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Chapter 4

MANAGING MARKETING INFORMATION TO GAIN


CUSTOMER INSIGHTS
MARKETING STARTER: CHAPTER 4
Dominos Pizza: Listening to Consumers and Letting Them
Know You Heard Them

Synopsis
After five years of stagnant or declining revenues, Dominos Pizza did something practically unheard of in the
business world. It asked customers for honest feedback and reinvented its product from the crust up. The
Dominos Pizza Turnaround campaign began with marketing research to understand what customers thought and
wanted. Industry research showed that although Dominos was tops in service, convenience, and value for the
money, it trailed far behind competitors in taste. To gain deeper insights into what consumers really thought,
Dominos turned to research using social media channels and focus groups. Rather than hiding from these stinging
results or waving them off, Dominos executives fessed up to the problems and faced them head on. The company
began by completely reinventing its pizza recipes, and customers seemed to like it. To announce the changes and to
turn around customer opinions, Dominos launched a daring $75 million Pizza Turnaround promotion campaign.
The startlingly honest campaign was fully integrated into the brands Facebook and Twitter pages, where the
company posted all the bad along with the good and asked for continuing feedback. Since the Pizza Turnaround
campaign began, Dominos has seen revenues increase by 21 percent and profits increase by 31 percent, even as the
pizza-delivery industry and restaurants in general of struggled. The lesson for marketers is that talking to customers,
hearing what they have to say, and acting on the resulting insights can pay big dividends.

Discussion Objective
A focused 10-minute discussion of the Dominos Pizza Turnaround story will reveal just how far corporations can
sometimes stray from the needs and opinions and needs of their customers. The chapter-opening Dominos story
underscores the importance of recognizing ones problems, gaining customer insights (even when it is painful), and
then taking bold steps to re-invent a product. This discussion should also illustrate how Dominos effectively used
social media to research and monitor customer opinions, and then use those opinions as the basis for their entire
marketing campaign to promote The Pizza Turnaround.

Starting the Discussion


Start this discussion by asking students whether they eat Dominos pizza. Do they prefer it to others? Why or why
not? Ask what they know about the Dominos Pizza Turnaround. Some interesting opinions should emerge. Next,
view the Dominos Pizza Turnaround documentary at www.pizzaturnaround.com Browse through the videos and
blog postings to see how this campaign is still going strong three years after its inception. You can also explore the
pizza turnaround from different perspectives by going to www.youtube.com and entering the keywords pizza
turnaround. Ask for student ideas and keep the discussion moving. Focus on the big ideas behind this case:
recognizing issues that emerge through marketing research, gaining customer insights, being totally honest with all
stakeholders, and re-inventing ones product when necessary. Use the questions below to guide the discussion. Dont
for

Discussion Questions
1. How is it possible that a large and successful corporation such as Dominos drifted so far from what its
customers thought about them and how their pizzas tasted? (Consider how companies can weaken their
market position and lose their competitive edge when they fail to conduct continual market research,
revisiting customer preferences, checking out the competition, and double-checking their assumptions. It is

Copyright 2014 Pearson Education


also possible that Dominos had not yet developed a well-rounded strategy for monitoring social media
channels, a key research avenue.)
2. How Dominos gain key customer insights into the underlying needs, emotions, and brand connections of
its pizza customers? How did it apply these customer insights in The Pizza Turnaround campaign? (Heres
a chance to dig into one of the main points of the Dominos story that companies must listen hard to their
customers and be brutally honest in re-assessing their products and how they market them. Dominos took
its honesty a step further when it launched a daring $75 million promotion campaign featuring highlights of
company research and plenty of negative customer opinions. Some analysts predicted this approach would
be brand suicide. Far from it, customers loved Dominos loved the companys transparency and gave the
new product a second chance.)
3. How does The Dominos Pizza Turnaround relate to the major points made in the rest of the Managing
Marketing Information chapter? (The chapter discusses sources and approaches for obtaining and managing
marketing information. But perhaps the most important point is made early in the chapter and is
emphasized in the Dominos story: The real value of marketing information lies in how it is usedin the
customer insights that it provides. A great place to start in Chapter 4 is with the top box in Figure 4.1.)

CHAPTER OVERVIEW
Use Power Point Slide 4-1 Here

This chapter looks at how companies develop and manage information about important market-
place elements. This chapter is an examination of marketing information systems designed to
assess the firms marketing information needs, develop the needed information, and help
managers to use the information to gain actionable customer, and market insights.

CHAPTER OBJECTIVES
Use Power Point Slide 4-2 Here

1 Explain the importance of information in gaining insights about the marketplace and
customers.
2 Define the marketing information system and discuss its parts.
3 Outline the steps in the marketing research process.
4 Explain how companies analyze and use marketing information.
5 Discuss the special issues some marketing researchers face, including public policy and
ethics issues.

CHAPTER OUTLINE

p. 100 INTRODUCTION
After five years of stagnant or declining revenues, Dominos
Pizza asked its customers for honest feedback and reinvented p. 101
its product. Photo: Dominos
To gain deeper insights into what consumers really thought,

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Dominos turned to research using social media channels and
focus groups.
Rather than hiding from the stinging results or waving them
off, Dominos executives fessed up to the problems and
faced them head on.
The company began by completely reinventing its pizza
recipes. Next, it launched a daring $75 million Pizza
Turnaround promotion campaign. Dominos has since
increased revenues by 21 percent and profits by 31 percent.
Talking to customers, hearing what they have to say, and
acting on the resulting insights can pay big dividends.

Opening Vignette Questions


1. In the beginning, how did Dominos stray so far
from its customers and its commitment to
quality? What should the company have been
doing all along?
2. How did Dominos utilize social media to
monitor customer opinions? Which channels were
most effective in publicizing the turnaround?
3. If you were Dominos CEO, how might you have
handled the initial quality challenge and the
ensuing marketing campaign? As a CEO, what
would have been most challenging about being so
honest?
Chapter Objective 1
p. 102 MARKETING INFORMATION AND CUSTOMER
INSIGHTS

PPT 4-3 Companies use customer insights to develop competitive p. 103


advantage. Apple iPod

To gain good customer insights, marketers must effectively p. 103


manage marketing information from a wide range of sources. Key Terms:
Customer Insights,
PPT 4-4 The real value of marketing research and marketing Marketing
information lies in how it is usedin the customer insights Information System
that it provides. (MIS)

Customer insights groups collect customer and market


information from a wide variety of sources.

A marketing information system (MIS) consists of people


PPT 4-5 and procedures for assessing information needs, developing
the needed information, and helping decision makers to use

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the information to generate and validate actionable customer
and market insights. p. 104
PPT-4-6 Figure 4.1: The
Marketing
Information System
Assignments, Resources
Use Discussion Question 1 here
Use Individual Assignments 1 here
Use Web Resources 1 here

p. 103 ASSESSING MARKETING INFORMATION NEEDS Chapter Objective 2


PPT 4-7
A good marketing information system balances the
PPT 4-8 information users would like to have against what they really
need and what is feasible to offer.

Sometimes the company cannot provide the needed


information, either because it is not available or because of
MIS limitations.

The problem is not finding information. The real challenge is


to find the right information and turn it into customer
insights.

p. 104
PPT 4-9 DEVELOPING MARKETING INFORMATION

Internal Data
PPT 4-10 p. 104
Internal databases are electronic collections of consumer Key Term: Internal
and market information obtained from data sources within Databases
the company network.

Information in the database can come from many sources.


p. 104
Problems with internal data: Ad: USAA

It may be incomplete or in the wrong form for


making marketing decisions.
Keeping the database current requires a major effort,
because data ages quickly.
Managing all of the information requires highly
sophisticated equipment and techniques.

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p. 105 Competitive Marketing Intelligence
p. 105
PPT 4-11 Competitive marketing intelligence is the systematic Photo: Gatorade
collection and analysis of publicly available information
about consumers, competitors, and developments in the
marketplace.

Social media makes it easier than ever for people to


converse, share opinions, needs, ideas, and complaints.
Companies use specialized software to track trends and
better respond to consumers.

Competitive marketing intelligence gathering has grown


dramatically.

Firms use competitive intelligence to gain early warnings of


competitor moves and strategies.

Much competitor intelligence can be collected from people


inside the company.

Competitors often reveal intelligence information through


their suppliers, resellers, key customers, and the Internet.

The gathering of competitive marketing intelligence raises a


number of ethical issues. Most companies are now taking
steps to protect their own information.
Assignments, Resources
Use Discussion Question 2 here

p. 106 Chapter Objective 3


MARKETING RESEARCH
PPT 4-12 p. 106
Marketing research is the systematic design, collection, Key Term:
analysis, and reporting of data relevant to a specific Marketing Research
marketing situation facing an organization.
p. 107
Key Terms:
Exploratory
Research,
Descriptive
Research, Causal
Research

PPT 4-13 The marketing research process has four steps (see Figure

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4.2): p. 107
Figure 4.2: The
p. 107 Defining the Problem and Research Objectives Marketing Research
Process
Defining the problem and research objectives is often the
hardest step in the research process.

A marketing research project might have one of three types


of objectives.

PPT 4-14 1. Exploratory research: to gather preliminary


information that will help define the problem and p. 108
suggest hypotheses. Ad: Red Bull
2. Descriptive research: to describe things, such as the
market potential for a product.
3. Causal research: to test hypotheses about
cause-and-effect relationships.

Start with exploratory research and later follow with


descriptive or causal research.
p. 107 p. 108
Developing the Research Plan Key Terms:
PPT 4-15 Secondary Data,
The research plan outlines sources of existing data and spells Primary Data
out the specific research approaches, contact methods,
sampling plans, and instruments that researchers will use to
gather new data.
p. 106
Research objectives must be translated into specific Key Term:
information needs. Commercial Online
PPT 4-16 Databases
The research plan should be presented in a written proposal.

PPT 4-17 Secondary data consist of information that already exists


somewhere, having been collected for another purpose.

Primary data consist of information collected for the


specific purpose at hand.

Gathering Secondary Data

Researchers usually start by gathering secondary data.


p. 109
PPT 4-18 Using commercial online databases, marketing researchers Ad: Experian
can conduct their own searches of secondary data sources. Simmons

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p. 108-9 Can usually be obtained more quickly and at a lower cost
than primary data.

Can provide data an individual company cannot collect on its


own.

Secondary data can present problems.

The needed information may not exist.


The data might not be very usable.
o Relevant (fits research project needs)
o Accurate (reliably collected and reported)
o Current (up-to-date enough for current decisions)
o Impartial (objectively collected and reported)

Assignments, Resources
Use Discussion Question 3 here
Use Critical Thinking Exercise 2 here
Use Additional Projects 1 here
Use Outside Example 1 here
Troubleshooting Tip
Although todays students have grown up with
computers, the idea of an information system may
be very new to them. They typically will not have
had to do any research, and any jobs theyve held to
this point in their lives will most likely have entailed
very basic, entry-level type work. To get them past
this, you could talk about the type of information the
university will hold on each studenttheir major, the
courses theyve taken, the grades theyve gotten, their
current address, their home address, their parents
names, whether they are paying full tuition or are on
any kind of scholarship, what high school they
attended and their grade point average there, what
sports they play or activities they participate in, and
so forth. Then talk about how the university might
use that information to understand their current
student population to help them figure out how to
target future students while they are still in high
school. This should help them grasp how data gets
turned into information, and from that point to
knowledge.

p. 109 Primary Data Collection p. 109


PPT 4-19 Table 4.1: Planning

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Research Approaches Primary Data
Collection
PPT 4-20 Observational research involves gathering primary data by
observing relevant people, actions, and situations.
p. 109
Observational research can obtain information that people Key Term:
are unwilling or unable to provide. Observational
Research,
Disadvantages:

Some things cannot be observed.


Long-term or infrequent behavior is also difficult to
observe.
Observations can be very difficult to interpret. p. 110
Key Term:
Ethnographic research involves sending trained observers Ethnographic
to watch and interact with consumers in their natural Research
habitat.
p. 110
Ethnographic research often yields the kinds of details that Photo: P&G
dont emerge from traditional research questionnaires or
focus groups.
PPT 4-21 Survey research, the most widely used method for primary
data collection, is the approach best suited for gathering
descriptive information.

The major advantage of survey research is its flexibility.


p. 110
Disadvantages: Key Term: Survey
Research
Sometimes people are unable to answer survey
questions.
People may be unwilling to respond to unknown
interviewers or about things they consider private.
Respondents may answer survey questions even
when they do not know the answer.
Busy people may not take the time, or they might
resent the intrusion into their privacy.
p. 111
PPT 4-22 Experimental research is best suited for gathering causal Key Term:
information. Experimental
PPT 4-23 Research
Contact Methods

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p. 111 Mail, Telephone, and Personal Interviewing

Mail questionnaires can be used to collect large amounts of p. 111


information at a low cost per respondent. Table 4.2: Strengths
and Weaknesses of
Respondents give more honest answers to more personal Contact Methods
questions.

No interviewer is involved to bias the respondents answers.

Disadvantages:

Not very flexible


Take longer to complete
The response rate is very low
The researcher often has little control over the mail
questionnaire sample
As a result, more marketers are now shifting to
e-mail and online surveys

Telephone interviewing is the one of the best methods for


gathering information quickly, and it provides greater
flexibility than mail questionnaires.

Interviewers can explain difficult questions.

Response rates are higher than with mail questionnaires.

Disadvantages:

Cost per respondent is higher than with mail


questionnaires
People may not want to discuss personal questions
with an interviewer
Introduces interviewer bias
Different interviewers may interpret and record
responses differently
Increasingly high rates of hang-ups
PPT 4-24 Personal interviewing takes two formsindividual and
group interviewing.

Individual interviewing involves talking with people


p. 112
one-on-one.
Key Term: Focus
Group interviewing (focus group interviewing)

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consists of inviting six to ten people to meet with a Group Interviewing
trained moderator to talk about a product, service, or
organization. p. 111
Photo: Lexus Focus
Many companies are now moving away from traditional, Group
formal research approaches, and employing new ways of
listening to consumers.

PPT 4-25 Online Marketing Research


p. 113
Increasingly, researchers are collecting primary data through Key Term: Online
online marketing research. Marketing Research

The Internet is well suited to quantitative research, but p. 114


researchers are also adopting qualitative approaches. Photo: Snap
Surveys
Online research usually costs much less than research
PPT 4-26 conducted through mail, phone, or personal interviews.

A primary qualitative Web-based research approach is online p. 114


focus groups. Key Term: Online
Focus Groups
Web-based research does have drawbacks, including control
of who is in the online sample. In addition, consumer privacy p. 114
is a major ethical concern. Ad: FocusVision

Assignments, Resources
Use Real Marketing 4.1 here
Use Discussion Question 4 here
Use Critical Thinking Exercise 1 here
Use Additional Projects 2, 3, and 4 here
Use Individual Assignments 2 here

PPT 4-27 Sampling Plan


p. 115
A sample is a segment of the population selected for Key Term: Sample
marketing research to represent the population as a whole.

Designing the sample requires three decisions.

1. Who is to be studied (what sampling unit)?


2. How many people should be included (what sample
size)?
3. How should the people in the sample be chosen (what
sampling procedure)?
p. 115

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PPT 4-28 The two types of samples are: Table 4.3: Types of
Samples
1. Probability samples
6 Nonprobability samples p. 116
Photo: Online
Research Instruments Listening

PPT 4-29 The questionnaire is the most common data collection


instrument.

PPT 4-30 Closed- end questions include all the possible answers, and
subjects make choices among them.

Open-end questions allow respondents to answer in their


own words.

Care should be given to the wording and


ordering of questions.
p. 117
PPT 4-31 Researchers also use mechanical instruments to monitor Photo: Time Warner
consumer behavior. People meters and checkout scanners are Medialab
examples.

Neuromarketing techniques can measure consumer involve-


ment and emotional responses, but these can be difficult to
interpret.

p. 118 Implementing the Research Plan


PPT 4-32
The data collection phase of the marketing research process
must be carried out carefully to make sure the plan is
implemented correctly.

Researchers must process and analyze the collected data to


isolate important information and findings.

Interpreting and Reporting the Findings

Researchers should present important findings and insights


that are useful in the major decisions faced by management.

However, interpretation should not be left only to


researchers. Managers should work closely alongside them.

Assignments, Resources

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Use Marketing Ethics here
Use Marketing by the Numbers here
Use Video Case here
Use Think-Pair-Share 1-4 here
Use Small Group Assignment 2 here
Use Outside Example 2 here
Troubleshooting Tip
It is likely that no one in class will be familiar with
the market research process. They have not had to
worry about collecting information in any large-scale
process, although they might have been involved
with collecting information from members of a
student organization as to what activities the
members would like to participate in. One effective
way of discussing this issue is to talk about the
course evaluations that are completed at the end of
the semester. Explaining that this is not to rate the
instructors but to provide valuable feedback to the
university, the department, and the instructor on
course offerings, content within the courses, and only
lastly to get an idea of the competence of instructors
should help. Also, give examples of poorly designed
surveys and shows how they lead the respondent to
answer in a given way. Especially helpful are
questionnaires that use leading or loaded questions,
or double-barreled questions that are difficult to
answer.

p. 119 ANALYZING AND USING MARKETING Chapter Objective 4


INFORMATION

PPT 4-33 Customer Relationship Management (CRM)

Companies capture information at every possible customer


touch point.
PPT 4-34 p. 119
Customer relationship management (CRM) is used to Key Term:
manage detailed information about individual customers and Customer
carefully manage customer touch points in order to Relationship
maximize customer loyalty. Management

CRM integrates everything that a company knows about


individual customers to provide a 360-degree view of the
customer relationship.

A data warehouse is a companywide electronic database of

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finely detailed customer information that needs to be sifted
through for gems.

Data mining is the use of high-powered techniques to sift


through the mounds of data and dig out interesting findings
about customers.

The most common CRM mistake is to view CRM as a


technology and software solution only. Technology alone p. 120
cannot build profitable customer relationships. Ad: Macys

CRM is just one part of an effective overall customer


relationship management strategy.

PPT 4-35 Distributing and Using Marketing Information

p. 120 The marketing information system must make the


information available to managers and others who make
marketing decisions or deal with customers.
p. 121
Many companies use a company intranet to facilitate Ad:Caesars
information distribution. The intranet provides ready access Entertainment
to data, stored reports, and so forth.

Companies are increasingly allowing key customers and


value-network members to access account and product
information, along with other information, through extranets.

Assignments, Resources
Use Discussion Question 5 here
Use Marketing Technology here
Use Small Group Assignment 1 here

p. 122 OTHER MARKETING INFORMATION Chapter Objective 5


CONSIDERATIONS

p. 123 Marketing Research in Small Businesses and Nonprofit


PPT 4-36 Organizations

Managers of small businesses and nonprofit organizations p. 123


can obtain marketing insights by observing things around Ad: Bibbentuckers
them.

Managers can conduct informal surveys using small


convenience samples.

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Managers can glean a wealth of competitive data and
information by turning to the Internet.

p. 124 International Marketing Research p. 123


Ad: Nielsen
International marketing researchers follow the same steps as
domestic researchers.

The international researcher may have a difficult time


finding good secondary data.

International researchers frequently must collect their own


primary data.

Reaching respondents is often not easy in other parts of the


world.

Cultural differences from country to country cause additional


problems for international researchers.

Language is the most obvious obstacle.

Even when respondents are willing to respond, they may not


be able to because of high functional illiteracy rates.

p. 125 Public Policy and Ethics in Marketing Research

PPT 4-37 Intrusions on Consumer Privacy

Many consumers strongly resent or even mistrust marketing


research.

Increasing consumer resentment has led to lower survey


response rates in recent years.

The best approach is for researchers to ask only for the


information they need, to use it responsibly to provide
customer value, and to avoid sharing information without the
customers permission.

Most major companies have now appointed a chief privacy


officer (CPO).

p. 126 Misuse of Research Findings p. 126

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Ad: Kellogg
Many research studies appear to be little more than vehicles
for pitching the sponsors products.

Several associations have developed codes of research ethics


and standards of conduct.

In the end, unethical actions cannot be regulated away. Each


company must accept responsibility for its own conduct.

Assignments, Resources
Use Real Marketing 4.2 here
Use Company Case here

END OF CHAPTER MATERIAL


Discussion Questions

1. What is a marketing information system and how is it used to create customer insights?
(AACSB: Communication)

Answer:

A marketinginformationsystem(MIS) consists of people and procedures dedicated to


assessing information needs, developing the needed information, and helping decision
makers use the information to generate and validate actionable customer and market insights.
The MIS begins and ends with information usersmarketing managers, internal and external
partners, and others who need marketing information. First, it interacts with these
information users to assess information needs. Next, it interacts with the marketing
environment to develop needed information through internal company databases, marketing
intelligence activities, and marketing research. Finally, the MIS helps users to analyze and
use the information to develop customer insights, make marketing decisions, and manage
customer relationships.

2. Explain how marketing intelligence differs from marketing research. (AACSB:


Communication)

Answer:

Competitive marketing intelligence is the systematic collection and analysis of publicly


available information about consumers, competitors, and developments in the marketplace.
The goal of competitive marketing intelligence is to improve strategic decision making by
understanding the consumer environment, assessing and tracking competitors actions, and
providing early warnings of opportunities and threats. Marketing intelligence techniques
range from observing consumers firsthand to quizzing the companys own employees,
benchmarking competitors products, researching the Internet, and monitoring Internet buzz.

Copyright 2014 Pearson Education


In addition to marketing intelligence information about general consumer, competitor, and
marketplace happenings, marketers often need formal studies that provide customer and
market insights for specific marketing situations and decisions. Marketing research is the
systematic design, collection, analysis, and reporting of data relevant to a specific marketing
situation facing an organization. Companies use marketing research in a wide variety of
situations. For example, marketing research gives marketers insights into customer
motivations, purchase behavior, and satisfaction. It can help them to assess market potential
and market share or measure the effectiveness of pricing, product, distribution, and
promotion activities.

3. Explain the role of secondary data in gaining customer insights. Where do marketers obtain
secondary data and what are the potential problems in using it? (AACSB: Communication)

Answer:

Secondary data consist of information that already exists somewhere, having been collected
for another purpose. Researchers usually start by gathering secondary data. The companys
internal database provides a good starting point. However, the company can also tap into a
wide assortment of external information sources, including commercial data services and
government sources (see Table 4.1). Companies can buy secondary data reports from outside
suppliers. Using commercial online databases, marketing researchers can conduct their
own searches of secondary data sources. Beyond commercial Web sites offering information
for a fee, almost every industry association, government agency, business publication, and
news medium offers free information to those tenacious enough to find their Web sites.
There are so many Web sites offering data that finding the right ones can become an almost
overwhelming task. Web search engines can also be a big help in locating relevant secondary
information sources.

Secondary data can present problems. The needed information may not existresearchers
can rarely obtain all the data they need from secondary sources. Even when data can be
found, the information might not be very usable. The researcher must evaluate secondary
information carefully to make certain it is relevant (fits research project needs), accurate
(reliably collected and reported), current (up-to-date enough for current decisions), and
impartial (objectively collected and reported).

4. What are the advantages of Internet-based survey research over traditional survey research?
(AACSB: Communication)

Answer:

Internet-based survey research offers some real advantages over traditional phone and mail
approaches. The most obvious advantages are speed and low costs. By going online,
researchers can quickly and easily distribute Internet surveys to thousands of respondents
simultaneously via e-mail or by posting them on selected Internet sites. Responses can be
almost instantaneous, and because respondents themselves enter the information, researchers

Copyright 2014 Pearson Education


can tabulate, review, and share research data as they arrive.
Online research usually costs much less than research conducted through mail, phone, or
personal interviews. Using the Internet eliminates most of the postage, phone, interviewer,
and data-handling costs associated with the other approaches. Moreover, sample size has
little impact on costs. Once the questionnaire is set up, theres little difference in cost
between 10 and 10,000 respondents on the Internet. Beyond their speed and cost advantages,
Web-based surveys also tend to be more interactive and engaging, easier to complete, and
less intrusive than traditional phone or mail surveys. As a result, they usually garner higher
response rates. The Internet is an excellent medium for reaching the hard-to-reach
audiences.

5. What is neuromarketing and how is it useful in marketing research? Why is this research
approach usually used with other approaches? (AACSB: Communication)

Answer:

Neuromarketing is a way to measure brain activity to learn how consumers feel and respond.
Marketing scientists using MRI scans and EEG devices have learned that tracking brain
electrical activity and blood flow can provide companies with insights into what turns
consumers on and off regarding their brands and marketing. Neuromarketing has been used
to test commercials, product designs, and packaging. Although neuromarketing techniques
can measure consumer involvement and emotional responses second by second, such brain
responses can be difficult to interpret. Thus, neuromarketing is usually used in combination
with other research approaches to gain a more complete picture of what goes on inside
consumers heads.

Critical Thinking Exercises

1. In a small group, identify a problem faced by a local business or charitable organization and
propose a research project addressing that problem. Develop a research proposal that
implements each step of the marketing research process. Discuss how the research results
will help the business or organization. (AACSB: Communication; Reflective Thinking)

Answer:

The marketing research process has four steps: (1) defining the problem and research
objectives, (2) developing the research plan, (3) implementing the research plan, and (4)
interpreting and reporting the findings. Defining the problem and research objectives is often
the hardest step in the research process. The manager may know that something is wrong,
without knowing the specific causes. After the problem has been defined carefully, the
manager and researcher must set the research objectives. A marketing research project might
have one of three types of objectives: exploratory research, descriptive research, or causal
research. The statement of the problem and research objectives guides the entire research
process. Once the research problems and objectives have been defined, researchers must
determine the exact information needed, develop a plan for gathering it efficiently, and
present the plan to management. The research plan outlines sources of existing data and
spells out the specific research approaches, contact methods, sampling plans, and instruments
Copyright 2014 Pearson Education
that researchers will use to gather new data. Research objectives must be translated into
specific information needs. To meet the managers information needs, the research plan can
call for gathering secondary data, primary data, or both. The researcher next puts the
marketing research plan into action. This involves collecting, processing, and analyzing the
information. Finally, the market researcher must now interpret the findings, draw
conclusions, and report them to management.

2. Want to earn a little extra cash? Businesses that use focus groups and surveys to make better
marketing decisions might pay for your participation. Visit www.FindFocusGroups.com and
review the opportunities available for research participation. Find two more Web sites that
recruit research participants. Write a brief report of what you found and discuss the pros and
cons to companies of recruiting research participants this way. (AACSB: Communication;
Use of IT; Reflective Thinking)

Answer:

Students responses will vary, but they should be able to find several sites offering research
opportunities. Other Web sites include www.surveyclub.com, www.2020Research.com, and
www.pineconeresearch.com. Many of these require a participant to set up a profile in the
database, and if their profile matches researchers needs, they are offered an opportunity to
participate. Some pay hundreds of dollars for participation. Many of the focus group
opportunities are in major metropolitan areas, such as Boston, Chicago, and Atlanta.
However, many of the opportunities are online, even for focus groups, which means
researchers can gain access to a nationwide sample. One disadvantage of paying respondents
to participate is the potential for professional participants who participate in many studies
only for the compensation.

Marketing Technology: EWA Bespoke Communications

In 1996, Marks & Spencer (M&S), the venerable British retailer, launched lunchtogoan
online corporate catering service (see www.lunchtogo-e.com/). But M&S found it difficult to
develop long-term relationships with corporate customers due to high personnel turnover within
customer organizations, so it turned to EWA Bespoke Communications, a company that uses data
mining to tell you more about your customers. EWA used propensity modeling to develop a
critical lag formula, that identified customers whose last order fell outside of their expected
behavior. EWA then developed an automated system to send communications to customers who
have not reordered within the maximum allowed order lag determined by the formula. Whereas
most customers received e-mails, the system flagged M&Ss best corporate catering customers
that should receive more personalized phone calls because of their value and importance. EWA
also implemented information systems to improve the companys service. Knowing more about
its customers paid offwithin a short period of time, the EWA system generated more than 1
million, tripling the operations revenues, and delivered an almost perfect order accuracy rate.

1. Visit EWA Bespoke Communications at www.ewa.ltd.uk/ to learn more about its Customer
Insight services and the types of analyses performed by this company. What is propensity
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modeling? Review other case studies from this Web site and write a brief report of how data
mining technology was used to gain customer insights. (AACSB: Communication; Use of
IT)

Answer:

Students responses will vary, but students should discuss the types of analyses performed in
addition to propensity modeling, such as data study and audit, cross-sell analysis, critical lag,
customers as assets (customer lifetime value), and impact assessment. Propensity modeling
statistically predicts future behavior based on past behavior, allowing companies to focus on
customers most likely to respond to marketing communications. All of the analysis
techniques are described at www.ewa.ltd.uk/services/customer-insight. Additional case
studies include Adidas, Nissan, Merial, TDA, Ford, Brintons Carpets, traveline, and Wilshire
Farm Foods.

2. Describe how other organizations can benefit from these types of data mining analyses. Find
examples of other companies that can offer such analysis to businesses. (AACSB:
Communication; Reflective Thinking)

Answer:

Students responses will vary. An interesting application by MasterCard Advisors is


described at
www.mastercardadvisors.com/us/advisors/en/information_analytics/prop_models.html. This
site describes how accurate assessment of cardholder behavior can help target marketing
communications.

Marketing Ethics: Reading You

E-book sales have now surpassed print book sales, resulting in lower margins for all companies
in the publishing industry value chain. However, there is a silver lining to this trende-books
can read the readers. Publishers and e-book retailers are gathering billions of bits of information
from e-book readers. The publishing industry has been notorious for not conducting research,
leaving authors to lament that they didnt know who their readers were or what they wanted.
The only way to know if readers liked a book was from sales data after the fact. Not anymore.
Now companies know how many hours readers spend reading a book and how far they get when
they open it. Some publishers are even testing e-book manuscripts, revising them based on
feedback, and then publishing the print version. Scholastic Inc. has set up online message boards
and interactive games to learn what story lines and characters are connecting with readers.
Coliloquy digital books let readers choose their own stories, which the company then aggregates
and sends to the authors to shape future books. Amazon Kindle users sign an agreement giving
the company permission to store their reading behavior data, and the company then highlights
some of the data on its Web site. For example, the most highlighted passage in Catching Fire,
the second book of the popular Hunger Games series, is Because sometimes things happen to
people and theyre not equipped to deal with them.

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1. Most e-books readers do not know that their reading behavior can be tracked. What ethical
concerns might readers have? Are there any protections in place for consumers who may not
want their reading behavior tracked? (AACSB: Communication; Ethical Reasoning)

Answer:

The main ethical issue is privacy. According to the Electronic Frontier Foundation (EFF),
there is no way for readers to tell publishers or retailers of e-books that they do not want their
reading behavior tracked. Some consumers may be concerned because they dont want
others to know what they are reading. For example, because of the erotic content of the
books, the popular Fifty Shades of Grey trilogy may not have been so popular if e-readers
were not available. California enacted the Reader Privacy Act, which places restrictions on
law enforcement groups access to consumers digital reading records. A court-order must be
obtained to access this data. While most data are aggregated and not personally-identifying,
most digital reading platforms have considerable demographic information about their
customers and share that information with publishers.

2. What would your textbook reading behavior data reveal to publishers? How would
marketing textbooks change based on your behavior? (AACSB: Communication; Reflective
Thinking)

Answer:

Students opinions will vary. Many will probably say they would like shorter chapters and
more interactive media in e-textbooks.

Marketing by the Numbers: Sample Size

Have you ever been disappointed because a television network cancelled one of your favorite
television shows because of low ratings? The network didnt ask your opinion, did it? It
probably didnt ask any of your friends, either. Thats because estimates of television audience
sizes are based on research done by The Nielsen Company, which uses a sample of only 9,000
households out of the more than 113 million households in the United States to determine
national ratings for television programs. That doesnt seem like enough, does it? As it turns out,
statistically, its many more than enough.

1. Go to www.surveysystem.com/sscalc.htm to determine the appropriate sample size for a


population of 113 million households. Assuming a confidence interval of 5, how large
should the sample of households be if desiring a 95-percent confidence level? How large for
a 99-percent confidence level? Briefly explain what is meant by confidence interval and
confidence level. (AACSB: Communication; Use of IT; Analytical Reasoning)

Answer:

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A confidence level of 95% requires a sample size of 384 households. A confidence level of
99% requires 666 households.

The confidence interval is commonly called the margin of errorthe plus or minus figure
that is usually reported with polling data. The confidence level indicates how sure one can be
with the results. Thus, a 95% confidence level means one can be 95% sure that the response
lies within the confidence interval, and a 99% confidence interval means 99% certain. Thats
why the required sample size was larger at the higher confidence level.

2. What sample sizes are necessary at population sizes of 1 billion, 10,000, and 100 with a
confidence interval of 5 and a 95-percent confidence level? Explain the effect population
size has on sample size. (AACSB: Communication; Use of IT; Analytical Reasoning)

Answer:

The sample sizes are:

1 billion = 384
10,000 = 370
100 = 80

Population size only matters when dealing with a relatively small population. When the
population is approximately 250,000 or more, the required sample size is 384. An important
factor, however, is the representativeness of the sample. Truly random samples do not have
to be large.

Company Case Notes

Meredith: Thanks to Good Marketing Information, Meredith Knows Women

Synopsis

Meredith Corporation was started by E.T. Meredith in 1902 with a single publication, Successful
Farming, a publication that is still available today. Now, the company publishes 21 subscription
magazines and over 150 special interest publications. But Meredith also owns television stations
and 50 Web sites.

But Merediths strength as a company is not rooted in its products. It is rooted in its expertise on
managing marketing information. Specifically, Meredith has a massive database that allows it to
intimately know women. Meredith knows them as a group, and as individuals. With 85 million
individuals in its database, it has an average of over 700 unique pieces of information on each.

This case shows how Meredith manages information in a way that allows them to deliver
product, pricing, distribution, and promotional strategies in a way that truly appeal to individuals.
It also outlines how Meredith is moving from a largely print media publisher to other growth
media by employing its information management expertise.

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Teaching Objectives

The teaching objectives for this case are to:

1. Expose students to the overall structure of a marketing information system.


2. To illustrate the complexity of gathering customer information in a way that leads to
valuable customer insights.
3. To show how a successful CRM effort can emerge from a sound marketing information
system.

Discussion Questions

1. Analyze Merediths marketing information system. What are its strengths and
weaknesses?
For this, students should refer to Figure 4.1, The Marketing Information System. The
case gives little information with respect to assessing information needs. However, we
can make some pretty sound assumptions based on its information system. We might
assume that Meredith is also expert at keeping its database and analytics up-to-date by
assessing the need for new information.

In the developing needed information section, it is clear that Meredith has not only a
strength, but a core competency in its internal database. That is, Merediths database is a
valuable asset that gives it a competitive advantage over other publishers as well as
providing it with a revenue stream as a seller of marketing research and analytics. We
know little with respect to Merediths efforts in the area of marketing intelligence. The
case mentions some things about marketing research, but even that is limited.

Meredith has a huge strength in analyzing and using information as well. Its passion
points system is based on 20 predictive analytical models that are scored and ranked
every week. That is a powerful analytical system that uses the information in the
database on a consistent and ongoing basis. When it comes to using the information, the
case describes how the analytical outcomes help to come up with new product ideas.
That information also directs the type of promotional material that women see. Women
are targeted based on their interests. And because Meredith has such a large portfolio of
womens magazines, Meredith can keep a customer by graduating them from one title to
another as their life stages change.

One potential weakness of Merediths system is that even though it has an incredible
system, it is limited by the box that is created by the parameters set. In other words, it
knows women based on the information collected. This is the problem with a lot of
marketing research. Companies may be very efficient at collecting and analyzing
information. But what if they arent asking the right questions? The outcome of
information is limited by the nature of the information collected. We dont have a lot of

Copyright 2014 Pearson Education


information on the type of information collected, nor do we know about how innovative
Meredith is with respect to considering what kinds of information are added to the
database. But huge market trends could be missed if they stay locked in to the same old
system that they have always used.

One example of this is how heavily dependent Meredith is on middle-aged and older
women. A glimpse at all the titles Meredith has reveals that they have almost nothing that
appeals to tweens, teens, and young adults today. If they dont bring those girls in, their
customer base will age and disappear. If all the information that they are gathering is
based on current customers, then they are missing a key set of data that would allow
them to cater to a new set of customers.

2. Can impersonal data points really result in meaningful relationships? Explain.


If you think about it, humans do everything based on processing bits of data or
information. We make judgments and decisions every day based on data points. We get to
know people and develop relationships based on such. One difference is that humans
gather that data through five senses. As good as a database is, it can not really mimic the
type of information that is gathered from all five senses that allow humans to form
meaningful relationships.

But the good news for companies like Meredith is they dont have to. Customer-brand
relationships arent exactly the same as interpersonal relationships. Companies only
need to replicate some of those relationship characteristics. And in that respect, data
points can absolutely serve as the foundation for forming meaningful company-customer
relationships. In the old days, the company-customer relationship was based more on the
proprietor of a business. People formed relationships with a business based on the
relationship with the person who ran the butcher shop, the insurance agency, or the
bookstore. Today, the more successful businesses are those who can employ technology in
a way that they can automate the collection, and processing of information in a way that
the outcomes executed are personal to individuals. Netflix, Amazon, and Zappos are all
great examples of companies that process massive amounts of information on individual
customers in a way that provides a very custom customer experience.

3. Does Merediths marketing information expertise transfer into other media and products?
Absolutely. The concept of understanding needs and wants of market segments and
individuals is not bound to a particular medium. However, refer to the comments made
for question 1. If the nature of the information is media-specific, then it is limited to that
context. One thing that Meredith gathers and manages is information about which kinds
of magazines women subscribe to as well as how they respond to different offers for
subscriptions. That is print media information that has little bearing on other media. But,
that is only one kind of information that Meredith gathers. They clearly gather
information on life stages and personal interests. Thats the kind of information that
transfers.

4. As a company still heavily rooted in print, what does Merediths future hold? Gloom and
doom? Or future success? The bottom line is, Meredith is still a magazine company. The

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vast majority of its revenues come from magazine sales and advertising. Thats a dying
industry. Meredith has actually done amazingly well in this area, keeping at least a
steady level of readership and revenues from magazines. And they have made good
strides into other media. But they are hardly considered to be innovative pioneers in
online and mobile media. They need to have a replacement for each and every print title,
and they dont.

Additionally, even with really successful websites, the revenue models are not there. This
is the same thing that most Web companies have struggled with. Even Facebook is just
now coming in to profitability. You can have all the Web traffic in the universe, but there
must be a way to make money off that traffic. The advertising model alone for Websites
has not produced the kind of revenues that more traditional media (TV, radio, print) have.

5. What recommendations would you make to Merediths executives?


Meredith cannot afford to wait for other companies to develop good revenue models for
content distribution. They have got to blaze trails. If Better Homes & Gardens
disappeared and all its readers started checking in to the BHG.com website, Meredith
would lose money.

Another recommendation would be to consider products that are not based on the
distribution of content. Most magazines have turned websites into an online version of
the magazine, something that is heavily rooted in the content itself. Can Meredith
transition into other types of products that still draw from its knowledge of women?

Teaching Suggestions

This is an interesting case because most college students have little interest in the magazines that
Meredith publishes. Care must be taken to challenge them to get in to analyzing the case of an
old company from an old industry and moving it in to the next century. Students have the
perspective of what they want and what they think will succeed in coming decades. After having
students work on questions individually, have students get into groups to develop a set of
recommendations as per question 5.

This case also works well with the creating customer value chapter (Chapter 1) and the consumer
behavior chapter (Chapter 5).

ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES


Projects

1. Secondary data consists of information that already exists, having been collected for another
purpose. What are some secondary data sources you might take a look at if you were helping
your college or university develop a recruitment strategy? (Objective 3)
2. Observational research involves gathering primary data by observing people. Do you see any
potential ethical conflicts with its use? (Objective 5)

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3. Why would you want to (or not want to) use a mail questionnaire to reach Generation Y
individuals? Give both pros and cons. (Objective 3)
4. Focus group interviewing can be a most effective interview technique. Under what situations
does it make sense to use this technique? (Objective 3)

Small Group Assignments

1. Form students into groups of three to five. Each group should read the opening vignette to
the chapter on Dominos. Each group should answer the following questions. (Objective 3)

In this case, how did Dominos approach to marketing research differ from that of a
traditional corporation?

Discuss the key social media tools that Dominos utilized in researching customer
insights. What other tools would you have used, and how would you use them?

How has the Dominos Pizza Turnaround played out among your friends and
roommates? Do you believe the new pizza is vastly improved over the old recipe?
Why or why not?

What are some other possible advertising themes you might develop based on
Dominos discoveries regarding the taste and quality of its pizza?

2. Form students into groups of three to five. Develop a short questionnaire (seven questions)
designed to determine a respondents favorite social media site and the reason why.
(Objective 3)

Individual Assignments

1. Take a look at Apples Web site (www.apple.com). Examine the pages that discuss the
iPhone 4S. What customer insights do you believe Apple paid attention to in the redesign of
its famous mobile device? (Objective 1)
2. Construct two simple (5 question) surveys that examine students attitudes toward life at
your university. One survey should contain open-ended questions only and the other only
closed-ended questions. Be careful of your wording. Which of the two surveys do you
believe would provide the greatest depth of information? Why? (Objective 3)

Think-Pair-Share

Consider the following questions, formulate and answer, pair with the student on your right,
share your thoughts with one another, and respond to questions from the instructor.

1. What are the four steps of the marketing research process? (Objective 3)

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2. What are the differences between causal, exploratory, and descriptive research methods?
(Objective 3)
3. Why does it make sense to use secondary data before you turn to primary data? (Objective 3)
4. What are some of the more substantial drawbacks of observational research? (Objective 3)
Outside Examples

1. Secondary data consist of information that already exists somewhere, having been collected
for another purpose. One of the main sources of secondary data is the U.S. Census. Take a
look at the 2010 Census (http://2010.census.gov/2010census/) Find data that is relevant to
your home state and/or community. How reliable or accurate do you believe that information
to be? (Objective 3)

Possible Solution:

The interesting point of this exercise is for students to realize just how dated and unreliable
much of the secondary data we use to make decisions may be. Although the information
contained in this census was gathered in 2010, much of it will quickly change their individual
home states/communities. This can be an eye-opening activity.

2. Using observational research, gather data on your roommates eating habits. What do your
findings tell you? More importantly, what do your findings NOT tell you about his/her eating
habits? (Objective 3)

Possible Solution:

Students will come up with a variety of observations. What is important is to pay attention to
what the students believe they are discovering about their roommates eating habits. They
will be able to discover WHAT those habits are; however, they cannot determine the driving
force or motivation behind those habits.

Web Resources

1. http://247.prenhall.com
This is the link to the Prentice Hall support link.

2. www.dominos.com
Go to this Web site to learn more about the company and the campaign described at the
beginning of this chapter.

3. www.radian6.com
This Web site describes how Radian6 software is used to track important consumer trends.

4. www.redbull.com
Discover how Red Bull develops new beverage lines based on consumer insights on their
site.

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5. www.kraftcanada.com
Explore this Web site to see how Kraft utilizes key consumer insights in developing its food
products.

6. www.dunkindonuts.com
Check out this Web site and discover the many social media vehicles Dunkin Donuts uses to
gather information from its consumers.

7. www.apple.com
This is Apples Web home and it provides you with a wealth of information.

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