Chapter 7 Marketing Research Unit 2: Reaching Your Market

Chapter 7 Marketing Research

Unit 2: Reaching Your Market

Learning Goals

Identify three areas of marketing research Give examples of five ways to collect

primary data Identify five sources for secondary data Explain the bias that can occur with different

types of marketing research

Learning Goals

Describe how information technology is used in marketing research

Identify and analyze three trends that affect marketing

Explain the benefit of a sales forecast Summarize reasons why marketing research

might lead to wrong conclusions or actions

Day 1 Response Journal

What kinds of information do you think marketers want to know about you?

***Save As Oct 23 in your Response Journal Folder***

Marketing Research

According to the marketing concept, the best way to make a profit is to meet customers’ needs and wants

You also want to do a better job meeting those needs than your competitors do

So … How do you learn about customer needs and wants? Where do you get information to decide on a target

market? How do you learn about the competition? How do you learn about new opportunities to expand the

business? The answer to these questions is _________________Market Research

Marketing Research

Market Research is the gathering information to make marketing decisions Can range from very simple and inexpensive to

very complex and costly Read the examples in paragraph 2 & 3 on page 91

Market Research is conducted in many areas

This chapter will focus on research in 3 areas;

1.Customers

2.Competition

3.Opportunity

Three Areas of Marketing Research

Marketing Research Purpose Sample Question

Customer Learn about customers so that the company can meet their needs

What is my customers’ favourite snack food?

Competition Learn about competition so that the company can beat the competition

Does my competitor’s product have better features than mine?

Opportunity Learn about new opportunities so that the company can grow

Which market is growing the fastest?

Types of Data

Information is often called data

There are two broad categories of data;

1.Primary Data Collected for and about a specific business Always collected first hand Can be qualitative or quantitative

Qualitative data uses research questions that require judgment from people

• Open ended questions – “Describe the taste of the pop you just sampled?”

Quantitative data is based on facts and figures and can be numerically analyzed

• Closed ended questions - Yes or No, Multiple Choice, Always/Sometimes/Never, etc.

Types of Data

2. Secondary Data Collected for someone else or for

nonmarketing reasons, but is available for all to use

Secondhand data E.g. the government collects data on

population that business could use Usually quicker and less expensive to gather If the info you need already exists, there is no

need to go through the time and expense of collecting it yourself

Collecting Primary Data

There are 5 ways to collect primary data;

1.Observation

2.Interview

3.Survey

4.Diaries

5.Experiment

Collecting primary data is usually expensive and time-consuming

1. Observation

Involves watching customers and then recording their behaviour

Read the example in the first paragraph on page 93 Video cameras are often used so that the customers

don’t know they are being watched Another form of observation is the

_________________; a person hired by a company to visit its place of business and observe the quality of service (posing as a customer) The employees don’t know the secret shopper is observing

them The secret shopper then reports back to the company,

especially noting any problems

Secret Shopper

2. Interview

An _____________ is a formal meeting between two or more people, during which questions are asked of one person Asking in-depth questions of customers

to gain insight into their thoughts, opinions, and reactions to products

Interview

2. Interview

A variation of an interview is the ________________ A focus group is a small group of consumers who

discuss topics of interest with a researcher An interactive interview; the researcher observes

and collects info as the members of the focus group answer questions and/or use the product

A key component of the focus group is the ______________ The moderator asks questions and focuses the

discussion Members of the focus are chosen to represent the

target market

Focus Group

Moderator

Nike Focus Group Example

2. Interview

______ is a prejudice for or against something Bias can be introduced through tone of voice,

facial expressions, or body language Bias can also be introduced though the

questions asked E.g. “Lots of people like protein bars. Do you

like protein bars?”• An unbiased version of the above questions

would be “What is your opinion of protein bars?”

Bias

3. Survey

A ___________ is an organized set of questions asked to a significant number of people

Can be conducted in person, over the phone, by mail or through the Internet

A survey is given to a sample of people chosen represent the larger market

Read the example in paragraph 2 on page 94 The answers from all surveys are then

statistically analyzed

Survey

4. Diaries

A diary is a record of your thoughts, activities or plans

Diaries are used to collect specific information that research participants keep for a ____________ (a week, a month, etc.)

Researchers most often use diaries to … Study how people __________________

and ________________________

Set Time

Use Their TimeSpend Their Money

4. Diaries

Diaries have two formats;

1.Open Format Allows participants to write their own responses Gives more feedback to researchers Labour intensive to analyze responses, and

therefore too expensive for most companies to use

2.Forced-Choice Response Participants pick an answer from the alternatives

outlined (similar to multiple choice) Much easier to analyze Does not allow for any additional information

5. Experiment

In the experiment method, the researcher sets up an actual experiment of some kind and later compares the results

Read the example in paragraph 7 on page 94

Procedures and requirements of scientific accuracy must be followed

A ______________ is a common experiment

Coke Vs. Pepsi Taste Test

Taste Test

Who Collects Primary Data?

Primary data can be collected by; An individualBusinesses

Many businesses have their own market research departments

Market research firms Businesses can also hire a market research firm

to do the research for them E.g. A.C. Nielson, Ipsos Canada, etc.

Day 1 Assigned Work

Students please complete the following; K & U Questions #1 & 2 on page 104Thinking Questions #1 & 2 on page 104Application Questions #1 & 2 on page 104

*** Save As Ch 7 Day 1 in your Unit 2 folder ***


What surveys have you taken in the past? List.

Why do you believe that people aren’t always truthful when answering survey questions?


Surveys

Most surveys use _________________________ which ask you to select an answer from two or more choices

Pros Quick and simple for consumers to answer Easy to sort and analyze for researchers misinterpret Closed-ended questions usually take on one of the

following forms; Yes/No Multiple Choice Agree/Disagree Check all the Apply Rate on Scale

Closed-Ended Questions

Surveys

Closed Ended Questions – Examples

Do you drink pop more than once a week?

Yes No

I would buy Tide laundry detergent again.

Agree Uncertain Disagree

Surveys

From the list of soft drinks below, circle the kind you would most prefer to drink.

a)Pepsi

b)Coca-Cola

c)Dr. Pepper

d)Bark’s Root Beer

e)Other

What do you look for when you shop for a DVD player? (check off all that apply). Simple remoteEase of usePlays MP3sBrand nameMulti-discWarrantyOther

Surveys

Which brands of soap have you purchased in the last year? (check off all that apply). Dove Irish Spring Ivory Jergens Lever 2000 Other

Rate our service using the following scale. Poor Excellent

Cleanliness 1 2 3 4 5Friendly staff 1 2 3 4 5Value 1 2 3 4 5

Surveys

Occasionally surveys will use _______________________ that allow the respondents to develop their own answers

Because open ended questions are hard to analyze, researchers only use them in special circumstances

Respondents also tend to resist open ended questions because they take more time to answer

Open-Ended Questions

Surveys

Open Ended Questions – Examples

What do you like most about this flavor of soft drink?

What words do you associate with each of the following flavours: Cola, Root Beer, Grape, Orange and Ginger Ale?

List your top 3 soft drink flavours.

Surveys

When researchers conduct surveys they collect from a ____________________ of their target market population, thereby giving each member an equal chance of being selected

If a sample does not accurately represent the target market, then the results may be misleading and the sample is said to be __________

If the survey sample is truly random, then the results can be projected onto the entire market

Random Sample

Biased

Survey Examples

5. Surveys

The 5 common problems that often occur when creating survey questions are asking …A leading questionTwo questions in oneAn unanswerable questionAn ambiguous question A nonexhaustive question

Surveys

Leading QuestionA question phrased in such a way as to suggest the desired answer

Two Questions in OneA question that requires two separate answers

The question should be split into two

Unanswerable Question A question that is impossible to answer

Surveys

Ambiguous Question A question that has more than one possible interpretation or meaning

Nonexhaustive QuestionA question or answers that accompany the question is incomplete

Surveys

Common Problem ExamplesHave you ever been caught surfing inappropriate websites at work?Leading questionHow much time do you spend watching TV and doing housework?Two questions in oneWhen was the first time you saw a commercial for our product?Unanswerable question

Surveys

Why is our product better than our competitor’s?

Leading question

How much do you pay for entertainment?

Ambiguous question

How much money do you spend on fast food weekly?

$5 $10 $15 $20

Nonexhaustive question (answers)

How much do you think the average customer spends monthly on clothing?

Unanswerable question

Surveys

How much money do you spend on gas and groceries weekly?

Two questions in one

Where do you use All Around the House cleaner most? Bathroom Kitchen Laundry Room

Nonexhaustive question (answers)

Why do you think our cereal is the best tasting one on the market?

Leading question

Day 2 Assigned Work

Students please complete the following;Create 5 closed-ended and 2 open-ended questions that would help you gather data on teenage shopping habits



How many different frequent shopper or reward program

cards can you list?

Who do you believe benefits the most from these types of cards – the consumer or the

company? And why?


Sources of Secondary Data

Secondary data can be found in a variety of formats, including;

Newspapers Magazines Journals Databases Websites

Information technology has made it much easier to find and analyze secondary data

A ________________ is a computerized file of information Database software enables you to find the

information you need quickly and easily analyze it

Databases are often accessible through the Internet

E.g. A customer database will contain a file for each customer. Each file will contain info such as their name, address, phone number, email and a list of purchases


Database


There are 5 categories of sources for secondary data;

1.Business records

2.Government databases

3.Private databases

4.Libraries

5.The Internet

1. Business Records

Every business collects data That data includes;

Sales records Customer data Financial statements Marketing cost records

Analyzing company data to find answers to questions is called ____________________Data Mining

2. Government Databases

Statistics Canada collects large amounts of data about … The economy Population Businesses

Federal, Provincial, and Municipal governments also collect data

Much of this data is available online

3. Private Databases

The following groups collect information in private databases; BusinessesMarket research firmsTrade associationsChambers of commerce


Some businesses develop _____________________

An industry publication is a magazine or newsletter that focuses on a specific industry E.g. The Beverage Digest

Often gathers and publishes market information

Industry Publications


A _______________________ is an organization of people in a specific type of business

The members of a trade association work together to help each other succeed

Often collects data about its members and its businesses

Often publishes the data in the association magazine or newsletter, or on its website

Trade Association


Another source of information are local and provincial ________________________

A Chamber of Commerce is a group of businesses whose primary purpose is to promote business in their area

Often collects marketing information and information about other businesses in the area

Chambers of Commerce

4. Libraries

Libraries give you access to; DatabasesGovernment dataInternet sourcesPrinted resources

Such as books, business directories, magazines, journals, newsletters, and newspaper articles

5. Internet

Internet search engines make all types of market research easier especially in areas of competitor research

To find marketing information, visit the following types of websites; Trade associations Magazine Your competitors


Source Examples

Your business records

Customer records, sales records, financial statements, promotional campaign records

Government databases

Statistics Canada, Industry Canada, Office of Consumer Affairs

Private databases

Marketing research companies, trade associations, chambers of commerce

Libraries Books, industry publications

Internet Search engines, company websites, trade association websites

Marketing Research Process

Marketing research can be conducted informally Read the examples in paragraph 6 on page 97

Marketing research can also be conducted formally The formal marketing research process is similar

to scientific research Both require you to develop a _______________;

a statement that can be tested and proved either true or false

Hypothesis

Marketing Research Process

Marketing research can be organized into eight steps.

1. Define the problem

2. Conduct background research

3. State a hypothesis

4. Develop a research plan

5. Collect data

6. Analyze the data

7. Draw conclusions

8. Make recommendationsSee figure 7-7 on page 98

Day 3 Assigned Work

Students please complete the following; K & U Questions #8 & 10 on page 104Read the Windigo Catering Profile on pages 102 – 103 and answer the 2 corresponding questions



In your own words, describe what you believe a fad is. List a minimum of 3 examples of

products or services that you believe were/are fads.


Trend Research

One of the major goals of marketing is to spot business opportunities

One way to do this is to look for new trends In general, a __________ is a direction of

movement A ___________________ is direction of

movement of consumer behaviour Trend research often combines research on

customers, competition, and opportunity in order to determine marketing trends

Trend

Marketing Trend

Trend Research

Trend areas of interest to marketers include;

1. Social trends

2. Demographic trends

3. Product trends

The above trends affect consumer behaviourNew trends bring new business opportunitiesBusinesses that find new trends first are often the most successful

1. Social Trends

Social trends are changes in ____________ Often lead to changes in consumer

behaviour E.g. more households consisting of one

person has led to greater need for more single portion convenient food

Society

2. Demographic Trends

Demographic trends are changes in the _______ of segments of the ____________

Examples; An increase in people over the age of 65 A growing immigrant population

These trends lead to new consumer needs such as; More services for older Canadians

• Health care, snow removal, meal delivery, etc.

More publications in different languages

Size Population

3. Product Trends

Product trends refer to the direction of development of ____________ E.g. trend in electronics towards wireless,

trend in TVs towards large flat screens, and trends in snack foods towards bite-sized pieces

Products

3. Product Trends

A trend and a fad are NOT the same A ___________ is a significant change that

lasts an average of ten years and affects a large number of people

A ______ is something that is very popular for a short period of time then almost or completely disappears

Trend

Fad

Trend Researchers

Some companies specialize in giving marketing advice to businesses based on their trend research

Read the example in paragraph 1 on page 100

Trend Hunters – 2015 Trend Predictions

Sales Forecasting

Read paragraph 2 on page 100 A _______________ is a prediction of future

sales based on past sales and an analysis of the market for a specific time period Requires a business to evaluate past sales, review

current sales and determine future growth

Sales forecasts may be … Quantitative

based on facts and figures

Qualitative based on judgment

Sales Forecast

What Is a Sales Forecast?

Both internal factors (within the company) and external factors (outside the company) can impact the sales forecast

The simplest method for completing a sales forecast is to use previous sales and add a percentage of the sales increase

PastSales

Percentage increase factor = Sales Forecast+

Factors Impacting Sales Forecasts

Internal Factors External Factors

• Inventory shortages

• Price changes

• Problems with labour

• Changes in the distribution channels

• Sales force changes

• Economy

• Political events

• Population changes

• Weather

• Seasonality of the business or product

Is Marketing Research Always Right?

Marketing research results can be either useful or misleading E.g. Misleading - customers can change their mind between

the time you did your research and the time your new product reaches the market

Sometimes the usefulness of marketing research depends on the person interpreting the results


Some reasons why market research can be misleading are: Error in estimating target population

Stating the target market as larger or smaller than it actually is

Error in selecting population sample E.g. assuming an old telephone directory has all current

business listing, when in reality new businesses will have moved in and others closed

Survey errors Structure errors (poor questioning) and language errors

(vague, biased or assumes certain knowledge)


Errors in measurement E.g. failure to rotate answers for a question can

create bias, as respondents tend to select the first few answers from a list and overlook the others

Errors in data analysis E.g. simple math errors (adding numbers up

incorrectly)

Reporting errors Improperly representing the research findings in

the report

Day 4 Assigned Work

Students please complete the following; Complete the Fad or Trend? Activity Worksheet

Instructions for this activity are posted on ClassNet under Tasks

A hard copy of the student worksheet will be provided to you

Documents

Chapter 7 Marketing Research Unit 2: Reaching Your Market