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Chapter 4. Managing Marketing Information. The Importance of Marketing Information. Companies need information about their customer needs, marketing environment, and competition.
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Chapter 4 Managing Marketing Information
The Importance of Marketing Information • Companies need information about their customer needs, marketing environment, and competition. • Managers lose as much as 3 hours a day looking for the right information, costing U.S. companies more than $2.5 billion annually. • Marketing managers do not need more information, they need better information.
Developing Marketing Information • Internal Databases: Electronic collections of information obtained from data sources within the company. • Marketing Intelligence: Systematic collection and analysis of publicly available information about competitors and developments in the marketing environment. • Marketing Research: Systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.
Internal Databases • The order-to-payment cycle • Sales information system, e.g. 7-11, 鼎泰豐. • Databases, data warehouses, and data mining, e.g. Coca-Cola’s Georgia coffee.
Internal Databases • Financial services provider USSA uses its extensive database to tailor marketing offers to the specific needs to individual customers, resulting in greater than 96% customer retention.
Marketing Intelligence • Procter & Gamble admitted to “dumpster diving” at rival Unilever’s Helene Curtis headquarters. When P&G’s top management learned of the questionable practice, it stopped the project, voluntarily informed Unilever, and set up talks to right whatever competitive wrongs had been done.
Discussion Question How can the sales force of a company be utilized as part of the company’s marketing intelligence system?
Define the Problem and Research Objectives • Exploratory research: to shed light on the real nature of the problem and to suggest possible solutions or new ideas. • Descriptive research: to ascertain certain magnitudes. • Causal research: to test a cause-and-effect relationship.
Develop the Research Plan • Data Source • Research Approaches • Research Instruments • Sampling Plan • Contact Methods
Data Source • Secondary Data: the data that were collected for another purpose and already exist somewhere. • Primary Data: the data that are freshly gathered for a specific purpose or for a specific research project.
Source of Secondary Data • Internal Sources • Government Publication, e.g. United Nations, 行政院主計處. • Periodical and Books, e.g. 天下, 財訊, 商業週刊. • Commercial Data, e.g. A. C. Nielsen. • Online Data, e.g. AMA, Bloomberg, Google, TSEC, CEOExpress.
Research Approaches- Source of Primary Data • Observation research (觀察法) • Focus-group research (焦點群體法、集體訪談法、深入訪談法) • Survey research (調查法) • Behavioral data (行為資料) • Experimental research (實驗研究) • Online marketing research
Observation Research • Gathering data by observing the relevant actors and settings. • Example: Does the number of people who are behind you in a line affect your waiting patience?
Observation Research • People heavily shopped the periphery of the store (80%) but frequently circumvented the core dry-goods section (13~30%) that takes up the bulk of store space. • Many shoppers are “dippers”. • P&G found that sales rose sharply when items like coffee (↑500%) and toothpaste (↑119%) were placed outside their normal aisles on display racks.
Observational Research Fisher-Price set up an observation lab in which it could observe the reactions of little tots to new toys.
Ethnographic Research • Observe consumers in their “natural environments.” • Examples: Sunbeam’s Coleman Grill; OnceFamous.
OnceFamous • A unique ethnographic laboratory for studying consumer behavior in a natural setting. • Some interesting results: man (e.g. Brookstone, Sharper Image) vs. woman (e.g. Pottery Barn); cool colors vs. warm colors; turn left vs. turn right.
Panel Study • Purchase diary study, e.g. NPD (National Purchase Diary Panel). • Media study, e.g. Nielsen’s people meters. • On-line research panel, e.g. MediaMetrix.
Focus Group Research • A focus group is a gathering of 6 to 10 people who are invited to spend a few hours with a skilled moderator to discuss a product, service, organization, or other marketing entity. • Useful exploratory step • Avoid generalizing the reported feelings of the focus-group participants to the whole market.
Survey Research • Learn about people’s knowledge, beliefs, preferences, and satisfaction, and to measure these magnitudes in the general population. • Best suited for descriptive research • Major advantage – flexibility, e.g. Bissell’s Steam’n Clean. • Limitations – subject’s language, privacy, incapability, boasting, or cooperation.
Behavioral Data • Customers’ actual purchases reflect preferences and often are more reliable than statements they offer to market researchers. • Database marketing • market-basket analysis (市場菜籃分析), e.g. Walmart → diaper + beer; 7-11 (POS) → 蕎麥麵+ 納豆. • customer profiling (顧客剖面分析)
Experimental Research • Capture cause-and-effect relationship by eliminating competing explanations of the observed findings. • Most scientifically valid research • E.g. test marketing.
Online Marketing Research • Online research now accounts for 8% of all spending on quantitative. • Pros: low cost, access to respondents, speed, and anonymity. • Cons: • Hard to control who’s in the sample. • Lack the dynamics of more personal approaches. • Consumer privacy.
Research Instruments • Questionnaires: flexibility, the most common instrument used to collect primary data. • Closed-end: easy to interpret and tabulate. • Open-end: more information; suited for explanatory research. • Psychological tools: laddering techniques, depth interviews, ZMET. • Mechanical devices
Mechanical Devices • Mechanical Devices: • People Meters • Supermarket Scanners • Galvanometer • Eye Cameras
Galvanometer • Sensitive to affective stimulation • May present a picture of attention • May measure long-term recall • Useful in measuring effectiveness
Using Eye Cameras to Test Banner Ads • Many Internet users largely ignore banner ads. • Static banner ads elicited no reactions in the traditional physiological measures and animated ads elicited a mild response, with both types being less effective than television advertising. • Viewer’s eyes first went to the text on the news sites, ignoring graphics and ads, but they later viewed as many as 45% of the banners – thought only for an average of 1 second.
Sampling Plan • Sampling units: Who is to be surveyed? • Sampling size: How many people should be surveyed? • Sampling procedure: How should the respondents be chosen?
Discussion Question Can you think of a situation where a nonprobability based sample would yield better results than a probability based sample?
Contact Methods • Mail: not biased or distorted by interviewers, simple and clearly worded question, low response rate. • Telephone: quick, interactive, higher response rate than mail. • Personal interview: most versatile, expensive and require more administrative planning and supervision. • Online interview: convenient.
Interpreting and Reporting Findings • Managers should not blindly accepts faulty interpretations from the researcher. • Managers may be biased – they might tend to accept research results that show what they expected and to reject those that they did not expect or hope for.
The Failure of New Coke • Why did Coca-Cola introduce New Coke? • In the early 1980s, Coke was slowly losing market share to Pepsi. • Pepsi had successfully mounted the “Pepsi Challenge”, a series of televised taste tests showing that consumers preferred the sweeter taste of Pepsi. • By early 1985, Pepsi led in share of supermarket sale by 2% (2% amounts to almost 1.2 billion in retail sales!)
The Failure of New Coke • What did Coca-Cola do before introducing New Coke? • It spent more than 2 years and $4 million on research. • It conducted some 200,000 taste tests – 30,000 on the final formula alone. • In blind test, 60% of consumers chose the new Coke over the old, and 52% chose it over Pepsi.
The Failure of New Coke • Why did New Coke fail? • It took no account of the intangibles – Coke’s name, history, packaging, cultural heritage, and image. • It used poor judgment in interpreting the research and planning strategies around it.
