“Problems” in Marketing Research MAR 6648: Marketing Research January 6, 2010

Overview What are the steps we take when conducting marketing research? How do figure out what to do with our research? How do we decide when to do research?

Marketing Research is… The process of monitoring the environment: – Customers, competitors, other influences (legal, political, global…) The eyes and ears of a corporation A tool to help you get close to your customers A decision aid for marketing strategies and tactics A tool to reduce uncertainty in outcomes Costly in terms of time, effort, and money – It should be used when its value > its cost

Customer groups: Consumers Employees Shareholders Suppliers Customer groups: Consumers Employees Shareholders Suppliers Controllable marketing variables: Product Price Place Promotion Controllable marketing variables: Product Price Place Promotion Uncontrollable environmental factors: Economy Technology Competition Socio-cultural Legal/political Uncontrollable environmental factors: Economy Technology Competition Socio-cultural Legal/political Marketing Researchers Marketing Managers: Segmentation Target segments Marketing programs Performance and control Marketing Managers: Segmentation Target segments Marketing programs Performance and control Assess information needs Provide information Make marketing recommendations

The Marketing Research Process Goal formulation Define research purpose and objectives Research design Exploratory, descriptive, causal Data collection Databases, survey design, sampling, target respondents Data analysis and interpretation Final report Communicate findings and recommendations

The Marketing Research Process Goal formulation Define research purpose and objectives Research design Exploratory, descriptive, causal Data collection Databases, survey design, sampling, target respondents Data analysis and interpretation Final report Communicate findings and recommendations

Research Purpose and Objectives They may sound similar, but they’re not the same thing Research Purpose Objective 1 Objective 2 Objective 3 …

So, What’s a “Research Purpose”? The Research Purpose is managements’ answer to the question: “Why should we do the research?” Managerial problem Managerial opportunity Research Purpose

Problem-Driven Research It’s important to distinguish between problems and their symptoms – Oh no, we’re losing money! Symptoms arise due to an underlying cause Symptom Cause A Cause B Cause C ? ? ?

Establishing Research Objectives Research Purpose Symptom Identification Potential Causes of Symptoms Known Information Information needed to find actual causes Information Gap Known Informatio n Research Objectives

Research Purpose vs. Objectives Example: Imagine you’ve been hired to help the manager of an independent dog chew toy company – The company has experienced declining sales – The manager is pretty sure this is related to the online order experience

Research Purpose vs. Objectives Research Purpose Research Objectives

Opportunity-Driven Research With opportunity driven research, the research problem is usually about how to respond to the opportunity Opportunity Action A Action B Action C ? ? ?

Establishing Research Objectives Research Purpose Opportunity Potential Actions Known Information Information needed to determine best action Information Gap Known Information Research Objectives

Research Purpose vs. Objectives Example: Imagine the dog chew toy company would like to expand his business, to buffer himself from declines in his dog toy business – He wants to know whether he can successfully branch into cat toy sales as well

Research Purpose vs. Objectives Research Purpose Research Objectives

So, a Research Objective… Translates management’s purpose into specific questions that need to be answered by the research States as precisely as possible what information is needed to fulfill the research purpose – I.e., to close the information gap

The Marketing Research Process Goal formulation Define research purpose and objectives Research design Exploratory, descriptive, causal Data collection Databases, survey design, sampling, target respondents Data analysis and interpretation Final report Communicate findings and recommendations

Backward Marketing Research 1. Determine how results will be implemented 2. Determine what final report will contain 3. Specify analyses needed to fill in the blanks 4. Determine data needed to carry out analysis 5. Scan secondary data sources 6. Design instrument and sample plan for data 7. Collect data, analyze it, and—finally—see it used

Marketing Research Designs Exploratory Research Designs Conclusive Research Designs Descriptive Causal To provide insights and understanding Information needed is loosely defined Research process is flexible and unstructured Sample is small and non- representative Analysis is qualitative Results tentative Generally followed by further conclusive research To test specific hypotheses and examine relationships Information needed is clearly defined Research process is formal and structured Sample is large and representative Data analysis is quantitative Results conclusive Findings used as input into decision making

Research Design Exploratory Research Quantitative Research Secondary Data Qualitative Research Descriptive Research Causal Research

YesNo Yes Descriptive Research (Surveys) Exploratory Research (Focus Groups, In-Depth Interviews) No Descriptive Research (Observation, Projection, Counterbiasing) Causal Research (Experiments) Phenomenological (Post- Positivism) Secondary Research (Internal/External) Which research design is best? Does the researcher know the question? Does the respondent know the answer? Will she tell you?

The Marketing Research Process Goal formulation Define research purpose and objectives Research design Exploratory, descriptive, causal Data collection Databases, survey design, sampling, target respondents Data analysis and interpretation Final report Communicate findings and recommendations

Data Collection and Survey Design Mail survey Database Observation Personal Interview Phone Interview Test market Internet survey SAMPLE?

The Marketing Research Process Goal formulation Define research purpose and objectives Research design Exploratory, descriptive, causal Data collection Databases, survey design, sampling, target respondents Data analysis and interpretation Final report Communicate findings and recommendations

Data Analysis DataInsights ? Analysis Note: The framework used for analysis determines, in part, which data we collect!

Interpretation Insights: – What have we learned from the analysis? Recommendations: – Can the findings be put into actions? – If so, how? – Is more research needed?

The Marketing Research Process Goal formulation Define research purpose and objectives Research design Exploratory, descriptive, causal Data collection Databases, survey design, sampling, target respondents Data analysis and interpretation Final report Communicate findings and recommendations

Communication: Client and Researcher Most important factor in predicting a good outcome of the research: – Having a close relationship between the researcher and the corporate decision maker Work out precise and specific objectives of the research—jointly with the decision maker

Communication: Client and Researcher Typical problems: – Research questions are too broad Manager wants to know everything – Internal/political bias Incentives for the researcher? Think through all possible findings—how can they lead to possible actions? – Construct scenarios – This will likely sharper the original research questions (or suggest new ones) by eliciting more specific goals for the client

The Marketing Research Process Goal formulation Define research purpose and objectives Research design Exploratory, descriptive, causal Data collection Databases, survey design, sampling, target respondents Data analysis and interpretation Final report Communicate findings and recommendations

The Value of Research Research can be expensive! We do not want to do research unless it is valuable to us Before embarking on a research project, we need to carefully evaluate costs and benefits – Is it worth it? – Should we always do research?

First question Will research findings change our actions?

The Value of Research Case A: Consider the following scenario: – You are considering introducing a new product – If you introduce With a 60% change of success ($4 million) With a 40% change of failure (-$2.5 million) – If you don’t introduce $0 for sure – If you do research you will learn the likely outcome (success or failure) What’s the maximum amount of $ you should spend on research?

The Value of Research Case B: Consider the following scenario: – You are considering introducing a new product – If you introduce With a 60% change of success ($4 million) With a 40% change of failure ($1 million) – If you don’t introduce $0 for sure – If you do research you will learn the likely outcome (success or failure) What’s the maximum amount of $ you should spend on research?

The Value of Research Case B: Consider the following scenario: – You are considering introducing a new product – If you introduce With a 0% change of success ($4 million) With a 100% change of failure (-$2.5 million) – If you don’t introduce $0 for sure – If you do research you will learn the likely outcome (success or failure) What’s the maximum amount of $ you should spend on research?

Remember… Research is valuable only if it causes us to change the optimal decision in a way that increases the expected return from the decision

Summary Marketing Research can be used to integrate a lot of information about products, customers, markets, etc. There is a general research framework to follow – Start with the end, and work your way back when planning your research It is also important to think about whether you’ll do research