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Chapter 8Chapter 8
Marketing Marketing Research Decision-Research Decision-Support Systems, Support Systems,
and Sales and Sales ForecastingForecasting
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Chapter ObjectivesChapter Objectives1. Describe the development of the marketing research function
and its major activities.2. Explain the steps in the marketing research process3. Distinguish between primary and secondary data and identify
the sources of each type.4. Explain the different sampling techniques used by marketing
researchers.5. Identify the methods by which marketing researchers collect
primary data. 6. Explain the challenges of conducting marketing research in
global markets.7. Outline the most important uses of computer technology in
marketing research.8. Explain how the use of information technology, particularly
marketing decision support systems (MDSSs), can enhance and refine market research and it’s impact on decision making.
9. Identify the major types of forecasting methods.
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The Marketing Research FunctionThe Marketing Research Function
Marketing research: the process of collecting and using information for marketing decision-making
Development of the Marketing Research Development of the Marketing Research FunctionFunctionFirst organized marketing research project done
by N.W. Ayer in 1879First commercial research department in the
U.S. established by Charles C. Parlin for the Curtis Publishing Co. in 1911
Parlin counted soup cans in garbage to convince the Campbell soup Company that working-class families would buy canned soup
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L'Oreal KidsL'Oreal KidsUsing Marketing
Research to Match New Products to Potential Customers.
The Tangle Free Shampoo and the Bottle Design Resulted From Research Among Mothers and Children.
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Who Conducts Marketing ResearchWho Conducts Marketing ResearchThe size and organizational form of the
marketing research function is typically tied to a given company’s structure
Many firms depend on independent marketing research firms
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Types of questions Marketing Research can help answer
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Syndicated Syndicated ServicesServicesOrganizations
that regularly provide a standardized set of data to all customers
NielsenIRI
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Full-Service Research SuppliersOrganizations
that contract with clients to conduct complete marketing research projects
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Limited-Service Research SuppliersA marketing research firm that specializes
in selected activities like:Field or telephone interviewsData-processingFocus groups
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Customer Satisfaction Measurement ProgramsProcedure for
measuring customer feedback against customer satisfaction goals and developing a plan of action for improvement
Figure 8.2Figure 8.2Research Designed to
Assess Levels of Customer Satisfaction
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The The Marketing Marketing Research Research ProcessProcess
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Step 1: Define the ProblemStep 1: Define the ProblemAvoid confusing symptoms of a problem with
the problem itselfThe problem(s) should be agreed upon by
all concerned partiesDoing so helps to keep everyone concerned
in agreement and to keep the project focused on solving the problem(s)
Doing so also helps to prevent the all-too-common tendency to spend resources attempting to answer “interesting, but not necessary” questions
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Step 2: Conduct exploratory researchStep 2: Conduct exploratory researchAn Informal investigation seeking to discover
the cause of a problem by discussing it with informed internal and external sources
Company records such as sales and profit analyses
Competitive dataUsing Internal Data
Sales records, Financial statements, and Marketing cost analysesSales analysis
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Step 3: Formulate a HypothesisStep 3: Formulate a HypothesisHypothesis: a tentative explanation for
some specific event – a statement about the relationship among variables that carries a clear implication for testing this relationship
Sets the stage for more in-depth research by further clarifying what researchers need to test
Not all marketing research tests specific hypotheses
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Step 4: Create a Research DesignStep 4: Create a Research DesignResearch design: a series of decisions
that, taken together, comprise a master plan or model for conducting marketing research
Must ensure that the study will measure what the marketer intends to measure
Must also ensure an appropriate selection of respondents
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Step 5: Collect DataStep 5: Collect DataSecondary data is data from previously
published or compiled sources (e.g. Census data)Almost always less expensive to gatherLess time is usually necessary to locate
and use itPrimary data refers to data collected for the
first time specifically for a marketing research studyCan provide richer, more detailed
information than secondary data
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Step 6: Interpret and Present Research Step 6: Interpret and Present Research InformationInformationFindings must be presented to decision-
makers in a format that allows them to make effective judgments
Cardinal rule of presenting marketing research requires that it assists decision-making rather than being an end in itself
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The Research Report and Presentation: Linking the Study and the Research User
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Marketing Research MethodsMarketing Research Methods
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Secondary Data CollectionSecondary Data CollectionGovernment Data
Nation’s most important source of marketing data
Most frequently used government statisticsCensus information available at no chargeTIGER System: Topographically
Integrated Geographic Encoding and Referencing System P.265
The system combines topographic features like railroads, highways, and rivers with census data such as household income figures
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Persuading People to Participate in Census 2000
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Secondary Data CollectionSecondary Data CollectionPrivate Data
Encyclopedia of AssociationsUrich’s Guide to International PeriodicalsSales & Marketing Management’s Annual
Survey of Media MarketsDialog’s ABI/InformCompuServe’s Knowledge IndexFind/SVP’s FindEx, the Directory of
Market Research Reports, Studies, and Surveys
Starch Readership ReportsA. C. Nielsen’s SalesNet
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Harris Harris InfoSourceInfoSourceOne of many
providers of secondary data
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Secondary Data CollectionSecondary Data CollectionOnline Sources of Secondary Data
Cyberspace sometimes simplifies the search for secondary data
A Web-based research project can cost less, and can yield significantly faster results than offline research
Caveat Emptor should guide Internet searches for secondary data
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Bureau of Labor Statistics
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Sampling TechniquesSampling TechniquesSampling: the process of
selecting survey respondents or other research participantsPopulation (universe): total group
that researchers want to studyCensus: a collection of data on all
possible members of a population or universe
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Probability sample: sample that gives every member of the population a known chance of being selected Simple random sample – every member of the relevant
population has a equal opportunity of selection [draft lottery] Stratified sample – randomly selected sup samples of
different groups represented in the total sample [opinion polls, groups share divergent views]
Cluster sample – a sample in which researchers select areas [clusters] from which to draw respondents
Non-probability sample: arbitrary grouping that produces data unsuited for most standard statistical tests Convenience sample – respondents selected who are readily
available [mall intercepts] Quota sample – a sample that is divided to maintain
representations for different segments [three McDonalds users, two Burger King users, one Wendy’s user]
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Primary Research TechniquesPrimary Research Techniques
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Primary Research TechniquesPrimary Research TechniquesObservation MethodObservation Method
Researchers actually view, or watch, the overt actions of the research subjects
Useful in helping to understand how consumers actually behave in certain situations
Can be as simple as counting passing cars or as sophisticated as people meters recording household TV-viewing habits
Interpretive Research – a researcher observes a customer or group of customers in their natural setting [grocery shoppers]. Their behavior is interpreted based on an understanding of the social and cultural characteristics of that setting
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Survey MethodSurvey MethodTelephone InterviewsTelephone Interviews
An inexpensive and quick method for obtaining a small quantity of relatively impersonal information
Relatively high response ratesLimitations include:
Only simple, clearly worded questions draw appropriate responses
Personal information difficult to obtain Respondents can’t view pictures Caller-ID
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Survey MethodSurvey MethodPersonal InterviewsPersonal Interviews
Best means for obtaining detailed information about consumers
Interviewer can explain confusing or vague questions
Offer Good FlexibilityMall interceptsLimitations:
Slow Expensive
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Survey MethodSurvey MethodFocus GroupsFocus Groups
A Focus Group is an information gathering procedure in marketing research that typically brings together 8 to 12 individuals to discuss a given subject
Can provide quick and relatively inexpensive insights
May not produce completely honest responses to questions
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Figure 8.7Figure 8.7Focus Groups:
Insights into Consumer Perceptions
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Figure 8.8Figure 8.8Benefits of Online Focus Groups
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Survey MethodMail Surveys
Cost EffectiveProvides anonymity that may encourage
respondents to give candid answersLimitations include:
Typically low response rates Take a long time to conduct Questionnaires cannot answer
unanticipated questions that occur to respondents as they complete the forms
Complex questions may not be suitable Bias from nonresponse
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Survey MethodFax Surveys
Low response rates and long follow-up times associated with mail surveys have spurred interest in the alternative of faxing survey documents
Faxing provisions may supplement mail surveys
Or, faxing may be the primary method for contacting respondents and obtaining their answers
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Survey MethodOnline Surveys and Other Internet-Based
MethodsGrowing number of Internet users has
sparked interest in going online to conduct surveys . . . and even focus groups
Benefits include the lack of geographic restrictions, faster turn-around time, and dramatically lower costs
Growth of the Internet is creating a need for new research techniques to measure and capture information about website visitors
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Survey MethodExperimental Method
Scientific investigation in which a researcher manipulates test group(s) and compares the results with those of a control group that did not receive the experimental controls or manipulations
The most common use to date has been test marketing
Major problem with controlled experiments comes from the failure to account for all variables in a real-life situation
Expensive to conduct
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Conducting International Marketing ResearchConducting International Marketing ResearchAs corporations expand globally, they need to
gather knowledge about consumers in other countries
The basic steps are the same as for domestic studies, however, face some different challenges
A major secondary information source is the U.S. Department of CommerceForeign Economic Trends and Their
Implications for the United StatesOverseas Business Reports
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Interpretative ResearchInterpretative Research
Observes a customer or group of customers in their natural settings and then interprets their behavior based on an understanding of social and cultural characteristics of that settingEthnographic
Focuses on understanding the meaning of a product or the consumption experience in a consumer’s life
Takes time and is expensive
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Computer Technology inComputer Technology inMarketing ResearchMarketing Research
Marketing Information System (MIS)Marketing Information System (MIS)A planned, computer-based system
designed to provide managers with a continuous flow of information relevant to their specific decisions and areas of responsibility [raw data, i.e. sales reports]
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Marketing Decision Support SystemMarketing Decision Support System (MDSS) Consists of computer software that helps
users quickly obtain information and apply that information in a way that supports marketing decisions
An MDSS can create simulations or models to illustrate the likely results of changes in marketing strategies or marketing conditions [manipulation of the raw data into graphs, charts, trend lines, etc.]
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Data MiningData MiningThe process of searching through computer
files to detect patternsFocuses on identifying relationships that are
not obvious to marketersThe data is stored in a huge database called
a data warehouseCan be an efficient way to make sense of
huge amounts of dataCan help create customer profiles, pinpoint
reasons for customer loyalty or the lack thereof, analyze the potential returns on changes in pricing or promotion, and sales forecasts
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Business IntelligenceBusiness IntelligenceProcess of gathering information and
analyzing it to improve business strategies, tactics, and daily operations
Competitive IntelligenceCompetitive IntelligenceForm of business intelligence that focuses
on finding information about competitors using published sources, interviews, observations by salespeople and suppliers in the industry, government agencies, public filings and other secondary sources including the Internet
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Sales ForecastingSales Forecasting
Estimate of company revenue for a specified future period.Qualitative Forecasting TechniquesQuantitative Forecasting Techniques
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Qualitative Forecasting TechniquesQualitative Forecasting TechniquesThese techniques rely on subjective data that
repots opinions rather than exact historical data.Jury of Executive Opinion – top executives
Delphi Technique – “Blue Chip” economic forecasts
Sales Force Composite – good starting point
Survey of Buyer Intentions – very subjective, limited application
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Techniques Benefits Limitations
Jury of executive Jury of executive opinionopinion
Opinions come from executives in many different departments; quick; inexpensive
Managers may lack sufficient knowledge and experience to make meaningful predictions
Delphi techniqueDelphi technique Group of experts can accurately predict long-term events such as technological breakthroughs
Time-consuming; expensive
Sales force Sales force compositecomposite
Salespeople have expert customer, product, and competitor knowledge; quick; inexpensive
Inaccurate forecasts may result from low estimates of salespeople concerned about their influence on quotas
Survey of buyer Survey of buyer intentionsintentions
Useful in predicting short-term and intermediate sales for firms that serve only a few customers
Intentions to buy may not result in actual purchases; time-consuming; expensive
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Quantitative Forecasting TechniquesQuantitative Forecasting TechniquesThis method uses statistical computations
such as trend extensions, computer simulations, and economic models.Market Tests
Trend Analysis
Exponential Smoothing
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Techniques Benefits Limitations
Market testMarket test Provides realistic information on actual purchases rather than on intent to buy
Alerts competition to new product plans; time-consuming; expensive
Trend analysisTrend analysis Quick; inexpensive; effective with stable customer demand and environment
Assumes the future will continue the past; ignores environmental changes
Exponential Exponential smoothingsmoothing
Same benefits as trend analysis, but emphasizes more recent data
Same limitations as trend analysis, but not as severe due to emphasis on recent data
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End of Chapter Eight