Chapter 4: Marketing Research

1. Chapter 4:Marketing Research BMI3C

2. Day 1 Response Journal What kinds of information do you think marketers want to know about you? *** Save As March 26 in your RJ folder ***

3. What is Market Research? MarketResearch • ____________________ is the systematic collection, analysis, and interpretation of information to develop a market strategy or solve a marketing problem • Market Research needs to be based on _____________; information supported by facts • Marketers must be careful NOT to make _____________________; decisions based on feelings and prior experience • E.g. Household fragrance – page 123 &124 HardData IntuitiveDecisions

4. Why is Market Research Needed? • Market research is used by businesses to make their marketing efforts more successful and to help them make important decisions • E.g. Where should I locate my business? What products should I sell? Where should I advertise? Etc. • Businesses may attempt to conduct market research on their own, but this can be extremely difficult to do if you haven’t been trained in market research • Therefore, most businesses hire a ___________________ . Market research firms provide businesses with professional researchers to collect, analyze and interpret the data MarketResearchFirm

5. Types of Information Two different types of information are used in market research: • Secondary data • Primary data

6. Gathering Secondary Data SecondaryData • __________________ isinformation that has already been collected and published by others • ______________________ involves searching for this type of information and then analyzing and interpreting it for a new purpose SecondaryResearch

7. Secondary Data: Pros and Cons PROS • Information is already gathered • Takes less time to conduct • Less expensive • Can be conducted by small businesses (without hiring marketing research firm)

8. Secondary Data: Pros and Cons CONS • Information is “second-hand” • May not be suitable for what you are researching • May be difficult to interpret (quality?) • May be old/outdated

9. Sources of Secondary Data Secondary data is available from a variety of sources including; • Books • Periodicals • Indexes and Databases • The Internet • Consultants • Marketing Research Professionals

10. Day 1 – Assigned Work • Complete the Sources of Secondary Data Worksheetprovided

11. Day 2 - Response Journal How many different frequent shopper or reward program cards can you list? Who do you believe benefits the most from these types of cards – the consumer or the company? And why? *** Save As March 27 in your RJ folder ***

12. Gathering Primary Data PrimaryData • ___________________ is information newly collected by a researcher for a specific purpose There are 2 general types of Primary Research: • Qualitative Research • Used to gather people’s reactions, responses and feelings • E.g. blind taste tests, opinion polls, in-depth consumer interviews, etc. • Quantitative Research • Used to collect data by surveying a sample of the target-market and then using the results to predict the opinions of the entire market • Quantitative data is easier to analyze as it can quickly be turned into numbers and statistics • E.g. surveys, questionnaires, etc.

13. Gathering Primary Data Researchers collect primary data using the following techniques; • Test Marketing • Internal Information Sources • Observation • Focus Groups • Surveys

14. 1. Test Marketing • To collect data on how well a product might sell, some marketers produce a limited quantity of the product and introduce it into test markets • ________________ are sites that mirror the demographic makeup of the country as a whole • E.g. Peterborough, ON is often used as a test market • Test markets are often used for packaged goods such as soup, toothpaste, cereal or beverages • Movies are often test marketed to preview audiences at private screenings or sneak previews Test Markets

15. 1. Test Marketing Test marketing can be conducted in two different ways: • Place the product in 1 or 2 selected stores and monitor sales • Change one factor/feature of the product in one store (e.g. packaging, price, in store display, in store advertising, etc.) and see how sales are impacted

16. 1. Test Marketing • Marketers prefer to keep the location of the test market secret so consumers don’t act differently • If people know something is being tested, they may ____________ the results, meaning the test wouldn’t be accurate • Test marketing can be very expensive and can sometimes produce inaccurate results • If competitors know you are conducting a test, they may try to sabotage process by dramatically reducing their price for example • Even with test marketing, marketers sometimes still make poor decisions – e.g. The McPizza was test marketed in Kingston, ON Skew

17. 2. Internal Information Sources • A business’s internal information sources can provide a wealth of data for researchers, and this is usually where marketing research begins Internal Info Sources often include; • Inventory and sales records • Provides data on the popularity of products, fluctuations in sales and stock turnover • Advertising and promotional records • Provides data on the effectiveness of ads, coupons, contests, product sample offers and other promo activities

18. 2. Internal Information Sources • Production records • Provide data on peak ordering periods and downtimes, to help schedule marketing and advertising plans • Customer databases • Used to track both personal data and purchasing patterns • This info can then be used to target previous buyers with sales promotions and advertising • Client cards, incentive cards, reward programs and other frequent buyer clubs are a very effective way to collect data on your consumers

19. 2. Internal Information Sources • Businesses often use _________________ to look for hidden connections between personal information and purchasing behaviour • E.g. data mining can tell how many customers in a business’s database have purchased more than $25 worth of product in the last 3 months, are female, between the ages of 30 – 35 and work at the management level DataMining

20. 3. Observation Observation • _________________ involves collecting information by recording people’s actions without interacting with them to see how they behave • People do not know they are being watched to ensure they act the way they usually do, and don’t try to please the researcher or give the right answer • Generally speaking, observation is more accurate and less biased than surveys, however it is more expensive • Observation is less effective in large groups because ... • It is difficult to observe many people at one time • People respond to the actions of others (follow what others do)

21. 3. Observation • Observation is often done using video cameras, one-way mirrors and other methods of mechanical observation • A common example of mechanical observation is the bar-code scanners at the supermarket • Another example of mechanical observation __________________________; a method used by researchers to determine what a person first looks at when approaching a store display or when reading a page in a magazine • Eye-Tracking Photography

22. 4. Focus Groups Focus Group • A __________________ is a small group of people brought together to discuss a particular product or issue • A focus group combines the features of an interview with observation • Participants in a focus group are carefully selected to represent a specific target market • E.g. a focus group for possible boat buyers may include couples who earn over $100,000 per year, people who already have a boat or people who own cottages

23. 4. Focus Groups • Focus group moderators guide the discussion and help participants generate ideas in an unbiased manner • Observers may watch the focus group during the interview to observe their behaviour • Focus group sessions are often recorded for further review Nike Focus Group Example

24. Day 2 – Assigned Work • Answer questions 1a, 1b and 2a on page 132 • Answer questions 1a and 1c on page 143

25. Day 3 – Response Journal What surveys have you taken in the past? List. Why do you believe that people aren’t always truthful when answering survey questions? *** Save As March 28 in your RJ folder ***

26. 5. Surveys Survey • A _____________ is a set of carefully planned questions used to gather data • Surveys can be completed in writing or orally • Surveys can be conducted in person, on the phone, through the mail or on the internet

27. 5. Surveys Closed-Ended Questions • Most surveys use _________________________ which ask you to select an answer from two or more choices Pros • Quick and simple for consumers to answer • Easy to sort and analyze for researchers Closed-ended questions usually take on one of the following forms; • Yes/No • Multiple Choice • Agree/Disagree • Check all the Apply • Rate on Scale

28. 5. Surveys Closed Ended Questions – Examples Do you drink pop more than once a week? Yes No I would buy Tide laundry detergent again. AgreeUncertain Disagree

29. 5. Surveys From the list of soft drinks below, circle the kind you would most prefer to drink. • Pepsi • Coca-Cola • Dr. Pepper • Bark’s Root Beer • Other What do you look for when you shop for a DVD player? (check off all that apply). • simple remote • ease of use • plays MP3s • brand name • multi-disc • warranty

30. 5. Surveys Which brands of soap have you purchased in the last year? (check off all that apply). q Dove qIrish Spring qIvory q Jergens qLever 2000 qOther Rate our service using the following scale. Poor Excellent Cleanliness1 2 3 4 5 Friendly staff 1 2 3 4 5 Value 1 2 3 4 5

31. 5. Surveys Open-Ended Questions • Occasionally surveys will use ____________________ that allow the respondents to develop their own answers • Because open ended questions are hard to analyze, researchers only use them in special circumstances • Respondents also tend to resist open ended questions because they take more time to answer

32. 5. Surveys Open Ended Questions – Examples What do you like most about this flavor of soft drink? What words do you associate with each of the following flavours: Cola, Root Beer, Grape, Orange and Ginger Ale? List your top 3 soft drink flavours.

33. 5. Surveys • When researchers conduct surveys they collect from a ____________________ of their target market population, thereby giving each member an equal chance of being selected • If a sample does not accurately represent the target market, then the results may be misleading and the sample is said to be __________ • Example - read paragraph 2 on page 140 • If the survey sample is truly random, then the results can be projected onto the entire market • Example - read paragraph 3 on page 140 (see Figure 4.17) Random Sample Biased

34. Survey Examples

35. 5. Surveys The 5 common problems that often occur when creating survey questions are asking … • A leading question • Two questions in one • An unanswerable question • An ambiguous question • A nonexhaustive question

36. 5. Surveys Leading Question • A question phrased in such a way as to suggest the desired answer Two Questions in One • A question that requires two separate answers • The question should be split into two Unanswerable Question • A question that is impossible to answer

37. 5. Surveys Ambiguous Question • A question that has more than one possible interpretation or meaning Nonexhaustive Question • A question or answers that accompany the question is incomplete

38. 5. Surveys Common Problem Examples Have you ever been caught surfing inappropriate websites at work? Leading question How much time do you spend watching TV and doing housework? Two questions in one When was the first time you saw a commercial for our product? Unanswerable question

39. 5. Surveys Why is our product better than our competitor’s? Leading question How much do you pay for entertainment? Ambiguous question How much money do you spend on fast food weekly? q$5 q $10 q $15 q $20 Nonexhaustive question (answers) How much do you think the average customer spends monthly on clothing? Unanswerable question

40. 5. Surveys How much money do you spend on gas and groceries weekly? Two questions in one Where do you use All Around the House cleaner most? q Bathroom qKitchen qLaundry Room Nonexhaustive question (answers) Why do you think our cereal is the best tasting one on the market? Leading question

41. Day 3 – Assigned Work • Answer question 2a on page 143 • Create 5 closed-ended and 2 open-ended questions that would help gather data on teenage shopping habits

42. Day 4 – Response Journal After conducting the required research, researchers create a report to give to marketers. What types of information do you think should be included in this report? Create a list. *** Save As March 31 in your RJ folder ***

43. The Research Report • Once the researchers have completed their research, they prepare a marketing research report • The marketing department then use the information presented in the report to make decisions • It is important to remember the research is _____ marketing • ______________ collect and interpret the data; ______________ then use the research to make marketing decisions NOT Researchers Marketers

44. The Research Report A research report typically includes the following sections; • Statement of the research task • Review of the data collection methods • Analysis of the data • Interpretation of the data • Summary of findings

45. 1. Statement of the Research Task • The researcher must create the research task, using the marketing objective as a guideline • The researcher will have to translate the marketing objective into the kind of questions that will provide the data that is ____________ and ______________ This section should outline; • What the purpose/objective of your research is • What are you trying to prove • Example – read paragraphs 3 & 4 on page 155 Measurable Specific

46. 2. Review of the Data Collection Methods This section outlines … • The type of research that was performed • E.g. surveys, focus groups, observation, etc. • Also states where (location) and when (date) it was conducted • Who was used for the research • Provides details about the people who were used in the above research • Includes demographics, geographics, psychographics and product usage information • Also outlines the _______________ (the number of people who participated in the research) • The minimum sample size is typically 100 Sample Size

47. 2. Review of the Data Collection Methods • The section should also outline the ______________; a measure of the accuracy of the research results, if the sample was truly random • Example – read paragraph 2 on page 157 Margin of Error

48. 3. Analysis of the Data Collated • After collecting data, it must be ____________; which means that the common factors are grouped together • As the data is tabulated, it is examined for ______________________; which are two or more elements that seem to have an effect on one another • The process analyzing the data is often referred to as _____________ or ________________ • Example – read paragraph 3 on page 157 Significant Correlations Data Mining Data Crunching

49. 4. Interpretation of the Data • Researchers use tables, charts and graphs to help interpret the analyzed quantitative data • This section provides marketers with visual representations (pictures) • Example – read paragraph5 on page 157 and paragraphs 1 & 2 on page 158 • Qualitative data is harder to interpret • Open-ended questions, focus groups and observation reports are often ______________, which means that the researcher has to interpret what respondents said or did Anecdotal

50. 5. Summary of Findings • This section highlights the study’s most important info and suggest ways the info could be used • However, the final interpretation of the report is the responsibility of the marketers