Chapter Two

1. Chapter Two The Marketing Research Process

2. Chapter Objectives • Identify major steps in marketing research process • Explain the interrelationship among and interdependence of the process steps • Understand when to use external providers and how to evaluate them • Develop your view of marketing research ethics and describe some of the ethical gray areas that exist

3. Research Process • The Research Process is an interrelated sequence of steps that make up a research project • Research process steps • Justify the need for marketing research • Define the research objective • Identify data needs • Identify data sources

4. Research Process (Cont’d) • The steps are (cont’d) • Choose appropriate research design and data collection method • Design the research instrument or form • Identify the sample • Collect data, including any relevant secondary data • Analyze and interpret the data • Present the research findings to decision makers

5. Exhibit 2.1 Research Project Steps

6. Research Process - Interrelated Example of Interrelationship: At the first step the researcher must understand what is involved in the remaining stages

7. Justify the Need for Marketing Research • Four Considerations • Potential usefulness of the results • Management attitudes towards marketing research • Resources available for implementation • Costs vs. benefits

8. Potential Usefulness of the Results • The extent to which findings are likely to reduce uncertainty or provide relevant information • KFC in Brazil • Tested how their product was perceived by Brazilian consumers • They did not test their product against other more traditional Brazilian chicken products • Result: research findings useless

9. Management Attitudes Towards Marketing Research • Management must trust the research findings for them to be useful • Whirlpool • Conducted marketing research in Europe that determined consumers in different countries favored different features • Whirlpool management had already decided to release the “World Washer” to be sold in all countries • They ignored the research findings, thus making the project worthless

10. Resources Available for Implementation • A company must have the resources to fully implement recommended decisions for the information to be useful • X-Disk Corporation • Operating at 95% Capacity • Marketing research determines there is a market for new product • Capacity is not enough to meet new product demand • Back to square one, as the marketing research was useless without the resources to implement

11. Costs vs. Benefits • A company must have the resources to fully implement recommended decisions for the information to be useful • Determining Research Costs • Quantify the necessary research steps • Determine the Benefits • Nature of the uncertainty it will alleviate • Projected financial benefits • Decision maker intuition • Do you think it is harder to determine cost or to determine benefit?

12. Justify the Need for Marketing Research (Cont’d) • Brenda Page is considering a new product for her company. The product will require a 10% market share to break even. Intuition and experience tell Brenda that the product will probably receive 8% market share. • Brenda has LOW potential benefit • Brenda is pretty sure that the product will not meet the necessary market share. The marketing research might determine that Brenda was incorrect and it will meet the necessary market share, but it most likely will not be high enough to be profitable.

13. Justify the Need for Marketing Research (Cont’d) • Jerry Wilson is deciding between possible commercials for a new product his company is promoting. Both have been proven to have good results on certain products and bad on others, however neither commercial has been used on a product similar to theirs. • Jerry has HIGH potential benefit • There is much more ambiguity in Jerry’s decision and the benefit of knowing the information is much higher

14. Conducting Small Budget Marketing Research • Treat every employee as a marketing researcher • Be on the look out for how your product or your competitors’ products are being used • Watch for trends • Share informal reports at meetings • Send employees to observe customers

15. Conducting Small Budget Marketing Research (Cont’d) • Send employees to interview tradeshow attendees • Costs as little as $1,000 compared to the traditional $5,000 • Use warranty cards or product registration cards to collect information on your customers • Provided by David Gordon, CEO Angell Research & past Chairman of AMA

16. Defining the Research Objective • Most Critical Step • Establishing the project’s purpose through effective communication between the decision maker and the researcher allows them to establish clear-cut and agreed upon research objectives

17. Defining the Research Objective (Cont’d) • Key: Accurate definition of the problem and all potential causes • Marketing Problem • Exploratory research fueled by client/researcher communication • Potential cause • Decide which causes most directly effect the problem • Decide if these issues are worth following • Goal: Decide on clear cut research objectives

18. Pac-N-Sac Paper Products Company– Defining the Research Objective • Marketing Problem: Paper product sales down • Manager assumes that the potential cause is a promotional problem • Team decides if these issues are worth following up on • They decide that the goal will be to find more effective promotions • Actual Problem: Industry sales decreasing • Because they did not consider all the possible causes, they missed the true cause of the sales decline • Faulty research objectives = Faulty recommendations

19. Avoiding Mistakes in Problem Definition • Accurate definition of a project’s purpose requires • Identifying all relevant issues • Deciding which of the issues are worth examining further

20. Avoiding Mistakes in Problem Definition – Captain Morgan Gold • Strategy • Capture more of the ready-to-drink alcoholic beverage market • Alternate Strategy • Revive sagging profits • Apparent Assumption • The popularity of Captain Morgan Rum would translate into popularity for Captain Morgan Gold.

21. Captain Morgan Gold (Cont’d) • Examined Wrong Problem • Marketing Research centered around evaluating the popularity of the Captain Morgan Rum brand and not discovering adult consumer needs and preferences • Mistake • Failed to examine what adult consumers are looking for in the ready to drink alcoholic beverage category • Focused on copying competitors

22. Avoiding Mistakes in Problem Definition • Effective Communication is a Must • Effective dialogue is critical for properly diagnosing any situation calling for the use of marketing research • Especially important when the purpose of research is to explore opportunities • The chances that a wrong or nonexistent problem will be researched are greatly increased when there is a lack of communication

23. Identifying Data Needs • Steps • Scrutinize the research purpose • List the types of data that will fulfill this purpose

24. Identifying Data Sources • Primary Data • Data obtained directly from consumer to fulfill a specific purpose • Secondary Data • Data that are readily available from other sources

25. Choosing the Appropriate Research Design • Exploratory Research: Used to gain initial insights and may pave the way for further research. • Conclusive Research: Used to verify insights and select appropriate course of action. Can be either descriptive or experimental.

26. Choosing the Appropriate Research Design (Cont’d) • Research Proposal • Serves as a blueprint for the execution of the product • Explains • Purpose and scope of the project • The specific design of the project • Sample design • Data collection procedures • The data analysis plan • The project timetable • The estimated cost of the project

27. Choosing the Appropriate Research Design (Cont’d) • Example Dialogue Questions • Why am I conducting this research? • How can I tell if my project has been a success? • When and where will data be collected? • Which pieces will be done internally and which will be done externally? • How will results be communicated in the organization? • Goal • Stimulate meaningful dialogue between the researcher and decision maker

28. Questions That Need to Be Answered by the Client/Marketing Researcher Team • Why am I conducting this research ? • How will I tell if my project has been a success ? • What method will be used ? • What questions will be asked ? • Who will be interviewed ? • How will you get contact information for potential respondents? • When and where data will be collected? • Which pieces will be done internally and which will be done externally? • What statistical analysis will be performed ? • How will the results be communicated in the organization?

29. Design the Research Instrument or Form • Relevant when you are using primary data • Interviews • Observation • The type of form used can seriously effect the nature and/or the quality of the data.

30. From where should the units come? Who or what type of units? How should the units be chosen? How many units? 30 Identifying the Sample

31. Collecting the Data • Interviewer-administered survey • Self-administered survey • Before data analysis there are two processes • Editing, or ensuring that the data is complete and correctly filled out • Coding, or transforming into a suitable form for analysis

32. Interrelationship Check • In order to create the data collection form, it is important to know what type of data the company or organization is planning to collect and what type of sample is being used

33. Analyzing Data and Interpreting Results • The types of data analysis used depend on the nature of the data • The nature of the data is determined by the type of data collection method used as well as other factors

34. External Providers of Marketing Research • Many organizations, even those with internal marketing departments, call on external research agencies. • The top 25 large marketing research firms account for 75% of the dollar spend on research services.

35. Factors to Consider in Deciding to Use External Suppliers • Credibility: perceived trustworthiness of the research and its findings • Competence: special capability or facilities and external research firm can provide • Cost: in some cases can be less costly to hire an external firm • Capacity: expand the capacity of the internal research department to meet immediate research needs

36. Exhibit 2.5 Criteria for Evaluating External Suppliers

37. Nickelodeon Wants to Know You • How does Nickelodeon get a kid’s view point about a TV Show? • Adopted a day-care center for testing new shows or new characters • Conducted marketing research on a weekly basis in a NJ school. Researchers quiz the kids on all aspects of their lives

38. Nickelodeon Wants to Know You (Cont’d) • How does Nickelodeon get a kid’s view point (cont’d)? • Children are given disposable cameras to record their activities in photos and words • Conducts focus groups with school-age viewers • What do you think about Nickelodeon’s research methods? Are there any ethical issues?

39. Code of Ethics • Marketing Research Ethics may be viewed as • Prohibiting selling or fundraising under the guise of conducting research • Maintaining research integrity by avoidance, misrepresentation, and omission of pertinent research data • Treating outside clients and suppliers fairly

40. Stakeholders of Basic Ethical and Business Principles • Research Suppliers • Field Service Firms • Research subjects or respondents • Clients • General public

41. Council for Marketing and Opinion Research - Respondent Bill of Rights

42. An Ethical Situation -You Decide • For instance, take a respondent’s right of privacy • Google’s new Gmail service • Went beyond traditional e-mail services by scanning mail for key words and then delivering advertising along with the messages

43. An Ethical Situation -You Decide (Cont’d) • Gmail is also storing subscribers e-mails even after they close their accounts • Google clearly spells out its policies for Gmail in the conditions for using the service section of the website • Do Gmail’s practices violate a consumer’s right to privacy?

44. An Ethical Situation -You Decide (Cont’d) • Does this notice cover Google’s ethical responsibility to its customers? • Do you feel that technological advances are eroding individual’s privacy?

45. Differing Interpretations of the Codes • A marketing researcher working on a project for a new client needs background information on competitive trends in the client’s industry. She contacts an advertising executive friend who formerly had the account of the client’s chief competitor. • How do you feel about the appropriateness of the data collection method as described in this scenario?