Professor Chip Besio Cox School of Business Southern Methodist University

3 Reduce uncertainty about market needs or the responsiveness of customers to marketing activities or potential marketing activities

 Quantify potential demand for new product  Sales forecasting  Buyer analysis  Segmentation  Map choice processes and information processing

 Select among alternative marketing mix options  Measure customer satisfaction  Identify optimal product features for target segment

Define the Problem and the Research Objectives Develop the Research Plan Implement the Research Plan Interpret and Report Findings

Causal Research 4 Test hypotheses about cause and- effect relationships. Exploratory Research 4 Gather preliminary information that will help define the problem and suggest hypotheses Descriptive Research 4 Describe customer’s attitudes and demographics 4 Determine product’s market potential 4 Describe customer’s attitudes and demographics 4 Determine product’s market potential Source: Adapted from Prentice Hall

Determine What Data Is Required!! Must Be: Valid Reliable Representative Current Must Be: Valid Reliable Representative Current Secondary Primary Information collected specifically for the purpose at hand Information that was collected previously Information that was collected previously Source: Adapted from Prentice Hall

Examples:  Online databases (e.g., Dialog, Lexis- Nexis)  Trade association reports  Government reports  Company records  Audits  Scanner data

 Market share  Price  Promotions  Discount  Display  Feature  Coupon  % distribution Store Sales

 Purchase and shopping histories  What you bought  How much paid for it  How many you bought  When you bought  Where you shopped Consumer Panel

 Exploratory  Focus groups  Depth interviews  Descriptive  Surveys  Causal  Experiments  Other observation  Test markets

Who is to be surveyed? Who is to be surveyed? How many should be surveyed? How many should be surveyed? How should the sample be chosen? How should the sample be chosen? Probability or non-probability sampling? Probability or non-probability sampling? Sample - representative of the target population

 Run by a moderator  Usually 8-12 participants  Usually uses a relatively formal setting  Usually employs a one-way mirror and/or videotape or audio recording equipment

Uses:  Collect background data  Generate hypotheses  Gather feedback on new product concepts  Stimulate new ideas about older products  Interpret previously obtained quantitative results

3 Develop a product or service that offers target customers a set of benefits that matches their wants and needs better than any competing option Example: Design a hotel

Simple Approach  Survey customers, ask what factors are important  Design an offering which meets those requirements

Potential problems with the simple approach  Customer may not know his/her requirements with any precision  Customer may be reluctant to reveal them  Especially true for:  Infrequently made decisions  Lack of awareness of attribute range  “Soft” attributes - difficult to quantify

Potential problems with the simple approach  May be difficult to specify, e.g., “reputation,” “prestige”  Ideal offering may not be a simple sum of its parts

A better approach is... Conjoint Analysis  A method for inferring how buyers trade-off attributes by analyzing responses to hypothetical product/service profiles  Different from methods which ask respondents directly about their preferences

1. Define set of attributes, levels 2. Construct a set of hypothetical products 3. Gather sample of relevant population to evaluate 4. Calculate the value of each attribute level 5. Conduct “what if” analyses -- segmentation studies, price sensitivity analysis, etc.

3 Marketing research can assist in making marketing decisions, though it does not guarantee success 3 Increases “batting average,” the likelihood of success 3 Research must be:  current  representative  valid  reliable 3 Ask the right questions!! 3 Marketing research can assist in making marketing decisions, though it does not guarantee success 3 Increases “batting average,” the likelihood of success 3 Research must be:  current  representative  valid  reliable 3 Ask the right questions!!