CHAPTER one The Role of Marketing Research in Management Decision Making CHAPTER one Copyright © 2000 South-Western College Publishing Co.

Learning Objectives 1. To review the marketing concept and the marketing mix. 2. To comprehend the marketing environment within which managers must make decisions. 3. To define marketing research. 4. To understand the importance of marketing research in shaping marketing decisions. 5. To learn when marketing research should and should not be conducted.

(1) a consumer orientation (2) a goal orientation To review the marketing concept and the marketing mix. THE NATURE OF MARKETING Marketing: The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services. The Marketing Concept (1) a consumer orientation (2) a goal orientation (3) a systems orientation

To comprehend the marketing environment. THE NATURE OF MARKETING Identifying Target Markets and Researching the Marketing Mix: The Opportunistic Nature of Marketing Research A marketing mix: The unique blend of product/service, pricing, promotion, and distribution strategies designed to reach a specific target market.

Altering the marketing mix because of changes: To comprehend the marketing environment. THE EXTERNAL MARKETING ENVIRONMENT Altering the marketing mix because of changes: new consumers new businesses different tastes needs incomes lifestyles purchasing habits

Marketing Research Defined To define marketing research. THE ROLE OF MARKETING RESEARCH IN DECISION MAKING Marketing Research Defined The planning, collection, and analysis of data relevant to market decision making and communication of the results of this analysis to management. The Importance of Marketing Research to Management descriptive function diagnostic function predictive function The Unrelenting drive for Quality and Customer Satisfaction

Demographics of Coupon Users Heavy (top 20%) Medium- Light Nonuser Table 1.1 Average household size 3.6 3.2 3.4 Average age female head 43.1 45.2 41.9 Household income ($000) $30.9 $29.1 $28.7 Female head attended college 51% 50% 52% Average monthly grocery bill $334 $292 $303 Female head does not work outside or works part time 65% 61% 55%

The Paramount Importance of Keeping Existing Customers To understand the importance of marketing research. THE ROLE OF MARKETING RESEARCH IN DECISION MAKING The Paramount Importance of Keeping Existing Customers Managers Must Understand the Ever-Changing Marketplace The Proactive Role of Marketing Research A proactive management: alters the marketing mix to fit newly emerging patterns in economic, social, and competitive environments new opportunities develops a long-run marketing strategy

Figure 1.1 Emergent Markets THE ROLE OF MARKETING RESEARCH IN DECISION MAKING

Applied Research versus Basic Research To understand the importance of marketing research. THE ROLE OF MARKETING RESEARCH IN DECISION MAKING Applied Research versus Basic Research Basic research hopes to provide further confirmation to an existing theory or to learn more about a concept or phenomenon. Most research undertaken by businesses is applied research because it must be: cost effective of demonstrable value to the decision maker

In a number of situations it is best not to conduct market research. To learn when marketing research should and should not be conducted. DECIDING WHETHER TO CONDUCT MARKET RESEARCH A manager faced with several alternative solutions to a problem should not instinctively call for applied marketing research. The first decision to be made is whether to conduct marketing research at all. In a number of situations it is best not to conduct market research.

insufficient funds to implement decisions from research To learn when marketing research should and should not be conducted. DECIDING WHETHER TO CONDUCT MARKET RESEARCH A Lack of Resources Two situations: lack of funds insufficient funds to implement decisions from research Research Results Would Not Be Useful Clients may be hard-pressed to use the information

Poor Timing in the Marketplace To learn when marketing research should and should not be conducted. DECIDING WHETHER TO CONDUCT MARKET RESEARCH Poor Timing in the Marketplace Marketing research should not be undertaken if the opportunity for successful entry into a market has passed. The Decision Has Already Been Made Marketing research may be used improperly.

The wrong phenomena might be studied To learn when marketing research should and should not be conducted. DECIDING WHETHER TO CONDUCT MARKET RESEARCH When Managers Cannot Agree on What They Need to Know to Make a Decision The wrong phenomena might be studied When Decision-Making Already Exists Further research may be redundant and costly When the Costs of Conducting Research Outweigh the Benefits Potential new products with large profit margins may have a greater potential

Deciding Whether to Conduct Market Research Table 1.2 Market Size Small Profit Margin Large Profit Margin Cost likely to be greater than benefit; e.g., eyeglasses replacement screw tire valve extension Possible benefits greater than cost; e.g., ultraexpensive Lambeggehni-type sportswear Small DON’T CONDUCT MARKETING RESEARCH PERHAPS CONDUCT MARKETING RESEARCH

Deciding Whether to Conduct Market Research Table 1.2 Market Size Small Profit Margin Large Profit Margin Benefits likely to be greater than costs; e.g., Stouffers frozen entries Crest’s tarter control toothpastes Benefits likely to be greater than costs; e.g., medical equipment high-definition TV Large PERHAPS CONDUCT MARKETING RESEARCH CONDUCT MARKETING RESEARCH

Ways to Use the Internet in Marketing Research Major internet use GOING ON- LINE Ways to Use the Internet in Marketing Research Secondary source material Data collection Project management Report distribution General communication

The End Copyright © 2000 South-Western College Publishing Co.