#7 Marketing Research Ch.5

7/30/2019 #7 Marketing Research Ch.5

1/33

Marketing Research &Forecasting

Chapter 5


2/33

The Situation Firm began by offering

classically styled, high-

quality leather handbags. Women needed only two

purses in brown or black.

Mid-1990s: sales slowed.

Consumer preferences

changed as more womenentered the workforce.

Designer bags madeCoachs look plain.

Coach

Research Revamps Strategy

Case Study

Researchs Role Method: Interviews 14,000

women annually. Watches

trends for market voids. Key research findings:

1) desire for fashionpizzazz in handbags.2) Usage voids.

New products are createdto fill voids (wristlets,fabric bags, Signature line,etc.).

Sales and earnings grow.


3/33

Definition of Marketing

Research

Marketing Researchis . . . .

the process of defining a marketing problem or opportunity,

systematically collecting and analyzing information, and

recommending actions to improve an organizations

marketing activities.


4/33

Limitations

Data is always out of date. Management usually wants research

yesterday to make a point.

Doesnt tell you what to do. Is scientific & objective

(numbers).

Only as good as the data gatherer & preparer. Shortcuts cut costs butadd risks.

Research is difficult to assess:

a. lacks follow up authority

b. management may not be qualified to interpret and react

accordingly.


5/33

Market Research Process

Defineproblem

and

research

objectives

Developplan

to

collect

data

Implement,collect

and analyze

data

Interpretand

report

findings


6/33

The Marketing Research Process

Marketing research:

Systematic design, collection, analysis, and reporting

Data relevant to a specific marketing situation facing the

organization A multi-step, purpose-driven process

Measure effectiveness of marketing actions, sales potential,

try to understand consumer behaviour

Can be done by company personnel or contracted out to

outside companies

Figure 5.2
http://www.marketingpower.com/


7/33

The Marketing Research Process (continued)

Defining the problem and research objectives:

Helps to know what you are looking for!

Can be the most difficult step in the process

Need to distinguish between symptoms and problems

Exploratory research: p.170

Research conducted to gather information to

Help better define problems and opportunities

Secondary research, focus group discussions and depth

interviews are commonly used for this purpose

Figure 5.2
http://www.mra-net.org/


8/33


Descriptive research:

Research conducted to better describe marketing problems,

situations, or markets, such as :

Demographic characteristics of markets, attitudes of

consumers, and market potential for a product

Surveys and personal interviews are commonly used Causal research:

Research to test hypothesis about cause and effect

relationships.

Figure 5.2
http://www.acnielson.com/


9/33


Developing the research plan:

Translating the research objectives into specific information

needs

Research plan presented in a written proposal for approval

Secondary data:information that already exists, having been

collected for another purpose ( see Table 5.1 p.172) Internal data, academic, and commercial sources

Faster and cheaper than primary data collection, but may

not be in a suitable form for decision making

Helps to see what work has already been done in the area

Figure 5.2
http://www.proquest.com/


10/33

The Marketing Information System

Assessing information needs:

Remember, the objective is to make better marketing

decisions

Must consider needs of all users

Must balance information wants

with decision making needs and

feasibility (and costs) of offering it The value of information comes

from its use, not its existence

Developing information:

Internal data Marketing intelligence

Marketing research
http://www.dialog.com/


11/33

Developing Information

Internal data:

Information collected from different sources within the

company, and stored within the organizations information

system

Accounting system

Operations/production

Sales reporting systemPast research studies

Internal data is cheap, quick,and easy

May not be in a usable form forthe decision to be made

May be too much informationto sort through
http://www.usaa.com/


12/33

Developing Information

Marketing intelligence:

Systematic collection and analysis of

Publicly available information

About competitors and market developments Proactive approach to keeping

track of what is going on within

the organizations marketing

environment

Sources:employees, customers,trade shows, websites, marketing

communications, suppliers,

resellers, professional information

services, and dumpster diving
http://www.npd.com/


13/33

Types of Marketing Information

Secondary data

Facts and Figures Already recorded

prior to the project

Primary data

Facts and Figures Newly collected for

the project

Internal data (inside the firm) Financial statements, research

reports files, customer letters,sales call reports, andcustomer lists

External data (outside the firm) Statistics Canada reports, trade

association studies, and

magazines, business periodicals,and commercial reports

Observational data

(watching people) Mechanical and electronic

approaches

Personal approaches

Questionnaire data

(asking people) Idea generation through in-depth

interviews and focus groups

Idea evaluation through mail,

telephone, and personal surveys

Data Facts and figures

pertinent to theproblem


14/33

Market Research Process:

Develop the Research Plan

Advantages of

Secondary Data

Less time to obtain

Lower cost than

primary research

Alternate means of

access to information Benefit from

resources of others

Potential Problems

With Secondary

Data

May not be:

Relevant

Accurate

Current

Impartial


15/33

Primary Data Sources (see p.174 Table 5.2)

1. Survey:a. Personal interview ( Molson Beer survey on Campus)b. Telephone

c. Mail

d. Focus groups, consumer panels, expert panels

e. Internet

2. Observation:

a. Audit (store & warehouse)b. Simple, direct (via consumer panel)

c. Contrived event

d. Mechanical

3. Experimentation:a. Psycho galvanometer (lie detector)

b. Pupilometer (eye direction camera)

c. Perceptoscope (pupil dilation)

d. Tachistoscope


16/33

Pros & Cons: Surveys1. Surveys: Low cost & quick.

Unwillingness to answer or unreliability of sample is common.

Certain leading questions or poorly constructed ones may influence answers. A great deal of time is spent studying the content, and wording of questions.

Personal interview: expensive, but high response rate. A large amount of data can be collected.

projective tests can be used.

Telephone: cheap & fast. Least amount of data collected.

hours of phoning are limited.

Mail: slow, inflexible, good control, but low response rate.

Focus groups: panels can be local or national.

They can yield info as to : who bought, or used according to age, sex, familysize, income, etc.


17/33

Pros & Cons: Observation

2. Observation: some bias may exist on behalf of consumers who know that they are being

observed or on behalf of observers who make the data fit their objectives.

Audit: no bias (inventory turnover)

made famous by A.C. Neilson.

Simple, direct: watching the movement of people in a store.

It gives us an idea for layout and design.

Contrived event: setting up an event to find (special item on bottom shelf in far corner)

Mechanical: cameras, audiometers, etc.


18/33

Pros & Cons: Experimentation

3. Experimentation: expensive, unnatural, unrealistic setting, but

completely objective.

Psychogalvanometer: (lie detector machine) to illicit someresponse, we examine sweat on hand, body temperature, etc.

Pupilometer:(eye camera) to find out what part of advertisementattracts the eye.

Perceptoscope:pupil dilation reveals level of boredom.(ie. Atropine for the belladonna effect)

Tachistoscope:measures speed at which ideas are perceived, (Adsmessage clarity).


19/33

Contact Methods (p.176 Table 5.3)

Source: Adapted with permission from Marketing Research: Measurement and Method,

7th ed., by D.S. Tull and D.I. Hawkins, MacMillan Publishing Company, 1993

Table 6.3

Mail Telephone Personal Online

Flexibility Poor Good Excellent Good

Quantity of data collected Good Fair Excellent Good

Control of interviewereffect

Excellent Fair Poor Fair

Control of sample Fair Excellent Fair Poor

Speed of data collection Poor Excellent Good Excellent

Response rate Poor Good Good Good

Cost Good Fair Poor Excellent
http://www.canadapost.ca/


20/33

Research Features

Question & answer techniques:

Direct

Open ended Comparison

Rating scales

Projective tests


21/33

Typical Problems in Wording Questions

PROBLEM SAMPLE QUESTION EXPLANATION

Leading question

Ambiguous question

Unanswerable

question

Two questions

in one

Why do you like Wendys fresh meat

hamburgers better

than those of competitors made with

frozen meat?

Do you eat at fast-food restaurants

regularly?

YesNo

What was the occasion for youreating your first hamburger?

Do you eat Wendys hamburgers and

chili?

YesNo

Consumer is led to make

statement favoring Wendys

hamburgers

What is meant by word

regularly-once a day, once a

month, or what?

Who can remember the

answer? Does it matter?

How do you answer if you

eat Wendys hamburgers but

not chili?


22/33

Typical Problems in Wording Questions

PROBLEM SAMPLE QUESTION EXPLANATION

Non exhaustive

question

Non mutually

exclusive

answers

Where do you live?

At homeIn dormitory

What is your age?

Under 2020-4040 and over

What do you check if you

live in an apartment?

What answer does a 40-year

old check?


23/33

Reliability & Validity

Reliable: data can be replicated, and is therefore trustworthy,dependable, and consistent. (to footnote your reference sources.)

Valid: logically related conclusion. We must measure what we aresupposed to be measuring. (Is there a logical connectiveness with your project claims? ieif A then B, therefore C may not be true.)

Example: a male panel is asked to judge which group is more attractive:

1. Group X [men with ties]

2. Group Z [females without ties]

Example: garlic around neck will cure your cold in 7 days; otherwise, it will take

one week.


24/33


Plan Primary Data Collection

Sampling Plans - three

issues

What is the sampling unit?

What is the sample size?

What is the sampling

procedure?
http://www.statpac.com/surveys/sampling.htm


25/33


Sample:

A segment of the population selected for marketing research

To represent the population as a whole

Who should be surveyed? Sampling unit

How many should be surveyed? Sample size

How should they be chosen? Sampling procedure
http://www.statpac.com/surveys/sampling.htm


26/33


Types of Samples ( see p.182 Table 5.4)

Probability Samples

Simple random

sample Known chance

Equal probability

Stratified random

sample Mutually exclusive

groups

Random sample drawn

Non-probability Samples

Convenience sample

Select easiest population Judgement sample

Select for accurate

response

Interviewer sets number Quota Sample


27/33

Sampling

Probability sampling: (everyone has a knownprobability of being selected).

A. Random sampling: (every 10th name in the phone book; but not everyoneis listed or has a phone).

B. Stratified sampling: where every major segment of the

population receives a weighted share of importance (furniturestore may be interested in 20-30 year old newly weds instead of empty nesters).

C. Cluster (area) sampling: (random city block; then random

sampling within.) Its cheap and quite good.

Non-probability sampling: (selection of people isbased on researchers judgement).

A. Quota sampling: no randomness. (first 100 people weareyeglasses. Very adequate for exploratory research.)


28/33

Forecastinga. Extending past behaviour

Assumes that past conditions will continue unchanged into

the future. Doesnt react to long run cyclical changes.

b. Anticipating future behaviour

Is much more time consuming and subjective as to which

factors to consider. Initially we may develop a national economic forecast based

upon (GDP, population growth, disposable income, etc.)

This is then used to develop an industry sales forecast, andthen a company, then a product forecast.

Forecasts can be used to provide breakdowns by:1. Geographic region

2. Product type

3. Customer type

4. Commission class, etc.


29/33

Forecasting (continued)

Single factor method:

past or future estimated sales x Z factor = forecast

Multiple factor method:

Same as above, only several factors are used.

population x income group sought x age group sought x share of

market x price of product = total sales potential


30/33

Time Series Analysis

Leading & lagging indicators ie construction starts;business bankruptcies, etc

Economist use the above to help predictseasonal, time, and special trends or

fluctuations in our economy.


31/33

Qualitative & Quantitative Methods

Quantitative methods: Time series, market test

methods, consumption co-efficient, regression analysis,barometric analysis, statistical demand analysis, etc.

Market-Build-up Method = potential buyers Xprobability of purchase.

Market Rating Index (MRI) = area share of retailsales percent of nations population. (IfVancouver has 7.03% of nations sales and 5.77% ofpopulation, its MRI = 122, 7.03 5.77 = 122%)

Chain-Ratio method (which is the opposite of theMarket-build-up method.) Start with more generalmarket information, and then compute more specificinformation.


32/33

Based on Methods

What people say Surveys of buyers

intentions.Composite sales force

opinions.

Expert opinion

What people do Test markets

What people have done

Time series analysisLeading indicators

Statistical demand

analysis


33/33

Qualitative methods:

a. Jury of executive opinion: a group of seasonedveterans give their opinions.

b. Sales force estimates: drawbacks to this may be:1. high turnover of reps. (unfamiliar + unreliable)

2. may not be familiar with economic climate changes.

3. mistrust of such information between sales force andmanagement.

c. Surveys & market tests:surveys of buyers intentions(Gallup, McGraw Hill surveys.)

d. Substitute methods: (Corollary Product Indexes) toapproximate upper & lower limits especially for new

products (pay T.V.)e. Delphi method: experts state their responses.

Information is collected and feedback is given. Newresponses are submitted and the process is repeated. Onechoice finally emerges. (The Pope was chosen in thisfashion.)

Qualitative & Quantitative Methods

Documents

#7 Marketing Research Ch.5