Marketing: Real People, Real Decisions Analyzing the Business Environment Chapter 5 Lecture Slides Solomon, Stuart, Carson, & Smith Your name here Course title/number Date

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-2 Chapter Learning Objectives When you have completed your study of this chapter, you should be able to: Describe the marketing research process. Explain the differences between exploratory, problem-solving, and causal research, and describe some research techniques available to marketers. Deal with the issues involved in making sense of research results. Discuss how marketers implement research results

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-3 Introduction to the Topic The topic of marketing research is important to marketers because of its relationship to the marketing concept. Marketing concept: a management orientation that focuses on achieving organizational objectives by understanding consumer needs and wants and the associated costs of satisfying them. Marketing research is the mechanism by which marketers find out what consumers really want, so that they can develop products or services to satisfy those needs and wants. So it would help if we knew something about this process!

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-4 Information for Decision Making Marketing research: the process of collecting, analyzing, and interpreting data about customers, competitors, and the business environment to improve marketing effectiveness. We are trying to improve the effectiveness of our marketing decision making, and we can do that by getting better information. Marketing intelligence: information about a firm’s external environment, which allows marketers to monitor conditions that affect demand for existing products or create demand for new products. Gathering marketing intelligence is an ongoing process, whereas marketing research refers to more objective-driven activities.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-5 The Marketing Research Process Secondary data Focus groups Depth interviews SurveyExperiment Problem definition Exploratory research Formal research design Observation

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-6 The Marketing Research Process ProbabilityNon-probability Conclusion and report Sampling Data collection and analysis Decision making Storage for future decision making Back to Problem definition

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-7 The Marketing Research Process Defining the problem to be investigated is the first step in the marketing research process. Defining the problem has three components: –Specify research objectives –Identify consumer population –Assess environmental context Finding out what consumers really think about your products can be a good research objective, as discovered by Mercedes-Benz. Research design: a plan that specifies what information marketers will collect and what type of study they will do. The first thing to do is to look at what has been done already, called secondary research.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-8 The Marketing Research Process (continued) Exploratory research: technique that marketers use to generate insights for future, more rigorous studies, and to help define the problem. This type of research produces qualitative data. Exploratory research can include secondary research, consumer interviews, focus groups, case studies, and ethnographies. Secondary research: an examination of research already conducted by others, and other sources of external information. Statistics Canada’s Market Research Handbook is a good source of information, as are bank web sites, and marketing research associations. It is better to find out what is available before deciding to conduct one’s own research, to save time and money.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-9 The Marketing Research Process (continued) Consumer interviews: one-on-one discussions between a consumer and a researcher. These interviews can be more in-depth than telephone surveys and allow for probing further into subject areas. Focus group: a product-oriented discussion conducted among a small group of consumers led by a trained moderator. Focus groups are used extensively by the advertising industry to develop communications strategy and test ideas. Focus groups are fast ways to collect information and benefit from the group atmosphere, however, they must be used with caution as the results are not necessarily representative of the overall population researchers are interested in.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-10 The Marketing Research Process (continued) Projective techniques: tests that marketers use to explore people’s underlying feelings about a product, especially appropriate when consumers are unable or unwilling to express their true reactions. The difficulty in using projective techniques comes in interpreting the results, which is very subjective. Case study: a comprehensive examination of a particular firm or organization. Ethnography: a detailed report on observations of people in their own homes or communities.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-11 The Marketing Research Process (continued) Descriptive research: a research tool that probes more systematically into the problem and bases its conclusions on large numbers of observations. The purpose is to describe a situation or population of interest at one point in time. Cross-sectional design: type of descriptive technique that involves the systematic collection of quantitative information at one point in time. Longitudinal design: techniques that tracks the responses of the same sample of respondents over time. Survey: a questionnaire that asks participants about their beliefs or behaviors via the telephone, direct mail, computer, or in person.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-12 The Marketing Research Process (continued) Observational research: a passive research technique where the behaviour of respondents are observed and recorded, either mechanically or by an observer. Useful in overcoming self-reporting bias, but difficult to know why people do the things that they do. Causal research: techniques that attempt to understand cause-and-effect relationships between concepts. Also known as experiments, these attempt to measure the effect of manipulating an independent variable on the dependent variable, while at the same time controlling for the influence of any extraneous variables. Test marketing is an example.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-13 A Standard Experimental Research Design Suppose you had a new cream (treatment) that you believed would grow hair on a billiard ball, and wanted to test it out. The only way to know for sure that it was the cream that caused the hair growth would be to compare it to the amount of hair grown by two other groups. ‘Gotta love that miracle drug placebo, it will cure anything! Measure the concept of interest to determine the baseline for comparison Randomly assign participants to one of three groups for the experiment Choose a sample of people from the population of interest Group 1 treatment Group 2 placebo Group 3 nothing Measure the concept of interest again to compare change

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-14 Reliability and Validity Reliability: the extent to which research measurement techniques are free from errors. Reliability is a measure of consistency and it applies to the measurement instrument. Validity: the extent to which research actually measures what it was intended to measure. The results are either a valid measure of the concept of interest, or they are not. Example: a bathroom scale can be a reliable method of determining your weight, however, your weight is not necessarily a valid indicator of your level of physical fitness. Note: a research instrument can be reliable but not valid, but if the results are valid, then they are by default, reliable.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-15 Sampling and Representativeness Sampling: the process of selecting respondents who statistically represent a larger population of interest. How a sample is chosen will determine how representative they are likely to be of the overall population. Representativeness: the extent to which consumers in a study are similar to a larger group in which the organization has an interest. Random sampling is the best method to use to ensure this is achieved, although variations of this can also be effective. If the sample is representative of the population of the whole, then we can generalize the results taken from the sample to that larger population, otherwise, we cannot.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-16 Gathering and Using Data Primary data collection is the process of gathering data yourself for a specific research project, versus secondary data already gathered by someone else. There are many ways to gathering data, from personal interviews, mail surveys, observational studies, and even looking in the garbage. Single source data: information that is integrated from multiple sources to monitor the impact of marketing communications on a particular customer group over time. These sources can be coupon redemptions, sales records, scanner data and loyalty programs.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-17 Gathering and Using Data (continued) Data mining: sophisticated analysis techniques that take advantage of the massive amount of available transaction information. Four important applications of data mining: –Customer acquisition –Customer retention –Customer abandonment –Market basket analysis Marketing information system (MIS): procedure developed by a firm to continuously gather, sort, analyze, store, and distribute relevant and timely marketing information to its managers. Scenarios: Possible future situations that futurists use to assess the likely impact of alternative marketing strategies.

Marketing: Real People, Real Decisions ©Copyright 2003 Pearson Education Canada Inc.5-18 Famous Last Words… Marketing research is an important activity because of its relationship to the marketing concept. Marketing research provides managers with the information they need to make better marketing decisions. At least in theory!