Marketing Research

Chapter Two
Marketing Information & Marketing Research Process
System

Yared Ademe /EMBA, MBA in Marketing/

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 Learning Objectives

After studying this unit, you will be able to explain:

What is marketing information system?
The components of marketing information system.
The steps involved in the marketing research process.
Understand the importance of and the process used for defining the
marketing research problem.

Yared A. EMBA, MBA in Marketing 2

 Introduction
To create value for customers and build meaningful relationships with them,
marketers must first gain fresh, deep insights into what customers need and want.
Such customer insights come from good marketing information.
Companies use these customer insights to develop a competitive advantage.
Although customer and market insights are important for building customer value
and engagement, these insights can be very difficult to obtain.
Customer needs and buying motives are often anything but obvious—consumers
themselves usually can’t tell you exactly what they need and why they buy.
To gain good customer insights, marketers must effectively manage marketing
information from a wide range of sources.

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Customer insights is a
fresh marketing information-
based understandings of
customers and the marketplace
that become the basis for
creating customer value,
engagement, and relationships.
It is current understanding of
customer needs via marketing
information.

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Marketing as a separate business, identifiable management function evolved from
the business philosophy that recognized the importance of the customer.
To be successful in the new competitive atmosphere, the needs of the customers
had to be satisfied.
This re-orientation of business activities demanded a more analytical and
systematic approach, founded on an assessment of customer requirements, with
the objective of maximizing net profits by providing customers with products and
services that really fulfilled their particular needs.
Without reliable data, management can not be expected to plan and execute all
the many activities necessary for the production and distribution of a range of
products involving, perhaps many months or even years of expensive development.

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At one time, businesses were small, customers were few, and markets
were mostly local.
Suppliers and customers were in almost daily, close personal, contact.
Bargaining was done face-to-face.
The market place was the hub of economic and social life.

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 Marketing Information System (MIS)
The marketing managers to carry out their analysis, Planning, implementation, and control
responsibilities, they need information about development in the marketing environment.
The role of the MIS is to assess the manager's information needs, develop the needed
information, and distribute the information in a timely fashion to the marketing managers.
The needed information is developed through:

1. Internal company records,

2. Marketing intelligence activities,
3. Marketing research,
4. Marketing decision support analysis.
The marketing information system is illustrated as below.
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A marketing information system (MIS) consists of people, equipment, and
procedure to gather, sort, analyze, evaluate, and distribute needed, timely
and accurate information to marketing decision makers.
A marketing information system (MIS) consists of people and procedures
for:
assessing the information needs,
developing the needed information, and
helping decision makers use the information to generate and validate
actionable customer and market insights.

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 Thus, companies must design effective marketing information systems
that give managers:
the right information,
in the right form,
at the right time and
help them to use this information to create customer value,
engagement, and stronger customer relationships.
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Marketing information by itself has little value.
The value is in the customer insights gained from the information and how
marketers use these insights to make better decisions.
The marketing information system primarily serves the company’s marketing and
other managers.

However, it may also provide information to external partners, such as suppliers,

resellers, or marketing services agencies.

For example, Walmart’s Retail Link system gives key suppliers access to
information on everything from customers’ buying patterns and store inventory
levels to how many items they’ve sold in which stores in the past 24 hours.

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Yared A. EMBA, MBA in Marketing 11
 Components of MIS

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 The problem isn’t finding information; in this “big data” age, the world is
bursting with information from a glut of sources.
The real challenge is to find the right information—from inside and
outside sources—and turn it into customer insights.
Marketers can obtain the needed information from:
1. Internal data,
2. Marketing intelligence, and
3. Marketing research.
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 Internal Record System
The most basic information system used by marketing managers is the
internal records system.
It is collections of consumer and market information obtained from data
sources within the company network.
Included in the system are reports on orders, sales, prices, inventory
levels, receivables, payables, & so on.
By analyzing this information, marketing managers can spot important
opportunities and problems.

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The marketing department furnishes Operations reports on:
information on:
production,
customer characteristics,
shipments, and
in-store and online sales transactions,
and inventories.
web and social media site visits. The sales force reports on:
The customer service department keeps reseller reactions
records of
competitor activities,
customer satisfaction or
service problems. marketing channel partners
The accounting department provides provide data on sales transactions.
detailed records of:
Harnessing such information can
sales,
provide powerful customer insights
costs, and
cash flows.
and competitive advantage.

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 Marketing Intelligence System

A marketing intelligence system is a

set of procedures and sources used by
managers to obtain their everyday
information about pertinent
development in the marketing
environment.

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Market intelligence covers four major activities:
1. Competitor intelligence: learning about competitors’ weaknesses and strengths in
a legal and ethical manner. Industrial espionage is illegal!
2. Product intelligence: gathering and analyzing data regarding the performance of a
product a company is designing. Also doing the same for products that it is
manufacturing.
3. Market analysis: determining factors, conditions and features of a market.
Studying the attractiveness and dynamics of a specific market.
4. Market research: the process of determining how viable a product or service is in
a market. We do this through techniques such as product testing, surveys, and
focus groups. If something is ‘viable,’ it is capable of generating profits year after
year.

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 Marketing research

The third important component of MIS is ‘Marketing Research’.

MR is conducted to solve specific marketing problems of the company.
It collects data about the problem.
This data is tabulated, analyzed and conclusions are drawn.
Then the recommendations are given for solving the problem.
Marketing research also provides information to the marketing managers.
However, this information is specific information.
It can be used only for a particular purpose.
MIS and MR are not substitutes of each other.
The scope of MIS is very wide. It includes ‘MR’.
However, the scope of MR is very narrow.
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Marketing Decision Support System (MDSS)
A marketing Decision support system (MDSS) is a coordinated collection of data,
systems, tools and techniques with supporting software and hardware by which an
organization gathers and interprets relevant information from business and
environment and turns it into a basis for marketing action.
Here is how a MDSS works.
The manager puts questions to the appropriate model located in the MDSS.
The model draws up data, which are then analyzed statistically.
The manager can then use a program to determine the optional course of action.
They include hardware, i.e. computer and software programs
Some of the statistical tools used is the MDSS are regression Analysis, queuing model,
Game theory Etc.

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Yared A. EMBA, MBA in Marketing 20
 Marketing Research Process

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 Introduction
Marketing research process is a set of eight steps that defines the tasks to be
accomplished in conducting a marketing research study.
These include:
1. Problem definition & Development of an approach to the problem,
2. Review of the related literature
3. Research design formulation,
4. Choice of method of research
5. Selection of sampling procedure
6. Data collection
7. Data analysis & Interpretation
8. Writing and Presenting the Report

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7 Writing and Presenting the Report
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Data Analysis & Interpretation
5 Data Collection

4 Selection of sampling procedures

3 Choice of Method of Research

2 Creation of Research Design

1 Review Literature

Define Research Problem & Developing an Approach

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 Define Research Problem
Although each step in a marketing research project is important, problem definition is the most important
step.
Problem definition involves stating the general problem and identifying the specific components of the
marketing research problem.
Only when the marketing research problem has been clearly defined can research be designed and conducted
properly.
Of all the tasks in a marketing research project, none is more vital to the ultimate fulfillment of a client’s
needs than a proper definition of the research problem.
All the effort, time, and money spent from this point on will be wasted if the problem is misunderstood or ill
defined.
As stated by Peter Drucker, the truly serious mistakes are made not as a result of wrong answers but
because of asking the wrong questions.
This point is worth remembering, because inadequate problem definition is a leading cause of failure of
marketing research projects.

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Once a problem has been sensed, the marketing researches come into the picture.
The first responsibility of the researcher, whether from an internal staff or
outside consulting firm, is to work with the marketing manager to precisely
define or uncover the problem whose symptoms have been observed.
Certainly, no area of marketing research requires more insight and creativity
than the process of problem definition.
It is the first step in arriving at a solution.
It is also the most critical part of the marketing research process.
Proper definition of a problem also provides a guidance and direction for the
entire research process.
Truly, a well defined problem is “half the battle” of conducting research.

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Development of an approach to the problem includes:
the purpose of the study
formulating an objective or theoretical framework,
analytical models,
research questions, and
hypotheses and
identifying the information needed.
This process is guided by:
discussions with management and industry experts,
analysis of secondary data,
qualitative research, and
qualitative research, such as focus groups.
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 Review of the Related Literature
A literature review is a body of text that aims to review the critical points of
current knowledge including:
It is substantive findings as well as theoretical and methodological
contributions to a particular topic.
A literature review is a critical and in-depth evaluation of previous research.
It is a summary and synopsis of a particular area of research.
The literature review is essential in order to acquaint yourself with the
available body of knowledge in your area of interest.
It is an integral part of the research process and makes a valuable
contribution to almost every operational step:
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 Research Design Formulation
A research design is a framework or blue print for conducting the marketing research project.
The research design is a plan for addressing the research objectives or hypotheses.
In essence, the researcher develops a structure or framework to answer a specific research
problem/opportunity.
It details the procedure necessary for obtaining the required information.
Its purpose is
To design a study that will test the hypotheses of interest
Determine possible answer  to the research question
Provide the information needed for decision making.
There is no single, best research design.
Instead, the investigator faces an array of choices, each with certain advantages and disadvantages.
Broadly, this can be derived upon one of the two ways; descriptive studies or casual studies.

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 Descriptive Studies
Descriptive studies are conducted to answer who, what, when, where, and
how questions.
Implicit in descriptive research is the fact that management already
knows or understands the underlying relationships among the variables in
the problem.
A variable is simply a symbol or concept that can assume any one of a set
of values.

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 A descriptive study for Starbucks might include demographic and
lifestyle characteristics of
typical, light, and heavy patronizers of Starbucks stores,
purchasers of Starbucks baked goods,
purchasers of Starbucks sandwiches, and
buyers of coffee to take home.
Other questions might determine drive time from work or home to the
nearest Starbucks.
whether purchasers pay by cash or credit.
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 Causal Studies
In causal studies, the researcher investigates whether the value of one variable
causes or determines the value of another variable, in an attempt to establish
linkage between them.
A dependent variable is a symbol or concept expected to be explained or
affected by an independent variable.
In contrast, an independent variable is a variable that the market researcher
can, to some extent, manipulate, change, or alter.
An independent variable in a research project is a presumed cause of or influence
on the dependent variable, the presumed effect.
For example, Starbucks may like to know whether the level of advertising
(independent variable) determines the level of sales (dependent variable).
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Temporal Sequence;
It is an appropriate causal order of events.
Temporal sequence is one criterion that must be met for causality.
Example
A causal study for Starbucks might involve changing one independent
variable (for example, the number of direct mailings offering a 10
percent discount on a 1-pound bag of coffee over a 6-month period to
target customers) and then observing the effect on coffee sales.
Here, there is an appropriate causal order of events, or temporal
sequence;

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Concomitant Variation
It is a second criterion for causality to occur.
It is the degree to which a presumed cause and a presumed effect occur
or vary together.
Example
If direct-mail promotions are a cause of increased coffee sales, then
when the number of direct-mail promotions is increased, coffee sales
should go up, and when the number of promotions is decreased, sales
should fall.
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Spurious Association
A relationship between a presumed cause and a presumed effect that occurs as a
result of an unexamined variable or set of variables.
In an ideal situation, the researcher would demonstrate a total absence of other
causal factors.
However, in the real world of marketing research, it is very difficult to identify
and control all other potential causal factors.
Think for a moment of all the variables that could cause sales of 1-pound bags of
coffee to increase or decrease—for example, prices, newspaper and television
advertising, coupons, discounts, and weather.
The researcher may be able to lower spurious associations by trying to hold
constant these other factors.
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 Choosing a Basic Method of Research
A research design, either descriptive or causal, is chosen based on a project’s
objectives.
The next step is to select a means of gathering data.
There are three basic research methods:
1. Survey,
2. Observation,
3. Experiment.
Survey research is often descriptive in nature but can be causal.
Observation research is typically descriptive, and
Experiment research is almost always causal.
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Surveys
Survey research involves an interviewer (except in mail and Internet
surveys) who interacts with respondents to obtain facts, opinions, and
attitudes.
A questionnaire is used to ensure an orderly and structured approach to
data gathering.
Face-to- face interviews may take place in the respondent’s home, a
shopping mall, or a place of business.
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Observations
Observation research is examining patterns of behavior as opposed to
asking consumers why they do what they do.
Observation research is a research that monitors respondents’ actions
without direct interaction.
This may involve people watching consumers or the use of a variety of
machines.
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Experiments
Experiments are the third method researchers use to gather data.
Experiment research is distinguished by the researcher’s changing one or more
independent variables—price, package, design, shelf space, advertising theme,
or advertising expenditures—and observing the effects of those changes on a
dependent variable (usually sales).
The objective of experiments is to measure causality.
The best experiments are those in which all factors other than the ones being
manipulated are held constant.
This enables the researcher to infer with confidence that changes in sales, for
example, are caused by changes in the amount of money spent on advertising.
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 Holding all other factors constant in the external environment is a
monumental and costly, if not impossible, task.
Factors such as competitors’ actions, weather, and economic conditions in
various markets are beyond the control of the researcher.
One way researchers attempt to control factors that might influence the
dependent variable is to use a laboratory experiment—that is, an
experiment conducted in a test facility rather than in the natural
environment.
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 Selecting the Sampling Procedure
A sample is a subset from a larger population.
Although the basic nature of a sample is specified in the research design, selecting
the sampling procedure is a separate step in the research process.
Several questions must be answered before a sampling procedure is selected.
First, the population or universe of interest must be defined.
This is the group from which the sample will be drawn.
It should include all the people whose opinions, behaviors, preferences,
attitudes, and so on will yield information needed to answer the research
problem
After the population has been defined, the next question is whether to use a
probability sample or a non-probability sample.
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Probability Sample
It is a sample for which every element in the population has a known nonzero
probability of being selected.
Such samples allow the researcher to estimate how much sampling error is present in
a given study.
All samples that cannot be considered probability samples are non-probability
samples.

Non-probability Sample
It is those in which the chances of selection for the various elements in the
population are unknown.
Researchers cannot statistically calculate the reliability of a non-probability sample;
that is, they cannot determine the degree of sampling error that can be expected.
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 Collecting the Data
Most survey-based data are now collected on the Internet.
Interviewer-based data collection is done by marketing research field
services.
Field service firms throughout the country specialize in collecting data
through personal and telephone interviewing on a subcontract basis.
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 Analyzing the Data
After the data have been collected, the next step in the research
process is data analysis.
The purpose of this analysis is to interpret and draw conclusions from the
mass of collected data.
The marketing researcher may use a variety of techniques, beginning with
simple frequency analysis and culminating in complex multivariate
techniques.

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 Writing and Presenting the Report
After data analysis is completed, the researcher must prepare the report and communicate
the conclusions and recommendations to management.
This is a key step in the process because a marketing researcher who wants project
conclusions acted on must convince the manager that the results are credible and justified
by the data collected.
The researcher usually will be required to present both written and oral reports on a project.
The nature of the audience must be kept in mind when these reports are being prepared and
presented.
The oral report should begin with a clear statement of the research objectives, followed by
an outline of the methodology.
A summary of major findings should come next. The report should end with a presentation of
conclusions and recommendations for management.
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 Following Up
After a company has spent a considerable amount of effort and money on
marketing research and the preparation of a report, it is important that
the findings be used.
Management should determine whether the recommendations were
followed and, if not, why not.
As you will learn in the next section, one way to increase the likelihood
that research conducted by a corporate marketing department will be
used is to minimize conflict between that department and other
departments within the company.
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Marketing Research at Marriott Corporation

Malhotra Page 11

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