Introduction to Marketing Research CHAPTER 1 & CHAPTER 2 Idil Yaveroglu Lecture Notes

MR - - Why do we need it?

“Everywhere you look, the quantity of information in the world is soaring. According to one estimate, mankind created 150 exabytes (billion gigabytes) of data in 2005. This year, it will create 1,200 exabytes. Merely keeping up with this flood, and storing the bits that might be useful, is difficult enough. Analysing it, to spot patterns and extract useful information, is harder still. Even so, the data deluge is already starting to transform business, government, science and everyday life. It has great potential for good—as long as consumers, companies and governments make the right choices about when to restrict the flow of data, and when to encourage it” (Economist Feb 2010)

Marketing Research Marketing research is the systematic and objective identification, collection, analysis, dissemination, and use of information for the purpose of improving decision making related to the identification and solution of problems and opportunities in marketing

Definition of Marketing Research Identifying and Solving Marketing Problems Identification of Information Needed Collection of Data Analysis of Data Dissemination of Results Use of Information in Decision Making

Marketing Research Specifies the information necessary to address these issues Manages and implements the data collection process Analyzes the results Communicates the findings and their implications

Classification of Marketing Research Problem Identification Research Research undertaken to help identify problems which are not necessarily apparent on the surface and yet exist or are likely to arise in the future. Examples: market potential, market share, image, market characteristics, sales analysis, forecasting, and trends research. Problem Solving Research Research undertaken to help solve specific marketing problems. Examples: segmentation, product, pricing, promotion, and distribution research.

Example Penn Barbie

Problem- Identification Research Marketing Research Problem- Identification Research Problem- Solving Research Market Potential Research Market Share Research Image Research Market Characteristics Research Forecasting Research Business Trends Research Segmentation Research Product Research Pricing Research Promotion Research Distribution Research

Steps in Marketing Research Step 1: Defining the Problem Step 2: Developing an Approach to the Problem Step 3: Formulating a Research Design Step 4: Doing Field Work or Collecting Data Step 5: Preparing and Analyzing Data Step 6: Preparing and Presenting the Report

The Role of Marketing Research in Marketing Uncontrollable Environmental Factors Economy Technology Competition Laws and Regulation Social and Cultural Factors Political Factors Assessing Information Needs Customer Groups Consumers Employees Channel Members Suppliers Marketing Research Marketing Managers Market Segmentation • Marketing Programs Target Market Selection • Performance and Control Controllable Marketing Variables Product Pricing Promotion Distribution Marketing Decision Making Providing Information

Do Not Conduct Marketing Research Does the management have a positive attitude towards research? Do Not Conduct Marketing Research No Yes Are enough resources available to collect additional information and implement the findings? No Yes Is additional information needed to make the decision? No Yes Is the decision of strategic or tactical importance? No Yes Does the value of additional information exceed the cost of research? No Yes Conduct Marketing Research

When should you do Research? When the costs of doing research is lower than the costs of making a bad decision. Marketing Research Benefits of Costs of Marketing Research The Role of Marketing Research

Defining the Problem Problem definition involves the defining the management decision problem (what should management do), and the marketing research problem (what information is needed). Management Decision Problem: What could we do to increase market share? Marketing Research Problem: Asses the effectiveness of different approaches to communication strategies.

The Problem Definition and Approach Development Process Tasks Involved Discussions with Decision Makers Interviews with Experts Secondary Data Analysis Qualitative Research Environmental Context of the Problem Step 1: Problem Definition Management Decision Problem Marketing Research Problem Step 2: Approach to the Problem Analytical Framework and Models Research Questions and Hypotheses Specification of Information Needed Step 3: Research Design

Factors to be Considered in the Environment Context of the Problem Past Information and Forecasts Resources and Constraints Objectives of the Decision Maker Buyer Behavior Legal Environment Economic Environment Marketing and Technological Skills

The Problem Audit The problem audit is a comprehensive examination of a marketing problem with the purpose of understanding its origin and nature. The events that led to the decision that action is needed; the history of the problem. The alternative courses of action available to the DM. The criteria that will be used to evaluate the alternative courses of action. The potential actions that are likely to be suggested based on the research findings. The information that is needed to answer the DM's questions. The manner in which the DM will use each item of information in making the decision. The corporate culture as it relates to decision making.

Discussion between Researcher and DM Focus of the DM Loss of Market Share Focus of the Researcher Superior Promotion by Competition Inadequate Distribution of Company’s Products Lower Product Quality Price Undercutting by a Major Competitor Symptoms Underlying Causes

New Coke http://www.youtube.com/watch?v=W6t7deaplgY

Problem Definition Based on Symptoms Can Be Misleading Firm Symptoms Based on Symptoms Underlying Causes Manufacturer of orange soft drinks Consumers say the sugar content is too high Determine consumer preferences for alternative levels of sugar content Color. The color of the drink is a dark shade of orange giving the perception that the product is too “sugary.” Manufacturer of machine tools Customers complain prices are too high Determine the price elasticity of demand Channel management. Distributors do not have adequate product knowledge to communicate product benefits to customers.

Management Decision Problem Versus the Marketing Research Problem Asks what the decision maker needs to do Asks what information is needed and how it should be obtained Action oriented Focuses on symptoms Information oriented Focuses on the underlying causes

Table 2.3 Management-Decision Problem and Marketing Research Problem Should a new product be introduced? To determine consumer preferences and purchase intentions for the proposed new product. Should the advertising campaign be changed? To determine the effectiveness of the current advertising campaign. Should the price of the brand be increased? To determine the price elasticity of demand and the impact on sales and profits of various levels of price changes. What can Subaru do to expand its automobile market? To determine the various needs of the automobile users and the extent to which those needs were being satisfied by the current product offering

Errors in Defining the Market Research Problem Problem Definition is too Broad Does Not Provide Guidelines for Subsequent Steps e.g., Improving the Company’s Image Common Errors Problem Definition is too Narrow May Miss Some Important Components of the Problem e.g. Changing Prices in Response to a Competitor’s Price Change

Example Symptom Management Decision Problem Research Problems (Models, RQs, Hypotheses) Approach to the Problem Research Design Needs of buyers of various cars can be operationalized in terms of the attributes or features desired. -Evaluation of passenger cars on the desired attributes What needs do buyers of passenger cars, station wagons, and sports utility vehicles seek to satisfy? How well do existing automobile product offerings meet these needs? Is there a segment of the automobile market whose needs are not being adequately met? VW lost market share “What can VW do to expand its share of the automobile market?”

Components of an Approach Analytical Framework and Model Research Questions and Hypotheses Specification of the Information Needed

Research Questions and Hypotheses Research questions (RQs) are refined statements of the specific components of the problem. A hypothesis (H) is an unproven statement or proposition about a factor or phenomenon that is of interest to the researcher. Often, a hypothesis is a possible answer to the research question.

RQ : What is the overlap between the features sought by station wagon buyers and buyers of sports utility vehicles (SUVs)? H1 : The buyers of station wagons rate certain features of SUVs as important. H2 : The buyers of SUVs rate certain features of station wagons as important.

Specification of Information Needed By focusing on each component of the problem and the analytical framework and models, research questions, and hypotheses, the researcher can determine what information should be obtained.

Colgate Palmolive Marketing Challenges: Penetration Opportunity: 25% of households in Turkey are not purchasing toothpaste How can we recruit non-users into the category? There is no habitual development. Consumption Opportunity: Those who purchase toothpaste brush their teeth only once a week on average How can we motivate users to brush their teeth regularly twice a day?