Module 1

Chapter 1
Introduction and Early

Phases of Marketing
Research
Copyright © 2010 Pearson Education, Inc. 1-1

Redefining Marketing Research
The American Marketing Association (AMA)

redefined Marketing Research as:
The function that links the consumer, the

customer, and public to the marketer
through INFORMATION

Redefining Marketing Research
Used to identify and

define market
opportunities and
problems
Generate, refine, and
evaluate marketing
performance
Monitor marketing
performance
Improve understanding
of marketing as a
process
q Business researchers systematically collect,
compile, analyze, and interpret data to
provide quality information based on which a
decision maker will be able to take a decision in
an optimum manner.
q Conducting research to deal with any problem is
a scientific, systematic, and interlinked
exercise, which requires sound experience and
knowledge.

Definition of Marketing Research
Marketing research is the systematic and objective

§ identification
§ collection
§ analysis
§ dissemination
§ and use of information
For the purpose of improving decision making related to the
§ identification and
§ solution of problems and opportunities in marketing

Market Research
• Specifies the information necessary to

address these issues
• Manages and implements the data

collection process
• Analyzes the results
• Communicates the findings and their

implications
• Helps managers use this information to

make decisions

Characteristics of Good Research
Clearly defined purpose

Detailed research process
Thoroughly planned design
High ethical standards
Limitations addressed
Adequate analysis
Unambiguous presentation
Conclusions justified
Credentials
SOME COMMONLY RESEARCHED AREAS IN
BUSINESS
1. Employee behaviours such as performance, absenteeism,
and turnover.
2. Employee attitudes such as job satisfaction, loyalty, and
organizational commitment.
3. Supervisory performance, managerial leadership style, and
performance appraisal systems.
4. Employee selection, recruitment, training, and retention.
5. Validation of performance appraisal systems.
6. Human resource management choices and organizational
strategy.
7. Evaluation of assessment center.
8. The dynamics of rating and rating errors in the judgment of
human performance.
9. Strategy formulation and implementation.
10. Just‐ in‐ time systems, continuous‐ improvement
strategies, and production efficiencies.
SOME COMMONLY RESEARCHED AREAS IN
BUSINESS
• 11. Updating policies and procedures in keeping with latest
government regulations and organizational changes.
• 12. Organizational outcomes such as increased sales,
market share, profits, growth, and effectiveness.
• 13. Consumer decision making.
• 14. Customer relationship management.
• 15. Consumer satisfaction, complaints, customer loyalty,
and word‐ of‐ mouth communication.
• 16. Complaint handling.
• 17. Delivering and performing service.
• 18. Product life cycle, new product development, and
product innovation.
• 19. Market segmentation, targeting, and positioning.
• 20. Product image, corporate image.

Different types of Business Research
• Basic and Pure research
• Qualitative and Quantitative research
• Problem identification and problem

solving research.

Difference Between Basic and Applied
Research
• Basic research is generally not related to a

specific problem and its findings cannot be
immediately applied.
• Applied research directly addresses the

problem at hand. Applied research is launched
by the firm, agency, or individual facing a specific
problem.

Basic or fundamental research
• Right from her days as a clerical employee in a bank, Sarah

had observed that her colleagues, though extremely
knowledgeable about the nuances and intricacies of banking,
were expending very little effort to improve the efficiency and
effectiveness of the bank in the area of customer relations and
service. They took on the minimum amount of work, availed
themselves of long tea and lunch breaks, and seemed
unmotivated in their dealings with the customers and the
management. That they were highly knowledgeable about
banking policies and practices was clearly evident from their
discussions as they processed applications from customers.
Sarah herself was very hardworking and enjoyed her work
with the customers. She always used to think what a huge
waste it was for talented employees to goof off rather than to
work hard and enjoy their work. When she left the bank and
did the dissertation for her PhD, her topic of investigation was
Job Involvement, or the ego investment of people in their
jobs.
• The conclusion of her investigation was that the single most

important contributory factor to job involvement is the fit
or match between the nature of the job and the personality
predispositions of the people engaged in performing it. For
example, challenging jobs allowed employees with high
capabilities to get job‐ involved, and people‐ oriented
employees got job‐ involved with service activities. Sarah
then understood why the highly intelligent bank employees
could not get job‐ involved or find job satisfaction in the
routine jobs that rarely called for the use of their abilities.
Subsequently, when Sarah joined the Internal Research
Team of a Fortune 500 company, she applied this
knowledge to solve problems of motivation, job
satisfaction, job involvement, and the like, in the
organization.

• The above is an instance of basic research, where

knowledge was generated to understand a
phenomenon of interest to the researcher.
• The primary purpose of conducting basic research

is to generate more knowledge and
understanding of the phenomena of interest and
to build theories based on the research results.

• Research can be undertaken for different purposes. One is

to solve a current problem faced by the manager in the
work setting, demanding a timely solution. Such research is
called applied research. The other is to generate a body of
knowledge by trying to comprehend how certain problems
that occur in organizations can be solved. This is called
basic, fundamental, or pure research.
• The findings of such research is to know something we did

not know before.
• Such knowledge, once generated, is usually later applied in

organizational settings for problem solving

Difference between Qualitative Vs. Quantitative
Research
Qualitative Research Quantitative Research
Objective To gain a qualitative To quantify the data and

understanding of the generalize the results from
underlying reasons and the sample to the population
motivations of interest
Sample Small number of non- Large number of

representative cases representative cases
Data Collection Unstructured Structured
Data Analysis Non-statistical Statistical
Outcome Develop an initial Recommend a final course of

understanding action
Classification of Marketing Research
Problem-Identification Research
• Research undertaken to help identify problems which are
not necessarily apparent on the surface and yet exist or
are likely to arise in the future. Examples: market
potential, market share, image, market characteristics,
sales analysis, forecasting, and trends research.
Problem-Solving Research
• Research undertaken to help solve specific marketing
problems. Examples: segmentation, product, pricing,
promotion, and distribution research.

A Classification of Marketing Research
Fig. 1.1
Marketing Research
Problem Problem-Solving
Identification Research Research
Market Potential Research Segmentation Research

Market Share Research Product Research
Market Characteristics Research
Pricing Research
Sales Analysis Research
Forecasting Research Promotion Research
Business Trends Research Distribution Research
Table 1.1
SEGMENTATION RESEARCH
§ Determine the basis of segmentation
§ Establish market potential and
responsiveness for various
PRODUCT RESEARCH
segments
§ Test concept
§ Select target markets
§ Determine optimal product design
§ Create lifestyle profiles:
demography, media, and § Package tests
product image characteristics § Product modification
§ Brand positioning and repositioning
§ Test marketing
§ Control score tests
Table 1.1 cont. PROMOTIONAL RESEARCH
0.00%
§ Optimal promotional budget
APR
§ Sales promotion relationship
§ Optimal promotional mix
§ Copy decisions
§ Media decisions
§ Creative advertising testing
PRICING RESEARCH § Evaluation of advertising effectiveness
§ Pricing policies § Claim substantiation
§ Importance of price in brand selection
§ Product line pricing
§ Price elasticity of demand
$ALE
§ Initiating and responding to price changes
Table 1.1 cont.

DISTRIBUTION RESEARCH
Determine…
§ Types of distribution
§ Attitudes of channel members
§ Intensity of wholesale & resale coverage
§ Channel margins
§ Location of retail and wholesale outlets

Hypothesis
• An hypothesis is a specific statement of

prediction. It describes in concrete (rather than
theoretical) terms what you expect will happen in
your study.

Descriptive Hypothesis
• It is a statement about the existence, size, form

or distribution of variable.
• It encourage researchers to think about the
implications of a supported or rejected finding.
• It describes the cause and effect relationship
phenomenon.
• Eg: Group study helps to achieve high marks in

exam.
• Eating more junk food leads to obesity.

Relational Hypothesis
• It is a statement about the relationship between

two variables with respect to some cases.
• Relational hypothesis may be

Ø a. correlational or
Ø b. explanatory (causal)

a. Correlational
• It’s a statement indicating that variables occur

together in some specific manner without
implying that one causes the other one.
Type of Direction Example
correlation
Positive Both variables change As height increases,
in same direction weight also increases.
Negative The variables change As coffee consumption
in opposite direction increases, tiredness
decreases.
Zero/No There is no Coffee consumption is
relationaship between not correlated with
the variables. height.

b) Causal Hypothesis
• It is a statement that describes a relationship

between two variables in which one variable leads
to a specified effect on the other.
• Eg: increase in petrol price leads to more usage

of public transport

• A null hypothesis is a statement of the status
quo, one of no difference or no effect. If the null
hypothesis is not rejected, no changes will be
made.
• An alternative hypothesis is one in which some
difference or effect is expected. Accepting the
alternative hypothesis will lead to changes in
opinions or actions.
• The null hypothesis refers to a specified value of
the population parameter (e.g., m, s , p ), not a
sample statistic (e.g.,X ).

Hypothesis Testing Procedure
Figure 10.1: Seven steps of hypothesis testing

Step 1: Set Null and Alternative Hypotheses
§ The null hypothesis generally referred by H0 (H sub-zero), is the

hypothesis which is tested for possible rejection under the
assumption that is true. Theoretically, a null hypothesis is set as
no difference or status quo and considered true, until and unless
it is proved wrong by the collected sample data.
§ Symbolically, a null hypothesis is represented as:
§ The alternative hypothesis, generally referred by H1 (H sub-

one), is a logical opposite of the null hypothesis. In other words,
when null hypothesis is found to be true, the alternative
hypothesis must be false or when the null hypothesis is found to
be false, the alternative hypothesis must be true.
§ Symbolically, alternative hypothesis is represented as:

Step 2: Determine the Appropriate Statistical
Test
§ Type, number, and the level of data may provide a

platform for deciding the statistical test.
§ Apart from these, the statistics used in the study
(mean, proportion, variance, etc.) must also be
considered when a researcher decides on appropriate
statistical test, which can be applied for hypothesis
testing in order to obtain the best results.

Step 3: Set the Level of Significance
§ The level of significance generally denoted by α is the probability,

which is attached to a null hypothesis, which may be rejected even
when it is true.
§ The level of significance is also known as the size of the rejection
region or the size of the critical region.
§ The levels of significance which are generally applied by researchers
are: 0.01; 0.05; 0.10.

Step 4: Set the Decision Rule
Figure 10.2: Acceptance and rejection regions of null hypothesis

(two-tailed test)
Critical region is the area under the normal curve, divided into two
mutually exclusive regions. These regions are termed as acceptance
region (when the null hypothesis is accepted) and the rejection region
or critical region (when the null hypothesis is rejected).

Step 5: Collect the Sample Data
§ In this stage of sampling, data are collected and the

appropriate sample statistics are computed.
§ The first four steps should be completed before

collecting the data for the study.
§ It is not advisable to collect the data first and then

decide on the stages of hypothesis testing.

Step 6: Analyse the data
§ In this step, the researcher has to compute

the test statistic. This involves selection of an
appropriate probability distribution for a
particular test.
§ Some of the commonly used testing

procedures are z, t, F, and χ2.

Step 7: Arrive at a Statistical Conclusion and
Business Implication
§ In this step, the researchers draw a statistical

conclusion. A statistical conclusion is a decision to
accept or reject a null hypothesis.
§ Statisticians present the information obtained using
hypothesis-testing procedure to the decision makers.
Decisions are made on the basis of this information.
Ultimately, a decision maker decides that a
statistically significant result is a substantive result
and needs to be implemented for meeting the
organization’s goals.

Marketing Research Process
Step 1 : Problem Definition
Step 2 : Development of an Approach to the Problem
Step 3 : Research Design Formulation
Step 4 : Fieldwork or Data Collection
Step 5 : Data Preparation and Analysis
Step 6 : Report Preparation and Presentation

Marketing Research Process
Step 1: Defining the Problem
Step 2: Developing an Approach to the Problem
Step 3: Formulating a Research Design
Step 4: Doing Field Work or Collecting Data
Step 5: Preparing and Analyzing Data
Step 6: Preparing and Presenting the Report

The Role of Marketing Research
Fig. 1.2 Customer Groups

• Consumers
• Employees
• Shareholders
• Suppliers
Uncontrollable
Controllable Environmental
Marketing Factors
Variables
Marketing • Economy
• Product
Research • Technology
• Pricing
• Laws &
• Promotion Regulations
• Distribution • Social & Cultural
Assessing Marketing Factors
Providing
Information Decision • Political Factors
Information
Needs Making
Marketing Managers
• Market Segmentation
•Target Market Selection
• Marketing Programs
• Performance & Control
Marketing Research Suppliers & Services
• Internal suppliers
• External suppliers
• Full-service suppliers
• Syndicated services
• Standardized services
• Customized services
• Internet services
• Limited-service suppliers
• Field services
• Focus groups and qualitative services
• Technical and analytical services
• Other services

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Chapter 1

Introduction and Early

Copyright © 2010 Pearson Education, Inc. 1-1

The American Marketing Association (AMA)

The function that links the consumer, the

Copyright © 2010 Pearson Education, Inc. 1-2

Used to identify and

Copyright © 2010 Pearson Education, Inc. 1-4

Marketing research is the systematic and objective

Copyright © 2010 Pearson Education, Inc. 1-5

• Specifies the information necessary to

• Manages and implements the data

• Analyzes the results

• Communicates the findings and their

• Helps managers use this information to

Copyright © 2010 Pearson Education, Inc. 1-6

Clearly defined purpose

Copyright © 2010 Pearson Education, Inc. 1-9

• Basic and Pure research

• Qualitative and Quantitative research

• Problem identification and problem

Copyright © 2010 Pearson Education, Inc. 1-10

• Basic research is generally not related to a

• Applied research directly addresses the

Copyright © 2010 Pearson Education, Inc. 1-11

• Right from her days as a clerical employee in a bank, Sarah

• The conclusion of her investigation was that the single most

Copyright © 2010 Pearson Education, Inc. 1-13

• The above is an instance of basic research, where

• The primary purpose of conducting basic research

Copyright © 2010 Pearson Education, Inc. 1-14

• Research can be undertaken for different purposes. One is

• The findings of such research is to know something we did

• Such knowledge, once generated, is usually later applied in

Copyright © 2010 Pearson Education, Inc. 1-15

Qualitative Research Quantitative Research

Objective To gain a qualitative To quantify the data and

Sample Small number of non- Large number of

Data Collection Unstructured Structured

Data Analysis Non-statistical Statistical

Outcome Develop an initial Recommend a final course of

Copyright © 2010 Pearson Education, Inc. 1-17

Market Potential Research Segmentation Research

Table 1.1 cont. PROMOTIONAL RESEARCH

Table 1.1 cont.

Copyright © 2010 Pearson Education, Inc. 1-21

• An hypothesis is a specific statement of

Copyright © 2010 Pearson Education, Inc. 1-22

• It is a statement about the existence, size, form

• Eg: Group study helps to achieve high marks in

Copyright © 2010 Pearson Education, Inc. 1-23

• It is a statement about the relationship between

• Relational hypothesis may be

Copyright © 2010 Pearson Education, Inc. 1-24

• It’s a statement indicating that variables occur

Copyright © 2010 Pearson Education, Inc. 1-25

• It is a statement that describes a relationship

• Eg: increase in petrol price leads to more usage

Copyright © 2010 Pearson Education, Inc. 1-26

Copyright © 2010 Pearson Education, Inc. 1-27

Copyright © 2010 Pearson Education, Inc. 1-28

§ The null hypothesis generally referred by H0 (H sub-zero), is the

§ The alternative hypothesis, generally referred by H1 (H sub-

Copyright © 2010 Pearson Education, Inc. 1-29