Marketing Research Midterm 1

Marketing Research

surveys, data analysis, and focus groups

Key Marketing Activities

• Understand customer needs and wants

• Design services and products to satisfy these needs and wants

• Offer value at a price

• Exchange value and earn profits: think about competitors

• Is the customer satisfied?

Competitor analysis

a strategic process of researching and evaluating rival businesses to understand their strengths, weaknesses, products, and marketing tactics relative to your own

Primary Function of MR

Need for marketing research

• focus on the use of information as a source of strategic advantage

• need to have a thorough knowledge of customers, their attitudes, tastes, and preferences

• need to analyze competition for benchmarking and making price, product, market, and segment decisions

Top Ten MR activities

1. Industry characteristics and trends

2. Customer satisfaction

3. Market share analysis

4. Segmentation

5. Purchase behavior

6. Brand awareness

7. Purchase intention

8. Brand preference

9. Concept testing

10. Marketing potential

Purposes

defining problems/opportunities

objectives

what information is required

The MR Process

• purposes and objectives

• research design

• data collection

• data analysis

• report

Decision problems

ex. dunkin donuts introduces a new donut

research problems

design a test market, evaluate locations, quantify impact of price changes on sales

research design

the detailed blueprint to guide the implementation of a research study toward the realization of its objectives (consistency with research objective and data collection and analysis)

categories of research

exploratory, descriptive, and casual

Exploratory research

Used when seeking insights into the general nature of a problem, the possible decision alternatives, and the relevant variables that need to be considered

• Problem ambiguous

• Focus groups

• Qualitative research; quantitive analysis unimportant

Descriptive Research

• Problem-aware

• Provides an accurate snapshot of some aspect of the market environment

• Surveys

• Larger sample; quantifying results is desirable

Casual Research

• Problem defined

• Used when it is necessary to show that one variable causes or determines the values of other variables: a causal relationship

• Experiments: controlled vs. natural

• Problem with observational data

Detective Funnel

Uses a combination of all three research techniques

• Exploratory techniques generate all possible reasons for a problem

• Descriptive and Causal approaches narrow the possible causes

Once the research approach has been chosen develop:

• The specifications of measurements

• Plan for choosing the sample

• Methods of analysis

• Analysis of value versus cost and time invovled

The value of information

Marketing research should be done only if the potential value of the improved decision is higher than the potential cost of the information being collected

Firms are risk neutral when

Uncertainty, change of decision, and risk make marketing research

Is MR Necessary?

Consider value of information and cost/time

Primary data

They are collected especially to address a specific research objective (data from focus groups, surveys, experiments)

Secondary data

They were collected for some purpose other than solving the present problem (census data, customer database, syndicated data)

Benefits and Limitations of Secondary Data

Secondary Data Sources - Internal

• Sales

• Factory shipments

• Distributor / Dealer reports

• Customer feedback - online reviews as well

Secondary Data Sources - External

• Published Data

• Private studies

• Online Databases

Published data

• Government

• Trade associations

• Periodicals/newspapers/books

• Annual reports

• Consumer attitudes/lifestyles, trends, and industry conditions

Consumer panels

Cross-sectional - thousands of participating households and time series of hundreds of weeks of purchasing data (home audit and mail diary method)

Scanner audits

used to study the behavior of the consumer when different elements of the marketing mix are varied

Single - source systems

Track the behavior of individual households, from the TV set to the checkout counter

Massive amounts of data

suppliers of scanner data have created expert systems to cut the mass of scanner data down to actionable piece of information

Measuring promotion effectiveness

scanner data and diary panels

Measuring Ad exposure and effectiveness

NTI/ Starch Scores/ Arbitron/ Multimedia Services

Measuring product sales and market share

diary panels / retails audit/ scanner data/ internal records

estimation and evaluation of models

scanner data / diary panels/ internal records

personalization through tracking

a new generation of internal secondary data companies can now track their customers' purchase and browsing behavior and customer

• advertising

• price

• promotion

• product

advertising

messages and ad placement this would eliminate the all too common mass advertising in the online space

exploratory research

data on consumer traits that cannot be directly observed and measured (soft data) - not structured and based on a very small sample

Individual in depth Interviews

non directive interviews and focused interviews

non directive interviews

respondent is given maximum freedom to respond

focused interviews

interviewer covers a specific list of topics with a fixed time allotted to each question, and focused interviews are useful with busy executives and others

focus group discussions

group internation (5-9), expensive, and widely used (15% of MR revenues)

advantages of focus group discussions

synergy, stimulation, and speed data collection

disadvantages of focus group discussions

moderation difficult, not freely adaptable across cultures, and sampling

Types of focus groups

exploratory, clinical, and experiential

exploratory focus groups

used in the exploratory phase of the market research process and used for generating hypothesis

clinical focus groups

Premise: an individual's true feelings and motivations are subconscious in nature. Motivations are subconscious

Experiential focus groups

Experience the emotional frameworks in which the product is being used

Projective techniques

1. word association

2. completion test

3. third person techniques

Limitations of Qualitative Methods

• Potential susceptibility of the results to being misused or misinterpreted

• Results not necessarily representative of the whole population

• Moderator or interviewer’s role is extremely critical and can lead to ambiguous or, at times, misleading results

Observational Data

• Also called the “anthropology” method

• Simple observation of consumer behavior generates insightful ideas:

• 1. direct observation

• 2. physical trace measures

• 3. behavior - recording devices

Limitations of Observational Methods

• Cannot be used to observe motives, attitudes, or intentions

• More costly and time-consuming

Surveys

used to measure attitudes, behavior, demographics, psychographics, etc.

Overwhelming choice for data collection

1. Prolific

2. Versatile

Survey Process and Potential Error

Non- response errors

phenotypic and genotypic source

Possible reasons of non - response errors

• Nature of questions and place

• Subject of no interest to the respondent

• Fear, invasion of privacy

• Hostility towards sponsor

• Personal bias

• Time and effort to respond

Phenotypic Source

Characteristics of the data collection procedure - question asked, how the question is asked and length of interview

Genotypic Source

indigenous - age, sex, occupation

Possible reasons for Response Error

• Inability to respond correctly: poor memory or bias in memory

• Vague questions; cannot formulate an adequate answer

• Concern about invasion of privacy

• Time pressure and fatigue

• Prestige seeking and social desirability response bias, courtesy bias

Possible reasons Interviewer Error

• Respondents’ impression of the interviewer

• Questions, probing, and recording

• Fraud and deceit

Personal Surveys

Door - to - door, mail intercept, etc.

Advantages of personal surveys

• Keep interest, build rapport (reduce non-response error)

• Increase participation (reduce non-response error)

• Provide clarifications (reduce response errors)

• Flexible

Disadvantages of personal surveys

• Time - consuming and costly

• Response error : social desirability

• Interviewer error : bias from asking questions

Telephone Surveys

Random - digit dialing (RDD), systematic RDD, etc.

Advantages of telephone surveys

time and cost effective

Disadvantages of telephone survey

• Non - response error (genotypic and phenotypic)

• Response error : long interviews are difficult

• Inability to employ visual aids of complex tasks

Mail Surveys

The most commonly used form of surveys

Advantages of mail surveys

• Cost- effective and prolific

• No social desirability bias, reduces response error

• No interviewer bias

Disadvantages of mail surveys

• Nonresponse error

• No control over how surveys are conducted ( response error)

• Inflexible (response error)

• Lack of control of sample (sampling error)

Advantages of Internet Surveys

• Speed: Faster delivery, response, and analysis than regular mail.

• Cost: Cheaper than mail surveys.

• Direct: No intermediaries involved.

• Convenient: Respondents answer on their own schedule (unlike phone surveys).

• Control: Allows candidate prescreening and skip-logic/question routing.

Disadvantages of Internet Surveys

• Risk of spamming/unsolicited bulk emails.

• Lower security/privacy concerns, leading to potentially untruthful answers.

Issues for measuring attitudes

• Attitudes lead to behavior

• Ask about attitudes vs. observe and interpret behavior

Issues to bear in mind

1. How to ask the questions

2. How to measure attitudes

3. How to evaluate whether or not the results are accurate

Attitudes

precursors of behavior, and are used to plan advertising and promotion programs

The components of attitude

1. Cognition - What does the customer know?

2. Affection - What does the customer like?

3. Intention - What does the customer intend to do?

Attitude measurement and scaling types

• Nominal Scale

• Ordinal Scale

• Interval Scale

• Ration Scale

Nominal scale - store last visited

• What is your gender?

• Which of the following media influences your purchasing decisions the most? - TV, Radio, Newspaper

Ordinal scale - preference ranks for stores

How would you rank the quality of our brand compared with four others? (brands 1-4)

Interval scale - preference ratings for stores

How likely are you to buy a new automobile within the next six months?

• (1) Defiantly will not buy - (5) Definitely will buy (scale 1-5)

Radio Scale - expenditure at scores

• What is your annual income before taxes? - $

• How far is your workplace from home? - miles

Single - item scales

only have one item to measure a construct (attitude)

• itemized category scale

• comparative scale

• rank order scales

• q-sort scales

• constant - sum scale

Itemized Category scale (satisfaction surveys)

• How satisfied are you with your current rental experience

• Ranges from very satisfied - not at all satisfied

Comparative scale

a judgement comparing one object, concept, or person against another

• Compared to option 1, option 2’s quality is (superior or inferior)

Rank order scales

Scale in which the respondent compares one item with another or a group of items against each other and ranks them

• Please rank from 1-6 the following characteristics of the cellular phone services ( 1 is most important and 6 is least important, no tiesn allowed)

Q-sort scales

Respondents are asked to sort the various characteristics of objects that are being compared into various groups, such that the objects in each group are viewed as the most familiar, then the respondent can rank order the objects within each group

Constant - sum scale

Respondents are asked to allocate a fixed number or rating points (usually 100) among several objects to reflect the relative preference for each object

Issues in designing single item scales

• number

• types

• strength

• labeling

• balance

Multiple item scales

measure a sample of beliefs toward the attitude objects and combine the set of answers into an average score

• Likert Scale

• Semantic Scale

Likert scale

The respondent is to indicate the degree of agreement or disagreement with a variety of statements related to the attitude or object , undimensional

Likert scale is also called …

The summated scale: scores on individual items are summed to give a total

• If my hair doesn’t look good, my whole day doesn’t go right

Semantic scale

Respondents are asked to rate each attitude object in turn on a five- to seven-point rating scale, bounded at each end by polar adjectives or phrases

Two issues of multiple item scales

validity and reliability

Validity

Does the measure capture what it is supposed to

Face validity

Are attitudes towards attributes reasonable?

Convergent validity

Are attitudes towards dissimilar items different?

Discriminant validity

Are the attitudes towards dissimilar items different?

Reliability

The measure is stable over repeated measurements

Observed score

True score + systematic error + random error

Validity =

Observed score = True score