ADVANCED MARKETING

RESEARCH

Jagrook Dawra
• What does a manager do?
• What is the most important skill he should have?
• Why MR?
• Why not to take decisions in absence of information?
• Shooting from the Hip – Lee Iacocca
 WHAT IS MR?

• Information
• Information processing
• Tools and techniques
• SWOT
• Observation
• One-on-one interviews
• Complex statistical tools and techniques – Regression, Factor, Cluster, etc.
 FROM MARKETING RESEARCH TO MARKETING ANALYTICS…

MR
• Focus is on analysis of survey-based carefully
collected data.
• Data size typically in a few hundreds.
• Focus on prediction from consumer’s psychological
aspects – perceptions/ attitudes.
• Data collection efforts are directed towards obtaining
a representative sample
MA
• Focus is on analysis of existing data obtained from
past behavior.
• Data size enormous.
• Focus is on prediction from past occurrences.
• Data collection is automatic and often mechanical.

4
• Evolution of an organization and its information needs.
• As an organization grows, its information needs also grow.
• Is there a real need for marketing research?
• Research takes time and costs money.
• Value of information vs. Cost of information?
Examples of failure:

• When you ignore MR:

• Hero Honda Street
• Nirma Premium soaps and beauty bars.
• When you use an incorrect tool or interpret
results incorrectly
• Coke – New coke
• Satisfaction Surveys
WORD OF
• When you have done everything right but still CAUTION…
things went wrong.
• Seinfeld
• Mercedes E-class

Examples of successes

• Numerous
 DEFINITION – AMA

• Marketing research: the function that links the consumer, customer, and public
to the marketer through information – information used to identify and define
marketing opportunities and problems; generate, refine, and evaluate
marketing actions; monitor marketing performance; and improve the
understanding of marketing as a process.
Business problem/
Business objective Research objective Research method Interpretation Recommendations
symptom

PROCESS
 DETAILED PROCESS

Research Method Interpretation Recommendation

• Establish Research Design • Analyze Data • Prepare Final Report

• Identify Information types and • Present Final Report
sources
• Determine Methods of Accessing
Data
• Design Data collection
Instruments
• Determine Sample Plan and Size
• Collect Data
 THE MOST
IMPORTANT STEP?
 THE MOST IMPORTANT STEP

Alice: Oh, no, no. I was just wondering

if you could help me find my way.
Cheshire Cat: Well that depends on
where you want to get to.
Alice: Oh, it really doesn't matter, as
long as...
Cheshire Cat: Then it really doesn't
matter which way you go.
• Alice in Wonderland (Lewis
Carroll)
• Research objectives, when achieved, provide the information necessary to
solve the problem identified.
• Research objectives state what the researchers must do.
 “The formulation of a problem is often more
IT ALL STARTS essential than its solution, which may be
WITH merely a matter of mathematical or
DETERMINING experimental skill”
OBJECTIVES • Albert Einstein.
 QUALITATIVE VS. QUANTITATIVE RESEARCH

• “Measuring the World”

• Humboldt vs. Gauss
 GAUSS…

MEASURING THE WORLD

HUMBOLDT…

MEASURING THE WORLD

 “MEASURING THE WORLD”

Merits of Gauss’ Method Merits of Humboldt’s Method

 CRITIC AL ABILITIES…

• Power of quantitative research lies in its efficiency

• Power of qualitative research lies in its exploration
 CRITICAL DIFFERENCES

Quantitative Qualitative
• Type of data: numbers • Type of data: verbose and media rich
• Method: Mostly deductive • Method: mostly inductive
• Relationship with the researcher: Researcher is • Relationship with the researcher: Researcher is very
withdrawn, unbiased observer. much a part of the research environment and is
difficult to remain unbiased
• Results involve giving thick descriptions.
• Results involve statistical description (mean, SD, etc.),
causal relationships between variables, etc.
 QUALITATIVE VS.
QUANTITATIVE TOOLS

• Measuring the world

• Exploratory vs. confirmatory research.
 RESEARCH METHOD

• Types of Research
• Exploratory Research: collecting information in an unstructured and informal
manner.
• Descriptive Research refers to a set of methods and procedures describing marketing
variables
• Causal Research (experiments): allows isolation of causes and effects.
 SOURCES OF DATA

• Primary Data: information collected specifically for the problem at hand

• Secondary Data: information already collected
 RESEARCH INSTRUMENT

• Survey instrument
• Asking the right question in the right way
 DESIGN DATA
COLLECTION QUESTIONNAIRE

• Software programs are available to assist marketing

researchers in preparing questionnaires.
 • Sample plan refers to the process used to
select units from the population to be
included in the sample. Gives you
SAMPLE representativeness!
PLAN AND • Sample size refers to determining how many
SIZE elements of the population should be
included in the sample. Gives you accuracy!
 DATA COLLECTION

• Data collection is very important because, regardless of the data analysis

methods used, data analysis cannot fix bad data.
• Data collection errors may be attributed to field workers or respondents.
• Researchers must know the sources of these errors and the controls to
minimize them.
 DATA ANALYSIS

• Data analysis involves entering data into computer files, inspecting data for
errors, and running tabulations and various statistical tests.
• SPSS
• Excel
• Any other software
• Knowledge of Software
• Knowledge of Statistical Tool
• It is important to master the method and not the software!
RESEARCH AND ETHICS
• A research company decides to leave a message on prospective respondents’
answering machines telling them that if they call back in the next 24 hours,
they will receive a valuable prize if they take part in a survey.
• Ethical as long as true
• Upon completion of an interview, the respondent is asked to provide the
names and telephone numbers of others he or she thinks should take part in
the survey.
• Ethical - snowball sampling, referral sampling
• A door-to-door salesman finds that by telling people that he is conducting a
survey, they are more likely to listen to his sales pitch.
• Unethical – sugging
• Selling under the guise of research
• What is frugging?
• Fund-raising under the guise of research
• The cover letter of a mail questionnaire says that it will "only take a few
minutes to fill out." But pretests have shown that at least fifteen minutes are
needed to fill it out.
• Unethical as “few” is vague
• Telephone interviewers are instructed to assure the respondent of
confidentiality only if the respondent asks about it.
• Ethical as long as confidentiality is true
• A client insists on inspecting the completed questionnaires to assess their
validity, but the researcher suspects that the client is really interested in
finding out what specific respondents said about the client.
• Unethical if the survey is confidential or anonymous.
• A client insists on inspecting the completed questionnaires to assess their
validity, but the researcher suspects that the client is really interested in
finding out what specific respondents said about the client.
• Unethical if the survey is confidential or anonymous.
• Respondents get a gift by Lottery.
• Considered unethical by some – Gambling.
• Institutional Review Board
• Reviews/ Scrutinizes research to ensure ethical practices and protect respondent
rights.
• Code of Ethics
• CASRO: www.casro.org
• MRA: www.mra-net.org
• ESOMAR: www.esomar.org
• PMRS: www.pmrs-aprm.com
 PANELS

• Marketing research companies are making greater use of panels.

• Recruiting respondents who agree to participate in future studies.
 COLD CALLING

• I have developed a schedule of cold calling. Students who are present in a session, can
expect me to call them any number of times during the session.
• I shall pose them with any specific question with regards to the session that is ongoing.
Any delay in answering or inability to appropriately answer shall warrant a negative mark
(-1).
• If I am satisfied with the answer, you get a +1 and if your name is not called in that session
you get a 0.
• I shall try my best to ensure everyone is called equal number of times in the term.
 DISCUSSION – ‘WARM’ CALLING

• You can also contribute as many times as you want to the class discussions.
• Response to a question I put to the class
• Your intelligent questions/ queries that leave the class wiser.
• Every time that I feel your points/ queries/ concerns add value to the class, you
get a +1. [An occasional +2 may also be given to deserving contributions]
• If you make a point just for the ‘sake’ of it, you get a 0.
•
COOP MARKET
RESEARCH

Please read for session 2

Fundamental
research
paradigms
J A G R O O K D AW R A
 Problems

Converting
this P to K Instruments
The world

Knowledge
 Converting P to K
APPROACH 1: INTERPRETIVISM APPROACH 2: POSITIVISM

Define Problem Define Problem

Make Predictive statements

from past knowledge
Collect data
Collect data

Interpret Analyze data to verify if the

predictive statements are true

Convert P to K Convert P to K
 Jaane bhi do
yaaron…

APPROACH 1: INTERPRETIVISM APPROACH 2: POSITIVISM

Who murdered Who murdered D’Mello?

D’Mello?
Corporator Taneja, involved in
substandard bridge construction
Interview all who committed the murder
knew D’Mello
Interview all

Interpret
Analyze data to verify if the
predictive statement is true

Convert P to K Convert P to K
Research RQ: What differential effect does HiLo promotion strategy (over
Question EDLP) have on customers behavior towards a store?
Approach 1: Interpretivism
Conduct an experiment:
◦ Subject one group of people to EDLP strategy over a period of time.
◦ Subject another group of people to HiLo strategy
◦ Collect data on several aspects of customer’s behavior towards each store.
◦ Conclude after exploration that customers trust an EDLP store more than a HiLo one. [this is assuming you had
taken ‘trust’ as one of the items to be studied in the broad ‘consumer behavior’.
Approach 2: Positivism
Studies show that people hate uncertainty. (Source: Theory)

Walmart that follows EDLP is more successful than Macey’s that follows HiLo. (Source: Newspaper article)

HiLo involves more uncertainty than EDLP (Source: Newspaper article)

Humans do not ‘trust’ an entity that is the source of uncertainty. (Source: Theory)

We therefore postulate/ conjecture/ hypothesize:

◦ H0: People will trust a store that follows EDLP strategy more than one that follows HiLo

Conduct an experiment:
◦ Subject one group of people to EDLP strategy over a period of time.
◦ Subject another group of people to HiLo strategy
◦ Collect data on how much they trust each store.
◦ Accept or reject H0.
 Basic paradigms in research
POSITIVISM INTERPRETIVISM

Focuses on predictive statements Focuses on understanding what is happening

(Hypotheses) that emerge from our past in a particular context.
knowledge about the issue.

Governed through explicitly stated theories

Let the data ‘lead the way’
and hypotheses.
Is more costly, but helps in exploration
Is more efficient.
Sampling caselet – covid 19
COVID 19 took the world by surprise. It is a pandemic of epic proportions. 3 crore people have been
affected up until now.

Last year, around the same time, in India, murmurs started to rise in the popular media about testing
methodology.

The press believed random sampling should be done.

India’s apex disease control body ICMR, however, adopted a methodology called ‘contact tracing’
(convenience sampling).

Who was right? Why? What are the pros and cons of the two methods for disease detection?
Qualitative Research
Forms of data
Written replies to open ended questions. Magazine articles

Photos/ documents Case studies written by 3rd parties

◦ Print ads/ story boards
Online comments
◦ Director’s reports
◦ On Consumer sites
◦ Annual reports
◦ Social networking sites
◦ Company minutes of meetings
◦ Etc.
◦ Etc.
Field notes
Recorded interviews (Voice/ Videos)
FGD records, etc.

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“Every animate and inanimate object on earth will soon be generating data, including our homes, our
car, and yes, even our bodies.”
◦ Anthony D. Williams, Author – ‘Wickinomics’

An average person today processes more data in a single day than a person in 1500s did in an entire
lifetime.

Much of this data is qualitative, though the analysis done on it may sometimes be quantitative.

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Process of conducting qualitative research
Discussion guide/ Interview Guide

FGG/ Interview
◦ Sample size: How many?
◦ Sampling method:

Discussion/ Interview

Transcribe data

Analysis
 Ethnography Case study
Types of
qualitative
research Action Grounded
research theory
 Sampling and sample size
• Information saturation

Triangulation
Issues
Analysis

Reporting results – Thick description

Analysis
Sampling method
Type of Sampling Purpose Example

Maximum Document diverse variation and common patterns – Actively looking for parting-off
variation involves looking for outliers to see if patterns still hold. ceremonies of private vs. public
Search actively for confirming, disconfirming and typical companies.
cases.
Homogeneous Focusses, reduces, simplifies finding patterns Focus on a homogeneous set of
companies.
Critical case Permits logical generalization and maximum application of
information to other cases.
Theory based Finding examples of a theoretical construct and thereby Need for special treatment – “How
elaborate and examine it. does a store/ retailer make you feel
special?
Confirming and Elaborating initial analysis, seeking exceptions, looking for Actively looking for the exceptions
disconfirming variation. in a study.
cases

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Triangulation
Confirmation bias – Researcher’s bias

Multiple sources of data

Multiple methods – e.g. observation and interviews

Multiple analysts
 Create a discussion guide for the following business problem:
◦ Retail stores have their own brands called private labels or store brands.
How do consumers perceive these brands? Are private label brands
perceived different from national brands?
◦ How do they perceive its quality? Manufacturers of Jeans (Jeans brands)
define quality in terms of threads per inch or weight (in ounces). Do
Exercise – in consumers also perceive quality of jeans as such?

groups Rules:
◦ Create the guide in groups.
◦ Please take no more than 15 minutes to create this guide. Feel free to
refer secondary sources if necessary.
◦ Submit the discussion guide by email to the CR in pdf format only. Name
of the file must be Ex_01_<group no>.pdf
Analysis of Qualitative
Data

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Common software that help in qualitative
data analysis
NviVo

Atlas Ti

RQDA – Freeware uses R

Important: all qualitative research software only do only a

preliminary analysis. They do not find ‘patterns’

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Using NVIVO
Helps organize qualitative data.

Also helps do some basic data analysis.

Basically gives a ‘structure’ to qualitative data and makes the analysis more scientific.

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Word clouds
Using sentiment analysis software
Capture and code adjectives like – ‘good’, ‘better’ and ‘excellent’ and code them as +1, +2 and +3
respectively.
 •Review •Key ideas
•Merge •Reflect
•Refine •Link

Coding Memoing

Visuals Queries

•Models •Text search

•Matrices •Word frequency
•Charts •Matrix
•Coding comparison

Qualitative analysis involves

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Why is coding important?
Qualitative analysis is often done to ‘explore’.

Simple text description is often not adequate.

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Hermeneutics
Hermeneutics focusses on the meaning of the qualitative data.

Hermeneutics means interpretation

Video – credit card

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Historicity and Hermeneutics
Understanding of a topic/ quote/ concept in a particular historical context.
◦ For e.g. We note that ‘profits of a company have been going down’. One would be tempted to think that there
is something wrong with the company or its management.
◦ But if the context was put in place – for instance: The state of the economy was bad and that recession had
set in, the interpretation changes.

Important to incorporate context at the time of taking field notes.

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The Hermeneutic circle
It refers to the idea that one's understanding of the text as a whole is established by reference to the
individual parts and one's understanding of each individual part by reference to the whole.

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Hermeneutics and prejudice

Interpretation of a text needs the researcher to have some prior knowledge. For instance, she needs
to know the language, its vocabulary and social conventions.

Social conventions change – SMS lingo: LOL, LMAO, TY, ☺, , :-/ …

The more poetic a person is, more cryptic is his/ her language and interpretation is less mechanical.
◦ Mark Twain: “I don’t let my school interfere with my education”

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Written vs. verbal text vs. visual interpretation

95% of interaction in the world is verbal.

Written text (written by respondents) comes after due deliberation and a certain ‘caution’ exercised
by the respondent, while verbal data is not so much.

Emotions associated with the statements can be captured only in verbal/ visual text and not
otherwise.

Verbal data cannot be accurately captured by existing technology.

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Example – Attitude towards Sony
HSC 300
Attitude towards the brand
Attitude towards the product
Attitude towards the performance
Attitude towards the attributes
Attitude towards the aftersales
service
Attitude towards the ease of use
Etc.
Whose attitude – is there a
difference between groups?
◦ Men vs. women
◦ Classification as per other
demographics.
◦ Amateur vs. professional
photographer.
◦ Usage – heavy vs. light user.
◦ Usage – purpose (wildlife/ friends
and family/ scenery/ etc.)
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 Advertisement deconstruction – understanding the explicit
and implicit messages in an ad. A further analysis could be
done to reconcile the difference between the intended
positioning strategy and the perceived positioning of brands.

Potential Director/ chairman report in the annual report of a company

– emphasis laid down on CSR activities by companies and its
relationship with the movement of stock prices of that
exercises company.

Analysis of Facebook/ twitter data on the pages of various

companies to bring out the attitude of consumers towards
these companies. [objective may need to be further focused]

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 Brand failures: using the cases in the book on
brand failures (and also perhaps the same author’s
book on brand successes) build a generalized
theory around what causes brands to succeed/ fail.
See if your emerging theory conforms to the ones
that already exist in the theory.
Potential
exercises
What type of comments/ content diffuse faster
over social media?

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Measurement in
Management
Issue of reliability and validity
Two extremely important aspects of a good research.

How many of you had questions vis-à-vis reliability and validity built into your SIP questionnaires?

What is Reliability?
◦ Validity?
 The degree to which
a measurement
instrument
Validity
accurately reflects
what it is designed to
measure.
 The degree to which a
measurement
Reliability instrument is
consistent in what it
measures.
Valid and Reliable
Valid but not Reliable
Not Valid but Reliable
Not Valid and not Reliable
A good instrument should have:
Objectivity: Definition of the task at hand – “Objective of playing darts is to hit the bulls eye”
◦ “Siddarth’s ability to hit the bulls eye”
◦ What is being measured? Siddarth? Ability?

Practicability: Online questionnaire may not be the right instrument for a study on Indian Kirana
store shoppers.

Reliability

Validity
True score test theory
Types of reliability…
Test-Retest: stability of the instrument – test it 2-3 times after a span of time.

Alternate form reliability: in test-retest reliability, the same instrument is given the second time. In
alternate form, the form of the questions may change.

Split half reliability: if an instrument has six questions that measure ‘loyalty’, compare the results
of first three with the next three.
… Types of Reliability…
Internal consistency – Several questions are often used to measure one
construct. E.g. ‘Price consciousness’ is measured using the statements below:
… Types of Reliability
Internal consistency is said to be achieved when scores of items are highly correlated.
◦ Cronbach’s alpha is used to calculate internal consistency.
◦ Internal consistency is also called inter-item reliability.

Inter rater reliability: more than two judges judging a boxing match.
◦ Three faculty members judging your SIP presentations.
Types of Validity…
Face validity: There is prima facie evidence to say that the results are accurate. E.g. the study
predicts a market share of 45%. Secondary sources also confirm this.
…Types of Validity…
Construct validity: Are we measuring the construct as it was defined?
◦ E.g. Brand Loyalty:
◦ Behavioral angle: A customer is loyal to a brand if (s)he buys the brand often.
◦ How often did you buy toothpaste in the last one year?
◦ Of these purchases, how often did you buy ‘Colgate’?
◦ Attitudinal angle: A customer is loyal to a brand if (s)he has a positive disposition towards it.
◦ Please rate the following brands on a scale 1 to 5 (I = dislike, 5= like)
◦ Colgate
◦ Pepsodent
◦ Close-up
◦ Etc.
Brand equity
…Types of Validity…
Content validity: Are we measuring the construct fully?
◦ Trust has three dimensions: Ability, Benevolence and Integrity.

Criterion validity: is the extent to which a measure is related to an outcome.

◦ Predictive validity:
◦ “high trust in a brand would lead to high purchase intention”.
◦ Concurrent validity: How well does a new test compare to a well-established test?
◦ Measuring attitudinal loyalty and behavioral loyalty should be highly correlated.
◦ Convergent validity: Two or more methods of measurement leading to similar results. E.g. market share
being predicted by analysis of scanner panel data and a survey method.
◦ Discriminant validity: can a set of questions discriminate between two constructs:
 …Types of Validity
What do the following questions measure?
 …Types of Validity
What do the following questions measure?
Optional exercise…1
Rishi measures attitudinal loyalty using a few statements constructed by him and observes low
effect on repurchase intention.
◦ Predictive validity?
◦ Construct validity?
◦ What needs to be done to rectify the situation?
Optional exercise…2
Chandan measures trust as an overall construct and also measures it on its dimensions of ability,
benevolence and integrity. He observes a difference between the mean scores of both
measurements.
◦ Content validity?
◦ How can this be corrected?
Optional exercise…3
Jaysun measures trust using its three dimensions and gets the following
Cronbach alphas:

Dimension Cronbach alpha

Ability 0.85
Integrity 0.78
Benevolence 0.60

How would you interpret these?

What corrective actions would you take?

 What we have done up until now
Importance of Objectives and translation of business problem to
research objectives (Case on Coop)

Qualitative research

Biases – Response bias and Sampling bias (Case on

Bluemountain)

Use of scale – Very Very IMPORTANT!

Issues of Reliability and Validity – Properties all scales must

address
 What we have done up until now
Issues of Reliability and Validity – Properties all scales
must address

Questionnaire Design

Scale construction process

Factor analysis – technique used in scale

construction
Link for questionnaire survey
https://iimrmarketing.au1.qualtrics.com/jfe/form/SV_5AzNg1hBbWaSlEi
“When we talk about attitudes, we are
talking about constructs of the mind as they
are expressed in response to our questions.
But usually all we really know are questions
we ask and the answers we get.”

“What does it mean if a finding is significant

or that the ultimate in statistical analytical
techniques have been applied, if the data
collection instrument generated invalid data
at the onset”
• Jacob Jacoby
 Constructs borrowed from other
disciplines.
•Cognitive dissonance, attitude, utility

Measurement Constructs that are trans-

in business disciplinary
administration •Trust, fairness

Constructs developed by
management scientists
•Repurchase intention, Brand equity,
customer loyalty, service quality, etc.
Challenge of measurement
in management
In physical sciences, measurement is almost always additive.
◦ Length: Ruler, cms.
◦ Weight: Scale, kgs.
◦ Time: Clock, minutes.

In marketing, is the measurement always additive?

Consider preference.
◦ Additive:

◦ Preference for a pair of jeans= Σ[(importance of attributes X desirability of its levels)]

◦ Preference for a pair of jeans= П[(importance of attributes X desirability of its levels)]

◦ The problem is complicated further because the various constructs interact with each other.
Multi-item scale
Instructions

Likert scale,
interval scale

Scale items
Scales and dimensionality
Purchase Intention is a unidimensional scale
◦ I would buy Lewis jeans in my next purchase. (1=strongly disagree to 7 = strongly agree)
◦ Next time I buy jeans, I would buy Lewis (1=strongly disagree to 7 = strongly agree)
◦ Lewis is my first preference to buy when I go buying Jeans (1=strongly disagree to 7 = strongly agree)

Trust is a multidimensional scale

◦ Ability
◦ Benevolence
◦ Integrity
Multi-dimensional scale
Ability

Benevolence

Integrity
 Creating a reliable and valid
construct
Specify the domain of •Literature Search
the construct

Qualitative techniques Generate Sample of •Literature search, Experience survey, Insight

Items simulating examples, critical incidents, FGDs

Collect data

Factor analysis Purify measure

Collect data
Adopted from
Assess reliability •Coefficient alpha, split-half, etc. Churchill GA
(1979), “A
CFA, SEM Paradigm for
Developing a Better
Assess Validity •Criterion Validity, Discriminant Validity, etc.
Measure of
Marketing
Constructs”, JMR,
Develop norms •Methods of summarizing distribution of scores pp. 64-73
Factor
Analysis
The Math
behind Factor
Analysis
method
Factor Analysis
A simple example
◦ 3 courses – Finance, Marketing and Business Policy
◦ If 𝑋1 , 𝑋2 , 𝑋3 are marks (out of 10) obtained by the students,

Student Finance 𝑋1 Marketing 𝑋2 Buss. Policy 𝑋3

1 3 6 5

2 5 3 3

3 9 4 8

4 4 5 7

5 7 9 5
These grades are functions of two underlying factors 𝐹1 [quantitative ability] and
𝐹2 [Verbal ability]

𝑋𝐹𝑖𝑛 = 𝑙𝐹𝑖𝑛,𝑄𝐴 𝐹𝑄𝐴 + 𝑙𝐹𝑖𝑛,𝑉𝐴 𝐹𝑉𝐴 + 𝜀1

𝑋𝑀𝑘𝑡 = 𝑙𝑀𝑘𝑡,𝑄𝐴 𝐹𝑄𝐴 + 𝑙𝑀𝑘𝑡,𝑉𝐴 𝐹𝑉𝐴 + 𝜀2

𝑋𝐵𝑃 = 𝑙𝐵𝑃,𝑄𝐴 𝐹𝑄𝐴 + 𝑙𝐵𝑃,𝑉𝐴 𝐹𝑉𝐴 + 𝜀3

Variable 𝑋𝒊 Loading on
𝐹𝑄𝐴 , 𝑙𝑋,𝑄𝐴 𝐹𝑉𝐴 , 𝑙𝑋,𝑉𝐴
Finance 𝑋𝐹𝐼𝑁 + 0
Marketing 𝑋𝑀𝑘𝑡 0 +
Business Pol 0 +
𝑋𝐵𝑃
Factor Analysis
𝑋𝐹𝑖𝑛 = 𝑙𝐹𝑖𝑛,𝑄𝐴 𝐹𝑄𝐴 + 𝑙𝐹𝑖𝑛,𝑉𝐴 𝐹𝑉𝐴 + 𝜀1

𝑋𝑀𝑘𝑡 = 𝑙𝑀𝑘𝑡,𝑄𝐴 𝐹𝑄𝐴 + 𝑙𝑀𝑘𝑡,𝑉𝐴 𝐹𝑉𝐴 + 𝜀2

𝑋𝐵𝑃 = 𝑙𝐵𝑃,𝑄𝐴 𝐹𝑄𝐴 + 𝑙𝐵𝑃,𝑉𝐴 𝐹𝑉𝐴 + 𝜀3

𝑿= 𝑳 𝑭 + 𝜺
3×1 3×2 2×1 3×1

Coefficient 𝑳 is a matrix of factor loadings

𝐹1 , 𝐹2 , …, 𝐹𝑚 , 𝜀1 , 𝜀2 , … , 𝜀𝑝 are unobservable.
Factor Analysis
Can you calculate variance?
Can you calculate covariance?

Student Finance 𝑋1 Marketing 𝑋2 Buss. Policy 𝑋3

1 3 6 5

2 5 3 3

3 9 4 8

4 4 5 7

5 7 9 5
Variance – covariance matrix from
the data
4.64 0.16 1.64
Var-Cov matrix calculated from the data = 0.16 4.24 −0.04
1.64 −0.04 3.04
It can be shown that
2 2 2
𝑉𝑎𝑟 𝑋𝑖 = 𝑙𝑖1 + 𝑙𝑖2 + … + 𝑙𝑖𝑚 + 𝜎𝑖2

Specific
Communality Variance

𝐶𝑜𝑣𝑎𝑟 𝑋𝑖 , 𝑋𝑗 = 𝑙𝑖1 𝑙𝑗1 + 𝑙𝑖2 𝑙𝑗2 + … + 𝑙𝑖𝑚 𝑙𝑗𝑚

 Variable
Variable 𝑋1 𝑋2 𝑋3
𝑋1 𝑉𝑎𝑟 𝑋1 𝐶𝑜𝑣 𝑋1 , 𝑋2 𝐶𝑜𝑣 𝑋1 , 𝑋3
𝑋2 𝐶𝑜𝑣 𝑋2 , 𝑋1 𝑉𝑎𝑟 𝑋2 𝐶𝑜𝑣 𝑋2 , 𝑋3
𝑋3 𝐶𝑜𝑣 𝑋3 , 𝑋1 𝐶𝑜𝑣 𝑋3 , 𝑋2 𝑉𝑎𝑟 𝑋3
 Variable
Variable 𝑋1 𝑋2 𝑋3
2 2
𝑋1 𝑙11 + 𝑙12 + 𝜎12 𝑙21 𝑙11 + 𝑙22 𝑙12 𝑙31 𝑙11 + 𝑙32 𝑙12
2 2
𝑋2 𝑙11 𝑙12 + 𝑙12 𝑙22 𝑙21 + 𝑙22 + 𝜎22 𝑙21 𝑙31 + 𝑙22 𝑙32
2 2
𝑋3 𝑙11 𝑙31 + 𝑙12 𝑙32 𝑙21 𝑙31 + 𝑙22 𝑙32 𝑙31 + 𝑙32 + 𝜎32

• We have a series of simultaneous equations:

2 2
𝑙11 + 𝑙12 + 𝜎12 𝑙21 𝑙11 + 𝑙22 𝑙12 𝑙31 𝑙11 + 𝑙32 𝑙12 4.64 0.16 1.64
• 𝑙11 𝑙12 + 𝑙12 𝑙22 2
𝑙21 2
+ 𝑙22 + 𝜎22 𝑙21 𝑙31 + 𝑙22 𝑙32 = 0.16 4.24 −0.04
𝑙11 𝑙31 + 𝑙12 𝑙32 𝑙21 𝑙31 + 𝑙22 𝑙32 2
𝑙31 2
+ 𝑙32 + 𝜎32 1.64 −0.04 3.04
Rotation
Some terms
Bartlett’s test of sphericity:
◦ H0: The population correlation matrix of the variables is an identity matrix.

Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy:

◦ Value should be > 0.5

Communality: Sum of square of loadings (from before). Defined as: Amount of variance that the
factors explain in the variables.

Eigen value: total variance explained by each factor.

Rotation
Varimax – searches for a rotation of the original factors such that the variance of
the loadings is maximized.
◦ Most popularly used method of rotation.

Qurtimax – minimizes the number of factors needed to explain each variable.

Equimax – compromise between Varimax and Quartimax

While all the above are orthogonal rotations, sometimes, oblique rotation
provides a better explanation of the factors. But this method is rarely used. They
may be used when one expects the factors to be slightly correlated.
Key Takeaways up until now
While Quantitative research has the power of confirmation, Qualitative research has the power of
exploration.

Two types of biases – response bias and sampling bias.

Validity and reliability.

Always use a scale to measure constructs.

Factor analysis is used in scale construction.

Optional Reading
Churchill GA (1979), “A Paradigm for Developing a Better Measure of Marketing Constructs”, JMR,
pp. 64-73

Jennifer L Aaker (1997), “Dimensions of Brand Personality”, JMR, pp. 347 – 356.
Behavioral Research:
through
experimentation
Experiments marked the
emergence of modern science
in the 16th and 17th century. An experiment is a way of
• ‘Bodies That Stay Atop Water or Move systematically observing a
Within It.’ (Galileo, 1612) phenomenon.
• ‘On loadstone and magnetic bodies.’
(William Gilbert, 1600)
 Early scientists like Aristotle based their scientific findings merely by
observation.

An Francis Bacon the creator of empiricism. ‘Baconian methods’

(scientific methods)
experiment is ◦ “He taught that not only should we observe nature in the raw, but also
different from ‘twist the lion’s tale’, that is, manipulate our world in order to learn its
secrets”
mere ◦ Hacking on Francis Bacon (1983)

observation Modern scientists emphasize the need to ‘control’ for all extraneous
influences that might bias or limit observation.
 Used to study an extremely well defined ‘focused’ phenomenon.
Experiments ◦ Do consumers prefer concept A/B/C
◦ What is more attractive – 10% off or 10% more
and causation ◦ What is the psychological impact of pricing a product as Rs. 79.00 vs. Rs.
in management 80.00?

Used to study cause and effect.

 Counterfactual – David Hume (1711-1776)
◦ In an experiment we observe what did happen when treatment was
given.
◦ Counterfactual is the knowledge of what would have happened if the
treatment was not given.
Effect
Effect = difference between what happened as a result of the
treatment and what would have happened without the treatment
(counterfactual).

“Control condition”
 Does the demand for Colgate increase if it is at a discount of 10%?
◦ Have observations (Sales) for non-discount periods.
◦ Take observations for discount period.
◦ Can the increased sales be attributable to the discount?
◦ What about extraneous factors?
◦ Are the consumers same in both the instances?
◦ It is not possible to simultaneously give and not give discounts to the
10% off same consumers.

Cause probing research tries to create reasonable approximations to

physically impossible counterfactual.

Make probabilistic inferences.

◦ 1st video: Versace
 A causal relationship occurs only when:
◦ The cause preceded the effect
◦ The cause was related to the effect
◦ We can find no other plausible explanation for the effect other than the
cause.
Causal In an experiment:
Relationship ◦ We manipulate the presumed cause
◦ We see whether variation in the cause is related to variation in the effect.
◦ We use various methods to reduce the plausibility of other explanations
for the effect.

Video 2: Does size of a plate make you obese? [1:16 – 4:38; 17:36].
Correlation does not prove
causation
Income and education are correlated.
◦ Do you need to have high income to have good education or do you
need to have good education to have high income?
◦ There may be a correlation, but no causation
◦ There may be a unidirectional causation –
◦ High income –> high education OR
◦ High education –> high income .
◦ There may be a bi directional causation
◦ High income –> high education –> high income
◦ The relationship may not be causal at all, but due to a third variable
(often called a Confound).
◦ Wisdom causes bot income and education to be high.
Manipulable Manipulable
◦ Dosage, extent of discount, format of discount, color and type of
and non- packaging, etc.
manipulable Non – manipulable
causes ◦ Age, gender, number of times they have bought a particular brand, etc.
After an experiment
B
Casual Description
◦ A affects C.
A C
◦ B also affects C.
◦ A affects C by a larger amount as compared to B.
◦ B moderates the relationship between A and C [A*B have a significant effect on C]
◦ Or B mediates the relation between A and C

Casual explanation
Some terms and definitions
Experiment: a study in which an intervention is deliberately introduced to observe its
effects.

Randomized experiment: an experiment in which units are assigned to receive the

treatment or an alternative condition by random process.

Quasi – experiment: an experiment where units are not assigned randomly.

Natural experiment: is not really an experiment because the cause cannot be

manipulated.

Field experiment: experiment done in the field (say organization)

Correlational study is usually synonymous with non-experimental or observational

study; a study that observes the size and direction of relationship among variables.
Independent variable – cause that is manipulated.

Dependent variable – effect of interest.

Video 3: Do creative people buy ‘Apple’ products?

◦ Does owning an ‘Apple’ product make you creative?
Most experiments are highly local but have general aspirations

Experiments are localized and particularistic

◦ Study the affect of one or two causes on a particular variable of interest.
◦ The aim is to make general statements about these localized phenomenon.

While experiments are used in practical applications, they are also widely used in
theory construction.

Video 4: Asch Experiments

Asch experiments
Two types of respondents:
◦ Genuinely believe the group is right. (referent informational influence)
◦ ‘Go along’ with the group to avoid the discomfort of not complying with the group. (normative influence)

What happened when the ‘naïve’ respondent got an ally in the group?

How did Asch prove normative influence?

UTOS: Components of experiment
Units

Treatments

Observations

Settings in which the study is conducted.

Generalizations
Construct validity generalizations - inferences about constructs that research operations presents.

External validity generalizations - inferences about whether casual relationship holds over variations
in persons, settings, treatment and measurement variables.
Videos
Video 1: Does brand have an effect on evaluation of a product?

Video 2: Does size of a plate make you fat?

◦ 1:16 – 4:38; 17:36 – onwards

Video 3: Creative and innovative people buy ‘Apple’. But does buying the brand ‘Apple’ make you
creative?

1 cause and 1 effect

Cause had two levels

Very IMPORTANT – Random Allocation
Random sampling is different from random allocation.
More than one causes
A 2-cause case: does color of packing and ‘country of origin’
have an effect on customer willingness to pay for yogurt?
◦ Black vs. white packing
◦ Country not mentioned vs. Switzerland (or ‘Swiss’) mentioned on the
pack
An example:
S I M O N A B OT T I , A N N L .
M C G I L L ( 2 0 1 0 ) T H E LO C U S O F
C H O I C E : P E RS O N A L
C AU S A L I T Y A N D
S AT I S FAC T I O N W I T H H E D O N I C
A N D U T I L I TA R I A N D EC I S I O N S ,
JOURNAL OF CONSUMER
R E S EA R C H , VO L . 3 7 , P G 1 0 6 5
– 1078.
A museum director wonders whether to plan the consumers’ visits or let them choose on their own.

A spa wants to offer a discount coupon for its treatments. It is wondering whether to give a coupon
that can be redeemed on any of the treatments or to give one that can be redeemed on a specific
treatment?
Consumers may consume the same products Goal: Hedonic vs. Utilitarian
or services with different goals, for example,
Choice: Self-chosen vs. Externally determined
for their own pleasure—a hedonic goal—or to
achieve some higher level purpose—a
utilitarian goal. This study investigates
whether this difference in goals influences
satisfaction with an outcome that was either
self-chosen or externally determined.
 Consumption goals
HEDONIC UTILITARIAN

Fun, sensorial, spontaneous Functional. Sensible and useful

Eating out for pleasure Eating out to better understand local culture

Visiting a museum for fun Visiting the museum for collecting material for
class project.
Locus of choice
Internal – when a consumer chooses something herself.
◦ individuals perceive themselves to be meaningful agents in what they will experience and attribute outcomes
to their own actions.

External – choice made by fate or third party.

◦ individuals perceive their experience as being determined by causal forces beyond their control
Four groups were created – respondents were randomly allocated among these four groups.
Study 1: 2 by 2 design
A moderately large U.S. city is planning to
Choice, Choice,
open a new photography museum. The
Utilitarian Hedonic
curators are testing different formats.
You have been selected for the test. The
curators have asked you to imagine being
No No aantourist visitingvisiting
art student the museum
the museumjust forto
choice, choice, fun. Youmaterial
collect will be presented with some
for your bachelor’s
Utilitarian Hedonic options
thesis. You
aboutwillhow to structure
be presented witha virtual
some
museum visit how to structure a virtual
options about
The curators
museum
You can visithave
choose one already
of the chosen
optionsone of
the
You options,
The
keeping
can
curators
choosekeeping
in mind
haveone
that in
already
of mind
your
the that
chosen
goal
options their
is to
one of
goal is toinmaximize
keeping
the options,
maximize mind
the keepingofyour
funthat in
your
the fun
mind during
goal
visit.that
is to the
their
visit.
goal is to maximize
maximize your learning yourduring
learning theduring
visit.
the visit.
Subsequently, the participants witnessed a virtual visit.
◦ People who were in the ‘choice’ cell got to choose and plan their visit, while the computer randomly chose for
those in the ‘no-choice’ cell.

Dependent variable: satisfaction with the outcome

◦ “How much did you like to visit the museum?
Study 1 results
Choice enhanced the extent to which participants liked the museum visit when their decisions were
led by the hedonic goal of having fun.

However, when participants were driven by the utilitarian goal of writing a thesis, they liked the
personally chosen museum visit only as much as the curator-chosen one.
Alternate explanations
In study 1 the no choice condition involved an expert making the choice on behalf of the consumer.
The mitigation in satisfaction observed in the utilitarian condition could then be explained with
participants’ belief that the curator was at least as qualified as they were in selecting the most
pedagogically effective alternative.

The aim of the study was to tie the results to personal causation and not to expertise.
Study 1: 2 by 2 design
Imagine that you have been working suffering
Choice, Choice,
Utilitarian Hedonic really
mild back
hardpains
duringandthea semester
general soreness.
and
Your doctor
achieved important
tells youacademic
that thesesuccesses.
are just
symptoms
You think that
of overall
a professional
body fatigue
massage
and at
arecommends
local spa renowned
a professional
for themassage
quality ofat a
No No local spa
their massage
renowned
treatments
for thewould
quality of
choice, choice, represent
their massage
a great
treatments.
way to reward
Imagineyourself.
Utilitarian Hedonic having a having
Imagine gift certificate
a gift certificate
to spendto atspend
the
spathe
at that
spaoffered
that offered
four types
four of
types
massage
of
massage
treatment.treatment
treatment.
The
Youcertificate
are allowed is valid only forany
to select massage
of
#3 (of
the themassages.
four four massages)
massages
Study 2 results
Y1 =   +  1X 1 +  2 X 2
Books Attend Books Attend

Grade
Grade Grade

Calculate the correlation between all the three variables.

 Awareness Image Brand Equity

Perception of Fair Repurchase intention

Customer trust
treatment
 Awareness Image Brand Equity

Perception of Fair Repurchase intention

Customer trust
treatment
 M

X Y

*Baron and Kenny, 1986

 Buy

Enjoy Read
Income (Rs.) D1 D2 D3
10000 and less 0 0 0
10000-20000 1 0 0
20000-30000 0 1 0
30000 and more 0 0 1