Global Marketing and World Trade

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C H A P T E R N I N E
TURNING MARKETING INFORMATION INTO ACTION
Irwin/McGraw-Hill
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AFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO

• Identify a five-step marketing research approach
  leading to marketing actions.
• Describe how secondary and primary data are used
  in marketing, including the uses of
  questionnaires, observations, experiments, and
  panels.
• Understand how information technology enables
  information systems to be used that link massive
  amounts of marketing information to meaningful
  marketing actions.
• Recognize alternative methods to forecast sales
  and use the lost-horse and linear trend
  extrapolation methods to make a simple forecast.

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PP9-AA Whats in a Movies Name?

• Three movies initial and ultimate titles
• Shoeless Joe became Field of Dreams
• Teenie Weenies became Honey, I Shrunk the Kids
• 3000 became Pretty Woman
• Is research on movie titles expensive? YES IT
  IS!!
• But, what is more expensive? A bad title that
  can kill a movie and cost a studio millions of
  dollars. Big budget films can cost as much as
  70 million.
• Market research has resulted in other types of
  changes to movies as well.

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PP9-1a Marketing Research Questions Asked in
Test Screenings of Movies and How They are Used

• POINT WHEN ASKED KEY QUESTIONS USE OF
  QUESTION(S)

Before the test screening

• How old are you?
• How frequently do
  you pay to see movies?
• What movies have you seen in the last 3 months?

Decide if person fits profile of target audience
for movie. If yes, invite to test screening. If
not, dont invite.
After the test screening

• What do you think of the title?
  What title would you suggest?
• Were any characters too distasteful? Who? How?

Change movie title. Change aspects of some
characters.
(continued)
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PP9-1b Marketing Research Questions Asked in
Test Screenings of Movies and How They are
Used (continued)

• POINT WHEN ASKED KEY QUESTIONS USE OF
  QUESTION(S)

• Did any scenes offend you? Which ones? How?
• How did you like the ending? If you didnt like
  it, how would you change it?
• Would you recommend the movie to a friend?

Change scenes. Change or clarify
ending. Overall indicator of liking and/or
satisfaction with movie.
After the test screening
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PP9-BB Definition of Marketing Research
Marketing Research is . . . .
the process of defining a marketing problem or
opportunity, systematically collecting and
analyzing information, and recommending actions
to improve an organizations marketing
activities.
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PP9-2 Five-Step Marketing Research
Approach Leading to Marketing Actions
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PP9-CC The Goal of Marketing Research

• Management is faced with many choices involving
  possible marketing actions. The goal of
  marketing research is to provide management with
  actionable information that will allow managers
  to make better decisions and ultimately reduce
  risk.

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PP9-DD Should Marketing Research be Undertaken?

• As indicated earlier, marketing research can be
  expensive. Management must balance the cost of
  doing or contracting for marketing research
  against the value of the information, the value
  of a better decision.
• A marketing research project might cost 50,000,
  but suppose its purpose is to evaluate the
  feasibility of a 20 million exhibition and
  convention center? In this case the involved
  parties cannot afford not to do marketing
  research.

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PP9-EE Concept Check

• 1. What is marketing research?
• 2. What are the five steps marketing
• research uses to help lead to
• marketing actions?

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PP9-FF Step 1 Defining the Problem -- Key Points

• Objectives are the goals the decision maker
  seeks to achieve in solving a problem.
• Measures of success are criteria or standards
  used in evaluating proposed solutions to a
  problem.
• One test of whether marketing research
  should be undertaken is if different
  outcomes will lead to different
  marketing actions.

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PP9-GG Step 2 Develop the Research Plan

• The second step in the marketing research
  process involves
• 1. Specifying the constraints on the research
  activity,
• 2. Identifying the data needed for marketing
  actions, and
• 3. Determining how to collect the data.

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PP9-HH Constraints

• The constraints in a decision are restrictions
  placed on potential solutions by the nature and
  importance of the problem.
• Common constraints in marketing problems are
  limitations on time and money available to solve
  the problem.

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PP9-IIa Data Collection

• Methods are approaches that can be used to
  collect data to solve all or part of a problem.
• One method of collecting data in by sampling.
  There are two basic ways of sampling from a
  population
• 1. Probability sampling involves using precise
  rules to select the sample such that each
  element of the population has a specific known
  chance of being selected. Probability samples
  can be very representative of a particular
  population.

(continued)
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PP9-IIb Data Collection

• 2. Nonprobability samples may be used when
  time and budget are limited. They use
  arbitrary judgments to select the sample. With
  this method it is not known how representative
  a population might be.

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PP9-A Kinds of Samples Used in Marketing Research
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PP9-JJ Concept Check

• 1. How do research objectives relate to
  marketing actions?
• 2. What does constraints mean?
• 3. What is the difference between concepts
  and methods?

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PP93 Types of marketing information

• Internal data (inside the firm)
• Financial statements, researchreports files,
  customer letters,sales call reports,
  andcustomer lists

• Secondary data
• Facts and Figures
• Already recordedprior to the project

• External data (outside the firm)
• U.S. Census reports, tradeassociation studies,
  and magazines, business periodicals,and
  commercial reports

• Data
• Facts and figurespertinent to theproblem

• Observational data
• (watching people)
• Mechanical and electronicapproaches
• Personal approaches

• Primary data
• Facts and Figures
• Newly collected forthe project

• Questionnaire data
• (asking people)
• Idea generation through in-depthinterviews and
  focus groups
• Idea evaluation through mail,telephone, and
  personal surveys

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PP9-KK Concept Check

• 1. What are methods?
• 2. What is the difference between
• secondary and primary data?
• 3. What are some advantages and
• disadvantages of U.S. Census of
• Population data?

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PP94 Nielsen Ratings of the Top 10 National
Television Programs from February 2, 1999
through February 7, 1999
NIELSEN RATING
RANK
PROGRAM
NETWORK
1 2 3 4 5 6 7 8 9 10
ER Frasier Friends NBC Sunday Night Movie (The
60s Pt. 1) 60 Minutes Touched by an
Angel Veronicas Closet Jesse Dateline
NBC-MON CBS Sunday Night Movie (Night Ride Home)
NBC NBC NBC NBC CBS CBS NBC NBC NBC CBS
20.3 17.0 16.9 15.1 14.8 14.7 14.1 13.5 13.0 12.3
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PP9-LL Questionnaire Data

• Questionnaire data are facts and figures
  obtained by asking people about their attitudes,
  awareness, intentions and behaviors.
• Because so many questions
  might be asked in questionnaires,
  it is essential that
  the researcher concentrate on
  those directly
  related to the marketing problem
  at hand.

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PP9B The two stages in a marketing research
study
Hypothesis generation stage Purpose uncover
ideas to test in idea evaluation stage Typical
methods one-on-one conversations, focus groups,
brainstorming sessions using small samples Kind
of questions used open-end How results are
analyzedqualitative analysis
Hypothesis evaluation stage Purpose test ideas
discovered in hypothesis generation stage to
recommend marketing actions Typical methods
mail, telephone, and personal interviews using
large samples Kind of questions used fixed
alternative How results are analyzedqualitative
analysis
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PP9-MM Hypothesis Generation Studies

• Marketing studies for hypothesis generation
  involve a search for ideas that can be
  evaluated in later research. Two methods of
  collecting data for such studies are
• 1. Individual interviews
• 2. Focus groups

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PP9-C Comparison of mail, telephone, and
personal interview surveys
Basis of Comparison Cost per completed
survey Ability to probe and ask complex
questions Opportunity for interviewer to bias
results Anonymity given respondent
Mail, Internet, andFaxSurveys Usually the least
expensive, assuming adequate return rate Little,
since self-administered format must be short and
simple None, since form is completed without
interviewer Complete, since no signature is needed
Telephone Surveys Moderately ex- pensive,
assuming reasonable completion rate Some, since
interviewer can probe and elaborate on
questions Some, because of voice inflection of
interviewer Some, because of telephone contact
Personal Interview Surveys Most expensive because
of interviewers time and travel expenses Much,
since interviewer can show visuals, probe,
establish rapport Significant, because of voice
and facial expressions of interviewer Little,
because of face-to-face contact
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PP9-D How Ethical is This Claim in an Ad That Is
Based on a Survey of Doctors?
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PP95a Typical Problems in Wording Questions
PROBLEM
SAMPLE QUESTION
EXPLANATION
Leading question Ambiguous
question Unanswerable question Two questions
in one
Consumer is led to make statement favoring
Wendys hamburgers What is meant by word
regularly-once a day, once a month, or what? Who
can remember the answer? Does it matter? How do
you answer if you eat Wendys hamburgers but not
chili?
Why do you like Wendys fresh meat hamburgers
better than those of competitors made with
frozen meat? Do you eat at fast-food restaurants
regularly? Yes No What was the occasion
for your eating your first hamburger? Do you eat
Wendys hamburgers and chili? Yes No
(continued)
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PP95b Typical Problems in Wording Questions
(continued)
PROBLEM
SAMPLE QUESTION
EXPLANATION
Nonexhaustive question Nonmutually exclusive
answers
Where do you live? At home In
dormitory What is your age? Under 20 20-40
40 and over
What do you check if you live in an
apartment? What answer does a 40-year old
check?
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PP96a Sample Questions from Wendys Survey
1. What things are most important to you when
you decide to eat out and go to a
restaurant?
2. Have you eaten fast-food restaurant food in
the past three months? Yes No
3. If you answered yes to Question 2, how
often do you eat fast food? Once a
week or more Two or three times a month
Once a month or less
(continued)
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PP96b Sample Questions from Wendys Survey
(continued)
4. How important is it to you that a fast-food
restaurant satisfy you on the following
characteristics? Check the box that describes
your feelings.
SOME- WHAT IMPOR- TANT
SOME- WHAT UNIMPOR - TANT
UN- IMPOR- TANT
VERY UNIMPOR- TANT
VERY IMPOR- TANT
CHARAC- TERISTIC
IMPOR- TANT
Taste of food Cleanliness Price Variety on menu









5. Check the space on the scale below that
describes how you feel about Wendys on the
characteristics shown.
CHARACTERISTIC
CHECK THE SPACE DESCRIBING HOW WENDYS IS
Not Tasty Dirty Expensive Narrow
Taste of food Cleanliness Price Variety on menu
Tasty Clean Inexpensive Wide
-------------------- -------------------- --------
------------ --------------------
(continued)
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PP96c Sample Questions from Wendys Survey
(continued)
6. Check the box that describes your agreement
with the statement.
STRONGLY AGREE
DONT KNOW
STRONGLY DISAGREE
STATEMENT
AGREE
DISAGREE
Adults like to take their families to fast- food
restaurants. Our children have a say in where
the family eats.





7. How important is this information about
fast-food restaurants?
VERY IMPORTANT SOURCE
SOMEWHAT IMPORTANT SOURCE
NOT AN IMPORTANT SOURCE
SOURCE OF INFORMATION







Television Newspapers Billboards Mail
(continued)
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PP96d Sample Questions from Wendys Survey
(continued)
8. In the past three months, how often have you
eaten at each of these three fast-food
restaurants?
ONCE A WEEK OR MORE
TWO OR THREE TIMES A MONTH
ONCE A MONTH OR LESS
RESTAURANT








Burger King McDonalds Wendys
9. Please answer the following questions about
you and your household. a Are you Male
Female b Are you Single Married
Other (widowed, divorced) c How many
children under the age of 18 live in your home?
0 1 2 3 4
5 or more d What is your age?
24 or under 25-39 40 or over e What is
your approximate total annual household income?
Less than 15,000 15,000-30,000
More than 30,000
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PP9-NN Concept Check

• 1. A mail questionnaire asks you, Do you eat
  pizza? What kind of question is this?
• 2. Does a mail, telephone, or personal interview
  survey provide the greatest flexibility for
  asking probing questions?
• 3. What is the difference between a panel and an
  experiment?

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PP9-OO Information Technology

• Information technology involves designing and
  managing computer
  and communication
  networks to provide
  an information system
  to satisfy an organizations
  needs for data storage, processing, and access.
  

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PP9-7 How Marketing Researchers Managers Use
Information Technology to Turn Information into
Action
Customer orders customer characteristics inve
ntory sales calls promotions
Computer and communication network Databases inter
nal external
Trade associations U.S. Census Internet Single
source services
Models to analyze, organize interpret, and
present data
Queries - who buys? - how much? -
why?
Results
Marketing researcher or manager at desktop
computer
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PP9-PP Step 4 Develop Findings and
Recommendations

• Analyze Findings
• Present Findings
• Make Recommendations

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PP9-QQ Step 5 Take Marketing Actions

• Implement the Recommendations Putting the
  research results into action is critical, or the
  research was a waste of time.
• Evaluate the Results
• - Evaluate the Decision Itself
• - Evaluate the Decision Process Used

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PP9-RR Concept Check

• 1. In querying an information system, give an
  example of a question that might be answered
  directly from the data in the system versus a
  question that would need some kind of a model to
  obtain an answer.
• 2. In marketing research, what is the
  difference between developing findings and
  recommendations and taking marketing actions?

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PP9-SS Market Sales Forecasting

• Market or Industry Potential
• Sales or Company Forecast

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PP9-TT Two Basic Approaches to Forecasting
Top-Down Forecast Buildup Forecast
TOP-DOWN
BUILDUP
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PP9-8 U.S. Population, Effective Buying Income,
and Retail Sales for Selected States, 1998
1998
Regional State Summaries of.. POPULATION
EFFECTIVE BUYING RETAIL SALES
INCOME 1997 1998
Total Total 1997
Retail Region/ Pop. of
Total EBI of Sales of
State (000) U.S. (000)
U.S. (000) U.S. Middle Atlantic
38,320.0 14.1793 684,011,632 15.5457
337,080,731 31.2381 New Jersey 8,078.3
2.9892 160,134,925 3.6394 78,290,968
3.0747 New York 18,197.6 6.7335
315,102,328 7.1614 142,486,171 5.5958
Pennsylvania 12,044.2 4.4566 208,774,378
4.7449 116,303,502 4.5676
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PP9-9 Buildup Approach to a Two-Year Sales
Forecast for Boeings Aerospace Department
Forecast of total sales
6
5
Estimated sales from
4
new business proposals
Estimated sales from
3
follow-up work
2
Estimated sales from
1
work under contract
0
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Year 1
Year 2
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PP9-UU Specific Sales Forecasting Techniques
Judgments of the Decision Maker direct
forecast lost-horse forecast Survey of
Knowledgeable Groups survey of buyers
intentions forecast salesforce survey
forecast jury of executive opinion
forecast survey of experts forecast Statistical
Methods Trend Extrapolation
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PP9-10 Linear Trend Extrapolation of Sales
Revenues of Xerox, Made at the Start of 1995
26
24
Actual values
22
available before
forecast is made
20
Linear trend
18
extrapolation
16
forecast
14
Sales revenue ( billions)
Actual values
12
after forecast
is made
10
8
Forecast
6
4
Actual
2
0
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
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PP9-VV Concept Check

• 1. What is the difference between the top-down
  and buildup approaches to forecasting sales?
• 2. How do you make a lost-horse forecast?
• 3. What is linear trend extrapolation?