Marketing Research and Sales Forecasting

Objectives Describe the development of the marketing research function and its major activities. Explain the steps in the marketing research process. Distinguish between primary and secondary data, and identify the sources of each type. Explain the different sampling techniques used by marketing researchers.

Objectives Identify the methods by which marketing researchers collect primary data. Explain the challenges of conducting marketing research in global markets. Outline the most important uses of computer technology in marketing research. Identify the major types of forecasting methods.

Introduction Marketing research - Collecting and using information for marketing decision making

Development of the Marketing Research Function Advertising pioneer N. W. Ayer conducted the first organized marketing research project in 1879 Charles C. Parlin organized the nation’s first commercial research department at Curtis Publishing Research methods grew more sophisticated in the 1930s with better sampling techniques and greater accuracy Computer technology has significantly advanced market research

Who Conducts Marketing Research? Syndicated services - Organization that provides standardized data on a periodic basis to its subscribers Full-service research suppliers - Marketing research organization that offers all aspects of the marketing research process Limited-service research suppliers - Firm that specializes in a limited number of activities, such as conducting field interviews or performing data processing

Customer Satisfaction Measurement Programs Firms focus on tracking satisfaction levels of current customers Analyze partial or complete dissatisfaction to identify problem areas that need attention

Figure 10.1 - The Marketing Research Process

Define the Problem Defining the problem clearly increases the speed and accuracy of the research process Confusing symptoms of a problem with the problem itself should be avoided A logical starting point in identifying the problem – to evaluate the firm’s target market and marketing mix elements

Conduct Exploratory Research Exploratory research - Process of discussing a marketing problem with informed sources both within and outside the firm and examining information from secondary sources Using internal data Sources of internal data are sales records, financial statements, and marketing cost analyses

Conduct Exploratory Research Sales analysis can compare expected sales with actual sales and be analyzed in a variety of ways, such as by customer type and sales method Accounting data provides information about financial issues Marketing cost analysis evaluates expenses for a variety of costs

Formulate a Hypothesis Hypothesis - A tentative explanation for some specific event Sets the stage for more in-depth research

Create a Research Design Research design - A master plan or model for conducting research Important considerations Marketers must be sure the study will measure what they intend to measure Selection of respondents

Collect Data Primary data - Information collected for a specific investigation Secondary data - Previously published information Less expensive Less time consuming Can become obsolete May not be completely relevant

Interpret and Present Research Data Present findings in a format that allows managers to make effective judgments Marketing researchers and research users must cooperate at every stage in the research process Reports must be clear and concise

Secondary Data Collection Comes from many sources Internal data - Sales records, product performance reviews External data - Government records, syndicated research services Government data Nation’s most important source of marketing data Census data provide the most frequently used government statistics

Secondary Data Collection The 2010 U.S. Census - Contains a wealth of valuable information for marketers Private data - Variety of sources Trade associations Business and trade magazines Electronic systems Radio-frequency identification technology

Secondary Data Collection Online sources of secondary data Online databases Research aggregators - Companies that acquire, catalog, reformat, segment, and resell premium research reports Examples: Datamonitor, eMarketer Social networking sites

Sampling Techniques Sampling - Process of selecting survey respondents or research participants Population (universe) - Total group of people a researcher wants to study Classification of samples Probability sample Nonprobability sample

Probability Sample Sample that gives every member of the population a chance of being selected Simple random sample - Sample in which every individual in the relevant universe has an equal opportunity to be sampled Stratified sample - Sample constructed to represent randomly selected subsamples of different groups within the total sample Cluster sample - Researchers select a sample of subgroups (or clusters) from which they draw respondents

Nonprobability Sample Sample that involves personal judgment in the selection process Convenience sample - Sample selected from among readily available respondents Quota sample - Sample divided to maintain the proportion of certain characteristics among different segments or groups seen in the population as a whole

Figure 10.2 - Types of Primary Research

Observation Method Researchers view the overt actions of subjects being studied Increasingly sophisticated ways for observing behavior are being used Videotaping consumers is gaining acceptance

Interpretative Research A researcher observes a customer or group of customers in their natural setting and interprets their behavior based on an understanding of the social and cultural characteristics of that setting

Survey Method Telephone interviews Quick and inexpensive way of getting a small quantity of relatively impersonal information Many people refuse to take part or are reluctant to give personal information over the phone Not a viable option in international markets where telephone ownership is rare

Survey Method Personal interviews Allows researchers to obtain detailed information and ask follow-up questions Researchers can establish rapport with respondents and explain confusing or vague questions Mall intercepts - Interviews conducted inside retail shopping centers

Survey Method Focus group - A small group of individuals brought together to discuss a specific topic Valuable for exploratory research Drawback is the potential lack of honesty due to peer pressure Researchers are experimenting with online focus groups

Survey Method Mail surveys Cost-effective and provides anonymity Lower response rates than for personal interviews Time-consuming May be subject to bias through self-selection Long follow-up time

Survey Method Fax surveys Limited households use fax machine Securing a representative sample of respondents is a difficult undertaking Federal Junk Fax Prevention Act limits fax transmissions for commercial purposes

Survey Method Online surveys and other Internet-based methods Allow researchers to: Increase the speed of the survey process Increase sample sizes Ignore geographic boundaries Reduce costs No industry wide standards define techniques for measuring Web use

Experimental Method Least used method Controlled experiment - Scientific investigation in which a researcher manipulates a test group and compares the results with those of a control group

Experimental Method Test marketing - Introducing a new product in a specific area and then observing its degree of success Can be expensive Competitors can learn about new products quickly Some products are not well suited to test marketing Alternatives include Computer-modeling software Regional product launches Limiting a product to a single retail outlet

Conducting International Marketing Research Follow same basic steps as for domestic marketing research Researchers must be aware of cultural and legal environments May have to adapt research methods to local conditions

Interpretive Research Researcher spends time studying the culture Focus is on understanding the meaning of the product or consumption experience in the consumer’s life Captures what consumers actually do, not just what they say they do

Computer Technology in Marketing Research Marketing information systems (MIS) A planned, computer-based system designed to provide decision makers with a continuous flow of information relevant to their areas of responsibility Continually monitors marketing environment and provides instantaneous information

Computer Technology in Marketing Research Marketing decision support systems (MDSSs) Marketing information system component that links a decision maker with relevant databases and analysis tools Develops raw data useful for decision making

Data Mining Process of searching through computerized data files to detect patterns Focuses on identifying relationships that are not obvious to marketers Efficient way to sort through huge amounts of data and make sense of it

Business Intelligence Process of gathering information and analyzing it to improve business strategy, tactics, and daily operations Can tell the firm how its own sales operation is doing or what its top competitors are up to

Competitive Intelligence A form of business intelligence Focuses on finding information about competitors using secondary sources Aim is to uncover the specific advantages a competitor has

Sales Forecasting Estimate of a firm’s revenue for a specified time period Qualitative forecasting - Use of subjective techniques to forecast sales The jury of executive opinion, Delphi technique, sales force composite, and surveys of buyer intentions Quantitative forecasting - Use of statistical forecasting techniques Test market, trend analysis, and exponential smoothing

Table 10.2 - Benefits and Limitations of Various Forecasting Techniques

Strategic Implications of Marketing in the 21st Century Marketing research can help an organization develop effective marketing strategies Marketing research ideally matches new products to potential customers Marketing researchers have a broad range of techniques to collect quantitative and qualitative data

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