ENT4310 Business Economics and Marketing

ENT4310Business Economics and Marketing A six-step model for marketing research Arild Aspelund

Outline • Key variables of market research • A six-step model for marketing research • Selection of methods • Development of tools • What characterizes good marketing research?

What do you wanna know? • Volume • What is a reasonable estimate of the total market for this product or service? • Value • What value would consumers associate to the product or service? • Does it change with the population? • Appropriability • What is a reasonable estimate of your part of the pie?

Define the problem Develop research plan Make decision Collect information Analyze information Present findings A Six-step Model for Market Research

Step 1: Defining the problem • The problem must be adequately defined • Not too narrow, not too broad • Remember that reality is complex • Clearly state the alternatives, objectives and limitations of the research project • Different problems require different research approaches • Exploratory • Descriptive • Causal

Step 2: Develop the research plan • The research plan helps you to coordinate the job, but also • Communicating and assessing objectives • Assessing costs • Document the process • Contents and key decision points • Data sources • Research approaches • Research instruments • Sampling plan • Contact methods

Step 2: Develop the research plan- Data sources • There two sources of data • Primary data – data collected for this specific project • Secondary data – originally gathered and structures for another purpose • A marketing research project normally involves use of both types of data • Researchers usually starts out the project by investigating and exploring secondary data • Secondary data are advantageous because it is readily available at usually low costs

Step 2: Develop the research plan- Research approach • Most projects will involve gathering of primary data. And you have several ways of doing so. • Just make sure your data fits your purpose! • Observational research • Observing relevant actors in relevant settings – consumer behavior! • Focus group research • 6 – 10 carefully selected people • In-depth discussion of various topics • Professionally moderated • Consumer motivation, quality and functional feed-back

Step 2: Develop the research plan- Research approach • Survey research • Large scale investigations of peoples knowledge, beliefs, preferences and satisfaction in the general population • Market potential and feasibility studies for new product launches • Behavioral data • Analysis of actual consumer behavior from collected customer records • More reliable that questionnaire data • Experimental research • The most scientific approach • Primarily used to detect cause-and-effect relationships

Step 2: Develop the research plan- Research instruments • Questionnaires • A very flexible instrument for data collection, and by far the most frequently used • Questionnaires need to be developed, tested and debugged before they are exposed to the respondent • Carefully choose questions, wording and sequence • The form of the question can influence the response • One can choose from a broad range of question types

Ensure questions are free of bias Make questions simple Make questions specific Avoid jargon Avoid sophisticated words Avoid ambiguous words Step 2: Develop the research plan- Research instruments Some questionnaire do’s and don’ts • Avoid negatives • Avoid hypotheticals • Avoid words that could be misheard • Use response bands • Use mutually exclusive categories • Allow for “other” in fixed response questions

Shadowing Behavior mapping Consumer journey Camera journals Extreme user interviews Storytelling Unfocused groups Step 2: Develop the research plan- Research instruments Qualitative measures

Galvanometers Tachistoscope Eye cameras Audiometers GPS Step 2: Develop the research plan- Research instruments Mechanical devices

Probability sample Simple random sample Stratified random sample Cluster sample Non-probability sample Convenience sample Judgement sample Quota sample Step 2: Develop the research plan- Sampling Plan • Sampling unit • Sample size • Sampling procedure

Step 2: Develop the research plan- Contact Methods • Mail questionnaire • Telephone interview • Personal interview • Online interview • What are the pro’s and con’s of these methods?

Step 3: Collect the information • Collecting the data is the most time and resource consuming part of the process • Make sure yourself reasonably sure that you have done your homework before entering this phase • Numerous problems may arise along the process • Respondents not available, not cooperative, biased or dishonest • Such problems are unavoidable, just make sure they don’t leave a bias in your data

Step 4: Analyse the information • … this is the point where you do not want to find out that your data is not analyzable… • Structure out the data and explore it • Analyze it according to • Interesting descriptives • Relevant causal relations • Your level of sophistication in analytical methods will determine the value added from the research process

Step 5: Present the findings • Structure the information that you find relevant for management • Make sure the presentation is not overloaded • Rather split it up in nice packages… • Presenting the scientific method is almost as important as presenting the results • You need to document your reliability…

Step 6: Make the decision • Decisions are made in the intersection between the findings and their reliability • Ingredients of good market research • Scentific method • Creativity • Multiple research methods • Accurate model building • Cost-benefit analysis • Healthy scepticism • Ethical focus

Summary and Continuation • The key variables of market research are volume, value and appropriability • The market research process can be defined into 6 distinctive steps • Define the problem • Develop a research plan • Collect information • Analyze information • Present findings • Make decisions • Continuation • Market analysis • Customer value and needs • Quality and satisfaction • Loyalty

ENT4310 Business Economics and Marketing