Marketing Research and Decision Support Systems Chapter 6 Marketing Research and Decision Support Systems McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

After studying this chapter, you should be able to: Understand the purpose and functions of marketing research. Be familiar with the stages of the marketing research process. Discuss different types of research designs, data collection methods, and sources of secondary and primary marketing research data.

After studying this chapter, you should be able to: Understand many of the major issues involved with survey design and sampling. Appreciate the role of marketing research within decision support systems.

What is Marketing Research? Identifies and defines marketing opportunities. Generates, refines, and evaluates marketing actions. Monitors marketing performance. Improves understanding of marketing as a process.

Marketing Research: Specifies the information required to address these issues . Designs the methods for collecting information. Manages and implements the data collection process. Analyzes the results. Communicates the findings and implications.

Questions Marketing Research Can Help Answer Planning Problem Solving Produce Price Place Promotion Control

Marketing Research in the New Millennium Environmental Phenomena will affect the marketing research industry in the next decade and beyond. The traditional time line of 4 to 6 weeks for the typical research project will not be acceptable. Marketing research is becoming a part of the marketing strategy development process.

Marketing Research in the New Millennium Interactivity, e-commerce, and the Internet are affecting the practice of marketing research. How will data be managed? Consolidation among companies has resulted in market dominance by the top 25 firms.

The Marketing Research Process

All parties involved must: Problem Definition Problem Definition: The first step in any marketing research project and is critical to its success. All parties involved must: Focus on the real research problem, not the symptoms. Anticipate how the information will be used. Avoid prescribing a specific study until the problem is fully understood and defined.

Research Designs Exploratory Research: Descriptive Research: Typically carried out to satisfy the researcher’s desire for better understanding, or to develop preliminary background and suggest issues for a more detailed follow-up study. Descriptive Research: Normally directed by one or more formal research questions or hypotheses. Cross-sectional study Longitudinal research Casual Research: Experiments in which researchers manipulate independent variables and then observe or measure the dependent variable or variables of interest.

Data Types Primary Data Secondary Date SURVEYS INTERNAL DATA Mail - Company records Telephone - Data from MDSS INTERVIEWS EXTERNAL DATA Mall intercepts Proprietary Personal interviews - Custom Research - Syndicated services FOCUS GROUPS Nonproprietary Personal - Published reports Mechanical - Census data - Periodicals

Data Collection Methods Focus groups Telephone surveys Mail surveys Personal interviews Mall intercepts Internet surveys Projective techniques and observations

Data Collection Instruments The collection of marketing research information involves construction of a data collection instrument called survey or questionnaire.

Types of Survey Research Questions Scaled Likert agree-disagree Semantic differential Multichotomous (multiple choice) Categorical Open-ended

Five Errors in Question Design Double-barreled wording Loaded wording Ambiguous wording Inappropriate vocabulary Missing alternatives

Sample Design

Nonprobability Sampling Simple random sampling Stratified sampling Cluster sampling Nonprobability Sampling

Sampling Frame Sample Size Response Rate Sampling A recent study by the Council for Marketing and Opinion Research (CMOR) estimated that 45 percent of consumers refused to participate in a survey in 2001.

Fieldwork is the process of: Contacting respondents Conducting interviews Completing surveys

Analysis and Interpretation Techniques for analyzing marketing research data: Straightforward frequency distributions Means Percentages Complex multivariate statistical tests

Changing Technology Positive Factors: The availability of computer-assisted telephone (CAT) interviewing has enhanced sampling, data entry, and data processing. Videoconferencing enables clients to monitor focus groups and provide the opportunity to involve more participants in observation. Videoconferencing result in savings because clients do not have to travel to locations to view focus group sessions. E-mail offers the potential for increasing survey efficiency.

Changing Technology Negative Factors: Answering machines and voice-mail responses inhibit both consumer and business-to-business telephone research. Call waiting hampers the conduct of telephone surveys.

International Considerations Selecting a domestic research company to do international research. Rigidly standardizing methods across countries. Interviewing in English around the world. Implementing inappropriate sampling techniques.

International Considerations 5. Failing to communicate effectively with local research companies. 6. Lack of consideration given to language. 7. Misinterpreting data across countries. 8. Failing to understand preferences of foreign researchers regarding the effective conduct of qualitative research.

Evaluating Marketing Research

Ethical Issues in Marketing Research Excessive interviewing Lack of consideration Abuse of respondents Delivering sales pitches under the guise of marketing research

Ethical Issues in Marketing Research Incomplete reporting of results Misleading reporting of results Nonobjective research Use of data and the confidentiality of information collected

Marketing Decision Support Systems (MDSS)

Support not supplant management MDSS Are Designed to: Support not supplant management decision marketing. Apply to semistructured decisions of middle and upper management (pricing, promotion, and location decisions).

MDSS Are Designed To: Provide interaction between and among people and systems. Center on a segment of related decisions (the allocation of marketing effort and resources). Be user-friendly.

Database Marketing Database Marketing: The collection and use of individual customer-specific information to make marketing more efficient. Database refers to customer/prospect information stored in a computer with software to process the information.

Customer Relationship Management (CRM): Database Marketing Customer Relationship Management (CRM): Relationship management from a transaction orientation has been one of the significant developments in the practice of marketing. One important aspect of data-based marketing is the ability to evaluate ROI of marketing expenditures.

Ethical Issues in Data Base Marketing Marketers must continue to work at self-regulation regarding privacy protection. Firms that build their databases from within, as opposed to buying lists from other sources, are able to maintain the privacy of their customers.

Ethical Issues in Data Base Marketing Customer permission and notification should be regularly sought. Customers generally want firms to reduce the volume of catalog and advertising mail while simultaneously increasing the relevance of that information.