Marketing Research for Managerial Decision Making Chapter 1 Marketing Research for Managerial Decision Making McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Describe the impact marketing research has on marketing decision making Demonstrate how marketing research fits into the marketing planning process Provide examples of marketing research studies Understand the scope and focus of the marketing research industry

Learning Objectives Recognize ethical issues associated with marketing research Discuss new skills and emerging trends in marketing research

The Growing Complexity of Marketing Research Technology and growth of global business are increasing the complexity of marketing research New data collection tools, including Twitter, clickstream tracking, and GPS, pose serious questions in regard to consumer privacy Current variety of available tools and techniques makes choosing a method for a particular research project increasingly challenging

Marketing Research Links an organization to its market through the gathering of information

The Growing Complexity of Marketing Research Marketing research is a systematic process Tasks include: Designing methods for collecting information Managing the information collection process Analyzing and interpreting results Communicating findings to decision makers

The Role and Value of Marketing Research Marketing research draws heavily on the social sciences both for methods and theory Marketing research methods: Are diverse Span a wide variety of qualitative and quantitative techniques Borrow from disciplines such as psychology, sociology, and anthropology

The Role and Value of Marketing Research Marketing research can be applied to a wide variety of problems involving the four Ps: Price Place Promotion Product

Marketing Research and Marketing Mix Variables Product - Product decisions are varied and include: New product development and introduction Branding Positioning products Perceptual mapping: Used to picture the relative position of products on two or more product dimensions important to consumer purchase decisions

Marketing Research and Marketing Mix Variables Place/Distribution - Decisions include choosing and evaluating: Locations Channels Distribution partners Retailing research: Focus on trade area analysis, store image/perception, in-store traffic patterns, and location analysis

Marketing Research and Marketing Mix Variables Behavioral targeting: Displays ads at one website based on the user’s previous surfing behavior Shopper marketing: Marketing to consumers based on research of the entire process consumers go through when making a purchase

Marketing Research and Marketing Mix Variables Promotion - Important influences on any company’s sales Essential that companies know how to obtain good returns from their promotional budgets Most common research tasks in integrated marketing communications: Advertising effectiveness studies Attitudinal research Sales tracking

Marketing Research and Marketing Mix Variables Price - Pricing decisions involve: Pricing new products Establishing price levels in test marketing Modifying prices for existing products

Marketing Research and Marketing Mix Variables Marketing research provides answers: How large is the demand potential within the target market at various price levels? What are the sales forecasts at various price levels? How sensitive is demand to changes in price levels? Are there identifiable segments that have different price sensitivities? Are there opportunities to offer different price lines for different target markets?

Consumers and Markets – Segmentation Studies Major focuses of a marketing research project: Creating customer profiles Understanding behavioral characteristics

Consumers and Markets – Segmentation Studies Benefit and lifestyle studies: Examine similarities and differences in consumers’ needs Researchers use these studies to identify two or more segments within the market for a particular company’s products Marketers use ethnographic research To study consumer behavior as activities embedded in a cultural context and laden with identity Requires extended observation of consumers in context

Marketing Theory Important to many businesses Can be useful in thinking business problems and opportunities

Types of Marketing Research Firms Internal or external Custom or standardized Brokers or facilitators

Types of Marketing Research Firms Internal External Organizational units that reside within a company Benefits: Research method consistency Shared information across the company Lower research costs Ability to produce actionable research results Perform all aspects of the research Benefits: Objective suppliers Less subject to company politics and regulations Specialized talent for the same cost Greater flexibility in scheduling studies and specific project requirements 1-19

Types of Marketing Research Firms Customized research firms: Provide tailored services for clients Standardized research firms: Provide general results following a standard format so that results of a study conducted for one client can be compared to norms Syndicated business services: Services provided by standardized research firms that include data made or developed from a common data pool or database

Changing Skills for a Changing Industry As marketing research firms expand, requirements for successfully executing marketing research projects will change Top five skills: Ability to understand and interpret secondary data Presentation skills Foreign-language competency Negotiation skills Computer proficiency

Ethics in Marketing Research Practices Major sources of ethical issues are the interactions among the three key groups: Research information providers Research information users Respondents

Exhibit 1.1 - Ethical Challenges in Marketing Research

Ethical Questions in General Business Practices Potential ethical pitfalls for research providers: Unethical pricing Unnecessary or unwarranted research services Client confidentiality issues Use of “black-box” methodologies Branded “black-box” methodologies: Offered by research firms that are branded Do not provide information about how the methodology works

Conducting Research Not Meeting Professional Standards Reasons: Fearful of losing the business entirely Client pressure to perform research to prove a predetermined conclusion Cost cutting Interviewers working for research firms may also engage in unethical behavior Curbstoning: Data collection personnel filling out surveys for fake respondents

Abuse of Respondents Potential ways to abuse respondents in marketing research: By not providing promised incentive to respondents for completing interviews or questionnaires By stating that interviews are very short when in reality they may last an hour or more By using “fake” sponsors

Abuse of Respondents At the end of any study involving deception, subjects must be “debriefed” to explain deception Subject debriefing: Fully explaining to respondents any deception that was used during research

Abuse of Respondents Sugging/frugging: Claiming that a survey is for research purposes and then asking for a sale or donation De-anonymizing data: Combining different publicly available information, usually unethically, to determine consumers’ identities, especially on the Internet

Unethical Activities of the Client/Research User Requesting detailed research proposals from several competing research providers with no intention of actually selecting a firm to conduct the research Promising a prospective research provider a long-term relationship or additional projects in order to obtain a very low price on the initial research project Overstating results of a marketing research project

Unethical Activities by the Respondent Providing dishonest answers Faking behavior

Marketing Research Codes of Ethics Marketing Research Society summarizes the central principles in ESOMAR’s code as follows: Conform to all national and international laws Behave ethically Be particularly careful with children and other vulnerable groups Ensure respondents are cooperating voluntarily and are well informed of risks

Marketing Research Codes of Ethics Respect rights of respondents Protect personal data and use only for intended purpose Conduct projects with accuracy, transparency, objectivity, and quality Conform to principles of fair competition

Emerging Trends Increased emphasis on secondary data collection methods Movement toward technology-related data management Expanded use of digital technology for information acquisition and retrieval Broader international client base Movement beyond data analysis toward a data interpretation/information management environment

Marketing Research in Action: Continuing Case: The Santa Fe Grill What kind of information about products, services and customers should the owners of Santa Fe Grill consider collecting? Is a research project actually needed? Is the best approach a survey of customers? Should employees also be surveyed? Why or why not?