class: middle, title-slide # Marketing ## 4: Market Research ### Dennis A. V. Dittrich ### 2022 --- layout: true <div class="my-footer"> <span><img src="img/tcb-logo.png" height="40px"></span> </div> --- # Knowledge is Power .row[.col-7[ Successful market planning depends upon informed decision making. * Developing marketing objectives * Selecting target markets * Positioning products * Developing 4 Ps strategies Information is the fuel that runs the marketing engine. ] .col-5[ .question[ What information does the marketer might want for deciding what new flavors of soda to introduce? ] ]] ??? Successful planning requires that managers make informed decisions. Marketing research is the critical function that provides this necessary information. While this may sound like a straightforward proposition, careful coordination and control is called for in order to ensure that research is conducted in an ethical manner. This means that marketing research should be conducted in an aboveboard manner which does no harm to the participant, either physically, or mentally. It also means that marketers need to respect consumers privacy. Marketers must clearly explain to respondents how their data will be stored, used, and reported, as well as disclosing the degree to which their individual confidentiality and anonymity will be protected. In particular, it would be considered unethical to collect personal information or other data under the guise of research when in fact the purpose in contacting customers is to build a database for direct marketers. Collecting marketing research information is only one piece of the puzzle. The marketing information system helps users by bringing a variety of information together and distributing it, via reports, to a variety of users. --- # Marketing Research Ethics .row[.col-7[ Marketing research ethics refers to taking an aboveboard approach in conducting market research that does no harm to the participant. * Privacy issues * Confidentiality issues ] .col-5[ A **database** is an organized collection (often electronic) of data that can be searched and queried to provide information about contacts, products, customers, inventory, and more. ]] ??? Several aspects of market research are fraught with the potential for unethical behavior. Assuring respondent privacy and confidentiality are is essential. Researchers should also disclose how the respondent data will be used. **Collecting data under the guise of market research with the intent of developing a database of prospective customers is unethical.** --- # The Marketing Information System .col-10[ ] ??? Marketing information systems (MIS) are those which feed internal company data, information gathered via marketing intelligence or marketing research activities, and information found via searching acquired databases into special software programs, which when queried by analysts, generate reports containing useful information which marketing decision makers find helpful in fulfilling their duties. --- # Internal Company Data .row[.col-7[ Information generated from within the company * Used to produce reports on sales and marketing activities * Commonly accessed via secure intranets ].col-5[ An **intranet** is an internal corporate communications network that uses Internet technology to link company departments, employees, and databases. ]] ??? A variety of information from within the firm can be helpful to marketers. Internal data collected and analyzed by MIS systems often includes sales data by date, product category, brand, or customers, as well as information pertaining to stock-outs or defective products. Many MIS systems also track marketing “inputs”, such as the amount of money spent on advertising or sales promotions, as well as the resulting “outputs” – coupon redemption rates, for example. The prevalence of technology in business today makes it easy for sales representatives or other individuals working away from the office to access this wealth of internal information while on the go. Sales representatives in particular benefit from the ability to tap into their firm’s intranet. Instant access to their company’s internal communications network means that representatives can double-check the inventory status of items before they are ordered, as well as provide instant feedback to clients who have questions related to delivery dates, pricing policies, or other information which can be found via the intranet. --- # Market Intelligence .row[.col-7[ Gathered via monitoring of everyday data sources, observations, and discussions with sales representatives. Market intelligence system Information may come from mystery shoppers, speaking with buyers, trade shows, purchasing, or using reverse engineering .question[ Customers today rely on their phones for much more than calls, so telecommunication companies need to understand the future of texting, online gaming, and other smartphone-based activities. What might telecommunications companies do to help them track trends in mobile computing? ] ] .col-5[ **Reverse engineering** is the process of (physically) deconstructing a competitor’s product to determine how it’s put together. ]] ??? The majority of marketing intelligence is gathered by monitoring everyday sources, such as news articles, trade publications, web sites, or even simple observations in the marketplace, as well as discussions with salespeople or others. A market intelligence system is a method by which marketers get information about what’s going on in the world that is relevant to their business. --- # Market Research .col-7[ Refers to the process of collecting, analyzing, and interpreting data about customers, rivals, and the business environment * Syndicated research * Custom research reports [Q-Scores](http://www.qscores.com/Web/Index.aspx) [Nielsen](http://www.nielsen.com/content/corporate/us/en/top10s.html)[Ratings](http://www.nielsen.com/content/corporate/us/en/top10s.html) ] ??? Syndicated research is general information that research companies collect on a regular basis and sell to other firms. For instance, INC/The Q-Scored Company collects data on consumer perceptions of 1800+ celebrities for companies interested in potential spokespeople. Other examples include Nielsen’s TV and Radio ratings services. --- # Acquired Databases .col-7[ Externally sourced databases can be used to collect various types of useful information * Noncompeting businesses * Government databases Misuse of databases can be problematic and has led to “do-not-call” lists and anti-spamming laws ] ??? Have you ever wondered why you receive some of the direct mail pieces that you do? Most likely it’s because the marketer has purchased your name from an acquired database of some type. Acquired database are sold by a variety of non-competing businesses and by other entities, such as magazine publishers. The government offers a wealth of information for free via the Census website as well as others. Auto registration and license information is often sold by states to interested parties. The use of databases for marketing purposes is being scrutinized carefully by the government though, as misuse of this information can easily result in an invasion of privacy. While analyzing trend data is generally considered to be an acceptable use of database information, using this same data as a source for unsolicited email or phone calls is more problematic, and consumer backlash have eventually led the government to institute anti-spam laws, as well as the do-not-call list. --- # Marketing Decision Support System  ??? While marketing information systems generate reports helpful for routine decision making, sometimes these reports are inadequate or managers want information different from that which is delivered via the reports. Marketing decision support systems can address problems that are too vague or unusual for an MIS system to easily answer. MDSS is more powerful, because even individuals who aren’t computer experts can run custom reports on their own via the interactive software. MDSS include both statistical and modeling software tools. Statistical software is helpful in examining complex relationships among variables; perceptual maps and multidimensional scaling are two examples. Modeling software allows decision makers to ask “What IF” types of questions. Helps answer “What if” type questions. --- # MIS, MSDS and Customer Insights .col-7[ To make good decisions, marketing managers need timely access to quality information! * A firm’s MIS stores and analyses data from a variety of sources * A firm’s MSDS makes it easier to access the MIS and find answers to specific “what-if” questions .question[ Suppose your university hired you to lead its customer insights team. What sorts of questions might your MIS and MSDS systems answer? ] ] ??? DISCUSSION NOTES: Instructor may begin discussion by asking students what sorts of research problems university marketing managers may be interested in examining? If students struggle to come up with examples, instructor might provide direction by discussing issues such as admissions trends, athletic event attendance, underage drinking. In addition, instructor may wish to refer to Table 4.1, which provides example questions answered by MIS and MSDS systems. Questions an MIS Answers * What were our company sales of each product during the past month and the past year? * What changes are happening in sales in our industry, and what are the demographic characteristics of consumers whose purchase patterns are changing the most? * What are the best media to reach a large proportion of heavy, medium, or light users of our product? Questions an MDSS Answers * Has our decline in sales simply reflected changes in overall industry sales, or is there some portion of the decline that industry changes cannot explain? * Do we see the same trends in our different product categories? Are the changes in consumer trends similar among all our prod- ucts? What are the demographic characteristics of consumers who seem to be the most and the least loyal? * If we change our media schedule by adding or deleting certain media buys, will we reach fewer users of our product? --- # Customer Insights and Marketing .col-7[ Goal of the Marketing Insights function -transform data into information * **Data** are raw unorganized facts * **Information** is interpreted data More complicated than it sounds * Massive amounts of data * Much data is unstructured * Functional silos ] ??? The idea of customer insights refers to the collection, deployment, and interpretation of information that allows a business to acquire, develop, and retail its customers. Most large companies today maintain a dedicated team of experts whose jobs are to sift through all the information available in order to support market planning decisions. Job is complicated by the massive volume of data that is constantly flowing through the organization. In addition, much of the most useful customer information is unstructured (e.g., customers’ social media posts, tweets, and images). In addition, many large companies have traditionally been structured as functional silos, so different units may hold different pieces of the puzzle. Integrating and sharing data/information across functional areas raises a number of challenges to customer insights teams. --- # 7 Steps in the Market Research Process .col-11[ ] ??? Ideally, market research is a well-structured, ongoing process with a common aim: help managers make better marketing decisions. There are seven steps in the marketing research process: --- # Step 1: Define the Research Problem .col-7[ Specify the research objectives * What questions will the research attempt to answer? Identify the consumer population of interest * What are the characteristics of the consumer group(s) of interest? Place the problem in an environmental context * What factors in the firm’s internal and external business environment might influence the situation? ] ??? As part of this process, research objectives – the questions that the research will answer – are defined. The consumer population from whom the information will be gathered is also identified, and those factors in the firm’s internal and external business environment which might influence the situation are also identified, in order to place the problem into an environmental context. Research objectives may stem from market feedback that indicates a true problem of some type, or it may reflect the firm’s interest in capitalizing upon a potential opportunity. --- # Step 2: Determine the Research Design .col-7[ Once the problem is isolated, the next step is to determine a ‘plan of attack’ * A **research design** is a plan that specifies what information marketers will collect and what type of study they will do Research designs fall into two categories: * Secondary data * Primary data ] ??? Different market research problems call for different research approaches. The research design determines the processes by which the researcher will seek to address the specific question. Research designs generally fall into broad categories based upon the type of data used: primary and secondary data. Many research designs will integrate various types of primary and secondary data research. --- # Research with Secondary Data .col-7[ Does information already exist? Trade associations compile data Secondary data can save time and money ] ??? Secondary data already exists – someone or another entity has already gathered the information. Often, trade associations will compile data on their specific industry. Secondary data can be very cost effective and far less time consuming that primary data. --- # Market Research Designs  ??? The second step of the research process involves determining the research design. A great deal of time, money, and effort can be saved if secondary data is available to help fulfill the research objectives before engaging in the expense of primary research. Secondary data is information that has been collected for some purposes other than the research problem at hand. As shown here, there are a number of sources of secondary data, both internal and external to the firm, though the quality of data can vary. For example, data purchased from syndicated research firms which exist solely for the purpose of collecting and selling marketing research data, tends to be very high quality. Information gathered by trade associations and the U.S. government also tends to be of high quality, though data provided by other foreign governments may not be as valid. Care must be taken to carefully evaluate information posted to websites to ascertain whether or not the information found if factual in nature, or simply reflective of the author’s opinion. --- # Research with Primary Data .col-7[ **Primary data** refers to data collected by the firm to address a specific question * When a company needs to make a specific decision, secondary data may not be enough! * May include demographics, psychological info, awareness, attitudes, and opinions There are different categories of primary data research: Exploratory, descriptive, and causal research ] ??? Introduce the three main categories of primary data research: exploratory, descriptive, and causal research. --- # Exploratory Research .col-7[ Exploratory research is useful for: * Gaining better understanding of problem * Identifying new opportunities Often qualitative in nature * Focus Group * Market research online community (MROC) * Case studies * Ethnographies ] ??? Exploratory research is particularly useful when marketers are trying to identify new strategies, new product opportunities, or when the need to understand in detail how consumers feel about a product or service. Researchers gather this information via in-depth consumer probing using focus groups or ethnographic studies, or by means of case study data. Exploratory research is qualitative in nature, meaning that research results tend to be non-numeric and thus inappropriate for most forms of statistical analysis. However, many forms of exploratory research provide rich data containing a wealth of thoughts, feelings, verbal descriptions, and even pictures. Focus groups consist of 5–9 individuals who typically share certain characteristics, and who have agreed to participate in an in-depth discussion of the product or service in question. The video clip discusses how focus groups indirectly led to a key consumer insight that ultimately formed the basis for repositioning that brand. Case studies examine a firm or organization thoroughly, often for the purpose of identifying how certain processes or procedures are accomplished. Ethnographic studies borrow their methodology from the anthropology profession, and often visit people’s homes to see how they store and use products and services. --- # Descriptive Research .col-7[ Descriptive research * Systematically investigate marketing problem * Results expressed in quantitative terms * Cross-sectional vs. longitudinal designs ] ??? While exploratory research can provide a great deal of interesting and useful information, research results are based on the opinions of only a few individuals. Very often researchers seek to verify these results using a larger, more representative sample using descriptive research studies. The larger sample size and manner in which the data is collected typically allows researchers to express the results in terms of averages, percentages, and more advanced forms of statistical analyses. Cross-sectional designs systematically use instruments such as questionnaires to systematically collect information from one or more consumer samples at a single point in time. Longitudinal studies attempt to track changes over time, by collecting data from the same set of consumers at multiple points in time. --- # Causal Research .row[ .col-7[ * Attempts to identify cause-and-effect * Often involves experiments * Independent and dependent variables .question[ Sales of beer and diapers are correlated, but does one cause the other? ] To rule out alternative explanations, researchers must carefully design **experiments** that test predicted relationships among variables in a controlled environment. ] .col-5[  ]] ??? Casual research uses experiments to better understand cause-and-effect relationships among two or more variables. For example, a marketer may be interested in learning the degree to which sales volume will change, if the price of a product is raised. In this instance, PRICE is the independent variable, and SALES is the dependent variable. --- # Ethical / Sustainable Decisions in the Real World .row[ .col-7[ Should companies that offer products or services that may pose health risks be allowed to fund research that could suggest that those products share little or no responsibility for those health risks? * Coca-Cola spent $132 million on research from 2010 to 2015 * Research suggested that Americans held an illegitimate fixation on calorie consumption, but didn’t exercise As a marketing executive, is it OK to commission and fund research that supports the position that the product posed no health risk when you are aware that other independent research studies contradict that view? ].col-5[ .question[ * Are you aware of similar industries where “research” indicated that the product wasn’t harmful? * Why can’t a company conduct its own research? * In what instances could/should a company conduct its own research? * What if a company commissioned research, but didn’t fund it? Would that make a difference? ] ]] --- # Step 3: Choose the Method to Collect Primary Data .row[ .col-7[ Primary data collection falls into two broad categories * Survey * Observation Use of new technologies * Neuromarketing * Virtual stores ] .col-5[  ]] ??? Survey and observation are the two main methods of collecting primary data. Some forms are applying technologies and experimental techniques from neuroscience to obtain sophisticated brain scans and other types of physiological data as consumers perform tasks or make decisions in either a real or virtual setting. Neuromarketing uses technologies such as functional magnetic resonance imaging (fMRI) to measure brain activity to better understand how and why consumers make the decisions they do. Some larger consumer products firms, like Google and Frito-Lay, have even built their own labs and employ in-house scientists to perform neuromarketing research. --- # Survey Methods .col-7[ Survey methods are used to interview respondents * Mail questionnaires * Telephone interviews * Face-to-face interviews * Online questionnaires ] ??? The third step in the marketing research process is to determine which survey methods and/or observational research methods are appropriate. Survey methods involve some kind of interview or other direct contact with respondents who answer questions. Each form of survey – mail, telephone, face-to-face, and online has it’s own advantages and disadvantages, as shown in Table 4.3 in your textbook. Mail questionnaires are typically delivered to respondents’ homes or places of businesses. Mail surveys take time to gather the data, offer little flexibility, and are characterized by low response rates. Telephone surveys also suffer from low response rates and more importantly, decreasing respondent cooperation, as technology makes it very easy for consumers to screen calls. While results can be gathered faster phone, compared to mail, only homes with phones can be surveyed, which is a growing problem, given that more and more homes are dropping their land lines in favor of cell phones. The most common form of face-to-face interview takes place as part of a mall intercept study, in which researchers recruit shoppers in malls or other public areas. Face-to-face interviews are subject to interviewer bias, are costly, and mall intercept studies in particular are notoriously unrepresentative of the greater population. While more and more surveys are being conducted over the Internet due primarily to lower costs and quicker turnarounds, online surveys are not without problems. It’s important that the relative advantages and disadvantages of each survey method be considered before selecting the type of questionnaire to administer. --- # Observational Methods .row[.col-7[ Data collection approach in which researcher records consumer behaviors, often without their knowledge * Personal observation * Unobtrusive measures * Mechanical systems .question[ Suppose you were hired to study teenagers and develop a new product that would appeal to the teen market. Where might you go to observe teenagers? What challenges might you or another researcher have in conducting this observation? ] ] .col-5[  ]] ??? Observation refers to situations in which the researcher records consumer behavior. Personal observation may occur in a grocery store when a researcher watches consumers actions as they take place. Sometimes researchers use unobtrusive measures instead. Unobtrusive measures require researchers to measure traces of physical evidence that remain after some action on the part of the consumer has been taken. For example, ‘garbologists’ go through consumers trash to find evidence of the products they consume. Mechanical forms of observation can often provide observations more cheaply and accurately than can in-person methods. Some examples include traffic counters placed at busy intersections, and people meters that track television viewing habits. --- # Online Research .col-7[ Two major types of online research * Gathering info from online surfing (e.g., cookies) * Gathering info via online sources (e.g., hash tag searches) **Predictive technology** uses shopping patterns of large numbers of people to determine which products are likely to be purchased if others are ] ??? Online research is the fastest way to collect data; it’s also less expensive, and perhaps the most versatile, as marketers can use the Internet for both exploratory research, via online focus groups and in-depth interviews, and descriptive research via Internet surveys. Data is gathered online via one of two methods: passively, via consumer’s web site surfing, and actively by enticing consumers to answer email questionnaires, online questionnaires, and focus groups. Cookies make tracking consumer surfing behavior possible. Cookies are small text files inserted by a web site on the user’s hard drive, that the web site recognizes when that surfer returns to the site. Predictive technology is the specific form of data base mining that uses shopping patterns of large numbers of people to determine which products are likely to be purchased if others are. Despite the fact that users can delete or block cookies from tracking their behavior, many consumers are concerned over a loss of privacy. In fact, 84% of the respondents to a recent study objected to having their information sold to other companies. Privacy rights advocates are hopeful of governmental regulation designed to protect their rights. The most serious disadvantage associated with online research is a lack of representativeness among respondents, as certain segments of the population, such as the elderly and the poor, do not have access to the internet and thus cannot have their opinions represented in Internet research studies. Hacking, cheating, and competitive interference in research studies are among the other problems found in online research studies. --- # Bounce Rate .row[ .col-6[ Bounce rate is a measure of how many visitors come to a page on a website and leave without viewing any other pages. `$$\text{Bounce rate} = \frac{\text{Total number of visitors viewing one page only}}{\text{Total entries to the web page}}$$` ] .col-6[ Marketers use bounce rates to determine whether an entry page effectively generates visitor interest. ]] .row[ .col-6[ .question[ Consider the bounce rate metric we describe above. Like any marketing metric, decisions should not be made based on the bounce rate alone. What other considerations should the marketer use to evaluate the effectiveness of a website? ] ]] ??? A rule of thumb for website effectiveness is that great websites should fulfill three basic criteria: 1. the site should be attractive, 2. the site should be easy to navigate and get you where you want to go, and 3. the site should have up-to-date information (no old stuff). --- # Data and Measurement Quality Issues .row[ .col-7[ Quality of market research insights based on “garbage in, garbage out!” Three key considerations: * Validity * Reliability * Representativeness ] .col-5[  ]] ??? Decisions made on the basis of marketing research are only as good as the information on which they are based. The three factors which influence data quality include: Validity: the extent to which the research actually measures what it was intended to measure. Reliability: the extent to which research measurement techniques are free of errors. Representativeness: the extent to which consumers in the study are similar to a larger group in which the organization has an interest. Self-selection bias is a threat to representativeness in online and offline research designs. The more valid and reliable the measures are, and the more representative the sample group of respondents are compared to the population of interest, the greater the degree of confidence a researcher can have in the results of the study. This underscores the reason why probability samples are preferable to non-probability alternatives, as we’ll discuss in just a minute. --- # Step 4: Design the Sample .col-7[ **Probability sampling** * Each member of the population has some known chance of being included (example: action films vs. “chick flicks”) * Simple random sample * Systematic sampling procedure * Stratified sample **Nonprobability sampling** * A sample in which personal judgment is used to select respondents (example: surveying random individuals at your favorite restaurant) * Convenience sample * Quota sample ] ??? The process of selecting participants for a research study is known as sampling. Two types of sampling exist: probability and non-probability. Probability samples are generally considered to be the superior choice, because information obtained from probability samples can be generalized to the larger population that the sample is supposed to represent. The same can not be said of non-probability samples. An example of probability sampling would be if you took a sample of the larger population and a males in the sample indicate they prefer “action films” over “chick flicks,” you can infer with confidence that males in a larger population would also prefer action films over chick flicks. In simple random sampling, every member of the population has an equal, known chance of being selected to participate in the research study. Pulling names out of a hat or using a random number table to select participants are examples of this method. Systematic sampling procedure occurs when the researcher has a numbered list of all elements in the population. By dividing the population size by the sample size, a skip interval is determined. The researcher then selects a random starting point on the list, and then counts down the skip interval to select the next member of the sample. This process continues until all sample members have been selected. Note that without a randomly selected starting point, not all elements of the population would have a chance of participating – thus randomness is a key factor in probability sampling. Stratified sampling is used when the researcher wishes to segment participants within a study. The population is first divided along the characteristic of interest (e.g., gender or some other factors that is closely tied to behavior). Respondents in each segment are then randomly selected in the same proportion as their percentage of the overall population. Nonprobability sampling is used if the researcher needs a quick answer or just wants to get a general sense of how people feel about a topic. Surveying individuals at your favorite restaurant may leave out any number of representatives from the general population. Therefore, there is no way to ensure that the sample is representative of the population. Convenience sampling involves selecting participants just because they happen to be present when and where the data are being collected. A quota sample consists of the approximate proportion of individuals as the general population. For example, if you were to survey students at your university, you would try and find a proportionate number of freshmen, sophomores, juniors, and seniors to the rest of your university. --- # Step 5: Collect the Data .col-7[ The quality of research conclusions is only as good as the data used to generate them Challenges to gathering data in foreign countries * Cultural issues * Language issues ] ??? The quality of the research results is only as good as the poorest interviewer in the study. Marketers must train and supervise field personnel to gather data appropriately, or the information obtained may be tainted by interviewer bias. Data gathering in foreign countries presents four key challenges: * Major differences exist in the sophistication of research operations in various countries as well as the amount of data available. For example, it may take years for the appropriate government official to sign-off on a research study in Egypt, as is required by law. * Infrastructure differences may impede telephone surveys or online research efforts among a large proportion of the population that do not have access to the technology, while low literacy hurt marketers ability to gather mail survey data in many countries. * Local customs and cultural differences can also influence how questions are interpreted and answered in different countries. Involving local researchers in the questionnaire design process may be beneficial. * Language translation difficulties are common, because sometimes things just don’t come out right. Embarrassment can often be avoided by using back translation, a process by which 1) a native of the country translates the questionnaire from English to the language of the targeted respondents, and 2) a different native translates the resulting questionnaire back into English. --- # Step 6: Analyze and Interpret the Data .col-7[ Data must be analyzed and interpreted to be meaningful! Tabulation * Arranging data in a table or other summary form to get a broad picture of overall response Cross-tabulation * Exploring data by sub-groups in order to see how results vary across categories ] ??? The data must be analyzed and interpreted in order to be useful for decision-making. Two of the most common and simplest forms of analysis include the presentation of data in tables, called tabulation, and the use of cross-tabulation to show how data varies by subgroups between two or more variables. --- # Step 7: Prepare the Research Report .col-7[ Research reports typically include the following sections: * Executive summary * Description of research methods * Discussion of study results * Limitations of study * Conclusions and recommendations ] ??? The final step in the marketing research process is to prepare a report of the research results that clearly and concisely tells readers what they need to know. Research reports typically contain the following sections: * An Executive Summary of the report that covers the high points of the total report. * An understandable description of the research methods. * A complete discussion of the results of the study, including the tabulations, cross-tabulations, and additional statistical analyses. * Limitations of the study (no study is perfect). * Conclusions drawn from the results and the recommendations for managerial action based on the results.