Marketing Research Information gathered for a specific need or want. Can be primary or secondary Lecture Dr. Geurts

Data Digestion

u A.Marketing research can be conducted by an outside firm or by a department within a company. u B.Scientific method - hypothesis testing. u Define problem & get prior studies that are applicable u Design a test or experiment or get previous results - Use data in Statistical Analysis u Regression or Analysis of Variance u Write & analyze results u Have results analyzed by expert u Use results for decision process

Research Process

C.Survey Research Questionnaire - Sample (part) vs. Census (whole)

Sources of Market Research

a.Problems u 1)Leading question u 2)Ambiguous question - What is your income? u 3)Low response - nonrepresentative u Too long u No inducement to reply to questionnaire u Functionally incompetent - 20% of the population is illiterate

u 4)Respondent error - people lie u 5)Sampling size - the larger the better u probability (random, cluster, stratified) u nonprobability (quota, judgment, convenience) u Frame Error u Measurement error u Sampling error!!!!!!!!! Test for significance a.Problems (con’t)

b.Statistical Analysis u Tabulate & cross tabulation u Sample error - Occurs when statistics are different than the population, alpha error u Regression* - Magnitude of association, functional relationship between two variables. The amount of sales increase from increasing advertising by $1000

b.Statistical Analysis (con’t) u Correlation** - Association strength, value equals -1 to 0 and 0 to 1. How frequently or consistently sales change when advertising changes. Do changes in advertising always increase sales. If no change and positive change and negative change about the same then correlation will be 0. If sales always go up when advertising goes up correlation will be 1. Correlation tells us nothing about the amount of change.

Establishing Relationships

b.Statistical Analysis (con’t) u Discriminate analysis - Uses variables to put people into categories. Used for segmenting and qualifying potential buyers. u Multidimensional scaling used to determine product attributes u ANOVA - Analysis of variance used in test marketing * Regression shows the magnitude of the relationship ** Correlation shows the strength of the relationship.

ValidityReliability Representativeness Collect the right type of information from the respondent Collect the information with high degree of accuracy, free of bias Collect the information from a representative sample of the population Quality Marketing Research

D.Experiments u Apply a treatment to one group but not to a second group u Measure response of both groups u Statistical test to measure if difference is significant u Reliability - repeat experiments give consistent results

D.Experiments (con’t) u Validity - measure what intend to measure u Causation u Correlation u Time ordered- result always follows cause u No other explanation u Spurious correlation - no relevant cause/effect

Research Attributes

E.Test Marketing - Get a few cities which represent U.S. population u Method u Introduce new product and vary combinations of marketing mix variables among cities u Measure sales impact u If sales impact is significant, select the best combination of marketing mix variables and introduce product into a larger market

E. Test Marketing (con’t) u Advantages u Allows you to find the best mix of marketing variables u Able to see if product will be successful without the cost of introducing it nationally u Provides information on consumer reaction u Disadvantages u Tip off competition u Delay profits

F.Panels u Get a group of individuals that represent the population of interest so that the panel represents the population in characteristics that are viewed as important. u Method u Introduce products & evaluate u Evaluate advertising u Survey about opinions

Decision Support

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