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Market Research
Conducting Marketing Research and Forecasting Demand
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Build-A-Bear Workshop makes the most of “interactive entertainment retailing”
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Marketing Research Defined
Systematic design, collection,
analysis, and reporting of data
and findings relevant to a specific
marketing situation facing a company.
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Types of Marketing Research Firms
Syndicated-Service—trade
Information (Nielsen
Media Research--track viewing habits of
varied audiences)
Custom(Specific projects
Design studyReport findings)
Specialty-Line
(interviewing Services)
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The Marketing Research Process
Define the problem
Develop research plan
Collect information
Analyze information
Present findings
Makedecision
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Step 1
• Define the problem
• Specify decision alternatives
• State research objectives
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Step 2
Data Sources
ContactMethods
ResearchInstruments
SamplingPlan
Research Approach
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Research Approaches
Observation—unobtrusive Observation—unobtrusive
Focus Group—discuss topics of interest
Focus Group—discuss topics of interest
Survey—knowledge, beliefs, preferences, satisfaction
Survey—knowledge, beliefs, preferences, satisfaction
Behavioral Data—purchasing data
Behavioral Data—purchasing data
Experimentation—cause and effect relationships
Experimentation—cause and effect relationships
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Focus Group in Session
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Research Instruments
QuestionnairesQualitative MeasuresMechanical Devices
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• Avoid negatives• Avoid hypotheticals• Avoid words that could
be misheard• Use response bands• Use mutually exclusive
categories• Allow for “other” in fixed
response questions
Questionnaire Do’s and Don’ts
• Ensure questions are free of bias
• Make questions simple• Make questions specific• Avoid jargon• Avoid sophisticated
words• Avoid ambiguous words
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Question Types - Dichotomous
In arranging this trip, did you contact American Airlines?
Yes No
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Question Types – Multiple Choice
With whom are you traveling on this trip?
No one
Spouse
Spouse and children
Children only
Business associates/friends/relatives
An organized tour group
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Question Types – Likert Scale
Indicate your level of agreement with the following statement: Small airlines generally give better service than large ones.
Strongly disagree
Disagree
Neither agree nor disagree
Agree
Strongly agree
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Question Types – Semantic Differential
American Airlines
Large ………………………………...…………….Small
Experienced………………….………….Inexperienced
Modern………………………..………….Old-fashioned
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Question Types – Importance Scale
Airline food service is _____ to me.
Extremely important
Very important
Somewhat important
Not very important
Not at all important
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Question Types – Rating Scale
American Airlines’ food service is _____.
Excellent
Very good
Good
Fair
Poor
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Question Types –Intention to Buy Scale
How likely are you to purchase tickets on American Airlines if in-flight Internet access were available?
Definitely buy
Probably buy
Not sure
Probably not buy
Definitely not buy
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Question Types –Completely Unstructured
What is your opinion of American Airlines?
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Question Types –Word Association
What is the first word that comes to your mind when you hear the following?
Airline ________________________
American _____________________
Travel ________________________
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Question Types –Sentence Completion
When I choose an airline, the most important consideration in my decision is: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.
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Question Types –Story Completion
“I flew American a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings.” Now complete the story. ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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Question Types –Picture (Empty Balloons)
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Question Types – Thematic Apperception Test
Make up a story that reflects what you think is happening in this picture.
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Qualitative Measures
Shadowing—observing peopleShadowing—observing people
Behavior mapping—photographing people with a space—2 or 3 days
Behavior mapping—photographing people with a space—2 or 3 days
Consumer journey—keeping track of interactions a consumer has with a product, service,
or space
Consumer journey—keeping track of interactions a consumer has with a product, service,
or space
Camera journals—ask consumers to keep visual diaries of activities and impression
related to a product
Camera journals—ask consumers to keep visual diaries of activities and impression
related to a product
Extreme user interviews—talking to people about a product and evaluating their
experience with it
Extreme user interviews—talking to people about a product and evaluating their
experience with it
Storytelling—prompting people to tell personal stories about their consumer
experiences
Storytelling—prompting people to tell personal stories about their consumer
experiences
Unfocused groups—interview a diverse group of people to explore ideas
Unfocused groups—interview a diverse group of people to explore ideas
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Mechanical Devices
Galvanometers (measure interest or emotions aroused by
exposure to a specific ad or picture)
Tachistoscope (flashes an ad to a subject with an exposure interval and
respondent describes everything he/she recalls)
Eye cameras (study respondents’ eye movement to see where their eyes
land 1st and how long, etc.)
Audiometers (record when TV is on and the channel)
GPS (global positioning system, can determine how many billboards s person
may walk or drive by during a day)
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Sampling Plan
• Sampling unit: Who is to be surveyed?
• Sample size: How many people should be surveyed?
• Sampling procedure: How should the respondents be chosen?
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Types of Samples
Probability• Simple random
– Every member of population has an equal chance of selection
• Stratified random– Population is divided into
mutually exclusive groups (age groups) and random samples are drawn from each group
• Cluster– Population is divided into
mutually exclusive groups (city blocks) and a sample is taken from each group
Nonprobability• Convenience
– Selects the most accessible population members
• Judgment– Selects population
members who are good prospects for accurate information
• Quota– Selects and interviews a
prescribed number of people in each of several categories
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Contact MethodsMail Questionnaire
(For people would not give personal interviews or whose responses
might be biased or distorted by interviewer)
Telephone Interview(Gather information quickly, however interview are short and non-personal)
Personal Interview(Most versatile and expensive,
subject to interviewer bias or distortion)
Online Interview(Inexpensive, fast, honest, versatile, samples small
and skewed, tech problems and inconsistencies)
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Characteristics of Good Marketing Research
Scientific methodObservation, hypotheses, prediction, testing
Research creativityInnovative ways to solve problem
Multiple methods2 or 3 methods to increase confidence in results
InterdependenceData interpreted from underlying model that
guide type of information sought Value and cost of information
Estimating value of information against cost Healthy skepticism
Assumptions about how a market works Ethical marketing
Invasion of privacy or a disguised sales pitch
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Marketing Metrics
External• Awareness• Market share• Relative price• Number of complaints• Customer satisfaction• Distribution• Total number of
customers• Loyalty
Internal• Awareness of goals• Commitment to goals• Active support• Resource adequacy• Staffing levels• Desire to learn• Willingness to change• Freedom to fail• Autonomy
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Sample Customer-Performance Scorecard Measures
• % of new customers to average #• % of lost customers to average #• % of win-back customers to average #• % of customers in various levels of satisfaction• % of customers who would repurchase• % of target market members with brand recall• % of customers who say brand is most preferred
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Tools to Measure Marketing Plan Performance
Sales Analysis(Actual sales in relation to goals)
Financial Analysis
Expense-to-SalesAnalysis
Market Share Analysis% of company sales to
The total market
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Sales Analysis
Micro-Sales
Analysis(views specific products,
territories that fail to produce expected sales)
Sales-VarianceAnalysis
(Relative contribution ofdifferent factors to a gap in
Sales performance)
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Market Share Analysis
• Overall market share– total market
• Served market share– target market
• Relative market share – relative to competitor
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Financial Model of Return on Net Worth
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Simplified Profit-and-Loss Statement
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Distinguishing Types of Costs
Direct(assigned to
marketing entities) (sales commissions)
NontraceableCommon
(highly arbitrary)(top mgt salaries,
taxes, interest)
TraceableCommon
(Indirect to marketing)(Rent)
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The Measures of Market Demand
PotentialMarket
(interest)
PenetratedMarket
(buying product)
TargetMarket
(qualified available, company pursues)
AvailableMarket
(interest, income, access)
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Ninety Types of Demand Measurement
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Estimating Current Demand
• Total market potential– Maximum amount of sales available
• Area market potential– Market buildup method
• Identifying all potential buyers in each market and estimating their potential purchases
– Multiple-factor index method• Sales are directly related to a series of indices
• Brand development index–Index of brand sales to category sales
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Calculating Brand Development Index
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Estimating Future Demand
• Survey of Buyers’ Intentions—probability of purchase
• Composite of Sales Force Opinions--salespeople• Expert Opinion—dealers, distributors, suppliers,
marketing consultants, trade associations• Past-Sales Analysis—trend, cycle, seasonal,
erratic• Market-Test Method—select some territories to
sale the product
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Purchase Probability Scale
Do you intend to buy an automobile within the next 6 months?
0.00 No
0.20 Slight possibility
0.40 Fair possibility
0.60 Good possibility
0.80 High possibility
1.00 Certain
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Marketing Discussion
When was the last time youparticipated in a survey? How helpful
do you think was the informationyou provided? Could the research
have been done differently?
Analyzing Consumer Markets
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Emerging Trends in Consumer Behavior
Metrosexual – Straight urban manwho enjoys shoppingand using groomingproducts
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What Influences Consumer Behavior?
Cultural FactorCultural Factor
Social FactorsSocial Factors
Personal FactorsPersonal Factors
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Culture
The fundamental determinant of a person’s wants and behaviors
acquired through socializationprocesses with family
and other key institutions
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Subcultures
Nationalities Nationalities
ReligionsReligions
Racial groupsRacial groups
Geographic regionsGeographic regions
Special interestsSpecial interests
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Fast Facts About American Culture
• The average American:
– chews 300 sticks of gum a year
– goes to the movies 9 times a year
– takes 4 trips per year
– attends a sporting event 7 times each year
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Social Classes
Upper uppersLower uppersUpper middlesMiddle class
Working classUpper lowersLower lowers
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Characteristics of Social Classes
• Within a class, people tend to behave alike
• Social class conveys perceptions of inferior or superior position
• Class may be indicated by a cluster of variables (occupation, income, wealth)
• Class designation is mobile over time
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Social Factors
Referencegroups
Social roles
Statuses
Family
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Reference Groups
Membership groups—direct influence
Membership groups—direct influence
Primary groups—family, friends, neighbors, co-workers
Primary groups—family, friends, neighbors, co-workers
Secondary groups—religious, professional, trade-union
Secondary groups—religious, professional, trade-union
Aspirational groups—hope to join
Aspirational groups—hope to join
Dissociative groups--rejects
Dissociative groups--rejects
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Family
• Family of Orientation– Religion– Politics– Economics
• Family of Procreation– Everyday buying
behavior
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Personal Factors
Age
Values
Life cyclestage
Occupation
Personality
Self-concept
Wealth
Lifestyle
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Behavior changesaccording to life cycle stage
•Family•Psychological•Critical life events
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Brand Personality
Sincerity--honestSincerity--honest
Excitement--daringExcitement--daring
Competence--reliable
Competence--reliable
Sophistication—upper-class
Sophistication—upper-class
Ruggedness--tough
Ruggedness--tough
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Lifestyle (pattern of living) Influences
Multi-tasking—doing two ormore things at one time
Time-starved
Money-constrained
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Model of Consumer Behavior
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Key Psychological Processes
Motivation(drive to act)
Memory(information & experiences
Short-term-temporaryLong-term—permanent)
Learning(changes in behavior
arising from experience)
Perception(Process of selecting,
organizing, interpreting information to create
a world picture)
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Motivation
Freud’sTheory
Behavioris guided by subconsciousmotivations
Maslow’sHierarchyof Needs
Behavioris driven by
lowest, unmet need
Herzberg’sTwo-Factor
Theory
Behavior isguided by motivating
and hygienefactors
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Maslow’s Hierarchy of Needs
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Herzberg’s Two-Factor Theory
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Perception
Selective Attention(notice)
Subliminal Perception(embed covert messages)
Selective Retention(remember)
Selective Distortion(interpret information to fit preconceptions)
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Consumer Buying Process
Problem Recognition
Information Search
Evaluation
Purchase Decision
PostpurchaseBehavior
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Sources of Information
Personal(family, friends, etc)
Experiential(handling, examining,
product usage)
Public(mass media,
consumer-rating Organizations)
Commercial(advertising, websites,
salesperson, etc)
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Successive Sets
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Non-compensatory Models of Choice(positive and negative attributes consideration do not necessarily net out)
• Conjunctive– minimum set of acceptable cutoff for each attribute and
choose 1st alternative that meets the minimum standard for all attributes
• Lexicographic– Choose the best brand on the basis of its perceived
most important attribute• Elimination-by-aspects
– Compares brands on an attribute selected probabilistically (probability of choosing an attribute is positively related to its importance) and brands are eliminated if they do not meet minimum acceptable cutoff levels
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Perceived RiskFunctional (product does not
perform)Functional (product does not
perform)
Physical (product poses treat to physical well-being or health of the user
or others)
Physical (product poses treat to physical well-being or health of the user
or others)
Financial (product is not worth the price paid)
Financial (product is not worth the price paid)
Social (product results in embarrassment from others)
Social (product results in embarrassment from others)
Psychological (product affects the mental well-being of the user)Psychological (product affects the mental well-being of the user)
Time (failure of product results in an opportunity cost of finding another satisfactory product)
Time (failure of product results in an opportunity cost of finding another satisfactory product)
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Other Theories of Consumer Decision Making
Involvement• Elaboration Likelihood Model
– High and Low• Low-involvement marketing
strategies– Link to some involving
issues– Personal situations– Personal values– Add Important feature
• Variety-seeking buying behavior– Encourage habitual buying
behavior by dominating self-space.
Decision Heuristics (rules of thumb)• Availability
– Quickness and ease with which a particular example of an outcome comes to mind
• Representativeness– How representative or similar
the outcome is to other examples
• Anchoring and adjustment– Consumers arrive at an initial
judgment and then make adjustments of that 1st impression based on additional information
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Mental Accounting (manner which consumers
code, categorize, and evaluate financial outcomes of choice)
• Consumers tend to…– Segregate gains
• Sum of parts maybe greater than the whole
– Integrate losses• House buyers more inclined to view additional
expenditures favorably given the high price of the house
– Integrate smaller losses with larger gains• Withholding taxes
– Segregate small gains from large losses• rebates
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Marketing Debate
Is Target Marketing Ever Bad?
Take a position:1. Targeting minorities is exploitative.2. Targeting minorities is a soundbusiness practice.
Analyzing Business Markets
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Organizational Buying
Decision-making process by whichformal organizations establish theneed for purchased products and
services, and identify,evaluate, and choose among
alternative brands and suppliers.
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Characteristics of Business Markets
• Fewer, larger buyers• Close supplier-
customer relationships• Professional
purchasing• Many buying
influences• Multiple sales calls
• Derived demand• Inelastic demand• Fluctuating demand• Geographically
concentrated buyers• Direct purchasing
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Buying Situation
Straight rebuy—routineStraight rebuy—routine
Modified rebuy—modify product specification, prices,
delivery requirements, or other terms)
Modified rebuy—modify product specification, prices,
delivery requirements, or other terms)
New task—purchase of new product or serviceNew task—purchase of new product or service
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Systems Buying and Selling
Turnkey solution desired;
Bids solicited
PrimeContractors
Second-tierContractors
System subcomponents
assembled
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The Buying Center
Initiators--requestInitiators--request
UsersUsers
Influencers—help define specification
Influencers—help define specification
Deciders—choose the product requirements
Deciders—choose the product requirements
Approvers—authorized proposed actions of deciders or buyers
Approvers—authorized proposed actions of deciders or buyers
Buyers—formal authority to select the supplier and arrange
the purchase terms
Buyers—formal authority to select the supplier and arrange
the purchase terms
Gatekeepers—power to prevent sellers or information from reaching
member of the buying center
Gatekeepers—power to prevent sellers or information from reaching
member of the buying center
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Of Concern to Business Marketers
• Who are the major decision participants?
• What decisions do they influence?
• What is their level of influence?
• What evaluation criteria do they use?
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Sales Strategies
Small Sellers
Large Sellers
Key Buying Influencers
MultilevelIn-depthSelling
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Types of Business Customers
Price-Oriented
(transactional selling, price is everything)
Gold-Standard
(quality selling)
Strategic-Value
(enterprise selling)
Solution-Oriented
(consultative selling)
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Handling Price-Oriented Customers
Limit quantity purchasedLimit quantity purchased
Allow no refundsAllow no refunds
Make no adjustmentsMake no adjustments
Provide no servicesProvide no services
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Purchasing Orientations
Buying (short term and tactical, lowest price for a given level of quality, commoditization, multi-sourcing)
Procurement (quality improvement and cost reductions)
Supply Chain Management
(seamless from purchase of raw materials to the
on-time arrival of finished goods to end users)
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Product-Related Purchasing Processes
Routine products (low value and cost to the customer
—office supplies)
Routine products (low value and cost to the customer
—office supplies)
Leverage products (high value and costs to the customer
—engine pistons)
Leverage products (high value and costs to the customer
—engine pistons)
Strategic products(high value and costs and involve in high risks—mainframe computers)
Strategic products(high value and costs and involve in high risks—mainframe computers)
Bottleneck products(low value and cost and low
risks—spare parts)
Bottleneck products(low value and cost and low
risks—spare parts)
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Methods of e-Procurement• Websites organized using vertical hubs
– plastics, steel, chemicals, paper• Websites organized using functional hubs
– logistics, media buying, advertising, energy management
• Direct extranet links to major suppliers– Dell, Office Depot
• Buying alliances (several companies combine to buy in volume to obtain lower prices)– Transora—Coca-Cola, Sara Lee, Kraft, PepsiCo, P&G,
and several other companies• Company buying sites
– For example, General Electric formed the Trading Process Network where it posts requests for proposals, negotiates terms, and places orders
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Forms of Electronic Marketplaces
•Catalog sites•Vertical markets
•Pure play auction sites--eBay•Spot markets—chemicals
•Private exchanges--suppliers•Barter markets—trade goods & service
•Buying alliances--Transora
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Assessing Customer Value
• Internal engineering assessment– determine product
performance characteristics• Field value-in-use assessment
– customer evaluate elements of new product
• Focus-group value assessment– determine value of potential
marketing offering• Direct survey questions
– place a direct dollar value on one or more changes in the market offering
• Conjoint analysis– rank preference for alternative
market offering or concepts and than estimate the implicit value placed on each attribute.
• Benchmarks– Compare a “benchmark” offering
and new-market offering and then asked how much more customers would pay if new features were offered or how much less if certain features were removed
• Compositional approach– Attach a monetary value to each of
three alternative levels of given attribute and repeat for other attributes. The values are then added together for any product configuration.
• Importance ratings– Rate the importance of a different
attributes and the supplier firms’ performance on these attributes
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Establishing Corporate Credibility
Expertise(Able to make and
sell products)
Likeability(Attractive, prestigious,
dynamic)
Trustworthiness(Honest and dependable,
sensitive to customer needs)
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Factors Affecting Buyer-Supplier Relationships
Availability of alternatives
Supply marketdynamism
Complexity ofsupply
Importance ofsupply
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Categories of Buyer-Seller Relationships
• Basic buying and selling– Simple routine exchanges with
moderately high levels cooperation and information exchange
• Bare bones– Adaptation by the seller and
less cooperation and information exchange
• Contractual transaction– Generally low levels of trust,
cooperation, and interaction; exchange is defined by formal contract
• Customer supply– Competition rather than
cooperation is the dominant form of governance
• Cooperative systems– Coupled closely in operational
ways, although not legally binding
• Collaborative– Trust and commitment leading
to true partnerships• Mutually adaptive
– Relationship-specific adaptation for buyer and seller, but without a need for strong trust or cooperation
• Customer is king– The seller adapts to meet the
customer’s needs without expecting much adaptation or change on the part of the customer in exchange
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Opportunism
Some form of cheating orundersupply relative to animplicit or explicit contract.
