Marketing Research Chapter Three

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-2 Key Learning Points The scope of marketing research activities Where to find secondary sources of information Primary sources of marketing research information Developing estimates of market potential Developing sales forecasts The impact of the Internet on marketing research

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-3 “ Marketing research is the function which links the consumer, customer, and public to the marketer through information – information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. ” - The American Marketing Association

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-4 Table 3.1 Marketing Research Functions

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-5 Marketing Research Common Uses of Research Forecast sales Refine product concepts Develop product strategy Understand the competition Market segmentation Understand consumers Pretest advertising Make price changes Understand perceptions

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-6 Figure 3.1 The Marketing Research Process

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-7 “ Secondary information sources are those that already exist and were not developed for the particular problem at hand. ” “ Primary information sources are those that are generated for the particular problem being studied. ” - Russell S. Winer

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-8 Table 3.2 Marketing Research Data Sources

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-9 The Research Process Internal Secondary Data Sources: Internal sources of information exist within the organization. Past marketing plans Sales call reports Transaction information Reverse engineering or benchmarking reports Web site visitation information

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-10 The Research Process Internal Secondary Data Sources: Information specialists may help. Intranets share information well. Obtaining information in a usable format may be a problem. Other departments aren’t always willing to share information.

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-11 The Research Process External Secondary Data Sources Trade associations General business publications (e.g. Forbes) Trade publications (e.g. Adweek) Academic publications (e.g. Journal of Advertising) Corporate reports Government publications and census Internet discussion groups

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-12 Table 3.3 Data Source Examples

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-13 Figure 3.2 “Toy Industry” Google Search Results

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-14 The Research Process Sources of Primary Data InformalQualitativeObservationSurveysPanelsExperiments Models and simulations

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-15 The Research Process Primary Data Sources: Informal Many types of informal sources Not representative samples Can help to form hypotheses Collected in different ways

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-16 Table 3.4 Qualitative versus Quantitative Research

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-17 The Research Process Primary Data Sources: Qualitative Small samples Not appropriate for statistical analysis Results should not directly lead to decisions Produces consumer insights

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-18 The Research Process Primary Data Sources: Qualitative Phenomenological studies Exploratory studies Clinical studies

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-19 The Research Process Qualitative Research: Focus Groups May be used for exploratory, clinical, or phenomenological purposes Small groups Discuss a topic in-depth Moderators guide the discussion and report results

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-20 Table 3.5 Characteristics of Focus Groups

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-21 The Research Process Qualitative Research: Focus Groups Most misused research technique Technological advances are altering focus group administration. Zaltman metaphor elicitation technique (ZMET)

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-22 Discussion Question Visit Decision Analysts’ website and quickly review the information related to Online Time Extended Focus Groups.website Next, watch the video to gain a better understanding of how it actually works.video What are some of the disadvantages and advantages of the online-time extended format compared to other methods?

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-23 The Research Process Primary Research: Observations and Ethnographic Research Observation research: One-way mirrors In-home product audits Physiological measures In-store video monitoring

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-24 The Research Process Primary Research: Observations and Ethnographic Research Ethnographic research Often conducted by trained anthropologists Virtual shopping See demo demo

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-25 The Research Process Primary Research: Surveys Questionnaires are administered as a form of quantitative research. Descriptive surveys Scientific surveys Key issues in survey design Sampling considerations Type of survey to be used

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-26 The Research Process Sampling considerations Population or “universe” Sampling method Probability samples are preferred. Convenience samples may be used. Drawing samples Nonresponse bias can also damage the validity of the results.

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-27 Table 3.6 Trade-offs with Different Kinds of Surveys

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-28 “ A panel is a set of customers who are enlisted to give responses to questions or to provide data repeatedly over a period of time. ” “ The main benefit of a panel is the ability to observe changes in behavior caused by changes in marketing variables or other factors in the marketplace. ” - Russell S. Winer

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-29 Illustration Loyalty programs such as those found at Food Lion stores provide valuation information on household purchasing behavior. Loyalty programs such as those found at Food Lion stores provide valuation information on household purchasing behavior.

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-30 The Research Process Primary Data Source: Panel Data forms Problems with panel data: Panel drop out Representativeness Conditioning may occur

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-31 The Research Process Primary Data Source: Panel Types of Panels: Continuous reporting panels Ex: Mediametrix Ex: MediametrixMediametrix Scanner panel Special-purpose panels

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-32 Activity Visit IRI’s website to learn more about scanner panels, the type of information collected, and how it can be used. IRI’s website IRI’s website

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-33 The Research Process Primary Data Source: Experiments Experiments determine cause & effect. Experimental features: Manipulation Control group External validity Internal validity Conducted in the laboratory or field

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-34 The Research Process Primary Data Source: Models and Simulations Developed to simulate a particular marketing problem Regression is typically used to estimate the mathematical relationships between two controllable marketing variables.

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-35 The Research Process Global Considerations in Marketing Research: Research design is more complex. Difficulties will arise in establishing comparability and equivalence. Standardization adds cost and time to research process. International marketing decision- making has an intrafunctional character.

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-36 Market Potential: “ The maximum sales of a product category reasonably attainable under a given set of conditions within a specified period of time. ” Market Forecast: “ The amount of sales of a product category expected to be achieved under a set of conditions within a specified period of time. ” - Russell S. Winer

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-37 Potential and Forecasting Market potential basic calculations: Determine the potential buyers or users of the products. Determine the number of customers in each group of buyers as identified in step one. Estimate the potential purchasing / usage rate.

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-38 Table 3.7 Market Potential Illustration

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-39 Potential and Forecasting Estimating sales potential: Multiply market potential by projected market share. Consider the relationship of the brand development index (BDI) to the category development index (CDI).

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-40 Category Development Index (CDI): % of category sales in a geographic area X 100 % of the country’s population in area Brand Development Index (BDI): % of brand’s sales in a geographic area X 100 % of the country’s population in area Potential and Forecasting

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-41 Table 3.8 Cell Phone Sales/Price Data

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-42 Potential and Forecasting Why create forecasts? Helps to anticipate growth Aids in production planning Important for budgeting Used in scenario planning Types of forecasting methods

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-43 Potential and Forecasting Judgment methods rely on pure opinion. Naïve extrapolation: Current sales + X% Sales force: Compilation of sales force forecasts Executive opinion: Manager, internal or external expert opinion Delphi method: Jury of experts

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-44 Potential and Forecasting Counting methods use customer data. Market testing: Focus groups, interviews, etc. provide information for forming forecast. Market surveys: Purchase intention survey questions are used to determine sales forecast.

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-45 Table 3.9, Part 1 Summary of Forecasting Methods

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-46 Potential and Forecasting Time-series methods use past sales data. Moving average Exponential smoothing: Combines current period sales with current period forecast Extrapolation: Simple regression analysis or analyzing slope of line and extending to future

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-47 Potential and Forecasting Association and causal methods develop statistical models relating market factors to sales. Correlation Regression analysis Leading indicators Econometric models

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-48 Table 3.9, Part 2 Summary of Forecasting Methods

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 3-49 Executive Summary Marketing research is critical. Primary and secondary data are used. Collect secondary research at the beginning of a research project. Secondary data can be internal or external to the firm. Primary data comes from many sources. Market potential estimates are useful. Forecasts are useful and computed in many different ways.