The Market Research ProcessWorkshopWorkshop

Introduction:

While the need for market research does cross the marketing executives agendafrom time to time, very few marketers actually follow a predetermined process to help them define what they need market research to deliver, and which marketresearch processes suit their requirements best.

The Market Research Process Workshop is a 32 slide workshop that serves the purpose of defining the market research process best followed to define the deliverables of a specific market research project, and to determine whichmarket research approach will serve the purpose best

Planning Process Overview

1. Problem formulation

2. Method of inquiry

3. Research method

4. Research design

5. Selection of data collection techniques

6. Sample design

7. Data collection

8. Analysis and interpretation of data

9. Research report

The Research Process

First: What is the Problem?Second: Is it worth Investigating?Third: How do we do it?

Managing Client Expectations

Future State

Statement ofAttainments

Problem FormulationCurrent State

Strengths

Critical SuccessFactors for theFuture State

Controllable

Plan of ActionInclude in theEngagementLetter

WhoProblemStatement

Analysis

ReportNormative

Strengths

Weaknesses

Opportunities

Threats

Controllable

Environmental

Relevant Data

Cost-Value

Who

Financial Plan

Timeline

CommunicationProtocol

Problem Formulation

• Single most important step!

– Addressing the wrong problem, no matter how brilliant and thorough you are, won’t help you solve their problemssolve their problems

Problem Formulation

• Two steps:

– Understand manager’s need

– Transform it into a meaningful problem

• Requires communication• Requires communication

– Marketing research manager must take initiative to determine client’s need and fulfill it

Problem Formulation

• Components

– Manager and manager’s objective

– Environment and context

– Nature of the problem– Nature of the problem

– Alternative courses of action

– Consequences, uncontrollable factors

– Degree of uncertainty

Examples of Problems

Management Problems Research Problems

Allocate advertising budget among media Estimate awareness generated by each media type

Decide whether to keep office open Evaluate use of services on Saturday and determineon Saturday on Saturday whether customers will shift

usage to weekdays

Introduce a new health service Design a concept test and assess acceptance and use

Change the marketing program Design a test-marketing situation such that theeffect of the new program can be estimated

Increase the sales of a product Measure a product’s current image

Environment of the Problem

• Consumer tastes and preferences

• Level of income and rate of growth in the market area

• The degree of competition and competitor action and reaction

• Government regulation (both type and extent)

• The types of consumers that comprise the potential market

• The size and location of the market

• The prospects for growth or contraction of the market over the planning period

• The buying habits of consumers

• The current competition of the product

• The likelihood and timing of entry of new competitive products

• The current and prospective competitive position of the company with respect to quality, and reputation

• The marketing and manufacturing capabilities of the company

• The situation with respect to patents, trademarks, and royalties

• The situation with respect to codes, trade agreements, taxes, and tariffs

Assessing Bottom Line

What data will really help sell more of a product?

An answer to this question involves understanding the consumer.

A clear understanding of consumer behavior ensures that relevant data are collected. relevant data are collected.

Consumers make decisions for many products in a purposeful and comparative way.

Markets are changing all the time and the need for data is ongoing.

Can the Data Answer Strategic Questions?

• Do the data reflect who is purchasing the product or service?• Can the data be related to, and offer insight useful for, solving the

immediate problem?• Do the data include whether a company was in the consumers’

consideration set?• Will the data say why consumers bought from the company or its

competitors?• Will the data say why the products of the company or its competitors • Will the data say why the products of the company or its competitors

were not purchased?• Can the data speak to the relevance of the target consumer?• Can the data help position the company in the competitive

environment?• Can the data suggest what kind of consumers the company wants to

attract in the future?• Do the data deal with when and why the company was successful?• Do the data address the matter of who the target of the marketing is?

“New Coke” Versus Original Coke

In the mid-1980s the Coca Cola Company made a decision to introduce a new beverage product (Hartley, 1995, pp. 129–145). The company had evidence that taste was the single most important cause of Coke’s decline in the market share in the late 1970s an early 1980s.

A new product dubbed “New Coke” was developed that was sweeter than the original-formula Coke. Almost 200,000 blind product taste tests were conducted in the United States, and more than one-half of the participants favored New Coke over both the original formula and Pepsi. The new product was introduced and the original formula was withdrawn from the market. This turned out to be a big mistake! Eventually, the company withdrawn from the market. This turned out to be a big mistake! Eventually, the company reintroduced the original formula as Coke Classic and tried to market the two products. Ultimately, New Coke was withdrawn from the market. What went wrong? Two things stand out.

First, there was a flaw in the market research taste tests that were conducted: They assumed that taste was the deciding factor in consumer purchase behavior. Consumers were not told that only one product would be marketed. Thus, they were not asked whether they would give up the original formula for New Coke.

Second, no one realized the symbolic value and emotional involvement people had with the original Coke. The bottom line on this is that relevant variables that would affect the problem solution were not included in the research.

Evaluating Cost and Value of Information

• Bayesian analysis

– Multiply outcomes by probability

– Example:• 30% chance of high payout $1,000,000

– (30% x 1,000,000) = 300,000– (30% x 1,000,000) = 300,000

• 20% chance of mid payout $500,000

– (20% x 500,000) = 100,000

• 50% chance of no payout $0

– (50% x 0) = 0

• 300,000 + 100,000 + 0 = 400,000

Other Methods of Valuation

• Simple savings

Value = E(cost)n – E(cost)I

* Where expected cost of error with current information * Where expected cost of error with current information less expected cost of error with additional information

• ROI– Calculated after project is completed

Other Methods of Valuation

• Present value

– Discounting present value of future cash flows

• Cost-benefit approach

Method of Inquiry

• Quantitative

– Objectivist-based

• Qualitative

– Subjectivist based– Subjectivist based

• Phenomenology

– No hypothesis—just strict observations

Method of Inquiry

• Based on the scientific method– Observation

• Identify a problem

– Hypothesis formation• An hypothesis is a generalization about reality that permits • An hypothesis is a generalization about reality that permits

predictions of outcomes

– Predictions• Implication of the hypothesis

– Testing the hypothesis• Data gathering and analysis, proving or disproving the

hypothesis

Research Method

• Experimental research

– All variables are controlled and manipulated by the researcher

• Non-experimental research• Non-experimental research

– Researcher just measures variables, and doesn’t manipulate them

Research Design

• Specific steps methods and procedures for gathering information

• Covered in more depth in upcoming chapters

Data Collection

• Communication

– Asking questions and receiving responses

– Can be done in person, by telephone, mail, email, or the internet

• Observation• Observation

– Past or present

• Past behavior visible through secondary sources (existing published material) or physical traces

Sample Design

• Sampling

– Surveying an entire population is practically impossible or too expensive

– Instead, researchers measure a subset of the population and assume the sample represents the population and assume the sample represents the whole population

Sample Design

Researchers control three things

• Where the sample will be selected

• The process of selection

• Sample size

Data Collection

• Doesn’t begin until all prior stages are completed

• Usually outsourced to a data collection agency

Data Analysis

• Data not presented in form collected

– Coded into a computer file

– Edited so invalid responses are left out– Edited so invalid responses are left out

• Formal analyses, usually statistical tests

Research Report

• Summary report

– Main conclusions

• Full report

– Contains all the boring details– Contains all the boring details

• Presentation

– Face-to-face meetings allow for questions, increasing clients’ understanding

Scientific Method

In structure, if not always in application, the scientific method is simple and consists of the following steps:

1. Observation. This is the problem-awareness phase, which involves observing a set of significant factors that relate to the problem situation.

2. Formulation of hypotheses. In this stage, a hypothesis (i.e., a generalization about reality that permit prediction) is formed that postulates a connection between seemingly unrelated that permit prediction) is formed that postulates a connection between seemingly unrelated facts. In a sense, the hypothesis suggests an explanation of what has been observed.

3. Prediction of the future. After hypotheses are formulated, their logical implications are deduced. This stage uses the hypotheses to predict what will happen.

4. Testing the hypotheses. This is the evidence collection and evaluation stage. From a research project perspective this is the design and implementation of the main study.

Scientific Method Example

Conclusions are stated based on the data collected and evaluated.A simple example will show how the scientific method works. Assume a researcher is performing a marketing research project for a manufacturer of men’s shirts:

1. Observation: The researcher notices some competitors’ sales are increasing and that many competitors have shifted to a new plastic wrapping.

2. Formulation of hypotheses: The researcher assumes his client’s products are of similar quality and that the plastic wrapping is the sole cause of increased competitors’ sales.

3. Prediction of the future: The hypothesis predicts that sales will increase if the manufacturer shifts to the new wrapping.

4. Testing the hypotheses: The client produces some shirts in the new packaging and market-tests them.

Research Proposal Outline

• Prepared by client to outline project for outside vendors– Statement of the problem

– Statement of research objectives

– Research methods– Research methods

– Nature of the report

– Timing and costs

– Special information

Outline of a Research Plan

Objectives

State the primary and secondary objectives of the study, including operational objectives and

more general aims.

Problem Analysis

Present a statement of the research problems and questions and the hypothesis or hypotheses relevant to the stated problem (i.e., testable hypotheses). Show the relationship of the objectives to the problem at hand.

Research Design

The design of a research project includes four components:

1. Research methodology. Describe how the investigation is to be made in general terms.

Justify selection of the methodology to be used.

2. Research techniques. Describe the methods and procedures to be used in collecting the

data in some depth. Who is to be solicited, how contact is to be made, special techniques

to be used, and so on are to be covered. Discuss forms to be used to collect data and, if

already developed, include with the plan.

Outline of a Research Plan

Research Design (continued)

3. Sample design and selection. State the size of the total sample and any proposed

subsamples. Describe in detail the procedure to be used to ensure a representative

(or other appropriate) sample of survey respondents or experimental subjects. Include

any technical notes as to how the sample size was determined in an appendix.

4. Proposed analysis. Describe general tabulation procedures, any cross-analysis tabulations,

and the reasons for such tabulations. Include discussion of proposed methods of statistical

analysis together with reasons why such analyses will be used. If possible, show

dummy tables with the “stubs” that will be used.

Personnel Requirements

List all personnel who will be involved with the project, the exact assignment of each person,the time to be spent, and the pay for each.

Time and Cost Requirements

Present a budget and time schedule for the major activities involved in conducting the study.

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