The Market Research Process Chapter 29.1

5 Steps of the Market Research Process Define the Problem Obtaining Data Analyzing Data Recommending Solutions Applying the Results

Step 1: Defining the Problem Most difficult step of the research process Problem definition occurs when a business clearly identifies a problem and what is needed to solve it. Helps researcher create objectives that will help answer the problem Objectives are used to develop the actual question

Step 2: Obtaining Data Data (or facts) are collected Primary Data - obtained for the first time and used specifically for the particular problem under study Secondary Data - already exists; previously collected for some other purpose

Obtaining Data Secondary Data Primary Data Data that has already been collected Done before primary data Primary Data Data that are collected for the first time Done only if secondary data does exist to support your question/problem

Ways to collect Secondary Data Internet Sources – company home pages, digital dossiers, business clearinghouses U.S. and State Government Sources – data collected by the government, like population demographics and economic trends Specialized Research – companies collect data to sell to other businesses like demographic data, economic forecasts, and consumer purchase information Business Publications – BusinessWeek, Forbes, Wall Street Journal

Ways to collect Secondary Data U.S. and State Government Sources – data collected by the government, like population demographics and economic trends Specialized Research – companies collect data to sell to other businesses like demographic data, economic forecasts, and consumer purchase information

Secondary Data Advantages Disadvantages Easily obtained No or low cost Saves time and money Data may not be suitable for the problem under study Can be inaccurate

Ways to collect Primary Data The Survey Method The Technological Method Interviews The Observation Method The Experimental Method

The Survey Method Information is gathered from people through the use of surveys or questionnaires Most frequently used method Conducted in person, by phone, by mail or Internet Census – survey the entire target population Not usual because population is normally too large and it would cost too much money and time Sample – part of the target population that represents it accurately Size of sample depends on the amount of time and money available Generally speaking, the larger the sample the more accurate the results

Technological Method Online surveys and focus groups – survey is conducted in a “chat room” environment Smart Phones/Devices – IPods, smartphones Fax broadcasts – questionnaires can be sent to a select group of fax numbers Automated dialers automatically rejects busy signals and answering machines Prerecorded voice walks caller through a series of questions and caller responds with key pad

Interviews Questioning people face-to-face Because it is expensive they are usually conducted in central locations “Mall Intercept Interviews” - (started in shopping malls) Focus Group Interview – 8-12 people brought together to evaluate advertising, product, or packaging under the direction of a moderator

Advantages and Disadvantages Type of Survey Advantages Disadvantages Personal Interview Easier to get people to respond Easy to administer Expensive Take time to tabulate results Telephone Interview Quick Efficient Inexpensive Limited by “Do Not Call Registry” People are irritated by unwanted calls Mail Survey Reaches large audience Respondents find them less intrusive Successful response rate is only 10% Incentives can increase results Internet Survey Automatic data entry Allows for real time data collection, multiple choice and opened ended questions Limited to people with internet access Many people dislike receiving uninvited surveys

The Observation Method Peoples actions are watched and recorded Better results because people are unaware that they are being observed Mystery Shoppers – sent in to observe interactions between customers and employees Disadvantage – cannot measure attitude or motivation

The Observation Method Point-of-Sale Research – combines natural observation with personal interview People can explain their buying behavior

The Experimental Method Researcher observes results when changing one or more marketing variables while keeping all the others constant Used to test: New package design Media usage New promotions

Step 3: Analyzing the Data The process of compiling, analyzing and interpreting results Data Mining – computer process that uses statistical methods to extract new information from large amounts of data

Step 4: Recommending Solutions to the Problem Conclusions drawn form research are usually presented in an organized report

Step 5: Applying the Results After research is completed and changes have been made, businesses must monitor the results carefully. The research efforts were a success if resulting decisions lead to increased sales.

Market Research Flow Chart Define the Problem Determine research questions and Determine how to solve it Obtain Data Secondary Data Primary Data Analyze Data Analyze and interpret data Does it answer the research question Recommend Solutions Organized in a written report Clear and well supported by data Apply Results Implement changes Monitor results

Review What are the five steps to market research? Defining the problem, obtaining data, analyzing data, recommending solutions, applying results What are the two types of research? Primary and Secondary What are the five methods used to collect primary data? Survey methods, technological method, interview, observation method, experimental method