Priciples of Marketing

by Philip Kotler and Gary Armstrong

Chapter 4
Managing Marketing Information to
Gain Customer Insights

PEARSON
Marketing Information and Customer Insig
hts
•• To
Tocreate
createvalue
valuefor
forcustomers
customersandandbuild
buildmeaningful
meaningful
relationships
relationshipswith
withthem,
them,marketers
marketersmust
mustfirst
firstgain
gain
fresh,
fresh,deep
deepinsights
insightsinto
intowhat
whatcustomers
customersneed
needandand
want.
want.
•• Such
Suchcustomer
customerinsights
insightscome
comefrom
fromgood
goodmarketing
marketing
information.
information.
•• Companies
Companiesuse usethese
thesecustomer
customerinsights
insightsto
todevelop
developaa
competitive
competitiveadvantage.
advantage.
•• To
Togain
gaingood
goodcustomer
customerinsights,
insights,marketers
marketersmust
must
effectively
effectivelymanage
managemarketing
marketinginformation
informationfrom
fromaa
wide
widerange
rangeofofsources.
sources.
Marketing Information and Customer In
sights
 The customer insights is the fresh understanding
s of customers and the marketplace derived from
marketing information that become the basis or c
reating customer value and relationships.
Customer insights teams
Customer insights groups collect customer and market information from
a wide variety of sources, ranging from traditional marketing research
studies to mingling with and observing consumers to monitoring
consumer online conversations about the company and its products.
Then they use this information to develop important customer insights
from which the company can create more value for its customers.
Marketing Information and Customer Insi
ghts
 A marketing information system (MIS) consists of peo
ple and procedures dedicated to assessing information ne
eds, developing the needed information, and helping deci
sion makers use the information to generate and validate
actionable customer and market insights.
Assessing Marketing Information Needs
 The marketing information system primarily serves the c
ompany’s marketing and other managers.
 A good MIS balances the information users would like to
have against what they really need and what is feasible to
offer.
 The company must decide whether the value of insights g
ained from additional information is worth the costs of pr
oviding it, and both value and cost are often hard to asses
s.
Developing Marketing Information

Marketing
Marketing
research
intelligence

Internal data
Developing
marketing
information
Internal Data
 Many companies build extensive internal datab
ases, electronic collections of consumer and mar
ket information obtained from data sources withi
n the company’s network.
f
Sources o
on
informati

a rk e ting Consumer Sales

M
ep a r tment characteristics transactions Web s
d
es ite
furnish n visits
f o r m atio
in
Competitive Marketing Intelligence

Competitive marketing intelligence

The
The systematic
systematic collection
collection and
and analysis
analysis of
of publicly
publicly available
available information
information about
consumers,
consumers, competitors,
competitors, and
and developments
developments inin the
the marketing
marketing environment
environment

 Clearly, companies should take advantage

resellers
ofSuppliers
publicly available information. KeyHowever,
they Good
shouldmarketing
not stoop tointelligence
snoop.
customers
Help gain
Help marketers With
gain all the
insights
insights into legitimate
into how intelligence
how consumers
consumers talk about andsources
talk connect with their
brands
brands
now available, a company does not need to
executives
break the law or accepted codes of ethics Information
to
We can collect competitor’s on the Web
get Information
good intelligence.
by using above ways.
Companies monitor competitors’ activities
Firms
Firms use
use competitive
competitive marketing
marketing intelligence
intelligence to
to gain
gain early
early warnings
warnings of
of competitor
competitor
moves
moves and strategies,
strategies, new-product
new-product launches,
launches, new
new or
or changing
changing markets,
markets, and potential
competitive
competitive strengths
strengths and
and weaknesses.
weaknesses.
Marketing Research
 Marketing research is the systematic design, col
lection, analysis, and reporting of data relevant to
a specific marketing situation facing an organizat
ion.
Defining the Problem and Research Obj
ectives
 A marketing research project might have one of three typ
es of objectives:

Exploratory
Exploratory Gather
Gather preliminary
preliminary information
information that
that will
will help
help
research
research define
define problems
problems and
and suggest
suggest hypotheses.
hypotheses.

Describe
Describe marketing
marketing problems,
problems, such
such as
as the
the
Descriptive
Descriptive market
market potential
potential for
for aa product
product or
or the
the
research
research demographics
demographics and
and attitudes
attitudes of
of consumers.
consumers.

Causal
Causal Test
Test hypotheses
hypotheses about
about cause-and-effect
cause-and-effect
research
research relationships.
relationships.
Developing the Research Plan
 The research plan outlines sources of existing dat
a and spells out the specific research approaches,
contact methods, sampling plans, and instruments
that researchers will use to gather new data.
Developing the Research Plan
 The research plan should be presented in a written propos
al.
 A written proposal is especially important when the resea
rch project is large and complex or when an outside firm
carries it out.

Secondary data:
Primary data:
ConsistTo meet the manager’s
of information that information needs, the
alreadyresearch plan can call forConsist
exists somewhere,
of information
gathering secondary
date, primary collected
date, or for the specific
both.
having been collected for
purpose at hand
another purpose
Gathering Secondary Data

The company’s internal database provides a good starting point.

However, the company can also tap into a wide assortment of
external information sources.

Marketing researchers who use commercial online databases and

internet search engines conduct their own searches of secondary
data sources.

The researcher must evaluate secondary information carefully to

make certain it is relevant (fits the research project’s needs),
accurate (reliably collected and reported), current (up-to-date
enough for current decisions), and impartial (objectively
collected and reported).
Primary Data Collection
Research Approaches
 Observational Research.
• It involves gathering primary data by observing relevant
people, actions, and situations.
• Researchers often observe consumer behavior to glean c
ustomer insights they can’t obtain by simply asking cust
omers questions.
Research Approaches
 Ethnographic research.
• It is a form of observational research that involves sendi
ng trained observers to watch and interact with consume
rs in their “natural environments.”
• Observational and ethnographic research often yield the
kinds of details that just don’t emerge from traditional re
search questionnaires or focus groups.
Research Approaches
 Survey Research.
• It gathers primary data by asking people questions about
their knowledge, attitudes, preferences, and buying beha
vior.
• It is the best suited for gathering descriptive information.
• The major advantage of survey research is its flexibility;
it can be used to obtain many different kinds of informat
ion in many different situations.
• Surveys addressing almost any marketing question or de
cision can be conducted by phone or mail, in person, or
online.
Research Approaches
 Experimental Research.
• It gathers primary data by selecting matched groups of s
ubjects, giving them different treatments, controlling rel
ated factors, and checking for differences in group respo
nses.
• It is best suited for gathering casual information.
Contact Methods

Personal
Online
Mail Interviewing
Marketing Research
Questionnaires
Telephone Interviewing
••• The
Individual
Telephone
interviewing
growthinterviewing is flexible.
of the Internet has of
is one had thea dramatic impact
best methods foron
• how• Trained
Mailmarketinginterviewers
research
questionnaires can can
is
be guide
conducted.
used to interviews,
collect largeexplain
gathering information quickly, and it provides greater
• difficultinformation
Increasingly,
amounts questions,
researchers and aexplore
atare costissues
collecting as thedata
perprimary situation
through
flexibilityofthan low
mail questionnaires. respondent.
• requires.
online marketing research: Internet
are not surveys,
However, mail
with questionnaires
telephone interviewing, very costonline
per allpanels,
the flexible;
• However,and
experiments, individual
online personal
focus interviews
groups may order.
cost three
respondents
respondent isanswer
higher the same
than mail orand
withquestions in abrand
online fixed
questionnaires.
to four times
communities.
Mail as much as telephone interviews.the
• Also,surveys
people mayusually
nottake
wantlonger to complete,
to discuss personaland questions
•• Group
The interviewing consists of inviting six to ten people to
withInternet
response is especially
rate—the
an interviewer. numberwell suited to
of people quantitative
returning research
meet with
—for aquestionnaires—is
example,
completed trained moderator
conducting to talkvery
marketing
often about
surveys
low.a product,
and collecting
• The method introduces interviewer bias—the way
service, or organization.
data.
interviewers talk, how they ask questions, and other
• Participants normally are paid a small sum for attending.
differences that may affect respondents’ answers.
Sampling Plan
Three decisions of
 Sample is a segment of the
designing population
sample : selected f
or marketing research to represent the population
who is to be studied
as a whole.
(what sampling unit)?

how many people

should be included
(what sample size)?

how should the people in the

sample be chosen (what
sampling procedure)?
Research Instruments

Questionnaires
Mechanical Instruments
• Questionnaires are very flexible—there are
• Researchers use mechanical instruments to
many ways to ask questions.
monitor consumer behavior.
• Closed-end questions include all the
• Nielsen Media Research attaches people
possible answers, and subjects make
meters to television sets, cable boxes, and
choices among them.
satellite systems in selected homes to
• Open-end questions allow respondents to
record who watches which programs.
answer in their own words.
Implementing the Research Plan
 Data collection can be carried out by the company’s mark
eting research staff or outside firms.
 Researchers should watch closely to make sure that the pl
an is implemented correctly.
 They must guard against problems of interacting with res
pondents, with the quality of participants’ responses, and
with interviewers who make mistakes or take shortcuts.
Interpreting and Reporting the Findings
 The researcher should not try to overwhelm managers wit
h numbers and fancy statistical techniques.
 Similarly, managers may be biased. They might tend to ac
cept research results that show what they expected and rej
ect those that they did not expect or hope for.
 In many cases, findings can be interpreted in different wa
ys, and discussions between researchers and managers wi
ll help point to the best interpretations.
Analyzing and Using Marketing Informati
on
 This help may include advanced statistical analys
is to learn more about the relationships within a s
et of data.
 Information analysis might also involve the appli
cation of analytical models that will help markete
rs make better decisions.
Customer Relationship Management
 To overcome such problems, many companies are now tu
rning to customer relationship management (CRM) to
manage detailed information about individual customers
and carefully manage customer touch points to maximize
customer loyalty.
 By using CRM to understand customers better, companie
s can provide higher levels of customer service and devel
op deeper customer relationships.
Distributing and Using Marketing Inform
ation
 Information distribution involves entering inform
ation into databases and making it available in a t
ime-useable manner
 Intranet provides information to employees and o
ther stakeholders.
 Extranet provides information to key customers a
nd suppliers.
Other Marketing Information Considerati
ons
 This section discusses marketing information in t
wo special contexts:

Small
International
businesses and
marketing
nonprofit
research
organizations
Marketing Research in Small Businesses a
nd Nonprofit Organizations
 Managers of small businesses and nonprofit organizations
often think that marketing research can be done only by e
xperts in large companies with big research budgets.
Small
 Thus, small businesses and not-for-profit organizations ca
organizations
n obtain good marketing insights through observation or i
nformal surveys using small convenience samples.
Secondary
 Also, many associations, local media, and government ag
encies data observation
provide special help to smallsurveys experiments
organizations.
collection
International Marketing Research
A difficult time
finding good
secondary data

Domestic researchers International researchers

Deal with fairly Deal with diverse markets in many

homogeneous markets different countries. These markets
within a single country often vary greatly in their levels of
economic development, cultures
and customs, and buying patterns.
International Marketing Research
 Cultural differences from country to country cause additi
onal problems for international researchers. Language is t
he most obvious obstacle.
 Responses then must be translated back into the original l
anguage for analysis and interpretation. This adds to resea
rch costs and increases the risks of error.
International Marketing Research
 Although the costs and problems associated with internati
onal research may be high, the costs of not doing it—in te
rms of missed opportunities and mistakes—might be eve
n higher.
 Once recognized, many of the problems associated with i
nternational marketing research can be overcome or avoi
ded.
Public Policy and Ethics in Marketing Res
earch
 Intrusions on Consumer Privacy.
• Many consumers feel positive about marketing research and b
elieve that it serves a useful purpose.
• Some consumers fear that researchers might use sophisticated
techniques to probe our deepest feelings, peek over our shoul
ders as we shop, or track us as we browse and interact on the I
nternet and then use this knowledge to manipulate our buying.
• The best approach is for researchers to ask only for the inform
ation they need, use it responsibly to provide customer value,
and avoid sharing information without the customer’s permiss
ion.
Public Policy and Ethics in Marketing Res
earch
 Misuse of Research Findings.
• Today, however, many research studies appear to be littl
e more than vehicles for pitching the sponsor’s products.
• In fact, in some cases, research surveys appear to have b
een designed just to produce the intended effect.
• Few advertisers openly rig their research designs or blata
ntly misrepresent the findings—most abuses tend to be
more subtle “stretches.”
The End