Chapter 4: Marketing Research

Marketers must not gather information only, but must also use the information to gain
powerful customer and market insights.

Marketing Information & Customer Insights

 Customer Insights: fresh understanding of customer and the marketplace derived from
marketing information that become the bases for creating customer value and
relationships.
 Important for building customer value & relationships
 Companies use such customer insights to develop competitive advantage
 They are difficult to obtain since:
 Not obvious
 Customers are unsure of their behavior & can’t tell what they need
 To gain good customer insights:
 Marketers must efficiently manage marketing information from a wide range of
sources
 Not derive from more information but from better information
 Use effectively the existing information
 Customer insight teams are being formed and are made up of representatives from all
of the firm’s functional areas
 These Customer insight teams
 Collect customer & market information from a wide variety of sources
(traditional marketing research studies, observing consumers, monitoring online
conv…)
 Use the marketing information to develop important customer insights from
which the company can create more value for its customers
 These teams must be careful not to become customer controlled—giving their
customers everything they request rather than what they need.
 Create value for customers as a means of capturing value for the firm in return
 Marketing Information System:
 Consists of people & procedure for:
 Assessing informational needs
 Developing needed information
 Helping decision makers to use the information to generate & check
customer and market insights
 Gives the manager the right information, in the right form, at the right time.
  MIS provides information to the company’s marketing and other managers and
external partners such as suppliers, resellers, and marketing service agencies.

Assessing Marketing Information Needs

 A good MIS balances the information users would like to have against what they really
need and what is feasible to offer
 Too much information can be as harmful as too little
 The MIS must monitor the marketing environment in order to provide decision makers
with information they should have in order to better understand customers and make
key marketing decisions
 The company must decide whether the value of insights gained from additional
information is worth the cost of providing it.
 By itself, information has no worth, its value comes from its use.

Developing Marketing Information

 Marketing can obtain the need information from internal data, marketing intelligence
and marketing research.

Internal Data
 Many companies build extensive internal databases—electronic collections of
consumer & market information obtained from data sources within the company
network
  Marketing managers can readily access and work with this information in the database
to identify marketing opportunities & problems, plan programs, and evaluate
performance
 Problems with internal information:
 It may be incomplete or wrong because it is likely to have been collected for
other purposes.
 Keeping a current database requires major effort because data ages quickly.
 Managing data that is well integrated and readily accessible requires highly
sophisticated equipment and techniques.

Marketing Intelligence
 It is the systematic collection & analysis of publicly available information about
consumers, competitors, and developments in the marketplace
 Goal: Improve strategic decision making by:
 Understanding the consumer environment: Good marketing intelligence can help
marketers to gain insights into how customers talk about and connect with their
brands
 Assessing and tracking competitors’ actions: Firms also use competitive
intelligence to gain early warnings of competitors moves & strategies, new
products launches, new or changing markets, and potential competitive strength
& weaknesses
 Providing early warnings of opportunities and threats
 Facing determined marketing intelligence efforts by competitors, most companies now
are taking steps to protect their own information

Marketing Research
 Marketers needs formal studies that provide customer and market insights for specific
marketing situation and decisions
 Marketing research: a systematic design, collection, analysis and reporting of data
relevant to a specific marketing situation facing an organization.
 Companies either:
 Create their own research departments
 Hire outside research specialist to consult with management on specific
marketing problems & conduct marketing research studies
 Purchase data collected by outside firm
 Use of marketing research:
 Gives marketers insights into customer motivation, purchase behavior, and
satisfaction
  Help marketers assess market potential and market share or to measure the
effectiveness of pricing product, distribution, and promotion activities.

Defining the Problem & Research Objectives

 Marketing managers (understand the decision for which the info is needed) &
researchers (understand marketing research & how to obtain the info) must work
closely together to define the problem and agree on research objectives
 A marketing research project might have one of 3 types of objectives:
 Exploratory Research: It is to gather information that will help define the
problem & suggest ways to respond
 Descriptive Research: It is to describe things, such as the market potential for a
product, or the demographics and attitudes of consumers who buy the products
 Casual Research: It is to test ideas about cause-and-effect relationships

Developing the Research Plan

 After the problem is defined, researchers must:
 Determine the exact information needed
 Develop a plan for gathering it efficiently
 Present the plan to management
 The research plans outlines:
 Sources of existing data
 The specific research approaches
 Contact methods
 Sampling plans
 Instruments that researches will use to gather new data
 Research objectives must be translated into specific information needs.
 The research plan should be presented in a written proposal including:
 Management problem
 Research objectives
 Information needed
 How the results will help management decisions
 Research costs
 To meet the manager’s information needs, the research plan can call for gathering
secondary data, primary data, or both.
Gathering Secondary Data
 Consists of information that already exists somewhere, having been collected for
another purpose
 Companies can gather secondary information:
 By looking at their internal databases
 Tapping into commercial data services and government sources
 Buying it from outside suppliers which supply high-quality data to suit a wide
variety of marketing information needs
 Using commercial online databases (Proquest) where marketing researches can
conduct their own searches
 Use Web search engines to locate relevant data
 Secondary data can be obtained more quickly & at a lower cost than primary data
 Secondary data must be evaluated carefully to make certain the data is
 Relevant: fits research project needs
 Accurate: reliably collected & reported
 Current: up-to-date enough for current decisions
 Impartial: objectively collected & reported

Primary Data Collection

 Designing a plan for primary data collection calls for a number of decisions on research
approaches, contact methods, sampling plan, and research instruments
 Research approaches
 Observational Research (Exploratory Research)
 Gathering primary data by observing relevant people, actions, and
situations
 Researches often observe consumer behavior to gather customer insights
they can’t obtain by simply asking customers questions
 It can obtain information that people are unwilling or unable to provide
 Observations may be very difficult to interpret
 Ethnographic Research: Involves sending trained observers to watch and
interact with consumers in their ‘natural habitat’.
 Whereas traditional quantitative research approaches seek to test know
hypotheses and obtain answers to well-defined product or strategy
questions, observational research can generate fresh customer and
market insights.
 Survey Research (Descriptive Research)
 Gathering primary data by asking people questions about their
knowledge, attitudes, preferences, and buying behavior
  Survey research is the most widely used method and is best for
descriptive information:
 Flexible
 People can be unable or unwilling to answer
 Gives misleading or pleasing answers
 Privacy concerns
 Experiment Research (Casual Research)
 Involves selecting matched groups of subjects, giving them different
treatments, controlling unrelated factors, and checking for differences in
group responses
 Tries to explain cause-and-effect relationships
 Contact Methods
 Mail Questionnaires
 Used to collect large amounts of information at a low cost per
respondent
 No interviewer bias
 Challenges:
 Not Flexible: all respondents answer the same questions in a
fixed order
 Low response rate
 Little sample control
 Telephone Interviewing
 It is one of the best methods for gathering information quickly
 It provides greater flexibility, where the interviewer has greater control
 Higher response rates
 Challenges
 Higher cost per respondent
 Interviewer bias is a concern due to different interviewers
 Personal Interviewing
 Individual Interviewing
 Involves talking with people in their homes, offices …
 A one-on-one interview
 Flexible
 Very expensive
 Group Interviewing (aka Focus-Group Interviewing)
 6-10 people
  A trained moderator focuses the group and encourages free and
easy discussion hoping that group interactions will bring out
actual feelings and thoughts.
 Small samples
 Other than being expensive, it is hard to generalize from the
results & consumers are not always open & honest about their
feelings, behavior, and intentions in front of people.
 Online Marketing Research:
 Incudes internet surveys, online panels, experiments and online focus
groups, click-stream data
 The internet is well suited for quantitative research ( conducting
marketing surveys & collecting data), however researchers now are
adopting qualitative web-based research approaches (online-focus
groups & in-depth interviews)
 Increased speed and reduced costs (sample size has little impact on cost)
 Online Focus Groups:
 The moderator monitors the online interactions and redirects the
discussion as required to keep the group on track.
 It gives participants the chance to reflect on their responses, to
talk to others, and to check out products in the real world as the
group progresses.
 It gives researchers the opportunity to make ongoing adjustments
as the discussion unfolds.
 It can produce much more data and deeper insights than single-
session, in-person focus groups.
 Advantages: low in cost and easy to administer
 Disadvantages: lack the real world dynamics of more personal
approaches.
 Drawbacks:
 Restricted Internet access can make it difficult to get a broad cross
section of respondents.
 Lack of control of who’s in the online sample
 Dry and lacking dynamics
 Consumer privacy and related unethical issues

 Sampling Plan
  Sample is a segment of the population selected for marketing research to
represent the population as a whole.
 Ideally, the sample should be representative so that the researcher can make
accurate estimates of the thoughts and behaviors of the larger population
 Designing the sample requires 3 decisions:
 Who is to be surveyed? (sampling unit)
 How many people should be surveyed? (sample size)
 How should the people be chosen? (sampling procedure)
 Probability samples : each member has a known chance of being
included in the sample

 Non-Probability samples: used when probability samples cost too
much or take a lot of time

 Research Instruments
 Questionnaires
 Administered in person, by phone or online
 Closed-end question
 Includes all the possible answers
 Provide answers that are easy to interpret and tabulate
 Open-end questions
 Allows respondents to answer in their own words
 Reveal more than closed-end questions because they do not limit
respondent’s answers
 Useful in exploratory research (what people think and not how
many think that way)
 Mechanical Devices
 Implementing the Research Plan
 Putting the marketing research plan into action
 This involves
 Collecting
 Processing
 Analyzing the information

Interpreting & Reporting the Findings

 The market researcher must interpret the findings, draw conclusions, and report them
to management.
 The researcher should present important findings and insights that are useful in major
decisions faced by management

Analyzing and Using Marketing Information

Customer Relationship Management (CRM)
 Managing detailed information about individual customers and carefully managing
customer touch points in order to maximize customer loyalty.
 Customer Relation Management Touch points (every contact between the customer &
the company)
 Customer purchases
 Sales force contacts
 Service and support calls
 Website visits
 Satisfaction surveys
 Credit and payment interactions
 Market research studies
 CRM consists of sophisticated software and analytical tools that integrate customer
information from all sources, analyze it in depth, and apply the results to build stronger
customer relationships.
 CRM provides a 360-degree view of the customer relationship
 CRM analysts develop Data Warehouses
 A companywide electric database of finely detailed customer information that
needs to be filtered to come up with useful analysis
 Gather and pull information together into a central and accessible location
 CRM analyst use Data Mining techniques
 Used to analyze the loads of data and dig out interesting findings about
customers
  CRM can be used to pinpoint high value customers and:
 target them more effectively
 Cross-sell them the company’s products
 Create offers tailored to their specific requirement
 CRM can’t be viewed only as a technology and software solution but an effective overall
customer relationship management strategy.

Distributing and Using Marketing Information

 Information distribution involves entering information into databases and making it
available in a time-useable manner.
 Intranet provides ready access to research information, reports, shared work
documents, contact information for employees and other stakeholders.
 Extranet provides information to key customers and suppliers in order to
update their accounts, arrange purchases, and check orders against inventories
to improve customer service.

Other Marketing Information Considerations

Marketing research in Small businesses and Nonprofit Organizations
 Secondary data collection, observations, surveys, and experiments can all be used
effectively by small organizations with small budgets
 Managers must think carefully about the objectives of the research, formulate questions
in advance, recognize the biases introduced by smaller samples and less skilled
researchers, and conduct the research systematically.

International Marketing Research

 Although the costs and problems associated with international research may be high,
the costs of not doing it—in terms of missed opportunities & mistakes—might be even
higher.

Public Policy & Ethics in Marketing Research

 Intrusion on Consumer Privacy
 They worry that marketers are building huge databases full of personal
information about customers.
 They fear that researchers might use sophisticated techniques to examine their
deepest feelings and use this knowledge to manipulate buying.
 Just as companies face the challenge of researching valuable but potentially
sensitive consumer data while also maintaining consumers trust, consumers
struggle with the trade-offs between personalization and privacy.
 Misuse of Research Findings
 Each company must accept responsibility for policing the conduct and reporting
its own marketing research to protect consumers’ best interests and its own.