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Module: Marketing Research- June, 2011 Time: Weeks 16 -17
Day 1: Case Question 1: Theme Park (Jun 2009 - M 10)

June 2009 Examiner's Solution
Case 1 – Answer Base 1. Explain to the managers of the theme park the value they might derive from multivariate regression analysis of the data. (15 marks) The relevant module is Module 10. Multivariate regression analysis will help the managers of the theme park to identify what factors are important to customers during their visit to the theme park and the relative contribution of these key factors to the development of customer satisfaction. So, for example, multivariate regression analysis can show whether queue management actually affects customer satisfaction and to what extent compared with other variables, e.g. staff friendliness. Multivariate regression analysis allows the development of a predictive equation which shows what changes in overall customer satisfaction may be anticipated as a result of, for example, initiatives to reduce queue waiting time. This will allow the theme park managers to gauge future investment priorities, if development of increased levels of customer satisfaction is a key business objective. The use of interval scales in the market research study allows the use of the multiple regression procedure for the analysis of the theme park market research data. Multiple regression analysis finds the weighted linear combination of independent variables, e.g. queue management, safety, etc., that has the maximum correlation with the dependent variable, which is overall customer satisfaction. In undertaking this analysis, clearly the value of information produced is very much dependent on inclusion of the independent variables in the market research questionnaire. A good student answer will note that if there is doubt that the set of independent variables researched is not fully inclusive in terms of what is important in delivering customer satisfaction in a theme park environment, it may justify qualitative research to identify what these key variables are. If other variables are at work, then the quantitative research must be re-commissioned.
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2. Are these data helpful in determining investment priorities to increase customer satisfaction levels in future? Explain your reasoning. (15 marks) The ‘regression function’ takes the form Y = a + b1 X1 + b2 X2 + … + b n X n The computer output suggests the following equation for customer satisfaction: Customer satisfaction = 1.0 + (0.6 × Queue management) + (0.3 × Staff friendliness) − (0.3 × Security procedures) So, for example, for every scale point that queue management increases, holding other variables constant, customer satisfaction levels increase by 0.6 units. A good student answer will note that, interestingly, for every scale point increase in security procedures, customer satisfaction decreases by 0.3 units. To understand whether these variables are statistically significant, it is necessary to test the significance of the regression coefficients. The individual values of the t-statistic for each of the variables can be compared with the critical t-statistic at the 5% level of significance, i.e. 1.96. Since the calculated t-statistic for queue management (2.73) and staff friendliness (2.50) are greater than the critical t-value of 1.96 at the 5% level of significance, it is concluded that both queue management and staff friendliness are statistically related to customer satisfaction. In considering future investment priorities, improved queue management is likely to have more impact on customer satisfaction than programmes to increase staff friendliness. This of course only holds in the current equation. The values of the coefficients will all change when safety is excluded. A good student answer will note that security procedures are observed to have a negative effect on customer satisfaction, but that the findings are not statistically significant at the 5% level and, therefore, security procedures should be excluded from the regression equation. The regression analysis should be run again and the variables tested for statistical significance. As noted above only queue management, staff friendliness and security procedures have been considered in the multiple regression analysis. If it is the case that other unidentified variables affect customer satisfaction (and the adjusted R square would tend to support this thinking as it suggests that only 40% of the variation in customer satisfaction is explained by queue management, staff friendliness and security procedures), then the theme park managers should investigate what these other variables might be and their relative impact on customer satisfaction levels.

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To do so the theme park managers should undertake qualitative research (to identify the key variables) and then commission a further quantitative study to provide ratings across all variables together with measures of customer satisfaction.

Case 1 Solution: Theme Park 1. Explain to the managers of the theme park the value they might derive from multivariate regression analysis of the data. Multivariate regression analysis (MRA) is a statistical method of finding whether there is a relationship between independent and dependent variables. This is the equation for multivariate regression: Y = b0 + b1 X1 + b2 X2 + b3 X3 + … + b n X n In this case, the MRA will find out the relationship between customer satisfaction with a different set of independent variables, such as queue management, staff friendliness and security procedures. If we find out, for example, that there is a relationship between customer satisfaction and queue management and/or staff friendliness then the manager might have to consider improving the queue management and staff friendliness, but if we find out there is no relationship between customer satisfaction with security procedures then we might consider trying to establish whether there are other independent variables which might affect or have a relationship with customer satisfaction. Multivariate regression analysis helps to analyse the information and it is one of the quantitative research technique. Also there is a need to explain the regression correlation (r) which –1 < r < +1.
o o o

r = 0 This means there is no relationship between x and y r ≥ 1 This means there is a relationship between x and y which means if x increases by 1 then y will increase by 1. r ≥ –1 This means there is a relationship between x and y which means if x increase by 1 then y will decrease by 1.

Suppose regression analysis, with customer satisfaction as the dependent variable, produced the following output: Aspects operation Staff friendliness of Coefficient Standard error 0.22 0.12 0.27 t-statistic 2.73 2.50 –1.11
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Queue management 0.6 0.3 Security procedures –0.3

then conduct the quantitative research. we have to design a proper questionnaire which includes the preliminary considerations. and –1. to determine an investment we might have to consider other factors or undertake other types of research because it may give information which will be more accurate for the manager to make a decision. and.0 0. In this case we might use stratified sampling. 2.11 for Security Procedures.4 2. personal survey/interview or telephone survey. social and economy. age.96 Degree of freedom = 17. In this case. Also we need to consider whether to use probability or non-probability sampling.50 for Staff Friendliness.Constant Adjusted R square 1. Are these data helpful in determining investment priorities to increase customer satisfaction levels in future? Explain your reasoning. Moreover. 4 . The survey can be postal survey. status. It means that if queue management is improved and staff are more friendly then there will be increase in customer satisfaction. Also it have to provide closed-end and open-end question which will give more opportunity to understand feelings and attitudes. we might decide to use postal survey and personal survey. In analysing the variable by using regression coefficient analysis we will first set: o o H0 = 0 (No relationship between x and y) In this case customer satisfaction and either queue management/staff friendliness/security procedures HA ≠ 0 (relationship between x and y) As % confidence level = 1.1 t-statistic = 2. Then we have to conduct a survey which is one method of quantitative research but before that we might have to provide a qualitative research in which we might set up a focus group or in-depth interview to understand feelings and attitudes.73 (for Queue management. If we are using these data to analyse the regression coefficient then we can say that queue management and staff friendliness have a relationship with customer satisfaction. First we might consider sample size because a bigger sample gives more accuracy. However. sex.

Day 2: Case Question 1: Electronic Waste (December 2007 – M10) December 2007 Examiner's Solution 5 .

the expected value is calculated as: Awareness that some electronic equipment can be recycled Company size Large (O = observed) (E = expected) Small (O = observed) (E = expected) Total Not aware 862 759 1018 1122 1880 Aware 288 391 682 578 970 2850 1700 Total 1150 7 .and careful profiling of the companies participating in the research (details of which we do not have). Of interest. The chi-square statistic is calculated by the formula: where O i is the observed value and E i is the expected value. For a particular cell. might be to analyse by type and size of company: type of equipment handed in average amount of equipment handed in distance travelled to the recycling site difference in awareness of recycling possibilities willingness to pay for disposal/recycling proportion of companies who clean own PC systems before hand-in proportion of companies seeking security reassurances 2. for example. assuming in this case that there is no difference between the backgrounds of respondents. o o o o o o o (15 marks) A chi-square test can be used to test whether a statistically significant association exists between size of company and awareness that some electrical equipment can be recycled. Is there a statistically significant association between size of company and awareness that some electronic equipment can be recycled? Explain the implications of your answer.

A good student answer will note the importance of this finding in terms of the methods used to communicate recycling opportunities. The research appeared to be simply to confirm in 8 . therefore. In large companies waste management is likely to be a delegated responsibility. the individual visiting the Marson site and interviewed on Amnesty day may be well down the decision-making hierarchy and. the difference noted in the sample is statistically significant. not knowledgeable about such matters. their views cannot be held to be representative of those held by senior management of the company. What does the market research tell us about the effectiveness of the Amnesty? In conducting any marketing research it is always important to clearly define what the objective of the research is. However it must be noted that these were the persons who attended and a good result of the research would have considered a population frame that included other persons in the community who may have had a different view or a suggestion not thought about by the recycling company. A random sample was taken. i. the aim of the amnesty was to publicise that irresponsible disposal of electronic waste is bad for the environment and that a lot of electronic equipment. The market research informs us that all those interviewed felt the amnesty was a good idea. In the case in question. The method employed to conduct the research on the day of the amnesty was based on face-to-face interviews. particularly personal computers. The chi-square statistic at 1 degree of freedom at the 5% level is 3. can be recycled and have second life market potential.e. It was felt the electronic recycling companies could do much more to raise awareness of proper disposal of electronic waste. However we are not sure of the questions on the structured research questionnaire that were asked. and 74% of large companies.84 and because 69. The research findings indicate that 59% of small companies. The chi-square test reveals that the difference in awareness is statistically significant. It may well be the case that the involvement of more people in waste management issues in larger companies makes targeting of messages about recycling opportunities more difficult and that a multi media strategy is required to reach all of the individuals concerned. On the other hand.We hypothesise that there is no relationship between awareness that some electronic equipment can be recycled and company size.84. are not aware that some electronic equipment can be recycled.46 > 3. this research finding may reflect another problem in the way the sample was drawn for the survey. December 2007 Selected Student Answer Case 1 Solution: Electronic Waste 1.

However the fact that 2850 companies handed in unwanted equipment is a success for the company (Marson Ltd). This is usually represented as follows: HO HA – association – no association 9 . we must remember that the interview was conducted on the day of the amnesty and only the persons who were interested enough attended. A chi-squared analysis of the data could be conducted to determine whether there is an association between the two data groups. Is there a statistically significant association between size of company and awareness that some electronic equipment can be recycled? Explain the implications of your answer. A combination of focus group and a more structured survey of companies. The fact that 84% of the companies taking part were not aware that recycling was available informs the researcher that there is a need for more advertising and possibly promotional opportunities to ensure that the knowledge is more widespread. This would have to be evaluated further by the company to see whether that consideration is one that they had thought about. Parameters must also be set before research is undertaken. and yet only 55% of those who attended were of the view. However further research will be necessary. The entire process must be clearly planned including the sampling method and the sample design. or by mixing with telephone interviews. The analysis of the report is also important bearing in mind the objectives that were outlined. The population units and boundaries were previously touched on. The market research essentially does not tell us much about the amnesty’s effectiveness because there are several unknowns in the equation.the minds of the researcher that the amnesty was a good undertaking. it is difficult to say whether the research was effective. But there is no knowledge of the population of persons (companies) with unwanted equipment on hand. While 55% is a notable number of persons. Marketing research must be undertaken to guide the decision of the manager and not simply to confirm what one wants to do. possibly by mail (since companies are involved and these are busy people). This is in respect to budget and related issues to the success of the research. In conclusion. 2. 68% of companies sought assurance of hard drives being checked and cleaned before recycling may be considered to give Marson Ltd extra work to be done and of course at a cost. The sample was taken from persons who handed in unwanted electrical or electronic equipment on the day and this may have been a way of helping those persons to get rid of obsolete equipment and not necessarily that their intentions supported the objective of the researcher. marketing research must be undertaken in a structured manner and objectives must be clearly defined to identify the information objective. a hypothesis can be drawn. As noted before. Based on the findings. 55% of the companies felt that Marson Ltd could charge companies a small fee for disposal and recycling raises an opportunity for a business venture for Marson Ltd and the research may be considered effective to some level.

An expected frequency can be calculated using the following formulae where: The chi-square statistic can then be calculated using the following formulae where: The chi-critical statistic is then calculated as follows – df (rows – 1) (columns – 1) where df refers to degrees of freedom. Company size Large (O = observed) (E = expected) Small (O = observed) (E = expected) Total Not aware 862 758.59 970 2850 1700 Total 1150 Using the formulae for expected frequency: Calculations Calculations 10 .4 682 578.84. According to the information provided the chi-critical statistic at 1 degree of freedom at the five percent level is 3.5 1018 1121.4 1880 Aware 288 391.

84.44 being higher than chi critical at 3. a HA hypothesis can be drawn where there seems to be an association between company size and awareness.84. According to the calculations with chi-squared statistic at 69.Chi statistic at one degree of freedom is 3. Suggest they organise visits to all companies to inform of the standards and efforts to better ensure compliance. There needs to be greater communication between WEEE and companies. Day 3: Dec 2010 exam questions Case Question 1: Fruity Juice Bubbles December 2010 Examiner's Solution Case 1 Answer 11 .

An example of a discussion group guide for Fruity Juice Bubbles would be: 1. Understanding consumer behaviour in the carbonated soft drinks category is key. the competitive set and the relative positions held by different carbonated soft drinks. As far as Fruity Juice Bubbles is concerned. Prepare a focus group discussion guide for the research. The focus groups will provide an opportunity for Pete to develop his understanding of target audience motivations and purchasing patterns (how often to buy. which is to help guide the development of marketing strategy. The exploratory or experiencing format looks to be most appropriate. It is appropriate to first consider what focus groups are and the general procedures used in running focus groups. feel and behave in the way they do. and sometimes unstructured. and potentially attractive positions for Fruity Juice Bubbles. purchase occasions. The group moderator uses a semi-structured. and that each group member’s comments and opinions are valid. and in line with the aim of the research which is to help guide the development of marketing strategy.). The facilitator should set respondents at their ease and explain at the outset that there are no correct opinions. The guide to the focus group discussion for Fruity Juice Bubbles will reflect the aim of the research. etc. but also to understand why people think. (10 marks) The discussion guide will include a welcome and introduction to the subject to be discussed. only opinions  Need to hear from everyone 12 . the focus group method relies on self-reports from individuals in a group situation which are moderated by a professional market researcher.1. The intention in focus group interviewing is not just to ascertain what people’s overall views and opinions are. Opening  Explain focus groups  No correct opinions. developing a better understanding of the target customer is vital. 2. the strength of the various positions held by competitive brands in this category. The different types of focus group are: exploratory. Advise Pete Martin on how he might use focus groups to help develop a marketing strategy for Fruity Juice Bubbles. approach to discussion of a subject – a method designed to reveal respondents full flow of thought in relation to the subject matter. (20 marks) The relevant module is Module 8. clinical and experiencing. as is the development of a clear picture of the perceived positions held by competitive brands and potential positions which offer marketing opportunity to Fruity Juice Bubbles. including the role of the moderator in facilitating the discussion As far as process is concerned. the product attributes considered to be most important to the target audience (determinant attributes). where to buy.

In examining whether there is a causal relationship between telesales activity and visits to the website. Whereas a laboratory experiment is generally believed to be more internally valid. What type of experimental design do you suggest Business Solutions Ltd should use? Explain your reasoning. no other factor is affecting website visits Experimental validity has two components: o o Internal validity External validity Internal validity is the extent to which an experiment controls the effects of all nonmanipulated variables so that any difference in web site visits (the dependent variable) between groups can be regarded as valid effects of the different promotional programmes used (experimental factor). in relation to the impact of researchers. three types of evidence are important: o o o concomitant variation. i.e. the variable which the researcher has some control over is the telesales initiative. The independent variable. As the experiment is being undertaken in the field. Threats to internal validity include: o o o o o o History and maturation Repeated testing Impact of the researchers Mortality of participants Selection errors Regression effects Each of these effects should be considered in the context of the case situation. For example. 2. which influences the extent to which telesales activity and web sites visits occur together in a predictable way time order of occurrence of telesales activity and the effect on website visits absence of other causal factors. the field experiment (as used in the case situation) provides more external validity as it is undertaken in a real market situation.(15 marks) An experiment implies some sort of test to allow the effects of independent variables on a dependent variable to be discerned. to decide whether a telesales initiative will increase visits to the website. visits to the website. The use of an experiment will help Business Solutions Ltd.e. Dependent variables are the outcomes of interest – in this case. i. 16 . it offers more realistic conditions in which to evaluate the effect of the supporting telesales campaign. External validity refers to the extent to which experimental effects will generalise to the marketplace. the fact that an SME is being interviewed may affect visits to Business Solutions Ltd website.

Factorial designs: takes into consideration the fact that variables may interact with each other. may be the use of the basic design. By using the design ‘before–after with control’.(15 marks) The different types of experimental designs are: o o Basic (informal) designs: only measure the treatment impact. Statistical (formal) designs: measure treatment impact and also other factors that may have been at work during the experiment. Randomised block design: measures treatment plus one extra variable. the subjects must be selected at random and the treatment should be randomly assigned. Basic designs can be described as follows: o o o o o o o After only Before–after without control Before–after with control After–only with control Ex-post facto designs: groups chosen only after treatment has been applied Four group six-study design Time series design Regarding the statistical designs. the control group should be comparable in make-up to the group who will receive the treatment (tele-sales activity). Latin square: measures treatment and two extra variables. The best approach for Business Solutions Ltd. they are as follows: o o o o Completely randomised design: only takes account of one variable. For this to be the case. if the following visits occurred: O1 = 45 visits O2 = 68 visits O3 = 34 visits O4 = 42 visits 17 . ‘before–after with control’. The statement of the design is: o o EG: O1 × O2 CG: O3 × O4 The effect of the treatment may be measured as: o (O2 – O1) – (O4 – O3 Therefore. The major assumptions in the design are that both groups are affected in a similar manner by extraneous factors.

December 2010 Selected Student Answer Case 2 Solution: Business Solutions Ltd.The assumption is that the increase in website visits in the control group (8 visits) was caused by extraneous factors. Internal validity refers to the extent to which the effect of the dependent (x) was caused by the independent (treatment y): this takes into account the confidence that the effect of x was not caused by other extraneous factors. the resulting 19 website visits can be viewed as the direct impact of the treatment. (i) basic design (informal) and (ii) statistical design (formal). the maturation and history. this experiment would lack internal experimental validity as the results may have been caused by other extraneous factors. If this impact is subtracted from the change in website visits in the companies contacted by the telesales team (23 website visits). if the company Business Solutions Ltd were to conduct a field experiment. All experiments must have both external and internal validity. There are two types of experimental design i. in this case ‘invest in telesales’ and the effect or results.e. The independent. Some extraneous factors are: regression effects (the use of extreme values which skew the results). Extraneous factors are factors that affect the dependent variable other than the independent i. whilst an experiment conducted in the field lacks internal validity. It may also be helpful to use a statistical design (randomised block design) to take account of other variables that may influence visits to the website apart from telesales activity. An experiment involves a test to determine the causal relationship between variables i. 2. External validity on the other hand. selection errors. 18 . refers to the extent the findings/results from the experiment can hold for other situations.e. repeat testing and the mortality rate of respondents. the influence of the interviewer. Hence in this case. Critically explain the threats to experimental validity. the dependent and in this case ‘interest in and visits to the website’. What type of experimental design do you suggest Business Solutions Ltd should use? Explain your reasoning. 1.e. the treatment. An experiment conducted in a laboratory lacks external validity.

e. I would suggest Business Solutions Ltd use a before-after with control group to determine the effects of the treatment. but only one group is exposed to the telesales activity. The statistical/formal design examples include completely randomised design. Given the fact that the Business Solutions Ltd wishes to draw a simple random sample and divided into two groups. Advise The Ugandan Coffee Development Authority on the need for. Examples of basic/informal experimental designs include: o o o o o o o After only (× O). it should be born in mind the caused components i. concomitant effect. bearing in mind the cost and time involved. perhaps group design. which in this case is the telesales activity. 19 . if this experiment is to hold on both internal and external validity. Before–after without control O1 × O2 (O2 – O1). and design of. EG (experiment group) – O1 × O2. hence it may be advisable to use triangulation i. Before–after with control. (20 marks) The relevant module is Module 16.The basic informal design looks primarily at the effect of the treatment and not extraneous factors. a marketing information system to help realise their goals. CG (control group) – O3 × O4 (O2 – O1) – (O4 – O3). time. where both groups are exposed to direct mail brochure. After only with control (EG × O1) (O1 – O2) (CG × O1). However. The completely randomised assumes ceteris paribus and applies the treatment to all the elements randomly and then analyses the results. whilst the statistical/formal designs look at both the affect of the treatment in addition to extraneous factors. more than one experimental design. Essay Question – The Uganda Coffee Development Authority December 2010 Examiner's Solution Essay Solution – Answer Base 1. as well as one other statistical design. and ex-factor post design which is a hybrid of after only design. randomised design and Latin square design just to name a few. order of occurrence and absence of other factors.e.

organisation and storage of data and may comprise the following sub-systems: o o o o o an internal reporting system a marketing intelligence system a market-research system an analytical marketing system. export data. a marketing information system to help realise their goals. composite of sales force opinion. and statistical demand analysis). What tools do you suggest the Authority use to help forecast market demand for Ugandan coffee? (20 marks) Various forecasting tools may be used to help forecast market demand. economic trends.). 20 . processors. physical environment. Advise The Ugandan Coffee Development Authority on the need for. Useful sources of data will include both internal and external sources: for example. roasters. A well designed information system enables the efficient handling. moving average. socio-cultural environment and impact on coffee consumption. December 2010 Selected Student Answer Essay Solution 1. exponential smoothing. competitor activity. In choosing which to use the following considerations should be taken into account: o o o o Time horizon Technical sophistication Cost Quality of data that can be used The basic approach is to make an environmental forecast before making a forecast of sales and profits. farmers. analysing past data) and time dependent approaches (classical time-series. market prices. transportation costs. and design of. etc. government sources. expert opinion. 2. etc. Methods to be considered include: asking people questions (surveys of buyer intentions.A marketing information system is vital to help The Ugandan Coffee Development Authority to make good decisions and provide sound research and information to their various stakeholders (exporters. members’ sales reports. political trends.

It can also give them information on how the domestic market feel about coffee and what can be done to promote their consumption. Information on sales for example can lead the Ugandan Coffee Development Authority to recognise their most profitable segments in their domestic market. Market research systems are another integral part of the Marketing Information System that can greatly assist decision makers in solving problems and setting and achieving objectives. customer enquiries and customer feedback can all be used to develop the product and even give the Ugandan Coffee Development Authority ideas on how to promote coffee as a value added product. analysing and interpreting data from the environment in an effort to solve problems. A Marketing Information System is made up of four aspects: internal data. It can also assist in gaining a competitive advantage over others. and so on. and to provide the best possible information in an effort to stay abreast in one’s industry. production and operations. Information from all these internal sources can be used to help the Ugandan Coffee Development Authority achieve their objectives. in an effort to promote. Information can also be gained externally. A Marketing Information System will assist the Ugandan Coffee Development Authority greatly in achieving their initiatives. Such information is especially important since the dynamics of the environment are constantly changing. sales force attitudes and behaviour. about competitors. How people respond to different marketing strategies can be assessed and if ineffective it can be tweaked. outbound logistics. marketing intelligence. improve and monitor marketing of coffee to optimise foreign exchange. Market research involves collecting. most efficient ways to produce and to provide the best coffee. In terms of internal data this includes things such as information on inbound logistics. For instance. Marketing intelligence is the knowledge gained by a firm from everyday interaction with the environment. The Ugandan Coffee Development Authority can use each aspect of the Marketing Information System to help them achieve these goals. 21 . They can assess what is attributing to success in these segments and try to transfer the source of success to other segments. These four aspects produce a sufficient flow of data to decision makers so that they can make the most suitable and efficient decisions. Having a proper understanding of such information can help the Ugandan Coffee Development Authority understand the environment and industry and thus set the necessary objectives to maintain competitiveness. consumer behaviour. Customer complaints. They can also look at production and operations information and determine the best. They are striving to excel in their coffee industry and at the same time keep abreast of the dynamics within the environment. Marketing intelligence and market research systems aid in accumulating helpful information about the industry. customer information and complaints and sales and marketing.The Ugandan Coffee Development Authority has many goals and objectives that they are seeking to achieve. market research systems and analytical systems. A very important source of internal information is from customers. about consumers (both users of coffee and non-users). special attention can be paid to sales and marketing information on how sales are doing and the strategies being used by marketing can be assessed. It can entail information on competitive behaviour. It can therefore be seen that an abundance of information can be attained internally to help the Ugandan Coffee Development Authority make decisions. meet objectives and understand consumers. A Marking Information System deals with a constant flow of information and coordination of this information to assist decision makers.

Forecasting tools for example help forecast demand. 2. telephone interviews and so on. There are many different methods to use when forecasting. Channel distribution information from the sales force can also be attained to help the decision makers in choosing the most suitable channels and selling methods. internationally. The Ugandan Coffee Development can determine if they are meeting international standards. This can greatly benefit the Ugandan Coffee Development Authority since they can use these forecasts to set appropriate objectives and develop certain aspects of their strategy to meet future demand. This can be done via questionnaires.g. Statistically.Information on answers received from marketing research therefore can help the Ugandan Coffee Development Authority promote domestic coffee consumption. These are basically decision support mechanisms that help decision makers in making valuable decisions from the information that they have received throughout the Marketing Information System. which can help the Ugandan Coffee Development Authority in setting distribution and marketing objectives. and so on. long term. if the quality is good. Other external sources of information may include commercial information such as scanners in stores. For instance. asking experts valid questions and gaining information by looking at past data. Market research information can also be used in gaining information in international foreign markets. Finding such information is valid since it allows the Ugandan Coffee Development Authority to 22 . What tools do you suggest the Authority use to help forecast market demand for Ugandan coffee? Forecasting demand is an essential aspect of a firm. moving average. A final aspect of the Marketing Information System is the analytical systems. Information from market research can help them segment the market and thus have a more focused approach to satisfying needs. how can their coffee be marketed better. This can give information of where sales are concentrated. Forecasting tools in this system can either be basic or statistical. The Ugandan Coffee Development Authority can therefore benefit immensely from designing an appropriate Marketing Information System. asking sales forces valid questions. This would inevitably improve the coffee industry. Special emphasis must be placed on the aspects of the system that give relevant feedback on customers and the coffee industry. extrapolation and statistical demand analysis. focus groups. It entails forecasting tools.g. Sales can be forecasted by a time period e. In terms of basic tools this deals with asking people questions. medium term or by location e. forecasting can be done by using time series analysis. they can embark on asking customers about the coffee. short term. The analytical system of a Marketing Information System deals with the different methods that can be used to forecast sales. The Ugandan Coffee Development Authority can use any one of these methods in assisting them to forecast market demand for their coffee. All information gained from the different components of the system can be used to help realise goals. mathematical tools and expert systems. or regionally. It allows a firm to recognise the potential of their market and how they can make the necessary arrangements to meet this forecast or even improve this forecast. locally.

Sales force can give information on how and where demand would most probably come from. Day 4: Case Question 1: Software House (Module 4 – June 2008) June 2008 Examiner's Solution Case 1 – Answer Base 1. 23 . It looks at things such as personal income. Asking sales people questions is also very relevant since they are the ones who are in direct contact with the market whose sales you are trying to forecast. advertising and so on to determine future demand. Time series analysis for instance is based on the assumption that sales change due to different influences over time. information on past demand can also be used to forecast what kind of demand is to come. Ugandan Coffee Development Authority can use this since they can ascertain how these influences affect demand and use it to project future demand. erratic. moving average. Such experts may be ones from similar industries who may be familiar with coffee drinkers and their habits. The Ugandan Coffee Development Authority can also seek help and forecast using estimates from experts. based on a sample of 80 customers. How confident should Steven be in the results of his own market research? (8 marks) Steven has undertaken market research already. follow a trend or rise and fall at different times. The Ugandan Coffee Development Authority can also take a statistical approach and use methods such as time series analysis.recognise how probable an increase in demand is. The statistical demand analysis balances the equation where S = a0 + b1P + b2A… In conclusion Ugandan Coffee Development Authority can collaborate both statistical ways and non-statistical methods of forecasting demand. Using this method may not be very appropriate for the Ugandan Coffee Development Authority since they are more concerned about forecasting demand of a potential market rather than really focusing on the demand of the current market. They may also manipulate these influences to further increase demand. and the results appear to be favourable to the introduction of interactive voice response technology. In time series analysis sales can either be seasonal. with 70% of customers in support of the idea. extrapolation and statistical demand. A good approach to use statistically is the statistical demand analysis which deals with looking at all the external influences that may affect demand.

4. increasing the sample size.1. Therefore. what size of sample do you recommend? (8 marks) One option available to Steven is to conduct further research. What other methods might Steven use to determine sample size? (6 marks) Other methods of deciding on sample size include: o o o intuition cost limitation industry standards Each of these should be discussed with reference to section 4.1. The Confidence Interval Approach to sample size can assist the evaluation of whether these results are satisfactory as a basis for such investment decisions. Steven should consider the confidence level attached to his existing market research findings. (8 marks) In deciding whether to press on with the installation of interactive voice response services or conduct more market research. 4. If Steven were to undertake additional research and wished the percentage in favour to be accurate to within ±5%.1. Do you think Steven should press on with the installation of the voice response service or should he conduct more market research? Explain your reasoning. we can be 95% certain that the true population proportion of those in favour of the introduction of telephone based voice response is between 60% and 80%. 4.3 and 4.6.6. 2.1. To be within ±5% of 70% Steven would require a sample size as follows: 3.The question is how confident can Steven be in these results.6. The key issue he has to consider is the extent to 24 .

It is worth mentioning that the total survey error comprises sampling and non-sampling error. the small sample size may have affected the quality of the research and hence misled the results. Steven is trying to assess if he should go ahead and purchase a new interactive voice response service (bearing in mind the benefits that his may bring to his company) or decide against purchasing due to articles that mention the frustration of consumers with automated telephone systems. A good student answer will note that Steven should keep in mind that the survey referred to in the article is a year old and that. conducting telephone interviews.which his comfort zone would be enhanced if the confidence interval were narrowed by conducting further market research amongst his customers. The research used a probability sampling (where elements in the sample have a known chance of being selected) and therefore it is possible to estimate sampling error. i. is not likely to be prohibitive. Increasing the sample size to 323 would produce a ±5% confidence interval which Steven may feel is enough for him to feel confident in making the investment. We should also take into consideration that telephone interviews may cause annoyance to the consumer if not properly conducted and if that is 25 . or those who feel comfortable with the technology (interactive voice response service) proposed. To overcome this flaw. Therefore. June 2008 Selected Student Answer Case 1 Solution: Software House 1. many changes are likely to have taken place in consumer reaction to modern technology. This in itself may explain the differences between the findings of the two surveys. The first consideration in evaluating his research methods is sampling. although Steven has used a probability sampling and error can be estimated. Relating to the case study. a very small sample was used (only 80 customers out of his total customer base=2500) and this may influence the accuracy of results or quality of the data. in the past year alone.e. How confident should Steven be in the results of his own market research? Market research helps the supplier to allay uncertainty inherent in all marketing decisions. Sampling error refers to the sample not being a perfect representation of the target population and non sampling error can be either non response error (not all in the sample do in fact respond) and response error (respondents giving inaccurate answers). The cost of undertaking additional market research. Steven should increase his sampling size because larger samples imply smaller sampling error. In the case. It may well be that the 70% represents the opinion of those who have strong feelings about the subject. Steven should take into account the cost of research and the value of the investment decision being undertaken.

to produce more accurate results Steven should increase the sample size. Let’s calculate the Steven’s study accuracy: If Steven would be satisfied with ±10% accuracy which translates to the lowest 60% and highest 80% of satisfaction then he could go ahead. In short. What other methods might Steven use to determine sample size? The methods used to calculate sample size are: o o o o o Intuition Statistical precision Cost limitations Industry standards Other factors 26 . what size of sample do you recommend? To calculate the size sample we can use the level of accuracy formula. 3. If Steven were to undertake additional research and wished the percentage in favour to be accurate to within ±5%.the case maybe all those 70% in favour of the new system just replied positively because they wanted to finish the interview as soon as possible. It is as follows: L = Z · Sp Notes: L = level of Sp = standard deviation Z = value given for a determined level of confidence precision for proportion Therefore the sample size at 5% level of confidence should be n = 324. 2.

thus changing the perceptions of those who feel frustrated and disappointed when dealing with this system (maybe the ‘hatred’ comes from a lack of understanding or ability to use the system and may be easily resolved). Other factors concern any other variable that may affect/influence how to calculate the sample size.g.Intuition is based on informed intuition but its not the most satisfactorily method. 4. It also takes account of the level of precision required ( L = Z · S x or L = Z · S p) and the confidence interval (the interval within which a population means or proportion have a stated probability of lying). Do you think Steven should press on with the installation of the voice response service or should he conduct more market research? Explain your reasoning. he may consider the use of qualitative research to complement his quantitative research. 27 . Therefore. Industry standards refers to the ‘rules of thumb’ developed by ‘experts’ in the industry. it should only be used when there is no other possibility. Through focus groups they may assess attitudes and opinions on the subject (automated telephone systems) and what underlies these feelings. Steven should undertake more research but this time increasing the sample size to decrease sampling error and provide more accurate results. Cost limitations only consider the available budget despite all the other factors (e. Steven should undertake more research before going ahead with the installation of the new system. but also the costs that the firm will incur (and bearing in mind all the articles that show a negative feeling from customers towards automated telephone systems). This more detailed research could provide valuable insights on how the firm may contribute (for those responsible for the development and design of those systems) to a positive customer experience. Considering the benefits that the new system may bring. this method ticks all the boxes and provides a more accurate result. Its used in industrial marketing research more often. level of precision). Therefore. If after undertaking research using the same method – telephone survey – with a larger sample of respondents he still was not convinced about which decision to make. His first interview used a sample too small and therefore its results may be misleading. Statistical precision take into consideration that larger samples are more accurate and that data that flows from it have more quality.

June 2006) June 2006 Examiner's Solution Case 2 – Answer Base Advise the manufacturer of the new home kit on what kind of marketing research they should undertake to develop an understanding of the views and opinions of young people towards heart disease and the use of home testing kits to assess personal risk of contracting the disease. Clearly. background to the research it is likely that in-depth personal interviewing would be the most appropriate qualitative research technique (other suitable alternative methods may also be discussed). (Total 30 marks) The terms of reference of the marketing research would seem to indicate a need for data of a qualitative nature in relation to the attitudes of young people towards heart disease and use of home test kits to assess personal risk.g. Because of the emotional. 28 . the issues are of a sensitive nature and attitudes may be influenced by personal circumstances.Case Question 2: Blood Test Equipment (Module 4 and 8 . death rates/disease rates amongst family and friends. and potentially distressing. e.

This is quite a sensitive and serious issue that involves young people. 1. what treatments actually exist and what specialists exist to deal with this situation. The qualitative market research I would recommend to be undertaken is personal interviews and telephone interviews.The full range of advantages of in-depth interviewing should be discussed together with their drawbacks. To be able to get the best out of research. This data will be obtained by the use of secondary data. Enables interviewer to ask questions in a systematic order. This can be gathered from health institutions and government bodies such as the Ministry of Health. The need to involve medical practitioners should be considered. I would recommend the use of both Quantitative and Qualitative research methods. Once an understanding of attitudes and opinions has been achieved. including the fact that they are expensive and time consuming and will require considerable preparatory work in terms of sample recruitment and selection. une 2006 Selected Student Answer Case 2 Solution: Blood Test Equipment Advise the manufacturer of the new home kit on what kind of marketing research they should undertake to develop an understanding of the views and opinions of young people towards heart disease and the use of home testing kits to assess personal risk of contracting the disease. The merits of different survey methods should be assessed in the context of the case and some attempt should be made to explain desirable sampling techniques and the range of issues which would lend themselves to quantitative examination. Quantitative research is research that is based on numerical or statistical figures. Personal Interviews Advantages o o o Allow interviewer to observe reaction to questions. This will also assist us to define the population – the group that fall into our research study for our following qualitative research. the qualitative research may be followed up by a quantitative study to assess the extent to which various views and opinions are held amongst the wider population. 29 . This can be undertaken at the initial phase of the research to ascertain the statistics of how many young people actually have attacks. Interviewer can steer off sensitive questions depending on reaction of interviewee.

the cluster is more demographic. This is seen as most appropriate since it avoids bias in the selection process and hence is most representative. social classes and a number randomly selected. the names of all the students in a university are written on various sheets of paper and put together in a basket or container. Telephone Interviews o o Advantages Eliminates interviewer influence. The sample is stratified into e. For example. Non-probability Sampling Here the sample is not random. 3. Personality of interviewer can influence answers. distribution methods and where to actually sell the product. and how representative of the population. o o Selecting the Sample The success of the research mostly depends on how large the sample size is. Some examples of probability sampling are: 1. In the case of the blood test equipment. This will affect pricing. promotions message and means. Examples of nonprobability sampling are: 1. Depth interviews such as focus groups can be used as well to identify feelings and attitudes to heart disease and the home testing kit. 30 . Stratified sampling. Probability Sampling Here there is a known chance of selection. but rather managed for practical reasons. The first 40 names that are picked are used as the sample. This will give perspective from different sections of social class. The specific method I would recommend is the stratified sampling technique. Samples may be non-probability or probability. Quota sampling.Disadvantages Interviewer can be biased. For example. 3. 2. every 80th number from a telephone book is selected as part of the sample. Systematic sampling. 4. Judgement sampling. Convenience sampling.g. Random sampling. 2. 3. Interviewee can express self freely with the knowledge that interviewer does not know them personally. 2. I would recommend that the probability sampling technique be used for the reasons stated above. Cluster sampling. o High response rate since most people have impulse to pick up the phone when it rings and especially so when it is to deal with young people. This is as stratified sampling except that in this case.

Potential problems with the sampling frame lie in any deviation which may exist from one to one correspondence between the customer list used and the population of credit card customers. the list used must be up-to-date (for example. For example.Essay Question: Inter-European (Module 4 – Dec 2008) December 2008 Examiner's Solution Essay Solution – Answer Base 1. How might Inter-European deal with each of these potential problems? (20 marks) The relevant module is Module 4. Ineligibility (i. regarding income status) and not omit any members of the population.e. Describe the potential problems which Inter-European might face in drawing up a sampling frame for the research study. listing individuals who are 31 .

it may make sense to separate the population of credit card customers by country. In the case of Inter-European. 2. Despite having higher sampling errors than simple random sampling of equal size. cluster samples allow a large enough increase in sample size to more than offset their inefficiency so that overall sampling error is reduced for any given budget. credit card customers in UK. Other problems may include duplication (holding more than one credit card) and clustering (joint account holders). Separate simple random samples are drawn from each sub-group. A consequential reduction in the total cost of the research can result under certain conditions. Discuss the benefits and drawbacks of Inter-European using stratified and cluster sampling methods to determine the relationship. if any. In stratified sampling. e. Germany. a sample of countries will be chosen as the focus of the research study. A good student answer will note that stratified sampling can improve the costeffectiveness of a research project as this technique allows sampling error goals to be achieved with smaller sample sizes than are required in simple random sampling. between socio-economic characteristics and credit card usage amongst their credit card customers (20 marks) Stratified and cluster sampling are both probability sampling methods so sampling error may be stated in mathematical terms. This will allow comparisons to be made between countries. the population is separated into sub-groups called ‘clusters’ and a sample of clusters is drawn. samples of credit card customers will be drawn from each country. 32 . Cluster sampling can also be cost-effective. The division is mutually exclusive and exhaustive which means that every population element is assigned to one stratum only and no population elements are omitted in the assignment procedure. A good student answer will consider possible methods of dealing with each of these problems. Using cluster sampling. The element which distinguishes the procedures is that with stratified sampling a sample of elements is selected from each sub-group. In cluster sampling. the population is separated into sub-groups called strata. France. Using stratified sampling. etc.not/no longer members of the population – lapsed customers) is a further potential problem.g. whereas in cluster sampling a sample of sub-groups is chosen.