Exploring Marketing Research

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Exploring Marketing Research

• Chapter 1
• The Role of
• Marketing Research

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The Marketing Process Occurs in a, Dynamic
Uncontrollable Environment
Competitive Economic Political
4 Ps
Legal Regulatory Technological
Sociocultural
Focus Interpret the environments influencing
product demand
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Marketing management is the process of

• Interpreting the external environment (the
  firms and the prospects)
• To develop internal strategy and tactics
• (by allocating company resources to
• alternative marketing mixes directed at
• satisfying the wants of targeted audiences)
• To influence the level of brand demand
• To achieve organizational objectives (profit)

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..information is the interpretation link among
environmental events, company resources,
customers.
Lack of Direction
WHICH ADVERSELYAFFECTS COMPANYPER- FORMANCE
POOR ANALYSIS MAY LEAD TO
Missed Opportunities
Legislative Violations
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Research supports planning, organizing control
efforts to understand marketplace reaction to
company efforts

• The value equation research links the producer
  and customer to the market through information.

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Marketing Management
Consumer Needs Wants
Information Gaps
Information gaps (actual vs. desired data)
create the need for research to reduce
uncertainty.

• - Product - demographics
• - Price - attitudes
• - Promotion - Reference
• - Distribution Groups
• - Problem
• Solving

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Information GAP Examples

• - 2/3 of Americans stop at a convenience store
  once a week.
• - Only about 13 of leftovers carried home in
  doggie bags actually goes to the dogs.
• - Americans spend 15 times more on gambling than
  they give to churches.

WELCOME TO S-MART
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Factors that Intensify Information Gaps

• Local to National to International Markets
• Basic needs to Wants
• Price to Non Price Focus
• Intense Competition
• Marketing mix effects (fine tuning)
• New Technology (innovation)
• Government Regulations
• Cost of Mistakes

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A Systems View Research
Economics
Social Culture
Personnel
Political Legal
Top Mgmt
Acctg.
Marketing 4 Ps
Organization Consumer Wants
Finance
Technology
Legal
R D
Research
Production
Monopoly Pure Competition
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A Systems View

• The integration of functional subsets such as
  finance, production, marketing etc., to operate
  as one unit, a system.
• Avoid inverting the end with the means.

Research is a means to an end
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Isolation of functions
A systems view
(Walls)
(Cross functionality)
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Advantages of the Systems Approach

• A methodical, systematic analysis
• Quicker problem recognition
• Synergism
• Avoids sub optimization (a
  box mentality with walls)

Importance Grasping the structure of a subject
is understanding it in away that permits many
other things to be related to it meaningfully. To
learn structure is to learn how things are
related (J. Bruner,1960,DIC,USA)
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Marketing Research is . . .

• The systematic objective process of generating
  information for use in marketing decisions.

The Australian Market is set for growth.
Frame of Reference Myth Busting

• It aint the things we dont know that gets us
  in trouble. Its the things we know that aint
  so.
• Artemus Ward

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Scientific Method - The analysis interpretation
of empirical evidence (facts from observation or
experimentation) to confirm or disprove prior
ideas.
Prior Knowledge (literature review)
Controlled Observation
Hypotheses (Relationships among variables)
Statistical Tests
Results (New Information)
Predictive in nature
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The Scientific Method calls for a Theoretical
Framework

• facts become meaningful, understandable, and
  render an explanation through the theoretical
  framework surrounding the problem area understudy

I touched all the bases just like the old man
wanted, but(SOB) I missed home plate!
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Characteristics of the Scientific Method

• Systematic (controlled observation)
• Unbiased (impersonal)
• Timely
• Accurate (Validity)
• Credible (Ethical)
• ex. NYT, WSJ
• Predictive in nature

SCIENTIFIC METHOD
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Limitations of the Scientific Method

• Emotional Involvement
  (of subjects and/or researcher)
• Non precise measurements
• Time pressure for results
• Complexity of human behavior
• Costs my not exceed benefits

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Basic Research attempts to expand the limits of
knowledge
Basic Applied Research

• Not directly involved in the solution to a
  pragmatic problem
• Example Do consumers experience cognitive
  dissonance in low-involvement situations?

Applied Research - conducted about a specific
real-life problem

• Should McDonalds add Italian pasta to its menu?

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U.S. RD Spending

• Japan and Germany have spent more of their
  gross domestic product on RD than the U.S.
  (2002)
• - Japan 2.8
• - Germany 2.5
• - U.S. 2
• The U.S. is still the biggest spender in
  science and technology it does 44 of all the
  research in the world

( of GDP vs. absolute )
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R D Spending

• 2001 2005
• Industry 69 61
• Federal Government
  .. 26 38
  
• Non Profit/ 5 1 Academic

• 2005 Trend Outsourcing RD to Asia Europe.
  Reasons Shortage of qualified researchers,
  Not lower costs.

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Research Development Spending

• (Booz, Allen Hamilton) Percent of Sales by
  Industry

11.5
407 bil in 2005 among top 1000 firms
Health
11
Software internet
7.5
Computing Electronics
Money does not buy effective innovation
4.0
Aerospace Defense
4.0
Technology
94 firms outperformed peers while spending less
on RD
3.9
Auto
2.2
Industrials
2.0
Consumer
1.5
Telecom
Paying for Innovation, WSJ, 13Nov06,B3
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ASIAN Countries forge ahead
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Research Activities of American Firms

• Percent of Firms Doing Research

97
Market Potential
97
Market Share
92
Sales Analysis
89
Sales Forecasting
83
Pricing Studies
76
New Prod. Acceptance
58
Sales Promotion
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Social Value
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Ecological Impact
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Research Supports the Marketing Concept
Marketing Concept
Needed Ethical Conduct
(GE 1954)
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Evidence of a weak Consumer Orientation ? . . .
Maybe

• Most companies are so concerned about making a
  profit, they do not care about quality.- 70
  agree.
• 63 wanted to complain about a product last
  year.

Marketing Concept Limitations

• MISMANAGEMENT
• LACK OF TOP MANAGEMENT COMMITMENT to a market
  orientation (MARKETING MANIA)
• THEORY X - THEORY Y, POWER STRUGGLES

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The Corporate Vision

• In THEORY- a consumer orientation
• In REALITY- absence of a customer orientation
  
• The vision
  should be
• refocused because
  . . . . .

Customers will take actions to meet their
own needs
Just as companies operate to meet
the organizations needs
A consumer orientation calls for an intelligence
system to discover customers needs and
to create satisfying products -Continuity with
customers to build continuous exchanges
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Marketing Concept LimitationsEthical Issues
Product Issues
Pricing Issues
Customers
Distribution Issues
Promotion Issues

• RELATIONSHIP MARKETINGdevelop a L-T relationship
  with parties who contribute to the companys
  success. (value satisfaction)

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Total Quality Management (TQM)

• A philosophy on integrating uniform commitment to
  customer-driven quality throughout the
  organization (Develop a quality driven culture)

• Benchmarking- Comparing the quality of the firms
  products with that of the best-performing
  competitors

Corporate Culture Carl Icahn, corporate raider
Most company management is mediocre. CEOs are
survivors, they fear 2. (lean
bureaucratic, risk takingavoidance) Source
CNBC,22May2002.
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• Empowerment- Giving customer-contact employees
  authority to make decisions on their own
  

• Control continuously improve performance
  standards.. adjust (reduce/eliminate
  desired-actual performance gaps)

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TQM The Deadly Sins

• Lack of constancy of purpose throughout the
  organization.
• Emphasis on short term profits and short time
  thinking
• Evaluation of performance, merit ratings, or
  annual reviews
• Mobility of management (job hopping)
• Excessive medical costs and costs of liability

(Deming,1986,Chapter 3)
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Evolution of Managerial Philosophies
Marketing Era
Sales Era
1980s
Production Era
1950s
Societal Era
Industrial Revolution
Mid-1920s
1990s
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The Societal Marketing Concept

• Act socially responsibly consider
• the ethical consequences of ones actions
• Consider the collective L-R needs of society as
  well as customer desires and the organizations
  profits. (Bell Emory,1971 JM)
  

Capitalism?

• Society.. 1 (Human welfare)
• Consumers ..2 (Want satisfaction)
• Company .3 (Profits)

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Applied Research
Stages in Developing a Marketing Strategy
(a) Identify Evaluate Opportunities
Ex. Decline in home cooking with rise in
precooked home replacement meals.
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(b) Analyze Market Segments and Select Target
Markets
Stages in Developing and Implementing a Marketing
Strategy

• Research Examples
• MTV, monitoring demographic trends, learns the
  Hispanic audience is growing rapidly
• Sears learns women, age 25-54 with average
  household income of 38,000, are core customers.
  Targets this market with softer side of Sears.

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(c) Implement the Marketing Mix (4Ps)

• A creative process to establish a competitive
  advantage.

• Begins with the Target Market Needs/wants

• Price Safeway does a competitive pricing
  analysis
• Distribution Caterpillar Tractor Co.
  investigates dealer service program
• Product Oreo conducts taste test, Oreo cookie
  vs. Chips Ahoy
• Promotion How many consumers like Always Coca
  Cola! slogan?

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Looking at 2001
(d) Analyze Performance

• Research that regularly provides feedback for
  evaluation and control. Ex. Compare trends

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(d) Analyzing Performance, an example
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The Strategic Marketing Process
Execute the plan
Control set performance standards, evaluate the
results reduce any gaps
Theory
Reality
Desired Performance
Actual Performance
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Determining When to Conduct Marketing Research
Availability of Data
Benefits vs. Costs
Time Constraints
Nature of Decision
Is sufficient time available?
Information already on hand inadequate?
Is the decision of strategic or tactical
importance?
Does the information value exceed the cost?
Conduct Marketing Research
Yes
Yes
Yes
Yes
No
No
No
No
Do Not Conduct Marketing Research
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Potential Value of Research Estimated Benefit -
Costs

• Costs
• Research expenditures
• Time Delay of decision possible disclosure of
  information to rivals
• Possible errors (mistakes doubts))

• Value
• Decreased risk (uncertainty)
• Increased confidence likelihood of a correct
  decision
• Improved marketing information, performance
  profit

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Global Research

• Marketing Research is increasingly global about
  country economic and political conditions.
• Information about consumer demand and competition
  is essential
• A.C. Nielsen - more than 60 is
  international business
• 1 www.vnu 13 www.harrisinteractive.com
• 17 www.opinionresearch.com

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Global Research, An example
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Bacardi Rum in China
Applied Marketing
Chinese Puzzle Spotty Consumer Data

• The total market is featured by uncertainty
  vagueness, a major challenge to companies.
• Market data comes in pieces due in part to the
  huge market of 1.3 billion consumers

• A research agency provided spotty data.
• If it believed one set of data, Bacardis market
  entry would be as a hard liquor.
• The other set of data showed that Bacardi should
  launch premixed bottles to appeal to beer
  drinkers.

WSJ, October 15, 2003, by Gabriel Khan
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Estimating Chinas Market
2002 Soft drink consumption in liters

• Euromonitor International Coca-Cola Co.
  Discrepancy (41 of
  estimated market)

23 billion 39 billion
16 billion (or 4.16
bil. gallons)
LOreal

• 107 million sales in 2002, a 63 increase over
  prior year.
• Complains that limitations of data from
  research firms complicates efforts to figure out
  the size of the total market its precise market
  share.

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The TV Advertising Market

• CSM, a TV ratings agency, says the TV-ad market
  is 2.8 billion/year
• Nielson Media Res. says 7.5 billion
• Discrepancy of 4.7 billion or 63

• Decisions about placing millions of
  ad dollars are left to guessing.
• R. Kong, an accounting manager at media buying
  firm Starcom Media Vest admits We dont have
  sufficient data. -- To tackle the information
  gap, if we think the economic-development level
  in one city is similar to another one and the
  dialect is similar, we use one city to benchmark
  another.

Starcom
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The Chinese market

• In 1989, China began to allow foreign companies
  to collect consumer data.
• Before that, Beijing thought market research was
  a mild form of spying.
• Opinion polls are screened by authorities.
• No questions about politics and sex are asked.

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The Chinese Market

• Foreign based consumer-goods companies feel that
  the data received in major cities is more
  accurate and up-to-date compared to the data from
  the countryside.
• An acceptable margin of error in cities is about
  3-5, in the countryside, it is in the double
  digits, and clients are cautioned not to use the
  data.
• But, companies are now pressured to push into the
  country side in search of growth.

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Research Issues

• Spotty research agency data means burning money
  as poor data clouds marketing decisions.
• Market tracking the analysis of trends in
  industry volume and brand share over time such as
  market penetration growth. (benchmarking)
• Simple random sampling a sampling procedure
  that assures each element in the population has
  an equal chance of being included in the sample.
  (representative)
• Systematic error error resulting from some
  imperfect aspect of research design, such as
  mistakes in sample selection, sampling frame
  error, or non responses.