Marketing Research and Information Systems

Lecture Outline

(Transparency Figure 7A: Chapter Outline)

I. The Importance of Marketing Research

A. Marketing research is the systematic design, collection, interpretation, and reporting of information to help marketers solve specific marketing problems or take advantage of market opportunities.

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1. It is a process for gathering information not currently available to decision makers.

2. The purpose of marketing research is to inform an organization about customers’ needs and desires, marketing opportunities for particular goods and services, and changing attitudes and purchase patterns of customers.

(Transparency Figure 7C)

B. Marketing research can help a firm better understand market opportunities, ascertain the potential for success for new products, and determine the feasibility of a particular marketing strategy.

C. Marketing research is used by all sorts of organizations to help develop marketing mixes to match the needs of customers.

D. The real value of marketing research is measured by improvements in a marketer’s ability to make decisions.

1. Marketers should treat information in the same manner as other resources utilized by the firm, and they must weigh the costs of obtaining information against the benefits derived.

2. Information should be judged worthwhile if it results in marketing activities that better satisfies the firm’s target customers, leads to increased sales and profits, or helps the firm achieve some other goal.

II. The Marketing Research Process

To maintain the control needed to obtain accurate information, marketers approach marketing research as a process with logical steps. These steps should be viewed as an overall approach to conducting research rather than as a rigid set of rules to be followed in each project.

(Transparency Figure 7.1)

A. Locating and Defining Problems or Research Issues

1. The first step in launching a research study is problem or issue definition, which focuses on uncovering the nature and boundaries of a situation or question related to marketing strategy or implementation. The first sign of a problem is typically a departure from some normal function, such as conflicts between or failures in attaining objectives.

2. Marketing research often focuses on identifying and defining market opportunities or changes in the environment. When a firm discovers a market opportunity, it may need to conduct research to understand the situation more precisely so it can craft an appropriate marketing strategy.

(Transparency Figure 7E)

3. To pin down the specific boundaries of a problem or an issue through research, marketers must define the nature and scope of the situation in a way that requires probing beneath the superficial symptoms.

B. Designing the Research Project

Once the problem or issue has been defined, the next step is research design, an overall plan for obtaining the information needed to address it. This step requires formulating a hypothesis and determining what type of research is most appropriate for testing the hypothesis.

1. Developing a Hypothesis

a) A hypothesis is an informed guess or assumption about a certain problem or set of circumstances.

b) It is based on all the insight and knowledge available about the problem or circumstances from previous research studies and other sources.

c) Sometimes several hypotheses are developed during an actual research project; the hypotheses that are accepted or rejected become the study’s chief conclusions.

2. Types of Research

The hypothesis being tested determines whether an exploratory, descriptive, or causal approach will be used for gathering data.

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a) When marketers need more information about a problem or want to make a tentative hypothesis more specific, they may conduct exploratory research. They may review information in the firm’s own records, examine publicly available data, or question knowledgeable people inside or outside the organization to gain insights into the problem.

b) If marketers need to understand the characteristics of certain phenomena to solve a particular problem, descriptive research can aid them.

(1) Descriptive studies can range from general surveys of customers’ education, occupation, or age to specifics on how they use products or how often they purchase them.

(2) Descriptive studies generally demand much prior knowledge and assume the problem or issue is clearly defined.

c) In causal research, it is assumed that a particular variable X causes a variable Y. Marketers must plan the research so that the data collected prove or disprove that X causes Y.


3. Research Reliability and Validity

In designing research, marketing researchers must ensure that research techniques are both reliable and valid.

a) A research technique has reliability if it produces almost identical results in repeated trials.

b) To have validity, the method must measure what it is supposed to measure, not something else.

C. Collecting Data

The next step in the marketing research process is collecting data to help prove (or disprove) the research hypothesis. The research design must specify what types of data to collect and how they will be collected.

1. Types of Data

a) Primary data are observed and recorded or collected directly from respondents. This type of data must be gathered by observing phenomena or surveying people of interest.

b) Secondary data are compiled both inside and outside the organization for some purpose other than the current investigation.

2. Sources of Secondary Data

(Transparency Figure 7D)

Marketers often begin the data collection phase of the marketing research process by gathering secondary data.

a) Internal sources of secondary data can include the organization’s own database, which may contain information about past marketing activities, as well as accounting records.

b) External sources of data include periodicals, government publications, unpublished sources, online databases, or outside services.

(Transparency Figure 7G)

3. Methods of Collecting Primary Data

The collection of primary data is a more lengthy, expensive, and complex process than the collection of secondary data.

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a) Sampling

(1) Because the time and resources available for research are limited, it is almost impossible to investigate all members of a target market or other population.

(a) A population, or "universe," includes all the elements, units, or individuals of interest to researchers for a specific study.

(b) By systematically choosing a limited number of units—a sample—to represent the characteristics of a total population, researchers can project the reactions of a total market or market segment.

(2) Sampling in marketing research is the process of selecting representative units from a total population. Most types of marketing research employ sampling techniques. There are two basic types of sampling: probability sampling and nonprobability sampling.

(3) With probability sampling, every element in the population being studied has a known chance of being selected for study.

(a) When marketers employ random sampling, all the units in a population have an equal chance of appearing in the sample.

(b) Another kind of probability sampling is stratified sampling, which divides the population of interest into groups according to a common attribute, and then a random sample is chosen within each group.

(4) Nonprobability sampling is more subjective than probability sampling because there is no way to calculate the likelihood that a specific element of the population will be chosen. One type of nonprobability sampling is quota sampling, in which researchers divide the population into groups and then arbitrarily choose participants from each group.

b) Survey Methods

(1) Marketing researchers often employ sampling to collect primary data through mail, telephone, online, or personal interview surveys.

(a) Selection of a survey method depends on the nature of the problem or issue, the data needed to test the hypothesis, and the resources, such as funding and personnel, available to the researcher.

(b) Gathering information through surveys is becoming increasingly difficult because fewer people are willing to participate.

(Transparency Table 7.3)

(2) In a mail survey, questionnaires are sent to respondents, who are encouraged to complete and return them.

(a) Mail surveys are used most often when the individuals in the sample are spread over a wide area and funds for the survey are limited.

(b) A mail survey is the least expensive survey method as long as the response rate is high enough to produce reliable results.

(c) The main disadvantages of this method are the possibility of a low response rate and of misleading results if respondents differ significantly from the population being sampled.

(d) Premiums or incentives that encourage respondents to return questionnaires have been effective in developing panels of respondents who are interviewed regularly by mail.

(3) In a telephone survey, an interviewer records respondents’ answers to a questionnaire over a phone line.

(a) Telephone surveys have some advantages over mail surveys, including higher rate of response, speed, and the ability to gain rapport with respondents and ask probing questions.

(b) Telephone surveys have several disadvantages.

Few people like to participate in telephone surveys, which can limit participation and distort representation.

Telephone surveys are limited to oral communication; visual aids or observation cannot be included.

Interpreters of results must make adjustments for subjects who are not at home, do not have telephones, have unlisted numbers, or screen or block calls.

(4) In an online survey, questionnaires can be transmitted to respondents who have agreed to be contacted and have provided their e-mail addresses.

(a) The potential advantages of e-mail surveys are quick response and lower cost than traditional mail, telephone, and personal interview surveys if the response rate is adequate.

(b) More firms are also using websites to conduct surveys.

(5) In a personal interview survey, participants respond to questions face to face.

(a) One such research technique is the in-home (door-to-door) interview, which takes place in the respondent’s home.

(b) The object of a focus-group interview is to observe group interaction when members are exposed to an idea or concept. These interviews are often conducted informally in small groups of eight to twelve people and allow customer attitudes, behavior, lifestyles, needs, and desires to be explored.

(c) Another option is the telephone depth interview, which combines the traditional focus group’s ability to probe with the confidentiality provided by telephone surveys.

(d) Shopping mall intercept interviews involve interviewing a percentage of individuals passing by certain "intercept" points in a mall. An on-site computer interview is a variation of the mall intercept interview, in which respondents complete a self-administered questionnaire displayed on a computer monitor.

c) Questionnaire Construction

(1) Questions must be clear, easy to understand, and directed toward a specific objective.

(2) A common mistake in constructing questionnaires is to ask questions that interest the researchers but do not yield information useful in deciding whether to accept or reject a hypothesis.

(3) Questions are usually of three kinds: open-ended, dichotomous, and multiple-choice (as shown in the text).

(4) Researchers must be careful about questions that a respondent might consider too personal or that might require an admission of activities that other people are likely to condemn.

d) Observation Methods

In using observation methods, researchers record individuals’ overt behavior, taking note of physical conditions and events. Direct contact with subjects is avoided.

(1) Observation may include the use of ethnographic techniques, such as watching customers interact with a product in a real-world environment.

(Building Customer Relationships: Reality TV or Marketing Research?)

(2) Observation may also be combined with interviews.

(3) Data gathered through observation can sometimes be biased if the person is aware of the observation process.

(a) An observer can be placed in a natural market environment, such as a grocery store, without biasing or influencing shoppers’ actions.

(b) If the presence of a human observer is likely to bias the outcome or if human sensory abilities are inadequate, mechanical means may be used to record behavior.

(4) Observation is straightforward and avoids a central problem of survey methods: motivating respondents to state their true feelings or opinions. However, it tends to be descriptive.

e) Experimentation

In an experiment, marketing researchers attempt to maintain certain variables while measuring the effects of experimental variables.

(1) Experimentation requires that an independent variable (one not influenced by or dependent on other variables) be manipulated and the resulting changes in a dependent variable (one contingent on, or restricted to, one value or set of values assumed by the independent variable) be measured.

(2) Experimentation is used in marketing research to improve hypothesis testing.

D. Interpreting Research Findings

After collecting data to test their hypotheses, marketers need to interpret the research findings.

1. The first step in drawing conclusions from most research is displaying the data in table format.

2. Next, the data must be analyzed. Statistical interpretation focuses on what is typical or what deviates from the average.

3. Data require careful interpretation by the marketer.

4. Managers must understand the research results and relate them to a context that permits effective decision making.

E. Reporting Research Findings

1. The final step in marketing research is to report the research findings. The marketer must take a clear, objective look at the findings to see how well the gathered facts answer the research question or support or negate the initial hypotheses.

2. The report of the research results is usually a formal, written document.

3. Bias and distortion can be a major problem if the researcher is intent upon obtaining favorable results.

III. Using Technology to Improve Marketing Information Gathering and Analysis

Technology is making information for marketing decisions increasingly accessible.

A. Marketing Information Systems

1. A marketing information system (MIS) is a framework for the day-to-day management and structuring of information gathered regularly from sources both inside and outside an organization. It provides a continuous flow of information about prices, advertising, expenditures, sales, competition, and distribution expenses.

(Transparency Figure 7B)

2. The main focus of the marketing information system is on data storage and retrieval, as well as on computer capabilities and management’s information requirements.

3. An effective marketing information system starts by determining the objective of the information—that is, by identifying decision needs that require certain information. The firm can then specify an information system for continuous monitoring to provide regular, pertinent information on both the external and internal environment.

B. Databases

1. A database is a collection of information arranged for easy access and retrieval.

2. Databases allow marketers to tap into an abundance of information useful in making marketing decisions: internal sales reports, newspaper articles, company news releases, government economic reports, bibliographies, and more, often accessed through a computer system.

3. Marketing researchers can also use commercial databases developed by information research firms to obtain useful information for marketing decisions.

4. Information provided by a single firm on household demographics, purchases, television viewing behavior, and responses to promotions such as coupons and free samples is called single-source data.


C. Marketing Decision Support Systems

A marketing decision support system (MDSS) is customized computer software that aids marketing managers in decision making by helping them anticipate the effects of certain decisions.

D. The Internet and Online Information Services

1. The Internet has evolved as a most powerful communication medium, linking customers and companies around the world via computer networks with e-mail, forums, webpages, and more.

2. There are many useful sources of information online, and companies can also mine their own websites for useful information.

3. Marketing researchers can also subscribe to online services, which typically offer subscribers such specialized services as databases, news services, and forums, as well as access to the Internet itself.

4. While most webpages are open to anyone with Internet access, many big companies also maintain internal webpages, called "intranets," that allow employees to access such internal data as customer profiles and product inventory.

IV. Issues in Marketing Research

A. The Importance of Ethical Marketing Research

1. Because marketing managers and other professionals are relying more on marketing research, marketing information systems, and new technologies to make better decisions, it is essential that professional standards be established by which such research may be judged reliable.

2. Such standards are necessary because of the ethical and legal issues that develop in gathering marketing research data.

3. Organizations like the Marketing Research Association have developed codes of conduct and guidelines to promote ethical marketing research. (See Table 7.5 in text)

(Ethics and Social Responsibility: Burger King’s Relationship with Coke Fizzles After Marketing Research Debacle)

B. International Issues in Marketing Research

1. The marketing research process described in this chapter is used globally, but to ensure that the research is valid and reliable, data-gathering methods may have to be modified to allow for differences in sociocultural, economic, political, legal, and technological forces in different regions of the world.

(Transparency Figure 7I)

2. Experts recommend a two-pronged approach to international marketing research.

a) The first phase involves a detailed search for and analysis of secondary data to gain greater understanding of a particular marketing environment and to pinpoint issues that must be taken into account in gathering primary research data.

b) The second phase involves field research using many of the methods described in the chapter, including focus groups and telephone surveys, to refine a firm’s under-standing of specific customer needs and preferences.

(1) Specific differences among countries can have a profound influence on data gathering.

(2) Primary data gathering may have a greater chance of success if the firm employs local researchers who better understand how to approach potential respondents and can do so in their own language.