Marketing Research

By- Jitendra Chauhan

 Role of Marketing Research in
a Marketing Plan
• Segmentation
LEVEL 1 Marketing • Target Market
(Strategic) Strategy Selection
• Positioning

Information for
Marketing
Decisions

4 Ps of Marketing
Marketing • PRODUCT
LEVEL 2
Plan • PRICING
(Tactical)
• PROMOTION
• PLACE
 Marketing Intelligence vs Marketing
Research
• Marketing Intelligence:
“An ongoing process of continuously
collecting information about the industry in
which our company operates, competitors’
moves in marketing or other functional areas,
related industries (e.g. Suppliers or substitute
products), government policies and actions in
areas of export, import, taxation,
liberalization, consumer law enforcement,
environmental protection and so on”.
• Marketing Research:

A clearly defined search for answers to some

questions, which if answered would lead our
company to make critical marketing decisions
on a strategic or tactical levels
 Marketing Intelligence vs Marketing
Research
Marketing Intelligence Marketing Research
Ongoing process Project based on
information gap
Usually done in-house Mostly outsourced to M.R.
Companies
Not meant for immediate Action oriented
action
General purpose Very specific answers to
questions
Focus on competition, Focus on consumers,
environment influencers, etc
 Typical Applications of Marketing
Research
• Application of MR can be divided into two
broad categories:
1. Strategic
– Demand forecasting, sales forecasting & STP.

2. Tactical
– Four Ps.
Cont...
The following list is the snapshot of the kind
of the studies that have actually been done in
India:
1. A study of consumer buying habits for detergents-
frequency, pack size, effect of promotions, brand
loyalty etc.
2. To find out the effectiveness of advertising
campaign for a car brand.
3. To determine brand awareness & brand loyalty for
a branded PC.
4. To find the customer satisfaction level among
consumers of an internet service provider.
5. To determine factors which influences consumer
in choosing a brand of cellular phone handset.
 Few more typical
application areas are......
Concept Research
• During a new product launch, there would
be several stages, for examples:
– Concept development
– Concept testing
– Prototype development & testing
– Test marketing etc...
• The first stage is development of concept
and its testing. The concept for a new product
may come from several sources, like..
• Brain storming sessions of employees of company
• A focus group conducted among customers
• A brainwave of top executives.
Product Research
• Product research helps to identify the
packaging, after sales services (price of
spare parts, availability of parts etc)
E.g.: A product research would be to find out
the reactions of consumers to manual
cameras vs automatic cameras.
• The scope of product research is immense,
and includes products or brands at various
stages of the PLC – introduction, growth,
maturity, saturation, decline & obsolescence.
Pricing Research
• Pricing research can investigate questions
such as:
– Pricing policy from customer’s point view
– From dealer’s point of view
– How a brand is perceived with respect to its price
and relative to other brand’s price (Brand
Positioning)
• For instance, a high price may be an
indicator of high quality or high esteem
value for certain consumer segment.
• Price elasticity at various price points for a given
brand is also an area of research.
• Price framing, or what the consumer compares price
against, in another area of research. E.g.- comparing
price of car against expensive 2 wheeler.
Cont...

Some interesting changes have

been incorporate in late nineties in
discounting practices like buy-
backs, exchange offers, straight
discounts etc.
Distribution Research
• Traditionally, most MR focuses on
consumers only, but right now, there is a
renewed interest in the entire area of
logistics, supply chain, and customer
service at dealer location.
• Distribution research focus on various
issues related to the distribution of
products including service level provided by
current channels, frequency of salesperson
visits to distribution points, transport
related issues, testing of new channels,
channel displays, linkage b’w displays and
sales performance etc..
A soft drink manufacturer want to know
where to set up vending machines?
Suggest Location??????

Roadside stall
Shopping malls
Educational institutions
Cinema theatres
Bus stands
Etc....
# Research would help to select best location in
city...
Advertising Research

• Two major categories of research in

advertising are:

1. Copy

2. Media
 A Classification of Marketing
Research

Marketing Research

Problem-Identification Research Problem Solving Research

-Market Potential Research -Segmentation Research

- Market Share Research - Product Research
- Forecasting Research - Pricing Research
- Sales Analysis Research - Promotion Research
- Business Trend Research, Etc.. - Distribution Research, Etc..
 The Role of Marketing Research
Customer Groups
• Consumers
• Employees
• Shareholders
• Suppliers
Uncontrollable
Controllable Environmental
Marketing Factors
Variables
Marketing •Economy
•Product
Research •Technology
•Pricing
•Laws & Regulation
•Promotion
•Social & Cultural
•Distribution Factors
Assessing Providing Marketing •Political Factors
Information Information Decision
Needs Making

Marketing Managers
• Market Segmentation
• Target Market Selection
• Marketing Programs
• Performance & Control
When to do Marketing Research
• There is an information gap which can be
filled by doing research.
• The cost of filling the gap through MR is less
than the cost of taking a wrong decision
without doing the research.
• The time taken for the research does not
delay decision-making beyond the
reasonable time.
Delay can have undesirable impacts like....
• Competitors becoming aware of strategies
• Consumer opinion changing
etc...
Limitations of Marketing Research
• MR is a costly affair (Large Population).
• It is lengthy & time-consuming.
• It has a limited scope (Students’ FRP).
• It has a limited practical value.
• It Can’t predict consumer behaviour.
• Can’t give 100% accurate results.
• It provides suggestions not solutions.
• Non-availability of qualified & experienced staff.
• It can be misused.
• Non-availability of reliable data.
• It is resistant to marketing managers.
Figure 1.4

RESARCH
INTERNAL SUPPLIERS
EXTERNAL

LIMITED SERVICE
FULL SERVICE

Field Branded
Syndicate Internet Products
Services
Services Services and Services

Standardized Customized Coding and

Services Services Data Entry Data
Services Analytical Analysis
Services Services
• Marketing Research Industry: the MR
industry consists of external suppliers who
provide MR services.
• Internal Supplier: MR departments located
within a firm.
• External Supplier: Outside MR companies
hired to supply marketing research data or
services.
• Full service Suppliers: Companies that offer
full range of MR activities.
• Limited-Service Suppliers: Companies that
specialize in one or few phases of MR project.
1. Syndicated Services
A research study which is conducted and funded
by a market research firm but not for any
specific client is called a syndicated research.
The result of such research is often provided in
the form of reports, presentations, raw data etc.
and is made available in open market for anyone
to purchase.
Surveys, panels, and audits are the main means
by which these data are collected.
E.g.: Exit poll survey by Nielsen Media Research.
 The Benefits of Syndicated Research
1. Providing a Representative Overview of the Market
- It provides a clear representation of the players
in the market, whether they are customers, clients, or
businesses
2. Identifying Industry Trends
- it often provides a macro-level overview of the
issues facing a particular industry
- to understand the market landscape and
their position
3. Measuring Brand Awareness, Strength, and
Perceptions
- see how their brands and product offerings are
viewed among customers and potential
customers compared to those of their competitors.
4. Offering Competitive Intelligence
- insights on macro-level industry trends as well as
a detailed understanding of specific issues within an
industry or market
 Why should you use syndicated
research?
• Syndicated research reports should be used
during exploratory research process to gain
more information about a market, industry or
company at a lesser cost and in shorter time
span.
• In short when you are building your
knowledge base about a business/research
problem and don’t want to spend huge amount
or have very less time you should use
syndicated research reports.
 Where to find syndicated research?

1. Industry Association

2. University Libraries (Specially b-schools)

3. Market Research Reports Portals

2. Customized Services

• Customized services offer the wide variety of

MR services customized to suit a client’s
specific needs. Each marketing research
project is treated uniquely.
• Some MR firms that offer these services
include Burke Inc (www.burke.com) ,
Synovate (www.synovate.com) , & TNS
(www.tns-globle.com)
3. Internet Services

Companies that have specialized in

conducting marketing research on internet.

E.g.: Greenfield online research centre Inc,

(www.greenfieldonline.com) & Jupiter
research, (www.jupiterresearch.com)
Limited Services

1. Field Services

2. Coding & Data Entry Services

3. Data Analysis Services

4. Particular Brand & Product Services

Selected Marketing Research Career Descriptions
Vice-President of Marketing Research: The senior position in
marketing research. The vice president (VP) is responsible for
the entire marketing research operation of the company and
serves on the top management team. This person sets the
objectives and goals of the marketing research department.
Research Director: Also a senior position. The research director
has the general responsibility for the development and
execution of all the marketing research projects.
Assistant Director of Research: Serves as an administrative
assistant to the director and supervises some of the other
marketing research staff members.
(Senior) Project Manager: Has overall responsibility for design,
implementation, and management of research projects.
Statistician/Data Processing Specialist: Serves as an expert on
theory and application of statistical techniques.
Responsibilities include experimental design, data processing,
and analysis.
 Selected Marketing Research
Career Descriptions
Vice President of Marketing Research Director
Research •Also part of senior
• Part of company’s top management
management team •Heads the
• Directs company’s entire development and
market research operation execution of all
• Sets the goals & objectives research projects
of the marketing research
department
Assistant Director of Research
•administrative assistant to
director
•supervises research staff
members

Senior Project Manager

•Responsible for design, implementation, &
research projects
Senior Analyst
Fig 1.5 Contd. Statistician/Data Processing
• Participates in the development
of projects •Serves as expert on theory and
• Carries out execution of application on statistical
assigned projects techniques
• Coordinates the efforts of •Oversees experimental design,
analyst, junior analyst, & other
data processing, and analysis
personnel development of
research design and data
collection
• Prepares final report

Analyst
• Handles details in execution of
project
• Designs & pretests questionnaires
• Conducts
• Preliminary analysis of data

Junior Analyst Field Work Director

• Secondary data analysis •Handles selection, training,
• Edits and codes questionnaires supervision, and evaluation of
• Conducts preliminary analysis of interviewers and field workers
A Sample of Marketing Research Jobs
 Marketing Research Associations
Online
Domestic
AAPOR: American Association for Public Opinion Research
(www.aapor.org)
AMA: American Marketing Association (www.ama.org)
ARF: The Advertising Research Foundation (www.amic.com/arf)
CASRO: The Council of American Survey Research
Organizations (www.casro.org)
MRA: Marketing Research Association (www.mra-net.org)
QRCA: Qualitative Research Consultants Association
(www.qrca.org)
RIC: Research Industry Coalition (www.research industry.org)
International
ESOMAR: European Society for
Opinion and Marketing Research
(www.esomar.nl)
MRS: The Market Research Society
(UK) (www.marketresearch.org.uk)
MRSA: The Market Research Society of
Australia (www.mrsa.com.au)
PMRS: The Professional Marketing
Research Society (Canada) (www.pmrs-
aprm.com)
Approaches
to the
Research
Deductive Approach
• Deductive reasoning works from the more
general to the more specific. It is a "top-down"
approach. We might begin with thinking up a
theory about our topic of interest. We then
narrow that down into more specific hypotheses
that we can test. We narrow down even further
when we collect observations to address the
hypotheses. This ultimately leads us to be able to
test the hypotheses with specific data -- a
confirmation (or not) of our original
theories.
Inductive Approach
• Inductive reasoning works the other way,
moving from specific observations to broader
generalizations and theories. This is a "bottom
up" approach. In inductive reasoning, we begin
with:
• specific observations and measures,
• begin to detect patterns and regularities,
• formulate some tentative hypotheses that we can
explore, and finally end up developing some
general conclusions or theories.
 Types of Research
1. Descriptive (Ex-post facto research) Vs.
Analytical (Critical Evaluation of the material).
2. Applied (Action) Vs. Fundamental (Basic or
Pure).
3. Quantitative (Inferential/experimental/
simulation) Vs. Qualitative.
4. Conceptual (abstract idea or theory) Vs.
Empirical (Experience or observations based
on data)
5. Longitudinal Research (Over a time period
such as clinical or diagnostic research) Vs.
Laboratory or Simulation Research.
 Descriptive (Ex-post facto research) Vs.
Analytical (Critical Evaluation of the
material)

• Descriptive study describes phenomena as

they exist. It is used to identify and obtain
information on the characteristics of a
particular issue. (By using 6 Ws)
• Example of a descriptive study:
 What is the absentee rate amongst a particular
group of workers?
 What are the feelings of workers faced with
redundancy?
 Descriptive (Ex-post facto research) Vs.
Analytical (Critical Evaluation of the
material)

• Analytical Research is continuation of

descriptive research. The researcher goes
beyond merely describing the characteristics, to
analyze and explain why or how something is
happening.
• Example of a descriptive study:
 How can the number of complaints made by
customers be reduced?
 How can the absentee rate among employees be
reduced?
 Applied (Action) Vs. Fundamental
(Basic or Pure).
• Applied research is problem oriented as the
research is carried out to solve a specific
problem that requires a decision.
– E.g. the improvement of safety in the workplace.
• Basic research is called fundamental or pure
research and is conducted primarily to improve
our understanding of general issues, without
any emphasis on its immediate application.
– E.g. invention of TQM and invention of
Herzberg’s theory of motivation.
Quantitative (Inferential/experimental/
simulation) Vs. Qualitative.

Quantitative Qualitative
Objective Objective
Research questions: How many? Strength Research questions: What?
of association?
Literature review must be done early in Literature review may be done as study
study progresses
Test theory Develops theory
One reality: focus is concise and narrow Multiple realities: focus is complex and
broad
Facts are value-free and unbiased Facts are value-laden and biased
Measurable Interpretive
Report statistical analysis. Report rich narrative, individual;
Basic element of analysis is numbers interpretation. Basic element of analysis is
words/ideas.
 Quantitative (Inferential/experimental/
simulation) Vs. Qualitative.
Quantitative
Researcher is separate
Hypothesis
Reasoning is logistic and deductive
Establishes relationships, causation
Uses instruments
Highly controlled setting:
experimental setting (outcome
oriented)
Sample size: n
Qualitative
Researcher is part of process
Research questions
Reasoning is dialectic and inductive
Describes meaning, discovery
Uses communications and
observation
Flexible approach: natural setting
(process oriented)
Sample size is not a concern; seeks
"informal rich" sample
Conceptual (abstract idea or theory) Vs. Empirical
(Experience or observations based on data)

Conceptual research focuses on the concept or

theory that explains or describes the phenomenon
being studied.
–What causes disease?
–How can we describe the motions of the planets?
The conceptual researcher sits at his desk with pen
in hand and tries to solve these problems by thinking
about them. He does no experiments but may
make use of observations by others.
–It is generally used by philosophers and thinkers to
develop new concepts or reinterpret existing ones.
–Use in social science, philosophy, psychology
studies.
 Conceptual (abstract idea or theory) Vs.
Empirical (Experience or observations based on data)
• Experimental research is a data based research
which depends upon experience or observation
alone (not individual’s perception). It is aimed at
coming up with conclusions without due regard for
a system and theory.
• Different statistical and scientific methods are used
to analyse the data.
• Illustrations:
– Are cigarette smokers less productive? Do they take more
sick days?
– What is the relationship between income and obesity?
– What is the effect of home team fan attendance on team
performance?
Longitudinal Research (Over a time period such as
Vs. Laboratory or
clinical or diagnostic research)
Simulation Research.

• “A type of research design involving a fixed

sample of population elements that is
measured repeatedly on the same variables.
The sample remains the same over time”

– How did Students change their view for Jitendra sir’s

performance during the lectures in MBAII sem &
MBAIII sem?
 Longitudinal Research (Over a time period such as
Vs. Laboratory or
clinical or diagnostic research)
Simulation Research.
In simulation research, replicated contexts are called
‘virtual worlds’ and the contents of these contexts are
‘synthetic elements’. Synthetic elements of the
virtual world are accurate representations of the real
world. The experience of these is similar to what one
would experience in the real world.
Both of these points of view relate directly to
simulation research:
1.The disadvantage of a loss of accuracy in replication.
2.The benefit of studying dangerous/ harmful situations at
a distance.
 Research Process

Deciding Planning Actually

What How Doing

1 2 3 4 5 6 7 8

Research Journey
Considerations & The Research Process Methods of
steps in data
formulating a processing; Use
Research Methods & Sampling of computer & Principles of
research
design: tools of data theory & statistics scientific
problem
Functions collection designs writing

Literature
Review

Conceptua Constructing Writing a

Formulating a Selecting a Collecting Processing Writing a
lizing a an instrument Research
research Sample data Data Research
Research for data Proposal
problem Report
Design collection

Operational
Steps
Study Design Field test of
Editing
the research Coding
tool of the Required
Variables & data theoretical
Validity & Content of knowledge
hypothesis: Research Developing Required
definition & Reliability of
Proposal a code intermediary
typology research tool knowledge
book

What How Conducting of the study

Steps in planning a research study

Step 1: Formulating a research problem

• A research problem identifies your
destination.
• It tells to researcher & readers that what you
intend to research.
• A well defined problem is half solved.
• The main function of formulating a research
problem is to decide what do you find out
about.
Cont…
Step 2: Conceptualizing a research design
• An extremely important feature of research is
the use of appropriate methods.
• The strength of what you find largely rests on
how it was found.
• The main function of a research design is to
explain how you will find answers to your
research questions.
• A research design is a frame work of how to
do.

51
Cont…
Step 3: Constructing an instrument for data
collection
• Anything that becomes a means of collecting
information for your study is called a ‘research
tool’ or a ‘research instrument’.
– E.g.- Observation forms, interview schedules,
questionnaires and interview guides are all
classified as research tools.
Cont…
Step 4: Selecting a sample
• The accuracy of findings largely depends upon
the way of selecting sample.
• The basic objective of any sampling design is to
minimize the error b’w sample & population.
Sampling theory is guided by two principles-
– Avoidance of bias in the selection of sample.
– Attainment of max. precision for a given
outlay of resources.
Cont…

There are three categories of sample design:

1. Random/Probability sampling designs.
2. Non-random/probability sampling designs.
3. Mixed sampling designs.
Cont…
Step 5: Writing a research proposal
• The overall plan that tells a reader about your
research problem and your planning to investigate,
is called a research proposal.
• A research proposal must tell about your study (to
you, to your research supervisor and to readers)
that:
– What you are proposing to do;
– What you plan to proceed;
– Why you select the proposed study.
Cont…
Therefore it should contain the following information
about your study:
1. A statement of the objectives of the study;
2. A list of hypothesis, if you are testing any;
3. The study design you are preparing to use;
4. The research instrument (s) you are planning to
use;
5. Information on sample size and sample design;
6. Information on data-processing procedure;
7. An outline of proposed chapters for the report
8. The study’s problems and limitations; and
9. The proposed time-frame.
Steps in conducting a study

Step 6: Collecting Data

• At this stage researcher actually collect the data
according to his research plan and he has to
use different ways.
Steps 7: Processing Data
• The analysis of the information depends upon-
– Type of information: descriptive, quantitative,
qualitative or attitudinal;
– The way you want to communicate your findings
to readers.
 Cont…

Step 8: Writing a research report

• It is the most difficult part of research process.
• It informs the world what you have done, what
you have discovered and what conclusion you
have drawn from your findings.
Research Design
After deciding what you want to study about,
next question is:
• How are you going to conduct your study?
• What procedure will you adopt to obtain
answers of research questions?
• What should you do and what should you not
do in the process of undertaking the study?
Basically, answers to these questions
constitute the core of research design.

59
 Definition

“A research design is a framework or blueprint for

conducting the research project. It specifies the
details of the procedure necessary for obtaining the
information needed to structure and/or solve
research problem.”

60
Essentials of the Research Design are:

• The design is an activity and time-based plan.

• The design is always based on the research
question.
• The design guides the selection of the sources
and types of information.
• The design is a framework for specifying the
relationships among the study’s variables.
• The design outlines procedures for every
research activity.
61
 Research Design Classification

Research Design

Exploratory Conclusive
Research Research
Design design

Multiple Descriptive Causal

Cross-Sectional Research Research
Design

Single
Cross-Sectional Cross-sectional Longitudinal
Design Design Design

62
Exploratory Research
One type of research design, which has as its
primary objective the provision of insights into &
comprehension of the problem situation
confronting the researcher.
Exploratory research could be used for any of the
following purposes.
• Formulate a problem or define a problem more
precisely.
• Develop hypothesis rather than testing it.
• Isolate key variables & relationship for further
examination.
• Gain insights for developing an approach to the
problem.
• Establish priorities for further research.
63
Conclusive Research

“Research design to assist the decision maker in

determining, evaluating, and selecting the best
course of action to take in a given situation.”

64
 Difference between Exploratory &
Conclusive Research
Exploratory Conclusive
Objective To provide insights & To test specific hypothesis
understanding. & examine relationship
Information needed is Information needed is
Characteristic defined only loosely. clearly defined. Research
s Research process is process is formal &
flexible & unstructured. structured. Sample is large
Sample is small & non- & representative. Data
representative. Analysis of analysis is quantitative.
primary data is
qualitative.
Findings/ Tentative Conclusive
Results
outcome Generally followed by Findings used as input into
further exploratory or decision making.
conclusive research
65
Descriptive Research
“A type of conclusive research that has as its
major objective the description of something.”
Descriptive research is conducted for the
following reasons-
– To describe the characteristics of relevant groups,
such as consumers, salespeople, organizations, or
market areas. E.g.- we could develop a profile of
the “heavy users” of a departmental stores.
– To estimate the percentage of units in specified
population exhibiting a certain behaviour. E.g.-we
might be interested in estimating the percentage
of heavy users for departmental stores

66
The six Ws:
1. Who- who should be considered a client of a
particular departmental store.
– Anyone who enters the department store,
whether or not she or he purchase anything.
– Anyone who purchases anything from the
store.
– Anyone who makes purchase at department
store at least once a month.
– The person in the household most responsible
for department store shopping.

67
Cont…

2. What- what information should be obtained

from the respondents?
– Frequency to visit different department stores
to buy a specific product category.
– Evaluation of various departmental stores in
terms of the salient choice criteria.
– Information pertaining to specific hypotheses to
be tested.
– Psychographic & lifestyles, demographics. Etc.

68
Cont…

3. When- when should the information be

obtained from the respondents
 Before Shopping.
 While Shopping.
 Immediately after shopping.
 Some time later after shopping.

69
Cont…

4. Where- where should the respondent be

contacted to obtain the required information?
 In the store.
 Outside the store but in shopping mall
 In the parking lot
 At home

70
Cont…

5. Why- why are we obtaining information

from the respondents?
 Improve the image of sponsoring store.
 Improve market share.
 Change the product mix.
 Develop a suitable promotional campaign.
 Decide on the location of a new store.

71
Cont…

6. Way- in what way are we going to obtain

information from the respondents?
 Observation of respondents’ behaviour.
 Personal interviews.
 Telephone interviews.
 Mail interviews.
 Electronic interviews.

72
Cross-Sectional Design

“A type of research design involving the collection

of information from any given sample of
population elements once only.”
They may be:
1. Single cross-sectional design
2. Multiple cross-sectional design

73
Cont…

• Single cross-sectional design: A cross

sectional design in which one sample of
respondents is drawn from a target
population & information is obtained from
this sample once.

• Multiple cross-sectional design: A cross

sectional design in which there are two or
more samples of respondents, and
information from each sample is obtained
only once.

74
Longitudinal Design

“A type of research design involving a fixed

sample of population elements that is measured
repeatedly on the same variables. The sample
remains the same over time”
E.g.-
• How did the American people rate the
performance of G. W. Bush immediately after the
war in Afghanistan?
(cross-sectional design)
• How did the American people change their view
of Bush’s performance during the war in
Afghanistan?
(Longitudinal design)
75
Causal Research (Experimental R.D.)

“A type of conclusive research where major

objective is to obtain evidence regarding cause-
effect-relationship (causal) relationship.”
Causal research is appropriate for following
purposes:
• To understand which variable is cause
(independent variable) and which variables are
the effect (dependent variables) of a
phenomena.
• To determine the nature of the relationship
between the causal variables and the effect to
be predicted.
76
A Comparison of Basic Research Design

Exploratory Descriptive Causal

Objective Discover ideas & Describe market Determine
insights characteristics or cause & effect
functions relationship

Flexible, Versatile, Marked by the Manipulation of

Characteri often the front end prior formulation of one or more
stics of total research specific hypothesis, independent
design preplanned & variables
structured design
Expert surveys, Secondary Data
Methods Pilot surveys, (analyzed Experiments
Secondary data quantitatively),
(analyzed surveys, Panels,
qualitatively), observation & other
Qualitative data
Research
77
Causal Research Design:
Experimentation
Concept of Causality
• Experiment is commonly used to infer causal
relationship.
• ‘Causality’ means something very different to
average person on the street than to a
scientist.
• A statement such as “X causes Y” will have the
different meanings to an ordinary person and
to a scientist.
It can be seen through following table:
Cont..
Ordinary Meaning Scientific Meaning

X is only cause of Y X is only one of a number of

possible causes of Y

X must always lead to Y The occurrence of X makes the

(X is a deterministic occurrence of Y more probable
cause of Y) (X is a probabilistic cause of Y)

It is possible to prove We can never prove that X is a

that X is a cause of Y cause of Y. At best, we can infer
that X is a cause of Y.

The scientific meaning of causality is more appropriate to MR than is the

everyday meaning. Marketing effects are caused by multiple variables, and
the relationship between cause and effect tends to be probabilistic.
Conditions for Causality
• Before making causal inferences, or assuming
causality, three conditions must be satisfied.
1. Concomitant variations

2. Time order of occurrence of variable

3. Elimination of other possible causal factors.

1. Concomitant Variation

Concomitant variation is the extent to

which a cause, X, and an effect, Y, occur
together or very together in the way predicted
by the hypothesis under consideration.
• Illustrations:
– Sales of a department store are highly
dependent upon the quality of in-store
services.
– Purchase of fashion clothing is influenced by
income level.
 2. Time order of occurrence of variable
• It states that the causing event must occur either
before or simultaneously with the effect; it can
not occur afterwards.
• An effect variable can’t be produced by an event
that occurs after the effect has taken place.
A variable can be both a cause and an effect in a
same causal relationship.
E.g.: Customer who shop frequently in a departmental
store are likely to have shopping card for that store.
Customers who have shopping card for a departmental
store are more likely to shop there frequently.
 Elimination of other possible causal
factors.
• The absence of other possible causal factor
means that the factor or variable being
investigated should be the only possible
causal explanation.
– In store service may be a cause of sales, if we
can be sure that changes in all other factors
affecting sales, such as pricing, advertising, level
of distribution, product quality, competition, and
so on were held constant or otherwise controlled.
Puzzle
Which Come First?
• Some studies indicate that as much as 80% of
buying decisions are made at point of purchase
(POP).
• POP buying decisions have increased
concurrently with increased advertising efforts
in the stores. These include Radio
advertisement, adds on shopping carts &
grocery bags, ceiling signs, and shelf displays.
• It is estimated that brand and a retail owners
spent more than $5 billion trying to influence
the customer at the POP.
??????
But it is difficult to ascertain from these data:
“whether the increased POP decision making is
the result of increased advertising effort in the
store”
OR
“ Whether the increase in store advertising
results from attempts to capture changing
consumers attitudes towards purchasing and to
capture sales from the increase in POP decision
making”
Some Concepts with Definition
• Independent Variable: Variables that are
manipulated by the researcher and whose effect
are measured and compared. These variables
are also known as treatment.
E.g. Price, Advertising investment, Packaging etc.
• Test Units: Individuals, organisations, or other
entities whose response to independent
variables or treatments is being
examined/studied.
E.g. Consumer, Stores, Geographical areas etc.
• Dependent Variables: Variables that measure
the effect of the independent variables on the
test units.
E.g. Sales, Profit & Market Share etc.
• Extraneous Variables: Variables, other than
the independent variables, that influence the
response of the test units.
• Experiment: The process of manipulating one
or more independent variables and measuring
their effect on one or more dependent
variables, while controlling for extraneous
variables.
• Experimental Design: An experimental design
is a set of procedure specifying
1. The test units and how these units are to be
divided into homogeneous sub samples;
2. What variables or treatments are to be
manipulated;
3. What dependent variables are to be measured;
4. How the extraneous variables are to be
controlled.
Definition of symbols

• X = the exposure of a group to an independent

variable, treatment, or event, the effects of
which are to be determined.

• O = the process of observation or

measurement of the dependent variable on
the test units or group of units.

• R = the random assignments of test units or

groups to separate treatments
Cont...
In addition, the following conventions are adopted:
• Movement from left to right indicates
movement through time.

• Horizontal alignment of symbols implies that

all those symbols refers to specific treatment
group.

• Vertical alignment of symbols implies that

those symbols refer to activities or event that
occur simultaneously.
Illustrations:
• The symbolic arrangement
X O1 O2
means that a given group of test units was exposed
to the treatment variable (X) and the response was
measured at two different points in time, O1 and
O2.
• Likewise, the symbolic arrangement
R1 X1 O1
R2 X2 O2
Means the two groups of test units were randomly
assigned to two different treatment groups at the
same time, and the development variable was
measured in the two groups simultaneously.
Validity in Experiment
Internal Validity
• Draw valid conclusions about the effect of
independent variables on the study group.
• It refers to whether the manipulation of the
independent variables or treatments actually
caused the observed effects on the dependent
variables.
• Thus, internal validity examines whether the
observed effects on the test units could have
been caused by variables other than the
treatment.
Cont...

External Validity
• A determination of whether a cause and effect
relationship found in the experiment can be
generalised.
• Make valid generalisations to a larger
population of interest.
Extraneous Variables
1. History (H)
Contrary to what the name implies, History (H)
does not refer to occurrence of the event before
the experiment. Rather, history refers to specific
events that are the external to the experiment but
occur at the same time as the experiment. These
events may affect the dependent variable.
– E.g.
O1 X1 O2
(O2 – O1) = Treatment Effect
If (O2 – O1) = 0 (Zero)
It doesn’t mean treatment variable was ineffective. It
might be result of other extraneous variables
occurred at same time.
2. Maturation (MA)

• Maturation is similar to history expect that it

refers to changes in in the test units
themselves. These changes are nor caused by
the impact of the independent variables or
treatments but occur with the passage of time.
• In an experiment involving people, maturating
takes place as people become older, tiered,
bored, or uninterested.
3. Testing Effect

• Testing effects are caused by the process of

experimentation.
• Typically, these are the effects on the
experiment of taking a measure on the
dependent variable before and after the
presentation of the treatment.
A. Main Testing Effect (MT)
B. Interactive Testing Effect (IT)
A. Main Testing Effect (MT)
• It occurs when a prior observation affect the
later observation.
– E.g.: Consider an experiment to measure the effect
of advertising on attitudes towards a certain brand.
The respondents are given a pre-treatment
questionnaire measuring background information
and attitude towards a brand. They are then
exposed to the test commercial fixed in an
appropriate program. After viewing the commercial,
the respondents again answer a questionnaire
measuring, among other things, attitude toward the
brand.
Cont...
– Suppose that there is no difference between the
pre- and post-treatment attitudes.
– Can we conclude that the commercial was
ineffective?
– An alternative explanation might be that the
respondents tried to maintain consistency between
their pre- and post-treatment attitudes.

As a result of the main testing effect, post-

treatment attitudes were influenced more by pre-
treatment attitudes than by treatment itself.
B. Interactive Testing Effect (IT)
• In the Interactive Testing Effect (IT), a prior
measurement affects the test unit’s response to
the independent variable.
– Continuing with our advertising experiment, when
people are asked to indicate their attitude towards a
brand, they become aware of the brand. They are
sensitized to the brand and become more likely to
pay attention to the test commercial than the people
who were not included in the experiment.
The measured effects are then not generalizable
to the population; therefore, the interactive
testing effects influence the experiment’s
external validity.
4. Statistical Regression (SR)
• SR effects occur when test units with
extreme scores moves closer to the average
score during the course of the experiment.
– In the advertising experiment, suppose that some
respondents had either very favourable or very
unfavourable attitudes. On post-treatment
measurement, their attitudes might have moved
towards average. People’s attitudes change
continuously. People with extreme attitudes have
more room for change, so variation is more likely.
This has a confounding effect on the
experimental results, because the observed effect
(change in attitude) may be attributable to
statistical regression rather than to the
treatment (test commercial).