MARKETING RESEARCH AND MARKETING INFORMATION SYSTEMS Marketing Information Systems (MkIS) Primary vs. secondary data Advantages and disadvantages of each Marketing research tools

Learning Objectives Appreciate the costs and benefits of research Appreciate the uses of both primary and secondary market research Appreciate the respective advantages and disadvantages of different primary research methods Develop an understanding of research method problems that can lead to misleading or incorrect conclusions. Understand the proper sequence of research activities.

Marketing Research An “investment” to reduce uncertainty Can help guide decisions on Whether to enter Product characteristics Promotional strategy Positioning Must weigh costs and benefits of research Money Time spent No perfect method—tradeoffs between methods

Marketing Information Systems (MkIS) Set of procedures and methods for regular collection and analysis of information for marketing decisions Databases (internal information—e.g., sales volumes) Market research Primary Secondary

Data Mining Processing of vast amounts of data to find relationships between variables—e.g., Items frequently purchased together  “strategic adjacencies” (items placed together in retail setting) Seasonal patterns in sales Customer segments

Primary Research Methods Surveys Experimentation Observation Focus groups In-depth interviews Projective techniques Physiological Measures Online research Scanner data Conjoint Analysis Hybrid Methods

Primary Research Methods Exploratory Methods Observation (can be more definitive with larger sample sizes and focus on specific behavior) In-depth interviews Focus groups Projective techniques Precision Methods (“Conclusive”) Experiments Surveys Panel Scanner data

Choosing a Primary Research Method Can the respondent answer accurately? (What someone consciously believes may differ from “deeper” opinions; beliefs about hypothetical products may not be well developed.) Does the question involve OPINIONS or BEHAVIOR? OPINIONS BEHAVIOR NO Can the relevant behavior be observed in the customer’s natural environment? PROJECTIVE METHODS YES EXPLORATORY or PRECISION research? YES NO SCANNER DATA (e.g., brand choice, impact of advertising, previous purchases, competing brands, demographics) EXPERIMENTATION (determine causality—e.g., impact of product design, advertising message) EXPLORATORY PRECISION OBSERVATION (e.g., how long does the shopper spend? What does he or she look at? Is anyone else involved?) PHYSIOLOGICAL (e.g., determine reactions, attention, arousal) INDIVIDUAL INTERVIEWS SURVEYS FOCUS GROUPS

Surveys Forms Planned questions Mail (self-administered, single time) Mail panel (self-administered, multiple surveys administered over time) Telephone (from central location) Mall Intercept Computer/Internet Planned questions Open-ended Closed-ended Need large sample sizes for precise conclusions SURVEY COSTS: USUALLY LOW

Characteristics of Some Problematic Questions Difficult to answer—respondent may not have knowledge needed Amounts spent annually on specific product categories may not be known Sensitive (embarrassing) Two in one—e.g., “On a scale from 1 to 10, how fast and reliable are Microsoft programs?” Leading questions—giving the feeling of the “desired” response “Do you agree that soft drinks with sugar are bad for you?” Non-exhaustive question Non-mutually exclusive answers

Troublesome Questions Note that respondents may not clearly remember this information. Responses may not be accurate.

Continuum Questions Questions rating the degree of a characteristic (e.g., agreement or product usage) tend to be more effective than binary “Yes/No” questions E.g., 5 4 3 2 1 Strongly Neither Strongly Agree Agree Agree Nor Disagree Disagree Disagree

Some Areas Suited for Continuum Ratings Interest Purchase likelihood Satisfaction/ Dissatisfaction Brand loyalty Price sensitivity Knowledge Experience Involvement Decision control Frequency or level of use Awareness Information search Personality traits Variety seeking

Experimentation Subjects in different groups treated differently E.g., for some, “target” product is given better shelf space E.g., some get coupon Can help isolate causes Subject is not biased by questions—does not know how others are treated EXPERIMENT COSTS: HIGH

My Simulated Store… A shopper in the everyday low price condition…

Ash’s Instant Coffee Study GROCERY SHOPPING LIST Ground beef Potatoes Apples Flour Sugar Laundry detergent Instant coffee 6 cups of yogurt Paper towels Bananas GROCERY SHOPPING LIST Ground beef Potatoes Apples Flour Sugar Laundry detergent Ground coffee 6 cups of yogurt Paper towels Bananas Respondents were asked to describe their impressions of a housewife based only on her shopping list. These shopping lists differ only on one item.

Definition Confound: The tendency of some phenomenon to be caused at least in part by some variable other than the one of interest. E.g., does having more toys cause children to be more intelligent?

Confounds What is cause, what is effect, and what is coincidence? Correlation is not necessarily cause “Lurking” factors may be real cause of Does sitting in front of the room cause higher grades? Do vaccinations cause autism? Does Prozac cause suicide? Do fish-heavy diets cause stomach cancer? Does fraternity/sorority membership cause higher grades?

(DEPENDING ON CODING AND Observation Looking at consumes in the field—e.g., Searching for product category area Number of products inspected and time spent on each Apparent scrutiny of labels or other information Involvement of others Behavior under limiting circumstances (e.g., time constraints) OBSERVATION COSTS: LOW TO HIGH (DEPENDING ON CODING AND ANALYSIS NEEDED)

Taste Tests Not experiments unless “Triangle” Measure Two or more groups of people are treated differently (e.g., get different food version) or The same person is being treated differently at separate times (e.g., half the participants receive new formulation, then current; half the participants receive in the opposite order) “Triangle” Measure Each respondent is given three items: One current, one new, and one duplicate of either old or new Asked to identify the one that is different and explain why

(ESPECIALLY FOR THE AMOUNT OF INFORMATION COLLECTED) Focus Groups Groups of 8-12 consumers assembled Start out talking generally about context of product Gradually “focus” in on actual product MOST APPROPRIATE AS EARLY STAGE METHOD Usually NOT the best approach. Should NOT be chosen as default research method! FOCUS GROUP COSTS: HIGH (ESPECIALLY FOR THE AMOUNT OF INFORMATION COLLECTED)

REMINDER Focus groups are most useful for identifying issues that should be studied in more detail with more precise methods Due to the small sample size and social influence on individual responses, it is difficult to generalize much from focus groups

In-depth interviews Structured vs. unstructured interviews Generalizing to other consumers Biases Subtle, inadvertent feedback IN-DEPTH INTERVIEW COSTS: HIGH

Projective Techniques Getting at motivations that may not be consciously known— “Tell a story about this picture.” Measurement of attitudes consumers are unwilling to express It is easier to admit something embarrassing about someone else Consumer discusses what other consumer might think, feel, or do PROJECTIVE METHODS COSTS: USUALLY HIGH IF PERSONAL INTERVIEWS OR EXTENSIVEINTERPRETATION IS NEEDED

Projective Examples “Please tell me a story of what is going on in this picture.”

More Projective Examples

Projective Techniques--Examples

Physiological Measures Consumer bodily responses are watched at various phases of advertisement or other marketing exposure Tracking of Eye movements For areas of focus For attention, involvement Heart rate Skin conductivity Brain waves State of mind Attention PHYSIOLOGICAL METHODS COSTS: HIGH

Online Research—Analysis of Customer Search Queries Unmet demand—search for product not found on site Message comprehension—comparison of search terms to media message Consumer vocabulary Feedback analysis ONLINE SURVEY COSTS: USUALLY LOW

Online Surveys Conditional branching—direct skip to relevant question Quality of response Time pressures Willingness to write out answers or respond to multiple closed-ended questions Willingness to read and follow instructions is limited Reliability and browser compatibility issues

Conditional Branching Traditional surveys: Have you bought a new car during the last six months? If not, please skip to Question 11. Conditional branching: Respondent will be taken to the appropriate question according to answer Customization of questions E.g., consumer lists three brands  subsequent questions ask about these specific brands by name

Other Online Tools “Click Stream Analysis:” Analysis of “clicking” path—how does the consumer get to a desired page or product? Shopping cart analysis COSTS: HIGH START-UP COSTS; LOW VARIABLE COSTS POSSIBLE WITH DEVELOPED ALGORITHMS USUALLY LOW COSTS: HIGH START-UP COSTS; LOW VARIABLE COSTS POSSIBLE WITH DEVELOPED ALGORITHMS USUALLY LOW

Searching for Reports of Personal Experience Sources Blogs (blogsearch.google.com) Photos (e.g., Flickr, Webshots, Picasaweb, Google image search) Video (e.g., Youtube) Cautions May be “staged” or sensationalized May represent what the writer or photographer wants to show May be limited entries on certain “mundane” tasks such as dishwashing Some issues Joy, enjoyment Decisions Anxiety Social setting and influence

Consumers rate several “profiles” (combinations of features) Conjoint Analysis: Determining the Relative Importance of Product Attributes Consumers rate several “profiles” (combinations of features) Statistical analysis is used to “decompose” ratings into preferences 17

Example Car #1 Car #2 Gas mileage: 30 mpg Gas mileage: 20 mpg Price: $18,200 Safety record: Average Performance High Reliability Poor How would you rate car #1 overall on a scale from 1 (Very poor) to 7 (Excellent?) 1 2 3 4 5 6 7 Car #2 Gas mileage: 20 mpg Price: $15,200 Safety record: Excellent Performance Poor Reliability Excellent How would you rate car #2 overall on a scale from 1 (Very poor) to 7 (Excellent?) 1 2 3 4 5 6 7 Each subject will evaluate several (usually 16+) combinations. A statistical technique determines the importance of each feature. 18

Conjoint Analysis: Advantages Reveals ultimate preferences of consumers when competing influences exist Able to predict desirability of combinations not actually explored Can estimate contribution of each factor and assess its cost effectiveness Will consumers pay $500.00 to reduce the weight of a laptop computer by 2 lbs? 19

Conjoint Analysis: Disadvantages May be difficult for subjects to rate many combinations May need a large number of subjects for accurate measurement/sufficient precision Must identify relevant attributes and levels in advance Subject must know about product category (attributes must be meaningful) 20

COSTS: HIGH START-UP COSTS; POSSIBLE WITH DEVELOPED Scanner Data Panel members in test communities agree to Swipe a card prior to each purchase Have purchases matched to Demographic profiles Media/coupon exposure Promotional status of competing brands Past purchases Problems: Aggregation over household Aggregation bias--averages of disparate segments obscure! Only available for grocery and some drugstore products COSTS: HIGH START-UP COSTS; LOW VARIABLE COSTS POSSIBLE WITH DEVELOPED ALGORITHMS USUALLY LOW

Scanner Data Research RECORDED PURCHASES TELEVISION EXPOSURE HOUSEHOLD Purchase on occasion: Yes, no Time since previous purchase Previous purchases Current price Previous price Current promotional status Previous promotional status Current display status Previous display status Display status of competing brands Promotional status of competing brands Coupon used: Yes, no Coupon available: Yes, no Coupon available for other brands? Yes, no Amount of coupon No. of ads seen by shopper Ads seen for competing brands “Split cable” RECORDED PURCHASES TELEVISION EXPOSURE HOUSEHOLD FILE DEMOGRAPHIC INFORMATION ANALYSIS Family size Occupation Income Home ownership

Choosing a Primary Research Method Can the respondent answer accurately? (What someone consciously believes may differ from “deeper” opinions; beliefs about hypothetical products may not be well developed.) Does the question involve OPINIONS or BEHAVIOR? OPINIONS BEHAVIOR NO Can the relevant behavior be observed in the customer’s natural environment? PROJECTIVE METHODS YES EXPLORATORY or PRECISION research? YES NO SCANNER DATA (e.g., brand choice, impact of advertising, previous purchases, competing brands, demographics) EXPERIMENTATION (determine causality—e.g., impact of product design, advertising message) EXPLORATORY PRECISION OBSERVATION (e.g., how long does the shopper spend? What does he or she look at? Is anyone else involved?) PHYSIOLOGICAL (e.g., determine reactions, attention, arousal) INDIVIDUAL INTERVIEWS SURVEYS FOCUS GROUPS