Marketing Management Market Research and Market Intelligence

1. Marketing ManagementMarket Research andMarket Intelligence Paul Dishman, Ph.D. Department of Business Management Marriott School of Management Brigham Young University Lecture 6

2. Two Types • Market Research • Charles Parlin’s Garbage • Market Information System

3. Market Research in the News …The work is painstaking, even for someone like Mr. Thoma, who makes espresso at his desk rather than drink the cafeteria brew. The 54-year-old acoustics engineer is still smoldering with frustration about turn signals. Like a lot of drivers, he found that tick-tick-tick of his car's turn signal a bit annoying, especially when sitting at a long stop light. A passionate piano player, he figured a few bars from a Brahms symphony would sound nice. Trouble was, a test group of potential customers at a private country club in Duesseldorf got sick of the music. Undaunted, Mr. Thoma asked what they thought of notes going up and down the scale. No, thank you. How about the thunk-thunk of an English grandfather clock? Not bad, all agreed, but when sped up to match the legally mandated pace of the blinking turn signals, it sounded like a cheap wristwatch. Source: Wall Street Journal 1/24/02

4. More Market Research in the News “P&G Keeps Focus Groupies of Cincinnati Busy as Guinea Pigs in Product Studies” …Ms. Geil is one of 105 subjects in a test to see how sensitive skin reacts to a product ingredient whose identity she doesn't know. She will be paid $55 for wearing patches, replaced every other day, for seven days. In the past week, she has also given her opinion of a facial moisturizer in a questionnaire, while her sons, Joseph, 17, and Andrew, 15, tested Old Spice gel in the shower each morning, and ate granola bars in a taste test one day after school. Ms. Geil figures that for the past 17 years she has participated in about one study a month, ranging from focus groups to taste tests to swabs on her face, hands, legs and back. "It's almost part of our daily routine, doing some kind of market research," says the 46-year-old Cincinnati native. She remembers her mother testing detergent for cloth diapers when her younger sister was born in 1960. Source: Wall Street journal 1/24/02

5. Steps in the MR Process • Problem Identification • Data Decision(s) • Budget • Data Collection Methodology • Analysis • Reporting • Action

6. Problem Identification ? • What is the Management Decision? • Problems vs. Symptoms • (What are political ramifications?) • Research Objective? • Exploratory • problem definition, suggest hypothesis, “What is problem environment” • Descriptive • describe market potential, customer demographics, customer attitude, etc • Causal/Experimental • Test hypothesis about cause/effect relationship

7. Research Objective? • You’ve just launched a successful new piece of exercise equipment that has been selling extremely well on QVC. You are ready to approach either K-Mart or SportMart about distributing your product, but you feel that you must first gain an understanding of your who it is that has been buying your product. • You work for a large snack-foods company. Your key sugar supplier’s sugar crop was devastated by a hurricane. He has been forced to drastically raise his prices. You must decide whether to pass the price increase on to your customers. You realize that you need data on the impact of price increases on sales volume. • Research scientists at the chemical company you work for have discovered a new paint that changes color depending on the angle from which it is viewed. As CEO, you would like to grow your business by capitalizing on this invention, but you have no idea as to who your competitors are or what might be appropriate applications for the new paint.

8. Data Decisions • What type of data do you need to collect? • Secondary vs. Primary • Qualitative • Focus Groups, Personal Interviews • Quantitative • Instruments (questionnaire) – close v. open • Mechanical Instruments (Smith’s)

9. Discussion • Name the type of research that would be appropriate in the following situations and explain why: • - Kellog wants to investigate the impact of young children on their parents’ decision to buy breakfast food • - The BYU Bookstore wants to know how students would feels about adding a new “Computer Corner” in the bookstore, staffed by Dell Computer personnel • - McDonalds is considering where to locate a new outlet in a fast-growing suburb. • - Gillette wants to determine whether a new line of deodorant for teenagers will be profitable - BYU is thinking about developing a new study abroad program and wants to gauge student interest in and willingness to pay for the program

10. Sampling Issues • Census vs. Sampling • Sampling size - the larger the better • Probability • random, cluster, stratified • Nonprobability • quota, judgment, convenience • Sample error

11. non-parametric statistical tests parametric statistical tests Types of Quantitative Data • Data Types • Nominal – Frequencies, Cross tabs • Ordinal – Ranking • Interval – Multivariate Analysis • Ratio – Absolute zero

12. Data Strength • Validity • Collect the right type of information from the respondent • Reliability • Collect the information with high degree of accuracy, free of bias • Representativeness • Collect the information from a representative sample of the population

13. Budgeting • Cost/Benefit Ratio • Decisions: • Methodology • Design • In-house vs. subcontract

14. Data Collection Methodology • Instrumentation Decisions • Telephone • Mail • Personal Interview • Internet • Focus Group • Electronic Instrumentation • Test Marketing • Instrumentation Issues • Question design, non-responsiveness, acquiescence, response error

15. The Six Thinking HatsEdward De Bono How do you get customers to be creative, and stop being persistently negative or positive? The six thinking hats is a questioning approach to get customers to be creative in seeing the total picture (positive, negative, opportunities, and potential problems) when developing and discussing new products or ideas. 1. White Hatthe information gathering hat. The focus is on what we know about a given product, service or idea. 2. Yellow Hatis the cheerful hat. The yellow hat focuses on what works now--the benefits, feasibility and value of present ideas. 3. Black Hatis for critical judgment. The black hat focuses on why things simply don’t work. 4. Green Hatis for creative thinking and new ideas. The green hat focuses on how things can be done better and emphasizes additional alternatives and suggestions--could we do things in a different way? 5. Red Hatis the emotional hat. It focuses on feelings, intuitions, and emotions. 6. Blue Hatis for process control. The blue hat asks for summaries, conclusions, and decisions.

16. Analysis • Qualitative • Contextual • Quantitative • Statistical • Parametric • Nonparametric

17. Reporting • Recommendation must match management decision • How does audience want to receive information? (Report format) • Archiving

18. Action • MR should be involved in management decision to the extent possible

19. Marketing Information Systems • Good liaison with developers • Timeliness of data • Format of data • How can better information/intelligence make us more profitable/competitive?

20. Competitive Intelligence • How to keep an eye on environmental changes and make you more competitive…