Chapter # 01 Naresh K. Malhotra 3rd Edition

Marketing Research

Prof. Basharat NaeemLecturer – Institute of Business Administration University of the PunjabMobile: 0323 – 4551589Email: [email protected]

Lecture No. 01

Topics: What Does Marketing Research Encompass? The Nature of Marketing Research Definition of Marketing Research A Classification of Marketing Research The Role of Marketing Research in MIS & DSS

Chapter # 01

Naresh K. Malhotra

3rd Edition

What Does Marketing Research (MR) Does?

The term MR broad in meaning: it is related to all aspects of marketing. The following examples will provide a flavor of the varied nature of marketing research:

Example # 01:

Lotus Development Corporation Uses Marketing Research as A Development Tool:

Lotus Development Corp. conducts focus groups (8 to 10 people at a time) of customers and business partners every four months.

Prepared By: Basharat Naeem, Lecturer at IBA (PU)

What Does MR Does? (cont.) They want to recognize the fact that Web sites are products with very short life

cycles and need ongoing attention to keep them up-to-date.

The focus group evaluates Lotus’ Web site and the sites of other companies.

From focus group the company learned that customers wanted improved navigation and high level of consistency.

These findings were further verified through a survey posted on its web site

So, the company redesigned its web site after marketing research revealed some improvements customers desired.


What Does MR Does? (cont.)

Example # 02:

Reviving an Ailing Giant:

In the early 1980s Chrysler (a car manufacturing company) was fighting for survival.

Fortunately two men (Lee Lococca & Howard Sperlich) had come to the company from Ford and they brought with them a revolutionary idea – the minivan (a car model).

These people used marketing research to identify a need – better family trasnportation.




Despite skyrocking fuel prices in the early 1980s “overpowering” research in the form of focus group, mall intercept and mail surveys suggested that consumers wanted a van that handled like a car.

A Chrysler executive stated that “The people we’re selling [the minivan] to don’t tow. A very small

percentage of Americans on a regular bass tow more than a Class 1 trailer; we can tow a Class 1 trailer.”

Marketing research suggested that a minivan net these characteristics and as a result Chrysler stunned the competition with an innovative new product that eventually was dubbed an automotive “home run” for the company.




Despite skyrocking fuel prices in the early 1980s “overpowering” research in the form of focus group, mall intercept and mail surveys suggested that consumers wanted a van that handled like a car.

Marketing research suggested that a minivan net these characteristics and as a result Chrysler stunned the competition with an innovative new product that eventually was dubbed an automotive “home run” for the company.

Chrysler designed its product around the consumer rather than the internal perceptions of the organization.

Marketing research gave the company the confidence to enter a market that GM & Ford considered too risky.




GM & Ford missed the opportunity to bring the minivan to market.

GM feared it would detract from its highly lucrative station wagon segment

Ford passed for the opportunity of smaller more fuel – efficient models.

Chrysler developed a strong linkage between the consumer problem and the product solution.

This marketing research that brought the minivan to market has revitalized the once ailing car manufacturer.


Nature of MR: MR played crucial role in designing and implementing successful

marketing program.

MR used by all king of companies like:

Small Businesses

Large Businesses

Technology Companies (Lotus)

Manufacturing Companies

Professional Services &

Non profit organization etc.


Nature of MR: (cont.)

The emphasis in marketing research is on the identification and satisfaction of customer needs.

In order to determine that needs, they need information about customers, competitors, and other forces in marketplace.

As competition has become more intense, the company needs information on the effectiveness of their marketing tools.

The task of marketing research is to assess the information needs and provide management with: Relevant Accurate Reliable Valid & Current Information


Nature of MR: (cont.)

Marketing research provides sound information to effective decision making in business in today’s most competitive marketing environment and the ever – increasing costs attributes.

In the absence of sound information an incorrect management decision may result.

For Example Johnson & Johnson attempt to use its company name on baby aspirin

proved to be unsuccessful. Company’s products are perceived as gentle, but gentleness is not what

people want in baby aspirin. Baby aspirin should be safe, gentleness is not a desirable feature. This is an example of what seemed, intuitively to be a natural move but

turned out to be an incorrect decision.



Fig. Role of Marketing Research

Nature of MR: (cont.) The company make numerous strategic & tactical decisions in the

process of identifying & satisfying customer needs.

As shown in previous fig, the company make decisions about:Potential OpportunitiesTarget Market SelectionMarket SegmentationPlanning & Implementing Marketing ProgramsMarketing Performance & Control

These decisions are complicated by interactions b/w the controllable marketing variables of:

ProductPricingPromotions & Distribution


Nature of MR: (cont.) Further complications are added by uncontrollable environmental

factors:Economic SituationsTechnology Public Policies & LawsPolitical Environment Competition Social & Cultural Changes

Another factor in this mix is the complexity of the various customer groups:

ConsumersemployeesShareholders & Suppliers etc.


Definition of MR:

Marketing research:

Systematic and Objective Data Collection Data Analysis Information Dissemination & Usage of information

For the purpose

improving decision making related to the identification and solution of the problems / opportunities in marketing.


Definition of MR Process:A set of six steps which defines the tasks to be accomplished in conducting a marketing research study. These includes:

Problem Definition

Developing an approach to the problem,

Research design formulation

Field Work

Data Preparation &

Analysis and Report Generation & Presentation.


Classification of MR:Classifying marketing research into two main types is useful from conceptual as well as particular, viewpoint. The definition states that organizations engage in marketing research for two reasons;

1. Problem Identification &

2. Problem Solving Research


Classification of MR: (cont.)1. Problem Identification Research which is undertaken to help identify problems that are not necessarily

apparent on the surface an yet exit or are likely to arise in the future. This research provides information about the marketing environment and helps

diagnose a problem.

For example A declining market potential indicates that the firm is likely to have a problem

achieving its growth targets. The recognition of Economic Social cultural trends such as changing in consumer behavior may point to

underlying problems or opportunities.


Classification of MR: (cont.)1. Problem Solving Research: Problem Solving Research is undertaken to arrive at a solution. The findings of

problem solving research are used in making decisions which will solve specific marketing problems.


Role of MR in Marketing Information System: Marketing Information System (MIS) is a formulized set of procedures

for generating, analyzing, sorting, and distributing pertinent information to marketing decision makers on an ongoing process.

MIS provides information continuously rather than on the basis of ad hoc research studies.

Design of MIS focuses on each decision maker’s responsibilities, style, and information needs.

Information gathered from different resources are combined and presented in a format which can be readily used in decision making.

MIS is limited in the amount and nature of information because the information is rigidly structured and cannot be easily manipulated.


Role of MR in Decision Support System: Decision Support System (DSS) is an integrated system including

hardware, communications, networks, database, model base, software base, and the DSS user (decision maker) that collects and interprets information for decision making.

DSS system can overcome the limitation of MIS and enable decision makers to interact directly with databases analysis model.

DSS combines the use of models or analytical technique with traditional access and retrieval functions of MIS.

Easier to use in interactive mood and can adapt to changes in environmental and decision making approach of the user.

DSS also enhance decision making effectiveness by using “what if” analysis.


Role of MR in MIS & DDS: Decision support system is an integrated system including hardware,

communications, networks, database, model base, software base, and the DSS user (decision maker) that collects and interprets information for decision making.

DSS system can overcome the limitation of MIS and enable decision makers to interact directly with databases analysis model.

DSS combines the use of models or analytical technique with traditional access and retrieval functions of MIS.

Easier to use in interactive mood and can adapt to changes in environmental and decision making approach of the user.

DSS also enhance decision making effectiveness by using “what if” analysis.


MIS Structured Problems Use of Reports Rigid Structure Information Displaying

Restricted Can Improve Decision

Making by Clarifying Raw Data

DSS Unstructured Problems Use of Models User – Friendly Interaction Adaptability Can Improve Decision

Making by Using “What If” Analysis

Role of MR in MIS & DDS:


Role of MR in MIS & DDS: (cont.)

Example:DSS Gives FedEx a Decided Edge

FedEx has developed a reputation for being a reliable express shipping services due to advanced Decision Support System (DSS).

FedEx become a technology leader in the highly competitive shipping market and aims to become the best worldwide.

From sophisticated DSS FedEx has enabled to become 1st company to go from “zero to 1 billion in sales in 10 years”.

DSS provide information to customers and detailed aspects of every shipment including ordering, billing, tracking and tracing.


Role of MR in MIS & DDS: (cont.)

DSS Gives FedEx a Decided Edge

FedEx has implemented highly sophisticated “Segment Management Marketing” (SMM).

The company developed “value quotient” formula that allows marketers to analyze customers individually.

Formula includes weights for strategic/competitive value of customer and profitability through a survey of 30 questions.

FedEx has defined 14 highly specific customer segments based on consumer attitudes relating to price, reliability, urgency, tracking and proof of delivery.

FedEx taken very aggressive information oriented approach to competition which will be the key to continued success.


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Chapter # 01 Naresh K. Malhotra 3rd Edition