations on the time and money available to solve the problem…example

Identify Data Needed for Marketing Actions:
Effective marketing research studies focus on collecting data that will lead to effective marketing actions….example…need relevant information to help make a clear choice

Determine How to Collect Data:
Determining how to collect useful marketing research data is often as important as actually collecting the data, which is step 3…Two key elements in deciding how to collect the data are (1) concepts and (2) methods
Concepts are ideas about products or services…to find out about consumer reactions to a potential new product, marketing researchers frequently develop a new-product concept, which is a picture or verbal description of a product or service the firm might offer for sale….
Methods are the approaches that can be used to collect data to solve all or part of the problems….Observing people and asking them questions, the two main data collection methods, are discussed in the following section….special methods vital to marketing are sampling and statistical inference…sampling by selecting a group of distributors, customers, or prospects, asking them questions, and then treating their answers as typical of all those in whom they are interested…they may then use statistical inference to generalize the results from the sample to much larger groups of distributors, customers, or prospects to help decide on marketing actions

Step 3: Collect Relevant Information, FIGURE 8-2 IMPORTANT, DRAW AND MEMORIZE
Collecting enough relevant information to make a rational, informed marketing decision sometimes simply means using your knowledge to decide immediately. At other times it entails collecting an enormous amount of information at great expense

DATA: the facts and figures related to the project, are divided into two main parts: secondary data and primary data

SECONDARY DATA: facts and figures that have already been recorded prior to the project at hand…divided into two parts, internal and external secondary data, depending on whether the data comes from inside or outside the organization needing the research

PRIMARY DATA: facts and figures that are newly collected for the project…can be divided into observational data (watching people), questionnaire data (asking people), and other sources of data

Step 3: Collect Relevant Information: Secondary Data (internal, external, advantages/disadvantages)
Secondary Data: Internal:
The internal records of a company generally offer the most easily accessible information…marketing inputs and market outcomes….marketing input data relate to the effort expended to make sales…marketing outcome data relate to the results of marketing efforts…examples

Secondary Data: External:
Published data from outside organizations are external secondary data…US Census Bureau….Economic Census…Nielsen TV ratings, JD Power’s automotive quality and customer satisfaction surveys…trade associations, business periodicals, and universities…

Advantages and Disadvantages of Secondary Data:
Advantages:
1) The tremendous time savings because the data have already been collected and published or exist internally
2) The low cost, such as free or inexpensive Census reports…furthermore, a greater level of detail is often available through secondary data, especially US Census Bureau data
Disadvantages:
1) Secondary data may be out of data, especially if they are US Census data collected only every 5 or 10 years
2) Definitions or categories might not be quite right for a researcher’s project…also, because the data have been collected for another purpose, they may not be specific enough for the project. In such cases, it may be necessary to collect primary data

Primary Data: Watching People
Observing people and asking them questions are the two principal ways to collect new or primary data for a marketing study. Facts and figures obtained by watching, either mechanically or in person, how people actually behave is the way marketing researchers collect OBSERVATIONAL DATA. Observational data can be collected by mechanical (including electronic), personal, or neuromarketing methods…

Mechanical Methods:…eg National TV ratings of Nielsen…

Personal Methods:…eg Mystery shopper…watching consumers in person or recording them are two other observational approaches…eg watching women do their laundry, people brush their teeth, etc…to see how people use the products…Ethnographic research is a specialized observational approach in which trained observers seek to discover subtle behavioral and emotional reactions as consumers encounter products in their “natural use environment,” such as in their home or car…Personal observation is both useful and flexible, but it can be costly and unreliable when different observers report different conclusions when watching the same event…and while observations can reveal what people do, it cannot easily determine why they do it…this is the principle reason for using neuromarketing and questionnaires, our next topics

Neuromarketing Methods: Lindstrom believes consumers’ feelings towards products and brands reside deep within the subconscious part of their brands…Lindstrom used brain scanning to analyze the buying process of more than 2,00 participants…example of Campbell changing soup packaging…

Primary Data: Asking People
Asking consumers questions and recording their answers is the second principal way of gathering information. We can divide this primary data collection task into (1) idea generation methods and (2) idea evaluation methods, although they sometimes overlap and each has a number of special techniques. Each survey method results in valuable QUESTIONNAIRE DATA, which are facts and figures obtained by asking people about their attitudes, awareness, intentions, and behaviors

Idea Generation Methods: Coming Up with Ideas…Individual interviews..depth interviews…focus groups…Trend Hunter…

Idea Evaluation Methods: Testing an Idea…In idea evaluation, the marketing researcher tries to test ideas discovered to help the marketing manager recommend marketing actions. Idea evaluation methods often involve conventional questionnaires using personal, mail, telephone, fax, and online surveys of a large sample of past, present, or prospective consumers…personal interview surveys, mail surveys, telephone interviews, online surveys…The foundation of all research using questionnaires is developing precise questions that get clear, unambiguous answers from respondents…open-ended question, closed-end or fixed alternative questions…dichotomous question, the simples form of a fixed alternative question…scale…semantic differential scale…Likert scale…Marketing research questions must be worded precisely so that all respondents interpret the same question similarly…mall intercept interviews…

Primary Data: Other Sources
Four other methods of collecting primary data exist that overlap somewhat with the methods just discussed. These involve using (1) social media, (2) panels and experiments, (3) information technology, and (4) data mining

Social Media: Revolutionizing the way today’s marketing research is done…conducting marketing research using social media…social media metrics…

Panels and Experiments: Two special ways that observations and questionnaires are sometimes used are panels and experiments…a panel is a sample of consumers or stores from which researchers take a series of measurements…advantages and disadvantages…an experiment involves obtaining data by manipulating factors under tightly controlled conditions to test cause and effect…uses, parts, advantages/disadvantages

Information Technology: INFORMATION TECHNOLOGY involves operating computer networks that can store and process data. Today, information technology can extract hidden information from large databases…Figure 8-5 shows how marketers use information technology, data, models, and queries to obtain results that lead to marketing actions…data warehouse, sensitivity analysis, product or brand drivers…

Data Mining: In contrast, data mining is the extraction of hidden predictive information from large databases to find statistical links between consumer purchasing patterns and marketing actions…

Advantages and Disadvantages of Primary Data
Compared with secondary data, primary data have the advantages of being more flexible and more specific to the problem being studied. The main disadvantages are that primary data are usually far more costly and time consuming to collect than secondary Data
Analyzing Primary Data Using Cross Tabulations, Developing Cross Tabulations, Interpreting Cross Tabulations
A CROSS TABULATION, or cross tab, is a method of presenting and analyzing data involving two or more variables to discover relationships in the data…add more on these sections if necessary
Step 4: Develop Findings
Marketing data and information have little more value than garbage unless they are analyzed carefully and translated into findings, Step 4 in the marketing research approach

Analyze the Data:
…example…hires a consultant to collect and analyze…

Present the Findings:
Findings should be clear and understandable from the way the data are presented.Managers are responsible for actions. Often it means delivering the results in clear pictures and, if possible, in a single page…graphs…using marketing dashboards to present findings graphically…

Step 5: Take Marketing Actions
Effective marketing research doesn’t stop with findings and recommendations…someone has to identify the marketing actions, put them into effect, and monitor how the decisions turn out, which is the essence of Step 5

Make Action Recommendations: Converting market research findings into specific marketing recommendations with a clear objective…example

Implement the Action Recommendations: Put them into action…example…eg advertising campaign/advertisement targeting specific group that was identified with marketing research…

Evaluate the Results: Evaluating the results is a continuing way of life for effective marketing managers. There are really two aspects of this evaluation process:
Evaluating the decision itself
Evaluating the decision process used
(more info in textbook)
Again, systematic analysis does not guarantee success…but, as in the case of Tony’s Pizza, it can improve a firm’s success rate for its marketing decisions

Sales Forecasting Techniques
Forecasting and estimating potential sales is often a key goal in a marketing research study. Good sales forecasts are important for a firm as it schedules production. The term SALES FORECAST refers to the total sales of a product that a firm expects to sell during a specified time under specified environmental conditions and its own marketing efforts…Three main sales forecasting techniques are often used:
1) Judgements of the Decision Maker…probably 99 percent of all sales forecasts are simply the judgment of the person who must act on the results of the forecast, the individual decision maker…direct forecast…lost-horse forecast…
2) Surveys of Knowledgeable Groups…asking people who are likely to know about future sales. Two common groups surveyed to develop sales forecasts are prospective buyers and the firm’s salesforce…survey of buyers’ intentions forecast…salesforce survey forecast…
3) Statistical Methods…The best known statistical method of forecasting is trend extrapolation…linear trend extrapolation