1. Chapter 3: Using Marketing Information to Make Better Decisions “Marketing is becoming more of a battle based on information than one based on sales power.”

2. Chapter Objectives 1.Know about marketing information systems; 2.Understand the scientific approach to marketing research; 3.Know how to define and solve marketing problems; 4.Know about getting secondary and primary data; 5.Understand the role of observing, questioning, and using experimental methods in marketing research; 6.Understand the important new terms.

3. 1. Why do marketers need research? Changing marketing environment Changing marketing environment Modern marketing concept determines marketing starts from collecting, recording and analyzing information on demand. Modern marketing concept determines marketing starts from collecting, recording and analyzing information on demand. A competitive advantage in today’s information- based society A competitive advantage in today’s information- based society

4. 2. MIS MIS –an organized way of continually gathering, accessing, and analyzing information that marketing managers need in order to make decisions. MIS –an organized way of continually gathering, accessing, and analyzing information that marketing managers need in order to make decisions.

6. Marketing Information Systems Market Research Studies Internal Data Sources External Data Sources Databases Decision Support System (DSS) Marketing Manager Decisions Outcomes Marketing Models Information Technology Specialists Inputs ? Answers New Information Feedback Informatio n Sources Questions and Answers Decisio n Maker Result s

7. Sub-systems of MIS The internal records system - orders, sales, prices, costs, inventory level, receivables and payables,etc. The internal records system - orders, sales, prices, costs, inventory level, receivables and payables,etc. The marketing intelligence system - a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment (by reading books, newspapers and trade publications; talking to customers, suppliers and distributors; and meeting with other company managers.) The marketing intelligence system - a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment (by reading books, newspapers and trade publications; talking to customers, suppliers and distributors; and meeting with other company managers.) The marketing research system The marketing research system The marketing decision support system(MDSS or DSS) - a computer program that makes it easy for marketing managers to get and use information as they are making decisions. The marketing decision support system(MDSS or DSS) - a computer program that makes it easy for marketing managers to get and use information as they are making decisions.

8. 3. Marketing research system Marketing research – the procedures to develop and analyze new information to help marketing managers make decisions. Marketing research – the procedures to develop and analyze new information to help marketing managers make decisions. Who does the work? Who does the work?  Large companies;  Small firms;  Nonprofits Effective research requires co-operation Effective research requires co-operation

9. 4.The scientific method and hypotheses Scientific method – a decision-making approach that focuses on being objective and orderly in testing ideas before accepting them. Scientific method – a decision-making approach that focuses on being objective and orderly in testing ideas before accepting them. Hypotheses – educated guesses about the relationships between things or about what will happen in the future. Hypotheses – educated guesses about the relationships between things or about what will happen in the future. With the scientific method, managers use their intuition and observations to develop hypotheses and test their hypotheses before making final decisions. With the scientific method, managers use their intuition and observations to develop hypotheses and test their hypotheses before making final decisions.

10. Solving the Problem Defining the Problem Analyzing the Situation Getting Problem- Specific Data Inter- preting Data Early Identification of Solution Feedback to Previous Steps 5.Marketing Research Process

11. Step 1 – defining the problem Define the problem and research objectives Define the problem and research objectives Management must not define a problem too broadly or too narrowly. Management must not define a problem too broadly or too narrowly.

12. Problem definition The Atlantic Hamburger shop opened next to a nationally franchised hamburger shop that had been in operation about one year. During its grand opening, the Atlantic attracted large crowds of curious people wishing to try the products of this new business. However, after about ten days of operation, the number of customers coming into the Atlantic seemed to be declining. By the end of the first month, very few customers were coming in. At the same time, business next door at the franchised hamburger shop seemed to be prospering. The Atlantic offered all the items that the nationally franchised shop offered, as well as several other items which were not on the menu of its franchised competitor. Prices were about the same at both shops. The Atlantic Hamburger shop opened next to a nationally franchised hamburger shop that had been in operation about one year. During its grand opening, the Atlantic attracted large crowds of curious people wishing to try the products of this new business. However, after about ten days of operation, the number of customers coming into the Atlantic seemed to be declining. By the end of the first month, very few customers were coming in. At the same time, business next door at the franchised hamburger shop seemed to be prospering. The Atlantic offered all the items that the nationally franchised shop offered, as well as several other items which were not on the menu of its franchised competitor. Prices were about the same at both shops.

13. Answer Since the Atlantic located its shop right next door to a nationally franchised competitor, it apparently hopes to make a profit catering to the same target market as its competitor. Since the franchised operation is prospering, Place does not appear to be problem. There are many shops of this type competing at about the same price level with similar products, so price is probably not the problem either. And the large crowds during the Atlantic’s grand opening may rule out promotion. Since the Atlantic located its shop right next door to a nationally franchised competitor, it apparently hopes to make a profit catering to the same target market as its competitor. Since the franchised operation is prospering, Place does not appear to be problem. There are many shops of this type competing at about the same price level with similar products, so price is probably not the problem either. And the large crowds during the Atlantic’s grand opening may rule out promotion.

14. Therefore, the problem may be in the product area, and this possibility should be researched first. Target customers may not like the taste or appearance of the products, or they may not like the Atlantic’s service (e.g., waiting time, cleanliness, appearance, the employees’ attitudes, etc.). Marketing research can be used to determine if the Atlantic’s product/service is really the problem and what changes are likely to be effective. Therefore, the problem may be in the product area, and this possibility should be researched first. Target customers may not like the taste or appearance of the products, or they may not like the Atlantic’s service (e.g., waiting time, cleanliness, appearance, the employees’ attitudes, etc.). Marketing research can be used to determine if the Atlantic’s product/service is really the problem and what changes are likely to be effective.

15. An exercise The Torch Club, now a restaurant-dance floor-bar combination, is located about one mile from the edge of Eastern Provincial University and two miles from the downtown district of a city of about 150,000. the Club is large and could seat over 500 people comfortably. The business has been losing money for four years. In this period various things have been tried. The Torch Club, now a restaurant-dance floor-bar combination, is located about one mile from the edge of Eastern Provincial University and two miles from the downtown district of a city of about 150,000. the Club is large and could seat over 500 people comfortably. The business has been losing money for four years. In this period various things have been tried. First, the major emphasis was on indoor golfing with some food. After about six months, the emphasis was changed to a night club, emphasizing disco and karaoke – while at the same time retaining some of the golfing facilities. After several months of this, the emphasis was changed to family-style restaurant, featuring roasted chicken. First, the major emphasis was on indoor golfing with some food. After about six months, the emphasis was changed to a night club, emphasizing disco and karaoke – while at the same time retaining some of the golfing facilities. After several months of this, the emphasis was changed to family-style restaurant, featuring roasted chicken.

16. Six months later, the business tried to become more attractive by featuring country and western and sometimes rock’n’roll music. About six months later, a number of billiard tables were installed in an effort to become a fancy billiard parlour. Six months later, the business tried to become more attractive by featuring country and western and sometimes rock’n’roll music. About six months later, a number of billiard tables were installed in an effort to become a fancy billiard parlour. Currently, there is a small dance floor, and a band plays soft rock music on Wednesday, Friday, and Saturday nights. The Club still has some of the golf facilities, billiard tables, a small sit-down bar, and a small restaurant area. At no time during its operation has it been profitable. Currently, there is a small dance floor, and a band plays soft rock music on Wednesday, Friday, and Saturday nights. The Club still has some of the golf facilities, billiard tables, a small sit-down bar, and a small restaurant area. At no time during its operation has it been profitable. Clearly state the nature of the problem and explain why the problem might require some marketing research. If you feel there are several problems in the case, list them in the order of their importance and indicate which problems you would research first. Clearly state the nature of the problem and explain why the problem might require some marketing research. If you feel there are several problems in the case, list them in the order of their importance and indicate which problems you would research first.

17. Step 2 – analyzing the situation Situation analysis – an informal study of what information is already available in the problem area. Situation analysis – an informal study of what information is already available in the problem area. Information needed Information needed How to gather the information? How to gather the information? Data sources Data sources Desk research or field research Desk research or field research

18. Secondary Data Sources Inside Company Outside Company Observation Questioning Primary Data Sources All Data Sources 4-4 Sources of Data

19. Secondary data and primary data Secondary data – information that has been collected or published already. Secondary data – information that has been collected or published already. Primary data – information specifically collected to solve a current problem. Primary data – information specifically collected to solve a current problem. Syndicated data – data collected by specialist firms and then sold on a shared-cost basis to companies with the same type of data needs. It is a blend of primary and secondary data. (P110) Syndicated data – data collected by specialist firms and then sold on a shared-cost basis to companies with the same type of data needs. It is a blend of primary and secondary data. (P110)

20. Desk research Desk research - secondary data research or literature research Desk research - secondary data research or literature research Secondary data – information that has been collected or published already.(p108) Secondary data – information that has been collected or published already.(p108) Advantages: low cost and ready availability Advantages: low cost and ready availability Sources: Sources:  internal sources( balance sheets, profit-loss statements, sales figures, inventory records and prior research reports)  Government publications  Periodicals and books  Commercial data  internet

21. Field research Primary data – information specifically collected to solve a current problem. Primary data – information specifically collected to solve a current problem. Approaches: Approaches:  Observation  Focus groups  Surveys  Behavioral data  experiments Instruments Instruments  Questionnaires (used most commonly)  Mechanical instruments (galvanometers 检流计 and eye cameras,etc.) Contact methods: mail, telephone, personal or on- line interviews. Contact methods: mail, telephone, personal or on- line interviews.

22. Research proposal Research proposal – a plan that specifies what marketing research information will be obtained and how Research proposal – a plan that specifies what marketing research information will be obtained and how

23. Step 3 – getting problem-specific data Qualitative research – seeks in-depth, open- ended responses, not yes or no answers. (what do you think about when you decide where to shop for food?) Qualitative research – seeks in-depth, open- ended responses, not yes or no answers. (what do you think about when you decide where to shop for food?)  Focus group interview – an interview of six to ten people in an informal group setting. Quantitative research – seeks structured responses that can be summarized in numbers ( e.g., percentages, averages, or other statistics). Quantitative research – seeks structured responses that can be summarized in numbers ( e.g., percentages, averages, or other statistics).  questionnaires

24. Collecting Data 4-5 Primary Methods for Collecting Survey Data Mail Telephone Personal Interview

25. Surveys by mail or phone, or in person Mail surveys – common and convenient; low response rate is lower (25%); economical. Mail surveys – common and convenient; low response rate is lower (25%); economical. Telephone surveys – fast & effective for getting quick answers to simple questions; but some people refuse to answer any questions and not good for personal information. Telephone surveys – fast & effective for getting quick answers to simple questions; but some people refuse to answer any questions and not good for personal information. Personal interview surveys – in depth. Personal interview surveys – in depth.

26. Other methods of collecting information Observing Observing Consumer panel – a group of consumers who provide information on a continuing basis. Consumer panel – a group of consumers who provide information on a continuing basis. Experimental method – a research approach in which researchers compare the responses of two or more groups that are similar except on the characteristic being tested. Experimental method – a research approach in which researchers compare the responses of two or more groups that are similar except on the characteristic being tested.

27. Step 4 – interpreting the data Statistical packages – easy-to-use computer programs that analyze data – makes this step easier. Statistical packages – easy-to-use computer programs that analyze data – makes this step easier. Technical specialists are involved. Technical specialists are involved.

28. Key Issues in Data Interpretation Population Confidence Intervals Validity Sample Interpreting Data 4-6

29. Population - In marketing research, the total group you are interested in. Population - In marketing research, the total group you are interested in. Sample - A part of the relevant population. Sample - A part of the relevant population. Confidence intervals - The range on either side of an estimate from a sample that is likely to contain the true value for the whole population. Confidence intervals - The range on either side of an estimate from a sample that is likely to contain the true value for the whole population. Validity - The extent to which data measures what it is intended to measure. Validity - The extent to which data measures what it is intended to measure.

30. Step 5 – solving the problem Use the research results to make marketing decisions. Use the research results to make marketing decisions.