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Identify the role of marketing research in strategic decision makingDefine the process of marketing researchIdentify the three principles for generating information useful to managersExplain why marketing research requires analysis and interpretation of data
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Copyright © by Houghton Mifflin Company, Inc. All rights reserved First Edition
Chapter 1
The Nature and Scope of
Marketing Research
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Chapter Objectives
• Identify the role of marketing research in strategic decision making
• Define the process of marketing research
• Identify the three principles for generating information useful to managers
• Explain why marketing research requires analysis and interpretation of data
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Chapter Objectives (Cont’d)
• Discuss the relationship between marketing research and decision making
• Describe the wide variety of applications for marketing research
• Identify various career opportunities in marketing research
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e-Bay: Listening to Customers
• Vision: To help practically anyone trade practically anything on earth
• To achieve the vision, e-Bay:– Blends marketing research with its overall business
strategy– Forms voice of the customer group to keep itself
informed about the needs and preferences of its customers
– Creates Feedback Forum for users to give each other ratings for each transaction
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Exhibit 1.1 Role of Marketing Research in Strategic Planning
and Decision MakingStrategic Marketing Plan:
Organizational Resources,Objectives,Marketing Strategy,Implementation and Control
Marketing Research
Marketing Strategy/Marketing MixProduct-Price-Promotion-Distribution
Customer/Society
informs
influences
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Marketing Strategy
• A plan that enable an organization to make the best use of its resources to meet marketing objectives
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Marketing Plan
• A formal document that specifies the organization’s resources, objectives, strategy and implementation and control efforts in marketing the specific products
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Basic Components of Marketing Plan
• Identifying marketing opportunities and constraints
• Developing and implementing marketing strategies
• Evaluating the effectiveness of marketing plans
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Identifying Market Opportunities
and Constraints• Who are our potential competitors and how strong
are their market positions?• How satisfied are consumers with current
offerings on the market ? Are there any unmet consumer needs ?
• How is our offering likely to be perceived by consumers relative to competitors’ offerings ?
• Marketing Research can help answer these and other questions of interest to marketers
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Identifying Marketing Opportunities and Constraints
• Identify– Potential customers’ strengths and weaknesses– Consumer satisfaction with current market
offerings– Consumer perceptions of the offer relative to
competitors
• Goal– Maintain competitiveness
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T.G.I.Friday’s: Using Marketing Research to Identify New Opportunities
• How the Research Was Conducted:– Formal interviews with parents and children– Observation of young customers’ likes and
wants
• Research Showed– Young customers want something beyond
ordinary drinks– T.G.I Friday’s created special kids’ drinks like
Banana Kong
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Marketing Research to Track Product Performance and Customer Satisfaction of
Products and Services• Research Showed
– Consumers wanted abundance of toppings
• Marketing research led to revamping of pizza toppings
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Embracing the Marketing Concept-Need to gain a good understanding of
customers• Importance of conducting marketing
research in the early stages of formulating marketing strategies:
• Unilever PLC – Developed new detergent brand, Power– Ignored warnings about the catalyst
used in the product – Forced to withdraw the product
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Understanding the Competitive Environment
• Who are Blockbuster’s competitors?
• Direct Broadcast Satellite (DBS)– Cable movie and pay TV channels – Supermarket video rentals
• How should Blockbuster react to competitive threats?
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Developing and Implementing Marketing Strategies
Develop an effective Marketing Mix
Price Place
Product Promotion
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Developing and Implementing Marketing Plans
• Renaissance Spirometry -- NPB– Conducted marketing research
• interviews,focus groups, telephone surveys, usage experiences, usage frequencies from doctors
– Quality deployment function: translate customer requirements into engineering specifications
– Potential users evaluate product through each step of product development
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Evaluating the Effectiveness of Marketing Plans
• Controlling or the Control Function– Getting feedback from the marketplace
– Taking necessary or corrective actions
• Example Questions– Is the market share rising/declining/not moving? Why?
– Who uses the product?
– Are the answers consistent with company goals?
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Common Views of Marketing Research
• Gathering data from markets• Conducting customer surveys• Determining the needs of customers• Evaluating customer response to advertising• Testing products in the market place• Estimating the potential sales of product• Gathering sales and market share data of
competitors
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Exhibit 1.2 Role of Marketing Research in the
Organization/BusinessOrganizational / Business
Decision Makers
Marketing Research
Marketing Decisions
Customer/Society
informs
influences
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Marketing Research Definition
• A set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers who are involved with marketing goods, services or ideas
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Principles of Marketing Research
• Principle #1: – Attend to the timeliness and relevance of research
• Principle #2: – Define research objectives carefully and clearly
• Principle #3: – Do not conduct research to support decisions already
made
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Principle # 1: Attend to the Timeliness and Relevance of Research
Ariel High Suds
Launch
LOW SALES RATES
1985 1986 1987 1988 1989
Marketing Research
Lag Time
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Research and Decision Making• P&G’s Ariel High Suds
– Research-related decisions--the timing of the research studies prior to launch
• Decision to forgo additional research to understand the impact of changed economic conditions – contributed to the initial lackluster performance of the product
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Principle # 2: Define Research Objectives Carefully and Clearly
• Coca Cola tested New Coke against Coke Classic
• They didn’t account for consumer reaction to lack of choice between the two!
• End Result: New Coke failed
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Principle # 3:Do Not Conduct Research to Support Decisions
Already Made• Indianized Yogurt:
– Decision was made to produce yogurt– Yogurt plant was constructed– Marketing research determined there was
only a very small market– Product failed in the marketplace
• Nestlé's Dahi is a recent entrant in the yogurt market
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The Role of Marketing Research in Analysis and Interpretation
• Marketing Research can be used to identify “profitable customers” and “not-profitable customers”– Profitable Customers: those who are more
likely to spend large amounts of money and become repeat customers
– Not-Profitable Customers: those who are more likely to spend less money on each transaction and might not return
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Importance of Analysis and Interpretation
Few Customers, Large Volume/per Customer – Profitable Target Market
Large Number of Customers, Low Volume/per Customer -- Not-Profitable
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Research Results and Management Decisions
• Kellogg sought foreign markets in which to expand
Latvians prefer a hearty plate of sausage, cold cuts,potatoes,eggs, and a few slices of thick, chewy buttered bread.
Mexicans and Indians prefer hot, spicy breakfasts.
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Research Results and Management Decisions
• Marketing research conducted by Kellogg did not forecast enthusiastic response in the countries—Kellogg decided to pursue these markets, anyway !
• Kellogg cereals’ appeal is limited to a small health-conscious group.
• Will it work?
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Exhibit 1.3 Marketing Research’s Relationship to Decision Making
Activity
Decision-making activity
Marketing Research
Organization’s internal and
external environments
Marketing situation calling for decision(s)
Final decision(s)
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Marketing Research Applications
• Gathering data from markets
• Conducting customer surveys
• Determining the needs of your customers
• Evaluating customer response to advertising
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Marketing Research Applications (Cont’d)
• Gathering sales and market share data on your competitors
• Testing your products in the marketplace
• Estimating potential product sales
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Classification of Marketing Research
• Basic Research : to generate or create knowledge – Journal of Marketing articles
• Applied research– To solve a problem– To develop strategies for products and services
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Marketing Services
• Claritas Inc -- Specializes in providing marketing information to companies
• Key supplier of information containing the profiles and life-styles of U.S. consumers on a zip code-by-zip code basis
• Developed a information base by combining U.S. Census Bureau demographic data with life-style/attitudinal data generated through various regional surveys
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How Do You Recruit a Nun? Marketing Research Comes to
the Rescue• St.Benedictine Convent:
– Majority of Sisters 70+ years– Inability to attract new recruits
• Conducted Focus Groups:– To determine why they were not able to recruit young
members– Research showed people perceived nuns to have a dull
existence
• Launched New Ad campaign • Recruited an average of three nuns a year
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In-house Marketing Research
• Formal Marketing Department– Centralized: one marketing department for all
product lines– Decentralized: separate marketing departments
for individual product lines– Hybrid : combination of centralized and
decentralized
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External Marketing Research
• Large Commercial Firms:– AC Nielsen provides full service, planning through
recommendations
• Small Commercial Firms – Specialize in one part of the process
– Custom Research Inc. provides
marketing research,customer
satisfaction, and database
marketing services
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External Marketing Research (Cont’d)
Academic Consultants Professors and students’
research projects
Trade Associations
International trade site (www.fita.org)
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Exhibit 1.4 Illustrative Centralized Marketing Research Function in a Multibrand Company
Corporate Marketing Research Department
Responsibilities include:
• Designing Studies
• Constructing Questionnaires
• Selecting Samples
• Collecting Data
• Analyzing Data
• Preparing Reports
• Choosing External Research Providers
Corporate Marketing Department
Marketing of Brand A
Marketing of Brand B
Marketing of Brand C
Research Reports
Research Requests
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Corporate Marketing Department
Marketing of Brand A
Marketing of Brand B
Marketing of Brand C
Requests Reports Requests Reports Requests Reports
Marketing Research Department for Brand A
Responsibilities Include:• Designing Studies• Constructing Questionnaires• Selecting Samples• Collecting Data• Analyzing Data• Preparing Reports• Choosing External Research Providers
Marketing Research Department for Brand B
Responsibilities Include:• Designing Studies• Constructing Questionnaires• Selecting Samples• Collecting Data• Analyzing Data• Preparing Reports• Choosing External Research Providers
Marketing Research Department for Brand C
Responsibilities Include:• Designing Studies• Constructing Questionnaires• Selecting Samples• Collecting Data• Analyzing Data• Preparing Reports• Choosing External Research Providers
Exhibit 1.5 Illustrative Decentralized Marketing Research Function in a Multibrand Company
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Corporate Marketing Department
Marketing of Brand A
Marketing of Brand B
Marketing of Brand C
Research Reports
Research Requests
Research Requests
Research Requests
Corporate Marketing Research Department
Responsibilities include:
• Collecting Data
• Analyzing Data
• Preparing Reports
• Choosing External Research Providers
Marketing Research
Department for Brand A
Responsibilities Include:• Designing Studies• Constructing Questionnaires• Selecting Samples
Marketing Research
Department for Brand B
Responsibilities Include:• Designing Studies• Constructing Questionnaires• Selecting Samples
Marketing Research
Department for Brand C
Responsibilities Include:• Designing Studies• Constructing Questionnaires• Selecting Samples
Shared Responsibilities
for Research
Exhibit 1.6 Illustrative Mixed-Structure Marketing Research Function in a Multibrand Company
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MR at BK -- Brand Research and Analysis Department
• Decentralized Function: Four separate groups within the department help to segment out the research into areas of specialty– Consumer research– Sales analysis group– Competitive/secondary information– Customer satisfaction
• Centralized Function: Director of the department keeps the 4 groups unified in their goals and task allocation
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Careers in Marketing Research
• The field of marketing research provides a vast array of job opportunities ranging from titles such as:– Data Entry Clerk; Tabulation Specialist;
Programmer– Interviewer (telephone or field)– Research Analyst– Marketing Research Manager/Director
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Careers in Marketing Research
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Careers in Marketing Research (Cont’d)
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