© 2004 McGraw-Hill Companies Inc. 5-1 Chapter 5 Marketing Research and Information Systems

© 2004 McGraw-Hill Companies Inc.© 2004 McGraw-Hill Companies Inc. 5-5-11

Chapter 5Chapter 5

Marketing Research Marketing Research and Information Systemsand Information Systems


Chapter OutlineChapter Outline Differences between Business and Consumer Differences between Business and Consumer

Marketing ResearchMarketing Research The Business Marketing Research ProcessThe Business Marketing Research Process Developing Information SourcesDeveloping Information Sources Marketing Research Versus a Marketing Information Marketing Research Versus a Marketing Information

SystemsSystems Major Tasks of Marketing Research and Information Major Tasks of Marketing Research and Information

GatheringGathering Technology and Environmental Factors Impacting Technology and Environmental Factors Impacting

MIS and Marketing ResearchMIS and Marketing Research


Marketers with Marketing Research Marketers with Marketing Research ResponsibilityResponsibility

Vice President of MarketingVice President of Marketing Director of MarketingDirector of Marketing Marketing ManagerMarketing Manager Product ManagerProduct Manager Assistant Product ManagerAssistant Product Manager Sales ManagerSales Manager Field SalespersonField Salesperson All other professional-level All other professional-level

marketing positionsmarketing positions

If you would like to have If you would like to have one of these positions, one of these positions, take learning marketing take learning marketing research skills seriously. research skills seriously. Marketing research is a Marketing research is a “must-have” core skill. “must-have” core skill.


.

Differences between Business and Differences between Business and Consumer Marketing ResearchConsumer Marketing Research

Preparing to researchPreparing to research Complicated: Talk with asComplicated: Talk with as Relative simple: Talk to the Relative simple: Talk to the many employees who havemany employees who have senior marketing, advertising orsenior marketing, advertising orcontact with the customer ascontact with the customer as product manager to define product manager to define possible, at all levels in the possible, at all levels in the problem.problem.organization. Then, organization. Then, summarize findings andsummarize findings andtalk to head managers totalk to head managers tofinalize identification of thefinalize identification of theproblem.problem.

Relationship with theRelationship with the Close: Think about usingClose: Think about using Relatively distant: Treat theRelatively distant: Treat theRespondent Respondent the research as a way to the research as a way to respondent with respect andrespondent with respect and

improve or enhance improve or enhance care but it is unlikely that thecare but it is unlikely that thecustomer relations.customer relations. Organization will ever have one-Organization will ever have one-to-one contact with individual to-one contact with individual respondents in the respondents in the

future.future.

BusinessBusiness Consumer Consumer Exhibit 5-1


.


Respondent definitionRespondent definition Different people in the sameDifferent people in the same Individuals that are aware of a and relationshipIndividuals that are aware of a and relationshipcompany may contribute to company may contribute to category or brand, users of a category or brand, users of a

the decision to buy. So, the decision to buy. So, of a category or brand, those of of a category or brand, those of

there may be multiple there may be multiple a particular demographica particular demographic

respondents from eachrespondents from each criteria. Each respondent iscriteria. Each respondent is

customer business thatcustomer business that likely to be independent from alllikely to be independent from all

to be surveyed.to be surveyed. other respondents.other respondents.

Sample sizeSample size Small. Fairly limited inSmall. Fairly limited in Large. Dependent on categoryLarge. Dependent on category

total population and eventotal population and even under investigation but usuallyunder investigation but usually

more so if within a definedmore so if within a defined more or less unlimited. Theremore or less unlimited. There

industry or NAICSindustry or NAICS are about 72.5 million U.S.are about 72.5 million U.S.

category.category. Households and over 250 million Households and over 250 million Americans.Americans.



.


Research approach andResearch approach and Surveys are often administeredSurveys are often administered Surveys are usually Surveys are usually

MethodologyMethodology personally (e.g., via one-on-one personally (e.g., via one-on-one administered impersonally administered impersonally

interviews)interviews) (e.g., via mail, the Internet, (e.g., via mail, the Internet,

or phone)or phone)



The Business Marketing Research The Business Marketing Research ProcessProcess

Define the Research ProblemDefine the Research Problem Develop Research Objectives and QuestionsDevelop Research Objectives and Questions Formulate a Research PlanFormulate a Research Plan

• Observational studiesObservational studies• Survey researchSurvey research• Experimental researchExperimental research

Execute Research DesignExecute Research Design Prepare and Analyze DataPrepare and Analyze Data Prepare and Communicate ResultsPrepare and Communicate Results


Developing Information SourcesDeveloping Information Sources

Secondary Data SourcesSecondary Data Sources• Internal Sources Internal Sources - - financial statements, research reports, financial statements, research reports,

sales reports, customer letterssales reports, customer letters

• External Sources External Sources - - published marketing researchpublished marketing research

• Secondary Data on the Web - Secondary Data on the Web - (but, as always, consider (but, as always, consider the source)the source)

• Government Sources Government Sources - - published marketing researchpublished marketing research NAICSNAICS


NAICS CodesNAICS Codes NAICSNAICS = North American Industrial Classification System; = North American Industrial Classification System;

replaced SIC (Standard Industrial Classification) codesreplaced SIC (Standard Industrial Classification) codes Common for NAFTA countriesCommon for NAFTA countries NAICS hierarchical structure:NAICS hierarchical structure:

XXXX Industry sector Industry sector XXX XXX Industry subsectorIndustry subsectorXXXXXXXX Industry groupIndustry groupXXXXXXXXXX IndustryIndustryXXXXXXXXXXXX U.S., Canadian, or Mexican national U.S., Canadian, or Mexican national

specificspecific

http://www.naics.com/cgi-bin/search.plhttp://www.naics.com/cgi-bin/search.pl

(continued)(continued)


NAICS CodesNAICS CodesDivides economy into 20 major industry sectors Divides economy into 20 major industry sectors (at two-digit level):(at two-digit level):

11 Agriculture, Forestry, Fishing,11 Agriculture, Forestry, Fishing, 54 Professional, Scientific, and Technical 54 Professional, Scientific, and Technical and Huntingand Hunting servicesservices

21 Mining 21 Mining 55 Management of Companies and 55 Management of Companies and 22 Utilities 22 Utilities EnterprisesEnterprises23 Construction23 Construction 56 Administrative and Support, Waste 56 Administrative and Support, Waste 31–33 Manufacturing 31–33 Manufacturing Management, and Remediation ServicesManagement, and Remediation Services42 Wholesale Trade 42 Wholesale Trade 61 Education Services 61 Education Services 44–45 Retail Trade44–45 Retail Trade 62 Health Care and Social Assistance 62 Health Care and Social Assistance 48–49 Transportation 48–49 Transportation 71 Art, Entertainment, and Recreation 71 Art, Entertainment, and Recreation 51 Information 51 Information 72 Accommodation and Food Services72 Accommodation and Food Services52 Finance and Insurance 52 Finance and Insurance 81 Other services (except Public 81 Other services (except Public 53 Real Estate, Renting, 53 Real Estate, Renting, Administration) Administration)

and Leasing and Leasing 92 Public Administration92 Public Administration(continued)(continued)


NAICS CodesNAICS CodesExample of additional digits making the product more specific:Example of additional digits making the product more specific:

Sector Sector 31–33 31–33 ManufacturingManufacturing

SubsectorSubsector 334 334 Manufacturing computer and Manufacturing computer and electronic productselectronic products

Industry group Industry group 33463346 Manufacturing of magnetic and Manufacturing of magnetic and optical optical mediamedia

3346133461 Manufacturing of magnetic mediaManufacturing of magnetic media

334611334611 Software reproductionSoftware reproduction


5-



Secondary Data SourcesSecondary Data Sources• Commercial Sources Commercial Sources - - suppliers, banks, consultants, ad suppliers, banks, consultants, ad

agenciesagencies

• Professional Publications Professional Publications - - trade associations, journals, trade associations, journals, showsshows


Commercial Secondary SourcesCommercial Secondary Sources

Thomas Register of American ManufacturersThomas Register of American Manufacturers• Most used directory of manufacturers Most used directory of manufacturers • Available in libraries and on InternetAvailable in libraries and on Internet• 16 volumes of manufacturers listed by product16 volumes of manufacturers listed by product• 2 volumes of manufacturers listed alphabetically2 volumes of manufacturers listed alphabetically• 8 volumes of manufacturer’s catalogs8 volumes of manufacturer’s catalogs

City Chamber of Commerce Directory—lists all member City Chamber of Commerce Directory—lists all member companies alphabetically, by product and by codecompanies alphabetically, by product and by code

To find company contacts, telephone To find company contacts, telephone numbers, products produced, and size:numbers, products produced, and size:

(continued)(continued)


Commercial Secondary SourcesCommercial Secondary Sources State Industrial DirectoriesState Industrial Directories

• Companies listed by product, then grouped by Companies listed by product, then grouped by location, by NAICS code, and alphabeticallylocation, by NAICS code, and alphabetically

• Field salespeople love themField salespeople love them• Many libraries have all 50 volumesMany libraries have all 50 volumes

Association Membership Directories—lists members Association Membership Directories—lists members alphabetically, by company, and sometimes by state or alphabetically, by company, and sometimes by state or county.county.



Disadvantages of Secondary DataDisadvantages of Secondary Data• Recency of dataRecency of data• Coverage of data (adequate for your purposes?)Coverage of data (adequate for your purposes?)• Sample size (adequate?)Sample size (adequate?)• Bias (by sponsor or objectives of original survey) Bias (by sponsor or objectives of original survey) • Data sourceData source



Primary Data SourcesPrimary Data Sources• Personal InterviewsPersonal Interviews• Telephone SurveysTelephone Surveys• Mail SurveysMail Surveys


5-5



Disadvantages of Primary Data Disadvantages of Primary Data • ExpensiveExpensive• Time intensiveTime intensive• Requires experimental design/survey design skillRequires experimental design/survey design skill• Unwillingness (or inability) of respondent to provide Unwillingness (or inability) of respondent to provide

informationinformation• Nonrepresentative, nonrespondent problemNonrepresentative, nonrespondent problem


Marketing Research Versus a Marketing Research Versus a Marketing Information SystemMarketing Information System

Marketing information system Marketing information system uses people, procedures, uses people, procedures, hardware, and software to accumulate, integrate, and hardware, and software to accumulate, integrate, and disseminate important data through reports to key disseminate important data through reports to key marketing decision makers. In contrast, marketing marketing decision makers. In contrast, marketing research is problem or project oriented.research is problem or project oriented.

Can also be defined as a system that scans and collects Can also be defined as a system that scans and collects data from the environment, makes use of data from data from the environment, makes use of data from transactions and operations within the firm, and then transactions and operations within the firm, and then filters, organizes, and selects data before presenting it as filters, organizes, and selects data before presenting it as information to marketing management.information to marketing management.


Marketing Information Marketing Information System = MIS System = MIS

Most common business usage of MIS = Most common business usage of MIS = managementmanagement information information systemsystem

Management information systems usually collect, organize, and Management information systems usually collect, organize, and report company operating information (production, quality, labor report company operating information (production, quality, labor usage, on-time delivery reports).usage, on-time delivery reports).

In general sense, a marketing information system could be included In general sense, a marketing information system could be included as one type of management information system. as one type of management information system.

MIS is also an old term for a company’s computer department MIS is also an old term for a company’s computer department (because it was responsible for management information system (because it was responsible for management information system hardware, software, and system operation).hardware, software, and system operation).

The moral of the story is, refer to a marketing information system as The moral of the story is, refer to a marketing information system as a marketing information system rather than MIS.a marketing information system rather than MIS.


MARKETING INFORMATION SYSTEMMARKETING ENVIRONMENT

Internal marketing

environment

Employees

Financial resources

Operating data

External marketing

environment

Customers

Competition

Government

Suppliers

Key Marketing Decision Makers

Marketing

Information

MARKETING MANAGERS

Analytical marketing

system

Data organization

EditingStorage

Data analysis

Modeling and simulation

Report generation and dissemination

Routine information

Nonroutine information

Information

Internal reports system

Marketing intelligence

system

Marketing research system

Exhibit 5-6


Major Tasks of Business Marketing Major Tasks of Business Marketing Research and Information GatheringResearch and Information Gathering Market PotentialMarket Potential

• maximum total sales and profit potential of existing maximum total sales and profit potential of existing and new products and new products

Market-Share Analysis Market-Share Analysis • ratio of sales revenue of the firm to the total sales ratio of sales revenue of the firm to the total sales

revenue of all firms in the industryrevenue of all firms in the industry Market CharacteristicsMarket Characteristics

• factors that identify buyers and potential buyersfactors that identify buyers and potential buyers


Major Tasks of Business Marketing Major Tasks of Business Marketing Research and Information GatheringResearch and Information Gathering Sales AnalysisSales Analysis

• a.k.a. microsales analysisa.k.a. microsales analysis• measuring sales as they relate to customer and measuring sales as they relate to customer and

product characteristics, geographic region, order product characteristics, geographic region, order size, and price or discount classsize, and price or discount class

Forecasting Forecasting • Estimates of amount a firm expects to sell during a Estimates of amount a firm expects to sell during a

specific time period under specific conditions and to specific time period under specific conditions and to specific segmentsspecific segments


Major Tasks of Business Marketing Major Tasks of Business Marketing Research and Information GatheringResearch and Information Gathering CRM and Database DevelopmentCRM and Database Development

• Customer Relationship Management—Customer Relationship Management—an integrated software system which typically an integrated software system which typically includes:includes: Customer service and communicationCustomer service and communication Sales force automationSales force automation Campaign managementCampaign management Business intelligenceBusiness intelligence


Major Tasks of Business Marketing Major Tasks of Business Marketing Research and Information GatheringResearch and Information Gathering

Determine Current Level of Customer Relationships within

the Firm

Establish Interaction with Current Customer Base

Acquire and Capture Customer Data Based on

Interactions

Use Technology to Store and Integrate Customer Data

Analyze Data for Profitable/Unprofitable

Segments

Leverage and Disseminate Customer Information

throughout Firm

Exhibit 5-7 A Simple Flow Model of the Customer Relationship Management Process

Adapted from: Hair, Bush & Ortinau, Marketing Research Within a Changing Information Environment, 2nd Ed. (2003), p. 128.


Major Tasks of Business Marketing Major Tasks of Business Marketing Research and Information GatheringResearch and Information Gathering Other ApplicationsOther Applications

• Setting sales quotasSetting sales quotas• Setting sales territoriesSetting sales territories• PricingPricing• Test-marketing auditsTest-marketing audits• Business trendsBusiness trends• New product acceptanceNew product acceptance• Advertising researchAdvertising research• Competitive differencesCompetitive differences


Technology and Environmental Factors Technology and Environmental Factors Impacting MIS and Marketing ResearchImpacting MIS and Marketing Research

The InternetThe Internet• Passive dataPassive data• Active dataActive data• E-commerceE-commerce• Directed dataDirected data• Data miningData mining

Increased concern for privacyIncreased concern for privacy Gatekeeper technologiesGatekeeper technologies


Marketing Research Assignment: Marketing Research Assignment: A Second ChanceA Second Chance

Scenario:Scenario:

Clemson Electronics Inc. is a high-tech electronics manufacturer that has Clemson Electronics Inc. is a high-tech electronics manufacturer that has designed a mobile, quick-responding device to measure and identify designed a mobile, quick-responding device to measure and identify hazardous waste in soils. Traditionally, soil samples are collected, hazardous waste in soils. Traditionally, soil samples are collected, brought to a lab, and processed through a series of tests by a trained brought to a lab, and processed through a series of tests by a trained chemist. The new device is brought to the site, requires no special chemist. The new device is brought to the site, requires no special training, and can quickly provide an accurate analysis. The general training, and can quickly provide an accurate analysis. The general manager has assigned you to develop information upon which strategic manager has assigned you to develop information upon which strategic planning will be based.planning will be based.

How would you respond?How would you respond?


Marketing Research Assignment: Marketing Research Assignment: Questions to ConsiderQuestions to Consider

What are the present and potential market segments? What are the present and potential market segments? Who are the key potential customers? Who are the key potential customers? Can you develop a demand forecast for the first five years? Can you develop a demand forecast for the first five years? Who are the major competitors for each segment? Who are the major competitors for each segment? How do we compare in costs and customer benefits? How do we compare in costs and customer benefits? What environmental factors could favorably or unfavorably What environmental factors could favorably or unfavorably

affect demand?affect demand? Are there government data that you recommend using? Are there government data that you recommend using? Do you recommend primary research? Do you recommend primary research? Can you have a report ready prior to the senior management Can you have a report ready prior to the senior management

meeting in three weeks? meeting in three weeks?

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© 2004 McGraw-Hill Companies Inc. 5-1 Chapter 5 Marketing Research and Information Systems