Essentials of Marketing Research Kumar, Aaker, Day Chapter Three The Marketing Research Process

Essentials of Marketing Research Kumar, Aaker, Day Why do we have an organized MR process? Relevant (does it address the problem at hand?) Relevant (does it address the problem at hand?) meaningful (will the results support the decision?) and meaningful (will the results support the decision?) and Appropriate (is the research plan appropriate to the data collected?) Appropriate (is the research plan appropriate to the data collected?)

Essentials of Marketing Research Kumar, Aaker, Day Market Research Process 1. Agree on Research Purpose 2. Establish Research Objectives 3. Estimate Value of Information 4. Design the Research 5. Collect the Data 6. Prepare and Analyze Data 7. Report Research Results

Essentials of Marketing Research Kumar, Aaker, Day The Research Purpose Research purpose is a shared understanding between manager and researcher about Research purpose is a shared understanding between manager and researcher about –Problem or opportunity to be studied –Evaluation of decision alternatives –Research users

Essentials of Marketing Research Kumar, Aaker, Day Case: Promoting a new health club in town Problem or opportunity be studied? Problem or opportunity be studied? –Consumers largely ignore advertising –Intense pre-existing competition –Competitor’s facilities outdated –Increasing populations of the young, urban professionals

Essentials of Marketing Research Kumar, Aaker, Day The Research Purpose Problem or opportunity analysis Problem or opportunity analysis –Motivations of research –Exploratory research to identify problems or opportunities –Goal is to move from exploratory to confirmatory research (decision-focused)

Essentials of Marketing Research Kumar, Aaker, Day The Marketing Research Process: Research Purpose Evaluation of decision alternatives Evaluation of decision alternatives –If there are no decision alternatives, no research is necessary –How will you evaluate the decision alternatives? –Time available and importance of decision

Essentials of Marketing Research Kumar, Aaker, Day Case: What decision alternatives may be important here? Should we advertise in mass media or should we promote through direct mail? Should we advertise in mass media or should we promote through direct mail? What should we position ourselves as? (prior exploratory research required) What should we position ourselves as? (prior exploratory research required) Should we promote our facilities or our location? Should we promote our facilities or our location? Should we promote our facilities or the ‘club’ atmosphere? Should we promote our facilities or the ‘club’ atmosphere?

Essentials of Marketing Research Kumar, Aaker, Day Research Purpose Research users Research users –Who will evaluate the research? –External bodies may require high-quality research designs

Essentials of Marketing Research Kumar, Aaker, Day Case: Who are the research users here? The health club management The health club management

Essentials of Marketing Research Kumar, Aaker, Day Market Research Process 1. Agree on Research Purpose 2. Establish Research Objectives

Essentials of Marketing Research Kumar, Aaker, Day Research Objective A statement, in as precise terminology as possible, of what information is needed A statement, in as precise terminology as possible, of what information is needed Should be framed to ensure information obtained will satisfy research purpose Should be framed to ensure information obtained will satisfy research purpose Three Components: Three Components:  Research Question  Hypothesis Development  Research Boundaries

Essentials of Marketing Research Kumar, Aaker, Day The Marketing Research Process (Research Objective) Research Question Research Question – Specifies information the decision maker needs to achieve the research purpose Hypotheses development Hypotheses development –Alternative answers to the RQ – research to reveal which of these are correct Research Boundaries Research Boundaries –Who / what should be included – what should be left out.

Essentials of Marketing Research Kumar, Aaker, Day Case: New Health Club: Research Questions Consumers ignore advertising? Consumers ignore advertising?

Essentials of Marketing Research Kumar, Aaker, Day Case: New Health Club: Research Questions Intense pre-existing competition Intense pre-existing competition

Essentials of Marketing Research Kumar, Aaker, Day Case: New Health Club: Research Questions Outdated competitor’s facilities Outdated competitor’s facilities

Essentials of Marketing Research Kumar, Aaker, Day Case: New Health Club: Research Questions Increasing YUPPIES Increasing YUPPIES

Essentials of Marketing Research Kumar, Aaker, Day Hypothesis Development Research Question Research Design HypothesisResearch Purpose Theory Management Experience Exploratory Research

Essentials of Marketing Research Kumar, Aaker, Day Role of the Hypothesis Introduces more detail than the RQ Introduces more detail than the RQ –RQ: Why are sales in the Northeast lower than the national average? –H1: The competitor released a new ad campaign –H2: The weather was abnormally cold –H3: A distribution snafu prevented products from reaching the retailers Introduces variables to be included in the research design (e.g. new ad campaign, temperature, distribution problems) Introduces variables to be included in the research design (e.g. new ad campaign, temperature, distribution problems)

Essentials of Marketing Research Kumar, Aaker, Day Case: New Health Club: Hypotheses Consumers ignore advertising? Consumers ignore advertising?

Essentials of Marketing Research Kumar, Aaker, Day Case: New Health Club: Hypotheses Intense pre-existing competition Intense pre-existing competition

Essentials of Marketing Research Kumar, Aaker, Day Case: New Health Club: Hypotheses Outdated competitor’s facilities Outdated competitor’s facilities

Essentials of Marketing Research Kumar, Aaker, Day Case: New Health Club: Hypotheses Increasing YUPPIES Increasing YUPPIES

Essentials of Marketing Research Kumar, Aaker, Day The Marketing Research Process (Research Objective) Research Purpose Research Question Hypothesis Develop a can design for the new Miller beer How effective is each of several different design alternatives? The design that conforms to the advertising message is best. Increasing Builders Square store traffic What is the current image of Builders Square? Builders Square’s image is not as good as its competitor’s image.

Essentials of Marketing Research Kumar, Aaker, Day Market Research Process 1. Agree on Research Purpose 2. Establish Research Objectives 3. Estimate Value of Information

Essentials of Marketing Research Kumar, Aaker, Day The Marketing Research Process (Estimated Value) Expected Value Concept Expected Value Concept –Cost of conducting the research vis-à-vis the benefits of conducting research and benefits of not conducting research –Probabilities associated with outcomes

Essentials of Marketing Research Kumar, Aaker, Day Expected Value of Introducing a product Case 1 Case 2 Success EV=0.6x4m = 2.4m Failure EV=0.4x1m = 0.4m EV=0.4x(-2.5m) = -1m Total EV = 2.8m Total EV = 1.4m

Essentials of Marketing Research Kumar, Aaker, Day Expected Value of Introducing a product In case 1, we have profits under both options, hence we will introduce the product – research is of little use here In case 1, we have profits under both options, hence we will introduce the product – research is of little use here In case 2, we have a loss which can be avoided if research tells us not to introduce the product In case 2, we have a loss which can be avoided if research tells us not to introduce the product What is the maximum you will pay for doing the research? What is the maximum you will pay for doing the research? ANS: $1m ANS: $1m