Marketing Research Krzysztof Cybulski, Ph. D. Marketing Chair Faculty of Management Warsaw University Warsaw, 2006 14.03.06 1 Contents: 1.The Essence & Role of Marketing Research - Alternative Sources of Marketing Information 2.Classifying Marketing Research Studies 3.The Marketing Research Process: An Overview - Designing Research Studies 4.Exploratory Research and Qualitative Analysis 5.Secondary Data Research in a Digital Age - Online Marketing Research 6.Syndicated Data 7.Survey Research 8.Observation 9.Experimentational Research 10.Measurement & Attitude Scaling, Questionnaire Design 11.Sampling and Statistical Theory - Sampling Designs and Sampling Procedures 12.Analysis and Reporting - Basic Data Analysis 13.Forecasting Future Demand and Sales Potential Estimation 14.03.06 2 14.Communicating Research Results: Research Reports, Oral Presentation, and Research Follow - Up
The Essence & Role of Marketing Research Marketing research covers a very wide range of phenomena, in essence, it fulfills the marketing managers needs for knowledge of the market. Marketing is a necessary but, not sufficient condition for success in competitive environments. Management decisions necessarily involve risk, so to decrease risk level knowledge about customers & their needs, competitors & their strategies is essential for successful decision making. Good information is the raw material of profitable business decisions. Objective up-to-date knowledge is superior to `hunch`: marketing research is a key factor. Systematic, objective information confers competitive advantage. 14.03.06 3 The Essence & Role of Marketing Research Marketing research is the foundation of effective marketing management through: 2. Analysis: identify market trends, competitors activities, customer preferences, etc. in (a) existing markets (b) potential markets. 3. Planning: decide on range of products, and services likely to satisfy specific identified needs, present and emergent. 4. Control and implementation: organize development, production and distribution of specific products/services; check that standards of performance (e.g. cost/sales ratio, market share, sales quotas, etc.) are maintained. 5. Continuous monitoring of market behaviour provides an earlywarning system for management. 14.03.06 4
The Essence & Role of Marketing Research Examples of typical marketing decision-makers problems: Will the package change improve my brand image? How can I monitor my sales and retail trade activities? To whom am I loosing sales? From whom am I taking sales? Why our customer aren t satisfied with the company s offer? Who is decision - maker in the buying-unit of customer company? What motivates consumers to more frequent buying habits? And so on, and so on? 14.03.06 5 The Essence & Role of Marketing Research Marketing management questions require information about how customers, distributors, and competitors will respond to our company s marketing actions!. 14.03.06 6
The Essence & Role of Marketing Research Marketing research is one of principal tools for answering these questions because it links the consumer, customer, and the public to the marketer through 14.03.06 7 The Essence & Role of Marketing Research Marketing research is the means for implementing marketing concept: Gain knowledge of critical facets of marketing management; Understand role and responsibilities of marketing research; Gain insights into sources of marketing research theory and practice; Understand need for all managerial specialisms to work closely together. 14.03.06 8
The Essence & Role of Marketing Research The task of marketing research is to help specify and supply accurate information to reduce the uncertainty in decision making. Although research provides information about consumers and the marketplace for developing and implementing plans and strategies, it is not the only source of information!. 14.03.06 9 Alternative Sources of Marketing Information Alternative Sources of Information Informal Sources of Information Formal Market Research 14.03.06 10
Alternative Sources of Marketing Information Informal Sources and Methods of Gathering of Information Managers Experience & Intuition Informal Observation of Marketplace Marketing Intelligence 14.03.06 11 Alternative Sources of Marketing Information A marketing intelligence system is set of procedures & sources used by managers to obtain everyday information about developments in marketing environment. Typical techniques of marketing intelligence are as follows: Marketing managers collect marketing intelligence by reading books, newspapers, and trade publications, and also by surfing in the Internet, Marketing managers are talking to customers, dealers, suppliers, and competitors, Marketing managers are meeting with other company managers, The sales force and distributor are motivating for gathering & delivering such informal information to marketing managers, Many companies hire specialist to gathering marketing intelligence e.g. retailers often send mystery shoppers to their stores to asses how l t t t 14.03.06 12
Alternative Sources of Marketing Information Formal Market Research Market Analysis & Forecasting Marketing Research 14.03.06 13 Alternative Sources of Marketing Information Scope of Market Analyses & Forecasting Market Demand Analysis Market Supply Analysis Market Prices Study Market Demand Potential Market Supply Sources Market Prices Level Market Demand Structure Market Supply Structure Market Prices Structure Market Demand Forecasting Market Supply Trends Market Prices Trends 14.03.06 14
Classifying Marketing Research Studies Scope of Marketing Research (I) Consumer Behaviour Studies Competition Analysis & Studies Company s Marketing Activities Evaluation 14.03.06 15 Classifying Marketing Research Studies Types of Marketing Research (II) Kind of Problem Problem Identification Research Market Potential Research Market Share Research Image Research Market Characteristics Research Forecasting Research Business Trends Research Problem Solving Research Consumers Research Competitors Research Support and Evaluation of Marketing Mix Decisions Segmentation Research Product Research Pricing Research Promotion Research Distribution Research 14.03.06 16
Classifying Marketing Research Studies Types of Marketing Research (III) Kind of Solution Inner Solution Company s Marketing Department External Solution Outside Research Suppliers 14.03.06 17 Inner Solution Company s own marketing department project, & imlement marketing research. Advantages: No communication problems Know the company and the market Keep information in secret Disadvantages: Lack of know-how in marketing research Lack of objectivity Rather expensive Rather long lasting 14.03.06 18
External Solution We employ outside marketing research company: Advantages: Objectivity Wider perspective towards company problems Speed Cost advantage Know-how & Infrasture Disadvantages: Lack of secrecy Communication Problems Lack of understanding specific marketing & company problems 14.03.06 19 External Solution Types of Marketing Research Suppliers Syndicated Services Custom Service Standarized Service Full Service Suppliers Limited Service Suppliers Field Services Tab House Internet Services 14.03.06 20
External Solution How to select Marketing Research Agency? How long does the agency exist? Is marketing research the only activity, or a marginal activity besides consultancy? Is the agency integrated in an international network? Does the agency understand well customers and research problems? Does exist potential conflicts of interest between the clients of research agency? Is the agency the member of ESOMAR (AMRA)? 14.03.06 21 External Solution How to select Marketing Research Agency? Safety and confidentiality of data guaranteed? Training and experience of staff? Does personnel have management experience? Who is responsible for the project? Potential communication problems? How are the results going to be presented? 14.03.06 22
External Solution How to select Marketing Research Agency? Type of fieldworkers used; Specialised interviewers available, professionally briefed and controlled? Can we do our own controls? Sampling method used; Data analysis methods; Statistical methods used. 14.03.06 23 External Solution How to select Marketing Research Agency? How are the results reported? Facilities such as group interview room, laboratory shop, mechanical observation tools; Does the agency have standarised procedures for product introduction or advertising research? Payment procedure? Types of contracts? 14.03.06 24
Classifying Marketing Research Studies 1.Identyfying Market Opportunities and Problems 2.Generate, Refine, and Evaluate Potential Marketing Actions 3.Monitor Marketing Perfomance 4.Improve Marketing as a Process 14.03.06 25 Classifying Marketing Research Studies Types of Marketing Research- (IV) The Main Objectives Exploratory Research Experimental Research Descriptive Research Continuous Research 14.03.06 26
The Role of Marketing Research Studies Exploratory Research: problem finding hypothesis generating 14.03.06 27 The Role of Marketing Research Studies The objective of exploratory research is to provide understanding of problem or situation. Exploratory research is designed to futher the understanding of marketing problem or issue. Exploratory research can help clarify the real issue that need to be researched. Exploratory research is useful for exploring and explaining consumer motivations, attitudes, and behaviour. It also can provide input to future stage of research or development. 14.03.06 28
The Role of Marketing Research Studies Commonly used exploratory research techniques: Experience survey Delphi Method Case Study In Depth Interviews Focus Group Interviews Projective Techniques 14.03.06 29 The Role of Marketing Research Studies Experimental (Conclusive) Research: problem solving hypothesis testing 14.03.06 30
The Role of Marketing Research Studies The objective of experimental research is to identify cause and reflect relationships. Main types of experiment situations are: Field (natural market condition) experiments Laboratory (artificial condition) experiments 14.03.06 31 The Role of Marketing Research Studies The objective of descriptive research is to answer the questions like follows: Who? What? When? How? Why? How often? 14.03.06 32
The Role of Marketing Research Studies Typical techniques of descriptive research are: Searching for Secondary Data Gathering Techniques Obtaing Syndicated Data Questioning Respondends by Surveys & Interviews 14.03.06 33 The Role of Marketing Research Studies Continous Research Panels Households panels Retail outlets panels Wholesalers panels Special panels 14.03.06 34
The Role of Marketing Research Studies Types of Marketing Research- (V) The Kind Of Data to Obtain Secondary Data Syndicated Data Primary Data 14.03.06 35 The Role of Marketing Research Studies Secondary Data Inside Company Data Outside Company Data 14.03.06 36
The Role of Marketing Research Studies Syndicated Data Media Usage Data Market Performance Data Household Purchase Data 14.03.06 37 The Role of Marketing Research Studies Obtaining Primary Data Surveys: by Asking People Observations: by Observing People Behaviour Experiments: throuh Influencing People s Behaviour By Searching Peoples,s Hidden Motives 14.03.06 38
The Role of Marketing Research Studies Types of Marketing Research- The Kind of Primary Data Quantitative: Qualitative: structure design large sample what, how much, who,? less formal design, small convenience sample why? (motivation research) 14.03.06 39 The Role of Marketing Research Studies Marketing Research Systematic collection, analysis and interpretation of data, in preparation of and as an evaluation of marketing management, using scientific method. 14.03.06 40
The Role of Marketing Research Studies Marketing research has borrowed liberally from other disciplines: Economics: general background economic data; identification of business/industry trends; structure of industries,and so on. Statistical theory: sampling theory and metodologies; hypothesis testing and market experiments; mathematical modelling. Sociology: social class grndings; theories of social mobility; life-style, household behaviour, opinion leadership, and diffusion of innovations. Cultural anthropology: environmental influences on consumption; cultural norms and values; subcultural factors; difusion of products/services. Psychology: perception and learning theories; qualitative influences on baying; group influences; 14.03.06 41 reference group theory Good Marketing Research decision-oriented and problem-solving; clearly defined goals and limitations; applied and empirical (collection of data); systematic research plan and detailed procedures; critical report flaws in procedure; confine conclusions to those justified by the data; objective: reliable and valid; ethical issues. 14.03.06 42
Scientific Marketing Research! 1.Theory Driven and Model-Based 2.Formulation and Testing of Hypothesis 3.Validity (internal and external) 4.Efficiency 5.Interpretability 14.03.06 43 Scientific Marketing Research! What Marketing Research is not: Mere information gathering! Mere transportation of facts from one location to another! Mere rummanaging for information! Catchword used to get attention! 14.03.06 44
Determining When to Conduct Marketing Research Time Constraints: is sufficient time available before a managerial decision must be made?. Availability of Data: is the information already on hand inadequate for making the decision?. Nature of Decision: is the decision strategic or tactical importance?. Benefits versus Costs: does the value of the research information exceed the cost of conducting research?. 14.03.06 45 Determining When to Conduct Marketing Research Existing Time Constraints: Systematic research takes time. In many instances, management believe that decision must be made immediately, allowing no time for research. Decisions sometimes are made without adequate information or thorough understanding of market situations. Although not ideal, the urgency of situation sometimes precludes the use of research. 14.03.06 46
Determining When to Conduct Marketing Research Existing Availability of Data: Often managers already posses enough information to make sound decisions with no marketing research. When they lack adequate information, however they must consider research. The following question arise Will the research provide the Information needed to answer the basic questions about this decision?, but if the data cannot be available research cannot be conducted. 14.03.06 47 Determining When to Conduct Marketing Research Nature of Decision: The value of marketing research will depend on the nature of the managerial decision to be made. A routine tactical decision that does not require a substantial investement may not seem to warrant a substantial expenditure for marketing research. In general, however, the more strategically or tactically important the decision, the more likely research will be conducted. 14.03.06 48
Determining When to Conduct Marketing Research Benefits versus Costs (Value of Information): Marketing research can be thought of as an investment alternative. When deciding whether to make a decision without research or to postpone the decision in order to conduct research, managers should ask three questions: 6.Will the payoff or rate of return be worth the investment? 7.Will the information gained by marketing research improve the quality of the marketing decision enough to warrant the expenditure? 10.Is the proposed research expenditure the best use of the available funds? 14.03.06 49 The Marketing Research Process Main characteristics of research in general: 2.Research originates with a question or problem. 3.Research requires a clear articulation of a goal. 4.Research follows a specific plan of procedure. 5.Research usually divides the principal problem into more manageable subproblems. 6.Research is guided by a specific research problem, question, or hypothesis. 7.Research accepts certain critical assumptions. 8.Research requires the collection & interpretation of data in an attempt to resolve the problem that initiated the research. 9.Research is, by the nature, cyclical or, more exactly, helical. 14.03.06 50
The Marketing Research Process Library & its resources Facility with language Computer & its software General Tools of Research The human mind Techniques of measurement Statistics 14.03.06 51 The Marketing Research Process Let s take a commonplace occurence: Lamp failure You come home after dark, open the front door, and reach inside for the switch that turns a nearby table lamp. Your fingers find the switch. You turn it. No light. At this point, you begin to construct a series of reasonable guesses hypotheses to explain the lamp failure. 14.03.06 52
The Marketing Research Process Main hypotheses of lamp failure: 2. The bulb has burned out. 3. The lamp is not pluged into the wall outlet. 4. A late afternoon thunderstorm interrupted the electrical service. 5. The wire from the lamp to the wall outlet is defective. 6. You forgot to pay your electric bill. 14.03.06 53 The Marketing Research Process Solutions of the problem of the malfunctioning lamp: 2. You go out to your car, get a flashlight, find a new, and insert the bulb. Lamps fails to light (hypothesis 1 is rejected). 14.03.06 54
The Marketing Research Process Solutions of the problem of the malfunctioning lamp: 2. You glance down at the wall outlet and see that the lamp is plugged into it. (hypothesis 2 is rejected). 14.03.06 55 The Marketing Research Process Solutions of the problem of the malfunctioning lamp: 2. You look at your neighbors homes. Everyone has electricial power. (hypothesis 3 is rejected). 14.03.06 56
The Marketing Research Process Solutions of the problem of the malfunctioning lamp: 2. You go back into your house and lift the cord connecting the lamp to the wall outlet. The lamp lights briefly and go out. You light the cord again. Again the lamp lights briefly. The connecting cord is defective. (hypothesis 4 is supported). 14.03.06 57 The Marketing Research Process Solutions of the problem of the malfunctioning lamp: 2. Fortunately, hypothesis 4 solved the problem, and by repairing or replacing the cord, you can count on adequate light to study by in the near future. 14.03.06 58
Marketing Research Process 1.Establishing the need for marketing research 2.Defining the problem 3.Establishing research objectives 4.Determining research design 5.Identyfying types and sources od information 6.Determining method of accessing data 7.Designing data collection forms 8.Determining the sample plan and size 9.Collecting data 10.Analyzing data 11.Preparing and presenting the final research report 14.03.06 59 Marketing Research Process When marketing research is not needed? The information is Already Available! Decisions Must be Made Now! We Cannot Afford Research! Costs Overweigh the Value of Research! Nature of Decisions! 14.03.06 60
Marketing Research Process Defining the Problem Ascertain the Decision Makers Objectives Isolate & Identify the Problem, Not the Symptoms State Research Questions Develop well formulated Hypotheses 14.03.06 61 Marketing Research Process The Iceberg Principle! 14.03.06 62
Marketing Research Process Managers (decision-makers) should express goals to the researcher in measurable terms, unfortunately this rarely occurs! 14.03.06 63 Marketing Research Process Organization 20 years old neighbourhood swimming association in a major city Symptoms Membership has been declining for years. New water park moved into town a few year ago. Problem Definition Bases on Symptoms Neighbourhood residents prefer the expensive water park and have negative image of swimming pool. True Problem Demographic changes: children in this 20 years old neighbourhood have grown up. Older residents no longer swim. Celluar phone manufacturer Distributor complain prices are too high. Investigate industrial user to learn how much prices need to be reduced. Sales Management: Distributors do not have adequate knowledge to communicate product s value. Microbrewery Consumers prefer the taste of competitor s brand. What type of reformulated taste is needed? Package: Old fashioned package influence taste perception. 14.03.06 64
Marketing Research Process A hyphothesis: is unproven proposition or possible solution of action. Hyphothetical statements assert probable answers to research questions. Hypothesis is a statement about the nature of the world!. In its simplest form, it is a guess!. 14.03.06 65 Marketing Research Process A hyphothesis samples: 2. Sales Manager may hypothesize that salespeople who show the highest job satisfaction will be most productive. 3. Advertising Manager may believe that if consumers attitudes towards the product are changed in a positive direction, demand for the product will increase. 14.03.06 66
Marketing Research Process Problem statements are interrogative! Hypotheses statements are declarative!. 14.03.06 67 Marketing Research Process Research Objective is the research version of the marketing problem. After the research questions or hypotheses have been stated, the research project s objectives are derived from the problem definition. They explain the purpose of the research in measurable terms and define standards for what the research should accomplish. The research objectives should be limited to a manageable number! 14.03.06 68
Marketing Research Process Defining the Problem Tasks Involved Discussion with Decision Makers Interviews with Industry Experts Secondary Data Analysis Qualitative Research 14.03.06 69 Marketing Research Process Problem Definition Problems Problem Definition Too Broad? Too Many, Unimportant Information Problem Definition Too Narrow? Too narrow Concept of Solution 14.03.06 70
Marketing Research Process Discussion with Experts Group Discussions Problem? Brain Storming Sessions Study of Secondary Data Communications between the Firm & MR Agency 14.03.06 71 Marketing Research Process Research Plan Data Sources Research Approaches Research Instruments Sampling Plan Contact Methods 14.03.06 72
Marketing Research Process Data Sources: Secondary Syndicated Primary or Combination? 14.03.06 73 Marketing Research Process Research Approaches: Observation FGI Survey Experiment Behavioral Data 14.03.06 74
Marketing Research Process Research Instruments: Questionnaires Psychotests Observation Scenario Experiments Schemes 14.03.06 75 Marketing Research Process Sampling Plan: Sample Size Sampling Procedures 14.03.06 76
Marketing Research Process Contact Methods with Respondents: Personal by Telephone by Internet by Mail 14.03.06 77 Marketing Research Process Secondary Data Advantages: Very wide availability of information, Data are not very expensive, Date could be rather easy and fast to reach, Not special technical e.g. statistical know-how is required. 14.03.06 78
Marketing Research Process Secondary Data Disadvantages: Not designed specially to project s needs, Often outdated, Sometimes variation in definition of terms exists, Different units of measurement, Lack the information to verify the data s accuracy. 14.03.06 79 Marketing Research Process Secondary Data When secondary data are reported in a format that does not exactly meet the researcher s needs, data conversion may be necessary. Data conversion (also called data transformation) is the process of changing the original form of data to a format suitable to achieve research objective. Another disadvantage of secondary data is that the user has no control over their accuracy. Although timely and pertinent secondary data may fit the researcher s requirements, the data could be inaccurate. 14.03.06 80
Marketing Research Process Secondary Data So the investigators are naturally more prone to accept data from reliable sources. Nevertheless, the researcher must assess the reputation of of the organization that gathers the data and critically assess the research design to determine whether the research was correctly implemented. Researchers should verify the accuracy of data whenever possible. 14.03.06 81 Marketing Research Process Secondary Data Cross-checks of data from multiple sources that is, comparison of data from one source with data from another should be made to determine the similarity of independent projects. When the data are not consistent, the researchers should attempt to identify reasons for differences or determine which data are most likely to be correct. 14.03.06 82
Marketing Research Process Secondary Data Typical objectives for Secondary Data Research Designs Fact Finding Identify Consumer Behaviour Market Tracking (Trend Analysis) Enviromental Scanning Model Building Estimating Market Potential Forecasting Sales Analysis of Trade Areas & Sites Database Marketing Claritas (PRIZM) Donnelley (Cluster Plus) 14.03.06 83 Marketing Research Process Secondary Data The simplest form of secondary data research is Fact Finding, but it could be sometimes very complex: Identify Consumer Behaviour for Product Category A typical objective for a secondary research study might be to uncover all available information about consumption patterns for a particular product category or to identify demographic trends that affect the Industry; Market Tracking refers to the observation and analysis of trends in industry volume and brand share over time; Environmental Scanning entails all information gathering and fact finding that is designed to detect indications of environmental changes in their initial stages of development. Very importance of the Internet in this task! 14.03.06 84
Marketing Research Process Secondary Data Model building involves specifying relationships between two or more variables, perhaps extending to development of descriptive or predictive equations. Models need not include complicated mathematics, though. In fact decision makers often prefer simple models that everyone can readily understand over complex, less comprehensible models. 14.03.06 85 Marketing Research Process Secondary Data Model Building Ilustrations Estimating Market Potential Forecasting Sales Analysis of Trade Areas & Sites 14.03.06 86
Marketing Research Process Secondary Data Sources of Secondary Data Internal Data Accounting system Complains system Sales reports Call reports External Data Libraries The Internet Books & Periodical Government Sources Trade Ass. Sources Commercial Sources Media Sources Single Source Data Competition Data 14.03.06 87 Marketing Research Process Secondary Data Internal: Structured Sales data, invoices Sales reports Unstructured Complains Request for information 14.03.06 88
Marketing Research Process Secondary Data External: Structured Government statistics Publications of professional organisations Libraries Sindicated services On-line databases Unstructured Competitor s activity Advertising content 14.03.06 89 Marketing Research Process Primary Data Research Process Primary Data Research Qualitative Research Quantitive Research Experience Survey Focus Group Interview Projective Techniques Depth Interviews Case Studies Other Techniques 14.03.06 90
Marketing Research Process Primary Data Research Process Primary Data Research Quantitive Research Qualitative Research Surveys Observations Experiments 14.03.06 91 Marketing Research Process Primary Data Research Process When a researcher has a limited amount of experience with or knowledge about a research issue, exploratory research is a useful preliminary step. It helps ensure that in more rigorous, conclusive future study will not begin with inadequate understanding of the nature of marketing problem!. Conclusive research answers questions of fact necessary to determine a course of action. Exploratory research, on the other hand, never has this purpose. Most, but certainly not all, exploratory research designs provide qualitative data. 14.03.06 92
Marketing Research Process Primary Data Research Process Why Conduct Exploratory (Qualitative) Researcher? Diagnosing a Situation Screening Alternatives e.g. Concept Testing Discovering New Ideas 14.03.06 93 Marketing Research Process Qualitative Research Qualitative research An unstructured, exploratory research methodology based on small samples which probides insights and understanding of the problem setting. 14.03.06 94
Marketing Research Process Primary Data Research Process Qualitative Research Objectives samples: In the department store study, the objectives of qualitative research were as follows: 4.Identify the relevant factors (choice criteria) used by households in selecting department stores. 5.Identify what consumers consider to be competing stores for specific product categories. 6.Identify the psychological characteristics of consumers which are likely to influence store patronage behavior. 7.Identify any other aspects of consumer choice behavior that may be relevant to store patronage. 14.03.06 95