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The systematic and objective process of generating information to aid in making marketing decisions.
also called “pure” research is the task of scholars and academicians. Its goal is to further the knowledge of mankind.
Ex. What is the nature of the relationship between advertising content and ad recall?
while calling upon basic research as its foundation, is meant to answer a specific question concerning a real world problem. Ultimate goal is to enhance decision making.
Ex. Do consumers recall Nike’s advertisements more when the content is dynamic or static?
The Marketing Concept
- Engineering orientation
- pre-Industrial Revolution
- Production orientation
- late 19th – early 20th centuries
- Marketing orientation
- early 20th century – present
- Consumer Orientation- Marketing is about satisfying needs of the consumer
- Long-run Profitability
- Cross-Functional Effort- All firm activities keep the needs of marketing in mind
- Relationship Building- Long term customer are the most profitable
- Total Quality Management- Continuous improvement of product quality and service
The Marketing Mix(or, the 4 Ps)
Product Research Example
Chee-tos wants to know if the cheese flavor will be liked in China, and if not, what flavor would be liked
Pricing Research Example
Bausch & Lomb wanted to know if consumers would be willing to pay a dollar a day for disposable contact lenses
Placement (distribution) Research Example
Golden Books wanted to learn where consumers would like to buy children's books
Promotion Research Example
Zale’s wanted to learn why people were hesitant to buy expensive pieces of jewelry so they could create ads that alleviated consumers’ concerns
- Research that regularly provides feedback For evaluation And control Indicates things are or are not going as planned
- Research may be required To explain why something “went wrong”
When Should I Do Research?
- When there is sufficient time available before a decision is required
- When currently available information in inadequate
- When the decision is of strategic of tactical importance
- When the value of the information is greater than the cost of the research
Data versus Information
- To enhance decision making, people need information
- Marketing research involves collecting data, but data is NOT information
- A thorough analysis and interpretation of the data results in information
Data- Facts, figures, statistics. Always start with data.
Information- A translation of the data into something meaningful.
Implications- Meaningful information should be useful for decision making.
Data Ex. 63% of the Denny’s morning (6am – 11am) customers are aged 55-75 59% of Denny’s morning item sales are from customers aged 25-45
Info Ex. While it may appear that Denny’s older customer base is strong, they provide proportionally less sales and yet require higher levels of service due to more time at the table. Older customers (55-75) are less profitable than younger (25-45) customers.
Implications Ex. Focus on growing the younger customer base, because they spend more and cost less to service.
Four Criteria of Valuable Information
- Relevance- To the decision maker
- Quality- The information must be true, or represent truth as closely as possible
- Timeliness- Out of date information is useless
- Completeness- Having truth in information is useless if there is more truth that needs to be uncovered
Problem Discovery and Definition
- First step
- Problem, opportunity, or monitor operations
- Discovery before definition
- Problem means management problem
The indication of a specific marketing decision area that will be clarified by answering some research questions.
Defining Problem Results in
Clear Cut Research Objectives
- Symptom Detection
- Analysis of the Situation
- Exploratory Research (Optional)
- Problem Definition
- Statement of Research Objectives
The Process of Problem Definition
- Ascertain the decision maker’s objectives
- Understand background of the problem
- Isolate/identify the problem, not the symptoms
- Determine unit of analysis
- Determine relevant variables
- State research questions and objectives
Ascertain the Decision Maker’s Objectives
- Decision makers’ objectives
- Managerial goals expressed in measurable terms.
- x Increase sales (bad)
- x Increase advertising effectiveness by 10% over the next three months (better)
- x Increase unaided brand recall in our three lightest markets (Atlanta, Birmingham, and Mobile) by 15% by Q3 2006 (good)
Understand the Background of the Problem
- Exercising judgment
- Situation analysis - The informal gathering of background information to familiarize researchers or managers with the decision area.
Isolate and Identify the Problems, Not the Symptoms
Symptoms can be confusing and misleading
- Twenty-year-old neighborhood swimming association:
- Membership has been declining for years.
- New water park - residents prefer the expensive water park????
- Demographic changes: Children have grown up
Determine the Unit of Analysis
- Individuals, households, organizations, etc.
- In many studies, the family rather than the individual is the appropriate unit of analysis.
Determine the Relevant Variable
- Anything that may assume different numerical values
- Types of Variables
- An unproven proposition
- A possible solution to a problem
Basic Questions - Problem Definition
- What is the purpose of the study?
- How much is already known?
- Is additional background information necessary?
- What is to be measured? How?
- Can the data be made available?
- Should research be conducted?
- Can a hypothesis be formulated?
The Significance of Research Design
There are basic marketing research designs that can be successfully matched to given problems and research objectives, and they serve the researcher much like the blueprint serves the builder.
Types of Research Design
- Three traditional categories:
- x Exploratory
- x Descriptive
- x Causal
- The choice of the most appropriate design depends largely on the objectives of the research and how much is known about the problem and research objectives.
A Caution- It should not be implied that research design is a step-by-step process in terms of the order in which design should be carried out. Many research projects use only one design.
Basic Research Objectives and Research Design
- Exploratory- To gain background information, to define terms, to clarify
- problems and hypotheses, to establish research priorities
Descriptive- To describe and measure marketing phenomena at a point in time
Causal- To determine causality, to make “if-then” statements
- Exploratory research is most commonly unstructured, informal research that is undertaken to gain background information about the general nature of the research problem.
- By unstructured, we mean there is no formal set of objectives, sample plan, or questionnaire.
- It is usually conducted when the researcher does not know much about the problems.
- Exploratory research is usually conducted at the outset of research projects.
- Initial research conducted to clarify and define the nature of a problem
- Usually only the first step in a research design.
- Not meant to provide the answer to your ultimate question.
- Formulate a problem or define a problem more precisely
- Identify alternative courses of action
- Develop hypotheses
- Isolate key variables and relationships for further examination
- Gain insights for developing an approach to the problem
- Establish priorities for further research
Exploratory Research Uses
- Gain Background Information
- Define Terms
- Clarify Problems and Hypothesis (refine research objectives)
- Establish Research Priorities
Exploratory Research Methods
- A variety of methods are available to conduct exploratory research;
- Secondary Data Analysis
- Experience Surveys
- Case Analysis
- Focus Groups
- Projective Techniques
- Descriptive research is undertaken to describe answers to questions of who, what, where, when, and how.
- Descriptive research is desirable when we wish to project a study’s findings to a larger population, if the study’s sample is representative.
- Research designed to describe characteristics of a population or phenomenon
- Answers who, what, when, where, and how questions
- For much market research, descriptive research is all that is needed to assist in decision making
- To describe the characteristics of a relevant group
- To estimate the percentage of units in a specified population exhibiting a certain behavior
- To determine the perceptions of product characteristics
- To determine the degree to which marketing variables are associated
- To make specific predictions
Descriptive Research- Research Design
- Two basic classifications:
- Cross-sectional studies
- Longitudinal studies
- studiesmeasure units from a sample of the population at only one point in time.
- Sample surveys: are cross-sectional studies whose samples are drawn in such a way as to be representative of a specific population.
- These studies are usually presented with a margin of error.
- Cross-sectional studies take “snapshots” of the population at a point in time.
- Repeatedly measure the same sample units of a population over time.
- Longitudinal studies often make use of a panel which represents sample units who have agreed to answer questions at periodic intervals.
- Many large research firms maintain panels of consumers.
- Causality may be thought of as understanding a phenomenon in terms of conditional statements of the form “If x, then y.”
- Causal studies are conducted through the use of experiments.
- Research conducted to identify cause-and-effect relationships among variables
- Most rigorous and demanding type of research
- Often causal relationship is isolated to basic research, although is performed in extensive applied research areas
- To understand which variables are the cause (independent variables) and which variables are the effect (dependent variables) of a phenomenon
- To determine the nature of the relationship between the causal variables and the effect to be predicted
Three criteria to establishing causality
- 1.Appropriate temporal sequence
- –Cause precedes effect
- 2.Strong concomitant variation
- –Cause must be statistically related to effect
- 3.No other possible explanations
- –Nearly impossible to rule out all other possible causes of any specific effect
An experiment is defined as manipulating an independent variable to see how it affects a dependent variable, while also controlling the effects of additional extraneous variables.
- Independent variables are those variables which the researcher has control over and wishes to manipulate.
- For example: level of ad expenditure; type of ad appeal; price; product features, etc.
- Dependent variables are those variables that we have little or no direct control over, yet we have a strong interest in.
- Examples would be return on investment, net profits, market share, customer satisfaction.
- Extraneous variables are those variables that may have some effect on a dependent variable yet are not independent variables.
- Extraneous variables must be controlled through proper experimental design.
A procedure for devising an experimental setting such that a change in a dependent variable may be attributed solely to the change in an independent variable.
Which measures the extent to which the change in the dependent variable is actually due to the change in the independent variable.
Which refers to the extent that the relationship observed between the independent and dependent variables during the experiment is generalizable to the “real world.”
Types of Experiments
- Laboratory experiments
- Field experiments
Those in which the independent variable is manipulated and measures of the dependent variable are taken in a contrived, artificial setting for the purpose of controlling the many possible extraneous variables that may affect the dependent variable.
Those in which the independent variables are manipulated and the measurements of the dependent variable are made on test units in their natural setting.
- Test marketing is the phrase commonly used to indicate an experiment, study, or test that is conducted in a field setting.
- Uses of test markets
- To test sales potential for a new product or service
- To test variations in the marketing mix for a product or service
- Test marketing is used in both consumer markets and industrial B2B markets as well.
- Lead country test market: test marketing conducted in specific foreign countries that seem good predictors for an entire continent.
Types of Test Markets
- Standard Test Market: one in which the firm tests the product and/or marketing mix variables through the company’s normal distribution channels.
- Controlled Test Markets: ones that are conducted by outside research firms that guarantee distribution of the product through prespecified types and numbers of distributors.
- Electronic Test Markets: those in which a panel of customers have agreed to carry identification cards that each consumer presents when buying goods and services.
- Simulated Test Markets: those in which a limited amount of data on consumer response to a new product is fed into a model containing certain assumptions regarding planned marketing programs, which generate likely sales volume.
Criteria for Selecting Test Markets
- Representativeness: Do demographics match the total market?
- Degree of isolation: Phoenix and Tulsa are isolated markets; Los Angeles is not.
- Ability to control distribution and promotion: Are there preexisting arrangements to distribute the new product in selected channels of distribution? Are local media designed to test variations of promotional messages?
Test Marketing Pros & Cons
- Allows most accurate method of forecasting future sales
- Allows firms the opportunity to pretest marketing mix variables
- Does not yield infallible results
- Are expensive
- Exposes the new product to competitors
- Takes time to conduct
The MR Process
- Problem Discovery
- Problem Definition
- Research Design
- Data Collection
- Data Analysis
- Report Findings
- The process of determining the problem in terms that can be researched
- Broader in scope than problem definition, and a necessary precursor
- May involve a qualitative or exploratory technique in order to properly define the problem
- The stage in which management seeks to identify a clear-cut statement of the problem or opportunity
- Must contain clear objectives and definite designs.
- The most important, and most often neglected area of MR.
- Very often this is the stage where you develop hypotheses.
- An unproven proposition or supposition that tentatively explains certain facts or phenomena
- H1: There is a direct relationship between the amount of homework assigned in a class and SIUE students’ attitudes toward that class.
- *Note: In statistical analysis, we test the null hypothesis, which is the opposite of the hypothesis, and attempt to disprove the null.
- The stage in which the researcher determines a framework for the research plan of action by selecting a basic research method
- -Secondary Data
Secondary Data Study
- Using previously collected data to study the research problem
- -Previous period sales
- -Historical measures of satisfaction
- -Patronage records with demographic profiles
- A research technique that gathers information from a sample of respondents through the use of a questionnaire.
- Most flexible way of collecting primary data, but subject to interviewer or respondent error
An unobtrusive method of learning about behavior without directly interacting with respondents
- A written statement of the research design that includes a statement explaining the purpose of the study and a detailed, systematic outline of procedures associated with a particular research methodology.
- Usually submitted to a client before undertaking the rest of the research project.
- The stage in which the researcher determines who is to be sampled, how large a sample is needed, and how sampling units will be selected.
- Sample needs to be representative of the market population
- Should be large enough to provide statistical precision
- Probability sample: every member of the population has an equal chance of being selected for sampling
- Non-probability sample: selection of units based on personal judgment
- Varies by research design
- Survey: get questionnaires completed by sample respondents
- Experiment: conduct the experiment, and measure all variables of interest
- Observation: Send research assistants to the field to observe appropriate phenomena and report their observations
- Secondary Data Study: Collect relevant data from appropriate sources
- Involves the conversion of data to information.
- Includes data entry, coding, and cleaning.
- SPSS, SAS, Excel, CA, DEA, etc.
- Interpret analysis to make decisions that will directly apply to the research problem defined in the first stage.
- Communicating the findings to the client, sometimes with recommendations.