Introduction and Phases of Marketing Research Chapter 1 Introduction and Phases of Marketing Research

Chapter 1 Outline 1) Definition of Marketing Research 2) The role of marketing research in marketing decision making 3) A Classification of Marketing Research 4) Marketing Research Process 5) Marketing Research Suppliers and Services 6) Careers in Marketing Research 7) Questions for Revision

First: Definition of 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 Systematic: uses scientific methods in research. Objective: free from personal or political biases of the researcher or the management. Marketing research process involves: 1- identification of the research problem and opportunity, and the information needed to investigate it + relevant recourses of information. 2- collection of data using the appropriate method of data collection. 3- analysis of data + interpretation + inferences 4- dissemination the finding and recommendation of the research that allows the information to be used for marketing decision making. The key words in this definition are; systematic, objective and analysis. Marketing research seeks to set about its task in a systematic and objective fashion. This means that a detailed and carefully designed research plan is developed in which each stage of the research is specified. Such a research plan is only considered adequate if it specifies: the research problem in concise and precise terms, the information necessary to address the problem, the methods to be employed in gathering the information and the analytical techniques to be used to interpret it. Maintaining objectivity in marketing research is essential if marketing management is to have sufficient confidence in its results to be prepared to take risky decisions based upon those results. To this end, as far as possible, marketing researchers employ the scientific method. The characteristics of the scientific method are that it translates personal prejudices, notions and opinions into explicit propositions (or hypotheses). These are tested empirically. At the same time alternative explanations of the event or phenomena of interest are given equal consideration.

Second: The Role of Marketing Research in marketing decision making Controllable Marketing Product Pricing Promotion Distribution Variables Research Decision Making Providing Information Assessing Needs Marketing Managers Market Segmentation Performance & Control Target Market Selection Marketing Programs Uncontrollable Environmental Factors Economy Technology Laws & Regulations Social & Cultural Factors Political Factors Consumers Employees Shareholders Suppliers Customer Groups The task of marketing research is to assess the managers’ information needs and provide management with relevant, accurate, reliable, valid, current, and actionable information as a base for decision making. Those information are about some controllable and uncontrollable variables, in addition to other direct variables in marketing environment: consumers, employees, shareholders, and supplier. Sound decisions are not based on gut feeling, intuition, or even pure judgment. In the absence of sound information, an incorrect management decision may be made.

Third: A Classification of Marketing Research Problem- Identification Research Problem-Solving Research Market Potential Research Market Share Research Market Characteristics Research Sales Analysis Research Forecasting Research Business Trends Research Segmentation Research Product Research Pricing Research Promotion Research Distribution Research Note: the two types of research follow a common marketing research process. Market characteristics may changer over time. Research on market characteristics can discover these changes (problem identifcication). Segmentation is done in order for targeting more segments in the market as a solution (problem solving) of sales reduction (problem) or market development (opportunity).

1- 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, brand or company image, market characteristics, sales analysis, forecasting, and trends research. This type of research provides information about the marketing environment and helps diagnose a problem. Example: a declining market potential indicates that the firm is likely to have a problem in achieving its growth targets. Similarly, studying economic, social, and cultural environment may point to problems or opportunities. The word problem implies both a real problem to be solved or a market opportunity to be benefited from.

2- Problem-Solving Research Research undertaken to help solve specific marketing problems. Examples: segmentation, product, pricing, promotion, and distribution research. The findings of this type of research are used in making decisions that will solve specific marketing problems. The two types of research go hand in hand, and a project of marketing research may combine both types of research. (Real research illustration Boeing 737) In Boeing 737 case the consumer surveys identified potential demand for smaller planes (problem identification). Subsequent product research led to the introduction of the new version of the Boeing 737, which cater to the 100-215-seat market (problem solving).

Problem-Solving Research Determine the basis of segmentation Establish market potential and responsiveness for various segments Select target markets SEGMENTATION RESEARCH Test concept Determine optimal product design Package tests Product modification Brand positioning and repositioning Test marketing Controlled store tests PRODUCT RESEARCH Segmentation: the problem is to which segment or segments should the company target? Controlled store tests: Market research firms that offer controlled tests in retail stores. Review vendors who study the effects on purchase or shopper behavior when product variables are controlled. Examples of controlled product variables during store testing are price, position within the store, display presentation, incentives/coupons, demonstrations, and inventory. Before you invest significant dollars and hours in any in-store marketing program – be it in a new product, package or promotion – you need a clear picture of its potential for success. And there is no better way to test that potential than at store shelves, where 70% of all shopping decisions are made.

Problem-Solving Research PRICING RESEARCH Pricing policies Importance of price in brand selection Product line pricing Price elasticity of demand Response to price changes $ALE PROMOTIONAL RESEARCH Optimal promotional budget Sales - promotion relationship Optimal promotional mix Copy decisions Media decisions Creative advertising testing Evaluation of advertising effectiveness Claim substantiation Product line pricing refers to the practice of reviewing and setting prices for multiple products that a company offers in coordination with one another. Rather than looking at each product separately and setting its price. product-line pricing strategies aim to maximize the sales of different products by creating more complementary, rather than competitive, products. If you offer more than one product or service, consider the impact that one product's or service's price will have on the others. Copy decision in advertising: Text of a print, radio, or television advertising messages that aims at catching and holding the interest of the prospective buyer, and at persuading him/her to make a purchase all within a few short seconds. Claim substantiation research: Advertising must be truthful, non-deceptive and not unfair. The claims that advertising makes, whether direct or implied, must have evidence to back them up. If they don’t, they can be challenged. Survey research is often used to provide a basis for the claim or the challenge. When research is used to support or challenge advertising messages, it is likely to be subjected to rigorous scrutiny from adversaries and adjudicating bodies… much more so than when market research is used in its more typical role, as an aid for internal decision-making. Therefore, it is important that Claims Substantiation Research which supports key strategic directions be designed and executed to anticipate and withstand criticism well beyond what is expected of most research. However, this is not often achieved. Between January 2006 and June 2011, the National Advertising Division (NAD) of the Better Business Bureaus found that 71 percent of the consumer perception surveys introduced by parties to an NAD proceeding were unreliable and, therefore, had little or no impact on the final outcome of the case. Claims Substantiation Tests From prior research, a major frozen food manufacturer believed that three of their frozen food products had the potential to be significantly preferred to competition on several attributes, including taste and texture.  Farrand Research designed and implemented a research study that followed all of the accepted practices for product claims research according to the Standard Guide for Sensory Claims Substantiation. A paired-comparison central location product test was conducted in order to gain consumer evaluations of three reformulated client company products, along with products from the major competitor. One of the food products targeted both children and adults, so we made sure both groups tested it.  The other two products were tested among adults age 18 to 59 only.  A total of 1200 in-person interviews were conducted at central locations in six geographically dispersed markets representing each United States Census Region.  Based on results of this study, the client was able to make a claim in advertising that would stand up to legal challenge. PreviousClaim Substantiation Next The use of sensory claims in product promotion is increasingly being used to highlight a point of difference against competitors. Once more popular in the personal care sector, the use of claims in food and beverage markets is increasing. At Sensory Dimensions we have helped many of our clients design studies to provide data to substantiate claims either on-pack or in advertising and other promotional material. Claims can be of superiority over another product either in terms of hedonics or specific product attributes, or non-comparative, that is communications claims. Examples of comparative claims might be "thicker than brand x" or "tastes better than any other" whereas communications claims could include "leaves your laundry with lasting freshness". We work with our clients to help them select the claims that they wish to make and design research that will fully support their claim whilst being robust against potential challenge. Techniques can include Sensory orQuantitative Consumer Research or a combination.

Problem-Solving Research DISTRIBUTION RESEARCH Determine… Types of distribution Attitudes of channel members Intensity of wholesale & resale coverage Channel margins Location of retail and wholesale outlets Channel Margin The price difference between what a manufacturer charges and what a consumer pays is called the channel margin. For example, suppose a breakfast cereal manufacturer sells its products to a wholesaler at a price of $1 per box. The wholesaler takes delivery of a large number of boxes and distributes them to various retailers across the country, charging $2 per box. Retailers then increase the price to $4 per box when selling to consumers. The total channel margin is thus $3.

Fourth: Marketing Research Process 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

Fifth: Marketing Research Suppliers & Services LIMITED SERVICE Other Services Technical and Analytical Focus Groups and Qualitative Field FULL SERVICE Syndicated Standardized Customized Internet RESEARCH SUPPLIERS EXTERNAL INTERNAL

Marketing Research Suppliers & Services 1- Internal research supplier: Marketing research department located within a firm. 2- external research suppliers: outside marketing research companies hired to supply marketing research services. They constitute the marketing research industry. It includes two types of suppliers: Full-service suppliers: companies that offer the full range of research activities from problem identification to report preparation and presentation. Limited-service suppliers: companies that specialize in one or a few phases of the marketing research project such as: field services, coding and data entry, and data analysis.

Full-service suppliers Syndicated services: companies that collect and sell common information of known commercial value, designed to serve information needs shared by a number of clients on a subscription basis (e.g. information on audience size and their demographic characteristics). Standardized services: companies that use standardized procedures to provide marketing research for various clients when they ask (e.g. procedures for measuring advertising effectiveness). Customized services: companies that tailor the research procedures to best meet each clients. Internet services: companies that have specialized in conducting marketing research on the Internet. Syndicated services: firms collect common data and sell these data to who asks for. Standardized services: firms that do research when the client asks for but use own standardized procedures. Customized services: research firms that tailor the research procedures to best meet each client. Internet services: surveys on the internet or depending on the available databases.

Limited-service suppliers Field services: companies whose primary service is collecting data for research projects. Coding and data entry services: companies whose primary service is converting completed surveys of interviews into a usable database for conducting statistical research. Analytical services: companies that provide guidance in the development of the research design such as: designing and pretesting questionnaires, determining the best means of data collection, designing sampling plan. Data analysis services: firms whose primary service is to conduct statistical analysis of quantitative data. Branded marketing research products: specialized data collection and analysis of patented procedures that developed to address specific types of research problems. These procedures are given brand names and marketed like any other branded product. e.g. Synovate’s TeleNation study. TeleNation is a twice-a-week multi-client telephone study among households selected at random from the U.S. population.

Top 15 U.S. Marketing Research Firms U.S. Rank Organization Headquarters Website U.S. Global Non-U.S. 2007 2006 1 1 The Nielsen Co. New York nielsen.com $2,173.0 $4,220.0 48.5% 2 2 IMS Health Inc. Norwalk, Conn. imshealth.com 801.0 2,192.6 63.5 3 3 Kantar Group* Fairfield, Conn. kantargroup.com 526.8 1,551.4 66.0 4 5 Westat Inc. Rockville, MD westat.com 467.8 — 5 4 IRI Chicago infores.com 441.0 702.0 37.2 6 6 TNS U.S. tnsglobal.com 379.8 2,137.2 82.2 7 7 Arbitron Inc. arbitron.com 338.5 352.1 3.9 8 8 GfK AG USA Nuremberg, Germany gfk.com 319.7 1,603.00 80.1 9 9 Ipsos ipsos-na.com 281.2 1,270.30 77.9 10 10 Synovate London synovate.com 250.4 867.0 71.1 11 11 Maritz Research Fenton, Mo. maritzresearch.com 187.4 223.3 16.1 12 13 J.D. Power and Associates* Westlake Village, Calif. jdpower.com 184.5 260.5 29.2 13 12 Harris Interactive Inc. Rochester, N.Y. harrisinteractive.com 161.0 227.0 29.1 14 14 The NPD Group Inc. Port Washington, N.Y. npd.com 160.4 211.1 24.0 15 — Opinion Research/ Guideline Group Omaha, Neb. infousa.com 124.7 206.7 39.7 15 Opinion Research Corp. Princeton, N.J. opinionresearch.com 97.5 179.5 45.7

Criteria for Selecting a Research Supplier What is the reputation of the supplier? Do they complete projects on schedule? Are they known for maintaining ethical standards in doing marketing research? Are their research projects of high quality? What kind and how much experience does the supplier have? Has the firm had experience with projects similar to this one? Do the supplier's personnel have both technical and non-technical expertise? Can they communicate well with the client? Competitive bids should be compared on the basis of quality as well as price.

Sixth: Marketing Research Career Vice President of Marketing Research Part of company’s top management team Directs company’s entire market research operation Sets goals & objectives of marketing research department Research Director Also part of senior management Heads the development and execution of all research projects Assistant Director of Research Administrative assistant to research director Supervises research staff members Senior Project Manager Responsible for design, implementation, & management research projects. Promising career opportunities are available with marketing research firms and business or nonbusiness firms. These are some of the positions available in marketing research.

Selected Marketing Research Career Descriptions Analyst Handles details in execution of project Designs & pretests questionnaires Conducts preliminary analysis of data Junior Analyst Secondary data analysis Edits and codes questionnaires Fieldwork Director Handles selection, training, supervision, and evaluation of interviewers and field workers Senior Analyst Participates in the development of projects Carries out execution of assigned projects Coordinates the efforts of analyst, junior analyst, & other personnel in the development of research design and data collection Prepares final report Statistician/Data Processing Serves as expert on theory and application on statistical techniques Oversees experimental design, data processing, and analysis

A Sample of Marketing Research Jobs

Preparation for a Career in Marketing Research Take all the marketing courses you can. Take courses in statistics and quantitative methods. Acquire Internet and computer skills. Take courses in psychology and consumer behavior. Acquire effective written and verbal communication skills. Think creatively. Creativity and common sense command a premium in marketing research.

Seventh: Questions for Revision Explain The Role of Marketing Research in marketing decision making.(Slide 4) 2. Describe the steps in marketing research process. (slides 11-12) 3. Describe, with examples, a classification of marketing research. (slides 5-10) 4. What is the main difference between a full-service and a limited-service research suppliers? (slides 13-16) 5. List 5 criteria for selecting an external marketing research supplier. (slide 18)