Chapter 6 Marketing (& Business) Research and Decision Support Systems

1. Chapter 6Marketing (& Business) Research and Decision Support Systems Jason C. H. Chen, Ph.D. Professor School of Business Administration Gonzaga University Spokane, WA 99223 chen@jepson.gonzaga.edu

2. After studying this chapter, you should be able to: • Understand the purpose and functions of marketing research. • Be familiar with the stages of the marketing research process. • Discuss different types of research designs, data collection methods, and sources of secondary and primary marketing research data. • Understand many of the major issues involved with survey design and sampling. • Appreciate the role of marketing research within decision support systems.

3. OPENING VIGNETTE WWW.NFOW. COM • How does NFO make its primary revenues? • How do NFO’s clients use the research information that is provided by the company? The web now is, http://www.tns-global.com

4. Marketing Research • Procedures to gather and analyze information for marketing decision making • Focus is on new information not already available in the MIS or other secondary data sources • May be handled inside the firm or by outside specialists • Cooperation is needed between technical specialists and manager/decision makers © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Basic Marketing

5. I. What is Marketing Research? • Marketing Research links the consumer, the customer, and the public throughout information used to: • Identifies and defines marketing opportunities. • Generates, refines, and evaluates marketing actions. • Monitors marketing performance. • Improves understanding of marketing as a process.

6. What is Marketing Research? (cont.) • Marketing Research: • Specifies the information required to address these issues . • Designs the methods for collecting information. • Manages and implements the data collection process. • Analyzes the results. • Communicates the findings and implications.

7. Questions Marketing Research Can Help Answer • Planning • Problem Solving • Produce • Price • Place • Promotion • Control

8. II. Marketing Research in the New Millennium • Environmental Phenomenawill affect the marketing research industry in the next decade and beyond. • The traditional time line of 4 to 6 weeks for the typical research project will not be acceptable. • Marketing research is becoming a part of the marketing strategy development process.

9. Marketing Research in the New Millennium (cont.) • Interactivity,e-commerce, and the Internet are affecting the practice of marketing research. • How to get information / How will data be managed? • Consolidation among companies has resulted in market dominance by the top 25 firms.

10. III. The Marketing Research Process Exhibit 6-2 The Marketing Research Process Problem Definition Determination of Research Design Decision on data types Determination of data collection methods Data collection, analysis, & interpretation Sample design Development of data collection forms

11. Problem Definition • Problem Definition: • The first step in any marketing research project and is critical to its success. • All parties involved must: • Focus on the real research problem, not the symptoms. • Anticipate how the information will be used. • Avoid prescribing a specific study until the problem is fully understood and defined.

12. Defining Problem Results in Clear Cut Research Objectives Analysis of the Situation Problem Definition Statement of Research Objectives Symptom Detection Exploratory Research (Optional)

13. “The of the problem is often more essential than its solution” formulation Albert Einstein

14. I keep six honest serving men, (they taught me all I knew), their names are and when, and how, and why, what, and where and who.” --Rudyard Kipling

15. Research Designs (Types of Research) • Exploratory Research: (Unaware of Problem) • Typically carried out to satisfy the researcher’s desire for better understanding, or to develop preliminary background and suggest issues for a more detailed follow-up study. • Descriptive Research: (Aware of Problem) • Normally directed by one or more formal research questions or hypotheses. • Cross-sectional study • Longitudinal research • Casual Research: (Problem Clearly Defined) • Experiments in which researchers manipulate independent variables and then observe or measure the dependent variable or variables of interest.

16. Exploratory Research Secondary data Experience survey Pilot studies

17. Exhibit 6-3: Three general research designs Example Studies Types Common Methods Exploratory designs Literature reviews Case analysis Interviews with knowledgeable persons In-depth interviews, focus groups Evaluation of new-product concepts, environmental-trend analysis, identification of product attribute importance Descriptive designs Cross-sectional surveys Panel studies Product movement surveys Store audits Telephone, mail, personal interviews Market potential, image studies, competitive-positioning analysis, market characteristic examination, customer-satisfaction studies Causal designs Experimental designs (lab and field studies) Market tests Evaluation of alternative marketing mix combinations (varying price levels, changing promotional appeals, reallocation of sales force efforts)

18. CAUSAL OR DESCRIPTIVE EXPLORATORY COMPLETELY CERTAIN ABSOLUTE AMBIGUITY Uncertainty Influences The Type Of Research

19. Degree of Problem Definition Exploratory Research Descriptive Research Causal Research (Unaware of Problem) (Aware of Problem) (Problem Clearly Defined) “Our sales are declining and “What kind of people are buying “Will buyers purchase more of we don’t know why.” our product? Who buys our our products in a new competitor’s product?” package? “Would people be interested “What features do buyers prefer “Which of two advertising in our new product idea?” in our product?” campaigns is more effective?” possible situation

20. Data Types Primary Data Secondary Data • SURVEYS INTERNAL DATA • Mail - Company records • Telephone - Data from MDSS • INTERVIEWS EXTERNAL DATA • Mall intercepts Proprietary • Personal interviews - Custom Research • - Syndicated services • FOCUS GROUPSNonproprietary • Personal - Published reports • Mechanical - Census data • - Periodicals

21. Sources of Primary and Secondary Data

22. Descriptive Research Example • Weight Watchers average customer • Woman about 40 years old • Household income of about $50,000 • At least some college education • Trying to juggle children and a job • Men’s fragrance market • 1/3 size of women’s fragrance market • But growing at a faster pace • Women buy 80 % of men’s fragrances

23. Causal Research • Conducted to identify cause and effect relationships

24. Identifying Causality • A causal relationship is impossible to prove. • Evidence of causality: • 1. The appropriate causal order of events • 2. Concomitant variation--two phenomena vary together • 3. An absence of alternative plausible explanations

25. Illustration of Experimental Method in Comparing Effectiveness of Two Ads

26. Data Collection Methods • Focus groups (see next slide) • Telephone surveys • Mail surveys • Personal interviews • Mall intercepts • Internet surveys • Projective techniques and observations (See Exhibit 6-5 for advantages and disadvatages, p.131)

27. Focus Group Interviews • A popular type of qualitative research • Involves a small group (usually 8 to 12 people) in a discussion—usually for no more than 2 hours • A group leader ("interviewer") unobtrusively guides the discussion • Designed to get in-depth, open-ended responses, not intended to be "representative" of larger market • Group interaction stimulates thinking and reactions • Analysis of results is subjective • May involve videotaping and or “online sessions” and other technologies

28. Data Collection Instruments • The collection of marketing research information involves construction of a data collection instrument called survey or questionnaire.

29. Types of Survey Research Questions (See Exhibit 6-6; p.135) • Multichotomous (multiple choice) • Open-ended • Scaled • Likert agree-disagree • Semantic differential • Categorical

30. Simplified Scaling Example THE PRESIDENT SHOULD RUN FOR RE-ELECTION _______ AGREE ______ DISAGREE

31. Method of Summated Ratings: The Likert Scale • An extremely popular means for measuring attitudes. Respondents indicate their own attitudes by checking how strongly they agree or disagree with statements. • Response alternatives: “strongly agree”, “agree”, “uncertain”, “disagree”, and “strongly disagree”.

32. Example: Likert Scale for Measuring Attitudes Toward Tennis #1 It is more fun to play a tough, competitive tennis match tan to play an easy one. ___Strongly Agree ___Agree ___Not Sure ___Disagree ___Strongly Disagree #2 There is really no such thing as a tennis stroke that cannot be mastered.

33. Semantic Differential • A series of seven-point bipolar rating scales. Bipolar adjectives, such as “good” and “bad”, anchor both ends (or poles) of the scale. • A weight is assigned to each position on the rating scale. Traditionally, scores are 7, 6, 5, 4, 3, 2, 1, or +3, +2, +1, 0, -1, -2, -3.

34. Category Scales • A category scale is a more sensitive measure than a scale having only two response categories - it provides more information. • Questions working is an extremely important factor in the usefulness of these scales.

35. Example of Category Scale How important were the following in your decision to visit San Diego (check one for each item) VERY SOMEWHAT NOT TOO IMPORTANT IMPORTANT IMPORTANT CLIMATE ___________ ___________ ___________ COST OF TRAVEL ___________ ___________ ___________ FAMILY ORIENTED ___________ ___________ ___________ EDUCATIONAL/ HISTORICAL ASPECTS _________ ___________ ___________ FAMILIARITY WITH AREA ___________ ___________ ___________

36. 3 2 1 Very Very Good Poor Graphic Rating Scales • A graphic rating scale presents respondents with a graphic continuum.

37. Five Errors in Question Design • Double-barreled wording • Loaded wording • Ambiguous wording • Inappropriate vocabulary • Missing alternatives

38. Exhibit 6-7 Sampling decisions and collection issues Basic research question Probability vs. non-probability sampling Specification of sampling frame Same size Data collection: Sampling, follow-up, & verification Time, cost, & precision constraints Sample Design

39. Types of Samplings • Probability Sampling • Simple random sampling • Stratified sampling • Cluster sampling • Nonprobability Sampling

40. Sampling • Sampling Frame • Sample Size • Response Rate • A recent study by the Council for Marketing and Opinion Research (CMOR) estimated that 45 percent of consumers refused to participate in a survey in 2001.

41. Fieldwork • Fieldwork is the process of: • Contacting respondents • Conducting interviews • Completing surveys

42. Analysis and Interpretation • Techniques for analyzing marketing research data: • Straightforward frequency distributions • Means • Percentages • Complex multivariate statistical tests

43. Problem Discovery Selection of Sample Design Exploratory Research Collection of the Data Selection of the Basic Research Method The Business Research Process

44. Editing and Coding Report Data Processing Interpretation of the Findings The Research Process (cont.)

45. Stages In Business Research Process • Problem Discovery and Problem Definition • Research Design • Sampling • Data Gathering • Data Processing and Analysis • Conclusions And Report

46. Problem Discovery And Definition • First step • Problem, opportunity, or monitor operations • Discovery before definition • Problem means management problem

47. Hypothesis State the Research Questions and Research Objectives • A statement • that can be refuted • by empirical data

48. If you do not know where you are going, any road will take you there

49. Secondary (historical) Data Pilot Study Experience Survey Case Study Exploratory Research

50. Exploratory Research Techniques:Two Examples • Secondary data (historical data) • Previously collected • Census of population • Literature survey • Pilot study • A number of diverse techniques