Introduction, Nature & Scope of Marketing Research Dr. A. K. Dey

Reference Books Marketing Research an Applied Orientation Naresh Malhotra & S. Dash Business Research Methods Cooper & Schindler Marketing Research – Text & Cases Boyd, Westfall & Stasch Res Method _ 1: Dr. Dey

Some Important Aspects In order to understand and appreciate Research Methodology following points must be very clear What is Research? What is Marketing Research? Why carry out Marketing Research? How it is different from Market Research? What is Bus Res Methods or Research Methodology? The connection between MR and managerial decision making. Res Method _ 1: Dr. Dey

Some Important Aspects…Contd. Is MR applicable in all situation? Def of MR. Scope of MR Scientific & Non-scientific Research: Distinction between these Validity & Reliability Res Method _ 1: Dr. Dey

Some Important Aspects…Contd. Six difficulties in applying scientific method to marketing Investigator involved in the use of result Imprecise measuring devices: How to measure attitudes? Intentions? Opinions? Influence of measurement process on the result Time pressure for the result Difficulty in using experiments to test hypothesis Great complexity of subjects Res Method _ 1: Dr. Dey

Some Important Aspects…Contd. Research Process: How to conduct a research? Which steps in which sequence? How many types of research Qualitative: Exploratory Quantitative: Descriptive and Experimental What is Research Design Sampling Design Scaling: Attitude Measurement Questionnaire Construction Res Method _ 1: Dr. Dey

Objectives Understand Marketing Research (MR) Understand relevance of MR for marketing decisions Develop appreciation of MR & its applications Know the procedure of conducting Develop familiarity with each step of procedure Res Method _ 1: Dr. Dey

What is Business Research? A systematic Inquiry whose objective is to provide information to solve managerial problems. Res Method _ 1: Dr. Dey

Why Study Research? Research provides you with the knowledge and skills needed for the fast-paced decision-making environment Res Method _ 1: Dr. Dey

Different Styles of Research Applied Research Emphasis on solving practical (specific) problems It could be exploring opportunities also Rectifying an inventory system that is resulting into lost sales Opportunity to increase stockholder wealth by acquiring another firm Pure Research/Basic Research Emphasis on problem solving but of a general nature (not specific) Effect of coupon as against rebate to stimulate demand Res Method _ 1: Dr. Dey

What is Good Research? Following the standards of the scientific method Purpose clearly defined Research process detailed Research design thoroughly planned Limitations frankly revealed High ethical standards applied Res Method _ 1: Dr. Dey

What is Good Research? (cont.) Following the standards of the scientific method (cont.) Adequate analysis for decision-maker’s needs Findings presented unambiguously Conclusions justified Researcher’s experience reflected Res Method _ 1: Dr. Dey

The Manager-Researcher Relationship Manager’s obligations Specify problems Provide adequate background information Access to company information gatekeepers Researcher’s obligations Develop a creative research design Provide answers to important business questions Res Method _ 1: Dr. Dey

Manager-Researcher Conflicts Management’s limited exposure to research Manager sees researcher as threat to personal status Researcher has to consider corporate culture and political situations Researcher’s isolation from managers Res Method _ 1: Dr. Dey

When Research Should be Avoided When information cannot be applied to a critical managerial decision When managerial decision involves little risk When management has insufficient resources to conduct a study When the cost of the study outweighs the level of risk of the decision Res Method _ 1: Dr. Dey

Need for MR A manager takes decisions His responsibility is to reduce risk of failure in decision making Risk arises due to lack of relevant information A manager always seeks information to improve quality of decision making Information can be collected through MR Hence, MR is an important tool for managerial decision making Res Method _ 1: Dr. Dey

MR & Marketing Decisions For Production, Finance, Personnel Most of the required info are available within the organization; Hence easy to collect & analyze Formal procedures are used to improve quality : Stats Methods for QC, PERT & CPM, Queuing Theory, Optimization Techniques etc For Marketing – information mostly exist outside the organization In consumer behaviour, perception, minds In competitive moves In new government rules & regulations In social & political changes Res Method _ 1: Dr. Dey

MR & Marketing Decisions Other problems for collecting information required for marketing decisions are Being external – collection is cumbersome & expensive Variables are often qualitative & dynamic – making measurements difficult & inaccurate Variables are complex & interact with each other Res Method _ 1: Dr. Dey

Risk of using wrong information Choice of wrong information may lead to Excessive expenditure Decision going astray – Hind Sanitaryware Becoming uncompetitive & losing out – S Kumars Internet centers & Modular Kitchen Market may vanish all of a sudden – fashion garments Res Method _ 1: Dr. Dey

Scientific Method: The Essential Tenets of Science Direct observation of phenomena Clearly defined variables, methods, and procedures Empirically testable hypotheses Ability to rule out rival hypotheses Statistical justification of conclusions Self-correcting process Res Method _ 1: Dr. Dey

Ways to Communicate Exposition Argument descriptive statements that merely state and do not give reason Argument allows us to explain, interpret, defend, challenge, and explore meaning Two types: Deduction & Induction Res Method _ 1: Dr. Dey

Important Arguments in Research Deduction is a form of inference that purports to be conclusive Induction draws conclusions from one or more particular facts For suitable examples consult book pages 32 - 34 Res Method _ 1: Dr. Dey

The Building Blocks of Theory Concepts Constructs Definitions Variables Propositions and Hypotheses Theories Models Res Method _ 1: Dr. Dey

Understanding Concepts A concept is a bundle of meanings or characteristics associated with certain events, objects, conditions, situations, and behaviors Concepts have been developed over time through shared usage Res Method _ 1: Dr. Dey

Understanding Concepts The success of research hinges on: how clearly we conceptualize how well others understand the concepts we use For customer loyalty use questions that tap faithfully the Attitude of participants Attitudes are abstract, try to measure them using carefully selected concepts Res Method _ 1: Dr. Dey

What is a Construct? A construct is an image or idea specifically invented for a given research and/or theory-building purpose. Constructs are required for more abstract concepts – “Personality”, “Satisfied Customer” Res Method _ 1: Dr. Dey

Types of Variables Independent Dependent Moderating Extraneous Intervening Res Method _ 1: Dr. Dey

Types of Variables Independent & Dependent Independent Dependent Leadership style & Employee performance or Job satisfaction Price of a product & Demand Independent Cause, Stimulus, Predictor, Antecedent Dependent Effect, Response, Criterion, Consequence Res Method _ 1: Dr. Dey

Types of Variables Moderating In each relationship there is one Independent Variable (IV) & one Dependent Variable (DV) Four day work week (IV) will lead to higher productivity (DV) Moderating variable is a second independent variable that has significant effect on the originally stated IV–DV relationship Four day work week (IV) will lead to higher productivity (DV), especially among young workers (MV) Res Method _ 1: Dr. Dey

Types of Variables Extraneous Infinite number of extraneous variables (EV) exist that might effect the relationship Most of such variables have little or no effect on the given situation and these may be ignored Others may have highly random occurrence as to have little impact For productivity example: election of a new mayor, rainy days, bird flu, strike etc Res Method _ 1: Dr. Dey

Types of Variables Intervening Intervening variable (IVV) is defined as a factor which theoretically effects the observed phenomenon but can not be seen measured or manipulated Its effect can be inferred from the effects on the observed phenomenon Four day work week (IV) will lead to higher productivity (DV) by increasing job satisfaction (IVV) Res Method _ 1: Dr. Dey

Propositions & Hypotheses A statement about concepts that may be judged as TRUE or FALSE if it refers to observable phenomenon Proposition formulated for empirical testing is Hypothesis Example Infosys employees have higher than average achievement motivation Res Method _ 1: Dr. Dey

The Role of the Hypothesis Guides the direction of the study Identifies facts that are relevant Suggests which form of research design is appropriate Provides a framework for organizing the conclusions that result Res Method _ 1: Dr. Dey

Characteristics & Types of a Good Hypothesis A good hypothesis should fulfill three conditions: Must be adequate for its purpose Must be testable Must be better than its rivals Hypothesis types Descriptive Relational: Correlation & Causal Res Method _ 1: Dr. Dey

Types of Hypothesis Descriptive Describes the existence, size, form or distribution of some variables Eighty percent of shareholders of HLL favour increasing the company’s cash dividend It can also be stated as research question Do shareholders of HLL favour an increased cash dividend? Either form is acceptable, but descriptive hypothesis format has advantages Encourages researcher to crystallize thinking Encourages to think about implications of either an accepted or rejected finding Useful for testing statistical significance Res Method _ 1: Dr. Dey

Types of Hypothesis Relational Statements that describe the relationship between two variables with respect to some case Foreign (variable) refrigerators are perceived to be of better quality (variable) by Indian consumers (case) Res Method _ 1: Dr. Dey

Types of Relational Hypothesis Two types: Correlation & Causal Correlation Merely states that variables occur together without implying that one causes the other People in Kerela give more importance to education than people in Punjab In an office old employees are more responsive than young employees Res Method _ 1: Dr. Dey

Types of Relational Hypothesis Causal (or Explanatory) There is an implication that existence of (or a change in) one causes or leads to a change in the other Causal variable is called Independent variable and the other Dependent variable Advertisement causes higher sales Increase in income leads to higher savings Res Method _ 1: Dr. Dey

The Value of a Theory Narrows the range of facts we need to study Suggests which research approaches will yield the greatest meaning Suggests a data classification system Summarizes what is known about an object of study Predicts further facts that should be found Res Method _ 1: Dr. Dey

Definition of Marketing Research American Marketing Association MR is the systematic gathering, recording and analyzing of data about problems related to the marketing of goods & services Philip Kotler MR is the systematic design, collection, analysis & reporting of data & findings relevant to a specific marketing situation facing the company It may be relevant to add the word “continuous” to the above definitions Res Method _ 1: Dr. Dey

Purpose of MR To improve quality of decision making process by providing information To help reduce the risk associated with managerial decision making Risk due to two types of uncertainties: About the expected outcome About the future environment To discover opportunity & exploit profitably For example : Frooti, Velvette, Mother Dairy, Dhara, Pan Parag Res Method _ 1: Dr. Dey

Scope of MR Consumers of products & services Product & product design Buyer behaviour, Influencers, Buying habits, Incentives Product & product design Pricing, Sourcing, Physical attributes Distribution Channels Performance, Dealer Satisfaction, Own vs Multi-brand Advertising Impact Image, Positioning, Media Planning, Message Content & Prioritizing Macro Level Phenomenon Govt spending. Mood of the Industry, State of Economy Res Method _ 1: Dr. Dey

MR Procedure Seven inter-related steps Specifying research objectives Preparing a list of needed information Designing the data collection project Selecting a sample type Determining sample size Organizing & carrying out the field work Analyzing the collected data & report the findings Res Method _ 1: Dr. Dey

The Management-Research Question Hierarchy Management Dilemma Measurement Questions Investigative Questions Research Questions Management Questions Management Decision 2 3 4 5 6 1 Res Method _ 1: Dr. Dey

The Management-Research Question Hierarchy 6 Management Decision 5 Conduct an employee survey for outcomes of change in compensation structure 4 If compensation scheme is changed, will good sales persons leave? 3 Introduce individual incentive? Quota based incentive? Advertise more? 2 How can we improve sales in south? 1 Why are sales declining in south while sales are booming in all other regions? Res Method _ 1: Dr. Dey

Working with the Hierarchy Management Dilemma The symptom of an actual problem Not difficult to identify a dilemma, however choosing one to focus on may be difficult Needs proper prioritizing Res Method _ 1: Dr. Dey

Working with the Hierarchy Management Question Categories Choice of purposes or objective Generation and evaluation of solutions Troubleshooting or control situation Res Method _ 1: Dr. Dey

Working with the Hierarchy Fine tune the research question Examine concepts and constructs Break research questions into specific second-and-third-level questions Verify hypotheses with quality tests Determine what evidence answers the various questions and hypothesis Set the scope of your study Res Method _ 1: Dr. Dey

Working with the Hierarchy Investigative Questions Questions the researcher must answer to satisfactorily arrive at a conclusion about the research question Res Method _ 1: Dr. Dey

Working with the Hierarchy Measurement Questions The questions we actually ask to extract information from respondents Res Method _ 1: Dr. Dey

Other Processes in the Hierarchy Exploration Recent developments Predictions by informed figures about the prospects of the technology Identification of those involved in the area Accounts of successful ventures and failures by others in the field Res Method _ 1: Dr. Dey

Research Process Problems The Favored Technique Syndrome Company Database Strip-Mining Unresearchable Questions Ill-Defined Management Problems Politically Motivated Research Res Method _ 1: Dr. Dey

MR Procedure Seven inter-related steps Specifying research objectives (Problem Definition) Preparing a list of needed information Designing the data collection project Selecting a sample type Determining sample size Organizing & carrying out the field work Analyzing the collected data & report the findings Res Method _ 1: Dr. Dey

Problem Definition Any situation requiring further investigation is a problem Not all problems require fresh MR to be carried out. Many can be decided upon based on past data, trend, experience Distributor Credit Manufacturing out put Stocking level Problem Definition should be Specific – neither too broad nor too narrow Target outcome should be precise Should be manageable within time & resource available Res Method _ 1: Dr. Dey

Problem Definition – an example Incomplete Problem Definition Better Problem Definition 1. Product Refrigerator Refrigerator – Ordinary & Frost free 2. Market West Zone West Zone with spl ref to Mumbai, Nashik, Pune & Nagpur 3. Market Segment ---- Office & Institutional Sector & NOT Households 4. Current Mkt Share Not available 12% over all 3% in Office & Inst 5. Problem Sales not picking up at the rate at which they should Last year our growth 5% Industry grew by 25% 6. MR Problem To find out the reason To find out the reasons for shortfall in our growth rate in office & inst segments & suggest specific strategies followed by Brands A & B Res Method _ 1: Dr. Dey

Research Design It spells out how to achieve stated MR objectives Consists of Data Collection Method Specific Research Instruments Sampling Plan Res Method _ 1: Dr. Dey

Research Design Data Collection Method Specific Research Instruments Secondary Data Primary Data Observation Survey (Most widely used) Experimentation Specific Research Instruments Camera, Tape, People Meter, Tally Sheet, Questionnaire Sampling Plan Who is to be surveyed? Sampling unit How many? Sample size How are they to be selected? Sampling Procedure How are they to be reached? Sampling Media Res Method _ 1: Dr. Dey

Field Work Involves planning, execution, supervision & checking for errors MR must be planned & executed well so as to complete within resource & time limits Progress to be closely monitored to avoid time & cost overrun Extensive back checks & spot checks will improve the quality of MR output Res Method _ 1: Dr. Dey

Data Analysis Done in two phases Classification of raw data Quantitative vs Qualitative Chronological, Geographical, Demographic Summarizing the data Frequency distribution, Mean, Median, Mode, Range, Variance, Standard Deviation Data Analysis Methods – Four classes Res Method _ 1: Dr. Dey

Data Analysis……….Contd. Analytical Methods – Four classes: Tests of Significance :Sampling Statistics, Chi Square Analysis & Analysis of Variance Explaining Observed difference I: Cross Tabulation, Correlation & Regression Explaining Observed difference II: Linear Discriminant Analysis & Automatic Interaction Detector Identifying Interdependencies: Cluster, Factor & Conjoint Analysis Res Method _ 1: Dr. Dey

Report Presentation Report must have following sections Executive Summary Objectives & Methodology Summary, Conclusion, Recommendation Sample Characteristics & Basis of selection Detailed findings Questionnaires & other supporting documents Res Method _ 1: Dr. Dey

Marketing Research Res Method _ 1: Dr. Dey

Secondary Research Secondary Data Inexpensive May not be relevant May be old Res Method _ 1: Dr. Dey

Internal Sources Company Accounts Internal Reports and Analysis Stock Analysis Retail data - loyalty cards, till data, etc. Res Method _ 1: Dr. Dey

External Sources Government Statistics Trade publications Commercial Data – IMRB, Gallup, Mintel, etc. Household Expenditure Survey Magazine surveys Other firms’ research Research documents – publications, journals, etc. Res Method _ 1: Dr. Dey

Marketing Research Advantages of Marketing Research Helps focus attention on objectives Aids forecasting, planning and strategic development May help to reduce risk of new product development Communicates image, vision, etc. Globalisation makes market information valuable (HSBC adverts!!) Res Method _ 1: Dr. Dey

Marketing Research Disadvantages of Marketing Research Information only as good as the methodology used Can be inaccurate or unreliable Results may not be what the business wants to hear! May stifle initiative and ‘gut feeling’ Always a problem that we may never know enough to be sure! Res Method _ 1: Dr. Dey