ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–1 Part 2: Understanding markets Chapter 4: Market research and information management Step 2: Undertake market research

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–2 When we finish this lecture you should Understand the scientific approach to market research Know how to define and solve marketing problems Understand the criteria for obtaining primary and secondary data Understand the difference between qualitative and quantitative research Know the most common methods used to collect qualitative and quantitative information Appreciate the need to assess the value of information Be aware of the specific nature of international market research Know about marketing information systems

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–3 Market research Procedures to gather and analyse information for marketing decision-making Focus is on new information not already available in the MIS or in other secondary data sources May be handled inside the company or by outside specialists – Cooperation is needed between technical specialists and managers/decision-makers

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–4 Figure 4.1 Market Research Society of Australia’s (MRSA’s ) Code of Professional Behaviour

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–5 Figure 4.2 The five-step approach to market research

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–6 Step 1—defining the problem This is the most important step in the market research process and often the most difficult Clearly define the problem Understand the target market and ability of company to satisfy the needs of the market Focus on lower-level problems—for example, how sensitive the target market is to a change in one or more of the marketing mix elements It is easy to confuse symptoms with problems

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–7 Step 2—analysing the situation A situation analysis is useful when the marketing manager believes that the real problem has begun to emerge Situation analysis is an informal study of available information relating to each problem area The situation analysis usually involves informal discussions with informed people Situation analysis is especially important if a researcher is a specialist who is unfamiliar with the management decisions to be made

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–8 Figure 4.3 Sources of secondary and primary data

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–9 Secondary and primary data Secondary data—information that has previously been collected or published – Examples—data from the Australian Bureau of Statistics, computer databases, internal reports, industry trade associations and the Internet Primary data—information specifically collected to solve a current problem – Examples—surveys, experiments and observational studies

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–10 Step 3—obtaining problem-specific data The next step consists of planning a formal research project in order to gather primary data In most primary data collections, researchers attempt to learn what customers think about some topic or how they behave in certain conditions

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–11 Qualitative research Seeks in-depth open-ended responses—not yes or no answers Examples of qualitative methods – Personal in-depth interviews – Projective techniques – Focus groups Can provide good ideas or hypotheses Responses may not be representative of the population

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–12 Focus group interview A popular type of qualitative research Involves a small group (usually 6 to 12 people) in a discussion—usually for about an hour A group leader (interviewer) unobtrusively guides the discussion Designed to get in-depth, open-ended responses, not to be ‘representative’ of a larger market Group interaction stimulates thinking and reactions Analysis of results is subjective

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–13 Quantitative research Seeks structured responses that can be summarised in numbers—like percentages, averages or other statistics Utilises sampling—a fraction of the relevant population Methods include – Surveys – Observation – Experimentation

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–14 Sampling methods Random sampling—each member of the research population has an equal chance of being included in the sample Stratified sampling—selecting fixed proportions of each group of interest in the sample Response rate—the percentage of people contacted who complete the questionnaire

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–15 Figure 4.4 Sample questioning methods to measure attitudes and opinions

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–16 Accuracy, reliability and validity of the research Confidence intervals—the range on either side of an estimate that is likely to contain the true value for the whole population Validity—the extent to which data measure what they are intended to measure Reliability—the extent to which results can be expected to hold when a test or survey is repeated

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–17 Mail surveys Advantages – No interviewer bias – Economical for large geographic areas – Respondent is anonymous = > more truthful responses Disadvantages – Require simple and clearly worded questions – Return rate low and/or slow (can introduce a bias) – Need a good, up-to-date mailing list

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–18 Telephone surveys Advantages – Quick – Permits question clarification – Cheaper than personal interviews – Can be cheaper than mail if restricted to local area Disadvantages – Restricted to telephone owners – Must be short and not too personal – May allow interviewer bias

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–19 Personal interviews Advantages – Easier to get and hold attention = > more questions can be asked – Permits question clarification – Can be supplemented by personal observation Disadvantages – Most expensive – Technical and administrative planning and supervision needed – May allow interviewer bias – May allow respondent bias

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–20 Observation Researches try to see or record what subjects do naturally, and avoid influencing a subject’s behaviour in any way – Advantages  Highly accurate  Objective  Consumers are unaware, so they act naturally  No interviewer bias – Disadvantages  Shows what happened but not why—can't tell motives, opinions, beliefs, brand images and so forth

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–21 The experimental method Researchers compare the responses of two or more groups that are similar except on the characteristic being tested – Advantages  Extraneous factors are eliminated or controlled  Most reliable way to find answers – Disadvantages  Difficult to control all other variables  May alert competitors to new strategies  Alert competitors may disrupt test  May need cooperation of stores/sales representatives/others

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–22 Step 4—interpreting the data Collected data is analysed in order to extract meaning and generate information Statistical packages are often used – SPSS – Microtab Cross-tabulation is one of most frequently used approaches for analysing and interpreting market research data

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–23 Figure 4.5 Cross-tabulation breakdown of responses to a telephone company survey

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–24 Step 5—solving the problem In the problem-solution step, the research results are used to make marketing decisions When research has been completed, the marketing manager should be able to apply the findings to marketing strategy planning—in terms of choosing the target market or the mix of the four Ps

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–25 Getting value from market research— how much information do you need? Information is costly – but it reduces risk What is the value of information?

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–26 International dimensions of market research Market research on overseas markets is often a major contributor towards international success Export failures are often due to lack of management expertise concerning local customer needs, interests, environmental factors, competitors’ prices and products Should work with local research companies

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–27 Marketing information systems (MIS) Organised for the continuous flow of information – Gathering information – Analysis of information Design of the MIS requires data processing expertise and marketing expertise Use of MIS is focused on making better marketing decisions – Strategy planning – Details of implementation – Timely control procedures

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–28 A decision support system (DSS) A computer program—an interface—between the manager and the MIS Makes it easy to obtain needed information Makes it easy to analyse the information Usually involves a search engine May involve marketing models—to show the relationships among different marketing variables Is used by the manager making the decisions

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–29 Making the most of the MIS Once marketing managers recognise how a functioning MIS or DSS can help their decision- making, they are usually eager for more information Monitor implementation of current plans, compare actual results with plans, and make necessary changes more quickly Opportunities exist to standardise computer-based elements of MIS internationally

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–30 Figure 4.6 Elements of a complete marketing information system (MIS)

ﴀ Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 4–31 What we will be doing in the next chapter In Chapter 5 we will discuss one of the most important principles of marketing—segmentation— which involves identifying, and understanding the needs of particular groups of customers. Marketers often aim their products at particular segments of the population. Chapter 5 explains what is involved in segmentation, why it is a sound approach and how it can be implemented