Chapter 1 The Nature and Scope of Marketing Research

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Chapter Objectives
Identify the role of marketing research in strategic decision making Define the process of marketing research Identify the three principles for generating information useful to managers Explain why marketing research requires analysis and interpretation of data
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Chapter Objectives (Contd)

Discuss the relationship between marketing research and decision making Describe the wide variety of applications for marketing research Identify various career opportunities in marketing research

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e-Bay: Listening to Customers

Vision: To help practically anyone trade practically anything on earth To achieve the vision, e-Bay:
Blends marketing research with its overall business strategy Forms voice of the customer group to keep itself informed about the needs and preferences of its customers Creates Feedback Forum for users to give each other ratings for each transaction

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Exhibit 1.1 Role of Marketing Research in Strategic Planning and Decision Making
Strategic Marketing Plan: Organizational Resources,Objectives,Marketing Strategy, Implementation and Control informs Marketing Research influences Marketing Strategy/Marketing Mix Product-Price-Promotion-Distribution Customer/Society
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Marketing Strategy
A plan that enable an organization to make the best use of its resources to meet marketing objectives

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Marketing Plan
A formal document that specifies the organizations resources, objectives, strategy and implementation and control efforts in marketing the specific products

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Basic Components of Marketing Plan

Identifying marketing opportunities and constraints Developing and implementing marketing strategies Evaluating the effectiveness of marketing plans

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Identifying Market Opportunities

are their market positions? How satisfied are consumers with current offerings on the market ? Are there any unmet consumer needs ? How is our offering likely to be perceived by consumers relative to competitors offerings ? Marketing Research can help answer these and other questions of interest to marketers
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and Constraints Who are our potential competitors and how strong

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Identifying Marketing Opportunities and Constraints

Identify
Potential customers strengths and weaknesses Consumer satisfaction with current market offerings Consumer perceptions of the offer relative to competitors

Goal
Maintain competitiveness
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T.G.I.Fridays: Using Marketing Research to Identify New Opportunities

How the Research Was Conducted:
Formal interviews with parents and children Observation of young customers likes and wants

Research Showed
Young customers want something beyond ordinary drinks T.G.I Fridays created special kids drinks like Banana Kong
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Marketing Research to Track Product Performance and Customer Satisfaction of Products and Services
Research Showed
Consumers wanted abundance of toppings

Marketing research led to revamping of pizza toppings

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Embracing the Marketing ConceptNeed to gain a good understanding of customers

Importance of conducting marketing research in the early stages of formulating marketing strategies: Unilever PLC
Developed new detergent brand, Power Ignored warnings about the catalyst used in the product Forced to withdraw the product
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Understanding the Competitive Environment

Who are Blockbusters competitors? Direct Broadcast Satellite (DBS)
Cable movie and pay TV channels Supermarket video rentals

How should Blockbuster react to competitive threats?

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Developing and Implementing Marketing Strategies

Develop an effective Marketing Mix

Product

Promotion

Price

Place

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Developing and Implementing Marketing Plans

Renaissance Spirometry -- NPB
Conducted marketing research
interviews,focus groups, telephone surveys, usage experiences, usage frequencies from doctors

Quality deployment function: translate customer requirements into engineering specifications Potential users evaluate product through each step of product development
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Evaluating the Effectiveness of Marketing Plans

Controlling or the Control Function
Getting feedback from the marketplace Taking necessary or corrective actions

Example Questions
Is the market share rising/declining/not moving? Why? Who uses the product? Are the answers consistent with company goals?

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Common Views of Marketing Research

Gathering data from markets Conducting customer surveys Determining the needs of customers Evaluating customer response to advertising Testing products in the market place Estimating the potential sales of product Gathering sales and market share data of competitors
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Exhibit 1.2 Role of Marketing Research in the Organization/Business

Organizational / Business Decision Makers informs Marketing Research influences Marketing Decisions

Customer/Society
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Marketing Research Definition

A set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers who are involved with marketing goods, services or ideas

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Principles of Marketing Research

Principle #1:
Attend to the timeliness and relevance of research Define research objectives carefully and clearly Do not conduct research to support decisions already made

Principle #2: Principle #3:

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Principle # 1: Attend to the Timeliness and Relevance of Research

Ariel High Suds Marketing Research

Launch

1985

1986

1987

1988

Lag Time

1989

LOW SALES RATES

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Research and Decision Making

P&Gs Ariel High Suds
Research-related decisions--the timing of the research studies prior to launch

Decision to forgo additional research to understand the impact of changed economic conditions contributed to the initial lackluster performance of the product

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Principle # 2: Define Research Objectives Carefully and Clearly

Coca Cola tested New Coke against Coke Classic They didnt account for consumer reaction to lack of choice between the two! End Result: New Coke failed

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 Indianized Yogurt:

Principle # 3:Do Not Conduct Research to Support Decisions Already Made

Decision was made to produce yogurt Yogurt plant was constructed Marketing research determined there was only a very small market Product failed in the marketplace

Nestl's Dahi is a recent entrant in the yogurt market

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The Role of Marketing Research in Analysis and Interpretation

Marketing Research can be used to identify profitable customers and not-profitable customers
Profitable Customers: those who are more likely to spend large amounts of money and become repeat customers Not-Profitable Customers: those who are more likely to spend less money on each transaction and might not return
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Importance of Analysis and Interpretation

Few Customers, Large Volume/per Customer Profitable Target Market

Large Number of Customers, Low Volume/per Customer -- Not-Profitable

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Research Results and Management Decisions

Kellogg sought foreign markets in which to expand Latvians prefer a hearty plate of sausage, cold cuts,potatoes,eggs, and a few slices of thick, chewy buttered bread. Mexicans and Indians prefer hot, spicy breakfasts.
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Research Results and Management Decisions

Marketing research conducted by Kellogg did not forecast enthusiastic response in the countriesKellogg decided to pursue these markets, anyway ! Kellogg cereals appeal is limited to a small health-conscious group. Will it work?

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Exhibit 1.3 Marketing Researchs Relationship to Decision Making Activity

Marketing Research Marketing situation calling for decision(s) Decisionmaking activity Final decision(s)

Organizations internal and external environments

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Marketing Research Applications

Gathering data from markets Conducting customer surveys Determining the needs of your customers Evaluating customer response to advertising

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Marketing Research Applications (Contd)

Gathering sales and market share data on your competitors Testing your products in the marketplace Estimating potential product sales

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Classification of Marketing Research

Basic Research : to generate or create knowledge
Journal of Marketing articles

Applied research
To solve a problem To develop strategies for products and services

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Marketing Services
Claritas Inc -- Specializes in providing marketing information to companies Key supplier of information containing the profiles and life-styles of U.S. consumers on a zip code-by-zip code basis Developed a information base by combining U.S. Census Bureau demographic data with lifestyle/attitudinal data generated through various regional surveys
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How Do You Recruit a Nun? Marketing Research Comes to the Rescue

St.Benedictine Convent:
Majority of Sisters 70+ years Inability to attract new recruits

Conducted Focus Groups:

To determine why they were not able to recruit young members Research showed people perceived nuns to have a dull existence

Launched New Ad campaign Recruited an average of three nuns a year

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In-house Marketing Research

Formal Marketing Department
Centralized: one marketing department for all product lines Decentralized: separate marketing departments for individual product lines Hybrid : combination of centralized and decentralized

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External Marketing Research

Large Commercial Firms:
AC Nielsen provides full service, planning through recommendations

Small Commercial Firms

Specialize in one part of the process Custom Research Inc. provides marketing research,customer satisfaction, and database marketing services
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External Marketing Research (Contd)

Academic Consultants
Professors and students research projects

Trade Associations
International trade site (www.fita.org)

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Exhibit 1.4 Illustrative Centralized Marketing Research Function in a Multibrand Company

Corporate Marketing Research Department Responsibilities include: Designing Studies Constructing Questionnaires Selecting Samples Collecting Data Analyzing Data Preparing Reports Choosing External Research Providers

Corporate Marketing Department

Research Reports Marketing of Brand A Marketing of Brand B Marketing of Brand C

Research Requests

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Exhibit 1.5 Illustrative Decentralized Marketing Research Function in a Multibrand Company

Corporate Marketing Department

Marketing of Brand A

Marketing of Brand B

Marketing of Brand C

Requests

Reports

Requests

Reports

Requests

Reports

Marketing Research Department for Brand A

Responsibilities Include:
Designing Studies Constructing Questionnaires Selecting Samples Collecting Data Analyzing Data Preparing Reports Choosing External Research Providers

Marketing Research Department for Brand B

Responsibilities Include:
Designing Studies Constructing Questionnaires Selecting Samples Collecting Data Analyzing Data Preparing Reports Choosing External Research Providers

Marketing Research Department for Brand C

Responsibilities Include:
Designing Studies Constructing Questionnaires Selecting Samples Collecting Data Analyzing Data Preparing Reports Choosing External Research Providers 1-40

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Exhibit 1.6 Illustrative Mixed-Structure Marketing Research Function in a Multibrand Company

Corporate Marketing Research Department
Responsibilities include: Collecting Data Analyzing Data Preparing Reports Choosing External Research Providers Research Reports Marketing of Brand A Marketing of Brand B Marketing of Brand C

Corporate Marketing Department

Shared Responsibilities for Research

Research Requests

Research Requests

Research Requests

Marketing Research Department for Brand A

Responsibilities Include:

Marketing Research Department for Brand B

Responsibilities Include:

Marketing Research Department for Brand C

Responsibilities Include:

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Designing Studies Constructing Questionnaires

Designing Studies Constructing Questionnaires

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MR at BK -- Brand Research and Analysis Department

Decentralized Function: Four separate groups within the department help to segment out the research into areas of specialty
Consumer research Sales analysis group Competitive/secondary information Customer satisfaction

Centralized Function: Director of the department keeps the 4 groups unified in their goals and task allocation
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Careers in Marketing Research

The field of marketing research provides a vast array of job opportunities ranging from titles such as:
Data Entry Clerk; Tabulation Specialist; Programmer Interviewer (telephone or field) Research Analyst Marketing Research Manager/Director
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Careers in Marketing Research

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Careers in Marketing Research (Contd)

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