Essentials of Marketing Research - Chapter 1 Study Notes

Learning Outcomes

• After studying this chapter, you should:

  • Know what marketing research is and what it does for business.

  • Understand the difference between basic and applied marketing research.

  • Understand how the role of marketing research changes with the orientation of the firm.

  • Be able to integrate marketing research results into the strategic planning process.

  • Know when marketing research should and should not be conducted.

  • Appreciate the way technology and internationalization are changing marketing research.

What Is Marketing Research?

• Key questions in business and marketing research:

  • What do we sell?

  • How do consumers view our company?

  • What does our company/product mean?

  • What do consumers desire?

  • How does our brand touch consumers?

Marketing Research Defined

• Marketing Research is defined as:

  • The application of the scientific method in searching for the truth about marketing phenomena.

  • The process includes:

  • Idea and theory development.

  • Problem definition.

  • Information gathering.

  • Analyzing data.

  • Model building.

  • Communicating findings and implications.

• This definition suggests that marketing research information is:

  • Not accidental or haphazardly gathered.

  • Accurate and objective.

  • Relevant to all aspects of the marketing mix.

  • Limited by one’s definition of marketing.

• Marketing research applies to all organizations and institutions engaging in any form of marketing activity.

Digital Marketing

• Digital Marketing is a term referring to:

  • All various communicative technologies through which marketing enterprises (suppliers, manufacturers, retailers, etc.) work together with customers.

  • Aim: Enhancing value from interaction, including exchange and relationships.

Applied Marketing Research

• Applied Marketing Research is conducted to address:

  • A specific marketing decision for a specific firm or organization.

• Example: Should Green Mountain Coffee add cola to its array of pod-based beverages?

Basic Marketing Research

• Basic Marketing Research is conducted:

  • Without a specific decision in mind.

  • Usually does not address the needs of a specific organization.

  • Attempts to expand the limits of marketing knowledge in general.

  • Not aimed at solving a pragmatic problem.

  • It can test the validity of a general marketing theory or learn more about a market phenomenon, e.g., social networking.

The Scientific Method

• The Scientific Method is:

  • The way by which researchers use knowledge and evidence to reach objective conclusions about the real world.

  • Involvement:

  • All marketing research, whether basic or applied, involves the scientific method.

  • Marketing researchers apply the scientific method to understand marketing phenomena.

• Stages of the Scientific Method:

  • Prior Knowledge/Theory

  • Research Questions/Hypotheses

  • Hypotheses Testing (Observation/Experimentation)

  • Conclusions (New Knowledge)

  • Discovery/Idea Generation

Marketing Research and Strategic Management Orientation

• Types of strategic management orientations that provide a common theme for decision-making:

  • Product-oriented

  • Production-oriented

  • Marketing-oriented

  • Stakeholder-oriented

Types of Business Orientation

• Four types of business orientation:

  • Product Orientation:

  • Internal focus.

  • Emphasizes product superiority.

  • Critical need for product research.

  • Production Orientation:

  • Internal focus.

  • Emphasizes efficiency and low costs.

  • Critical need for process research.

  • Marketing Orientation:

  • External focus.

  • Emphasizes customer tastes and desires.

  • Critical need for customer research.

  • Stakeholder Orientation:

  • External focus.

  • Emphasizes balancing all parties involved with the organization.

The Marketing Concept

• Focus: How a firm provides value to customers rather than just the physical product or production process.

• A marketing-oriented firm must:

  • Be customer-oriented, making decisions consciously aware of their effects on the consumer.

  • Emphasize long-run profitability to ensure continuity of the firm.

  • Adopt a cross-functional perspective, integrating marketing across other business functions.

Keeping Customers and Building Relationships

• Relationship Marketing:

  • Major goal of marketing is to build long-term relationships with customers.

  • Views a sale as the beginning of a relationship with the customer, aiming to secure customers for life.

  • Satisfied customers are more likely to return to a company that treats them well.

Marketing Research: A Means For Implementing the Marketing Concept

• Tracking trends.

• Analyzing existing data.

• Utilizing sales data to offer product suggestions to customers.

Marketing Research and Strategic Marketing Management

• Involves four stages:

  • Identifying and evaluating market opportunities.

  • Analyzing market segments and selecting target markets.

  • Planning and implementing a marketing mix that delivers value to customers and meets organizational objectives.

  • Analyzing firm performance.

Stage 1: Identifying and Evaluating Opportunities

• Monitor competitive environments for signals indicating business opportunities.

• Helps managers:

  • Recognize problems.

  • Identify opportunities for enriching marketing efforts.

  • Estimate market sales potential, allowing evaluation of profitability of various opportunities.

Stage 2: Analyzing and Selecting Target Markets

• Geo-Demographics:

  • Information describing the demographic profile of consumers in a particular geographic region.

  • Understanding geo-demographics allows effective communication with customers through chosen media.

  • Example: Architectural Digest magazine.

Stage 3: Planning and Implementing a Marketing Mix

• Marketing research can support decisions about aspects of the marketing mix.

• An overall research plan should involve all elements of marketing strategy.

Types of Marketing Mix Research: Product Research

• Designed to:

  • Evaluate and develop new products.

  • Learn how to adapt existing product lines.

• Areas to explore:

  • Concept testing.

  • Product testing.

  • Brand-name evaluation.

  • Package testing.

Types of Marketing Mix Research: Pricing Research

• Pricing Research involves:

  • Finding the amount of monetary sacrifice that represents value customers perceive in a product.

  • Acknowledging consumer quality perceptions as crucial.

Types of Marketing Mix Research: Distribution Research

• Research directed at:

  • Selecting retail sites or warehouse locations for product distribution.

  • Understanding operations and reactions from retailers and wholesalers.

  • Examining impacts of just-in-time ordering systems and exclusive distribution on product quality.

Types of Marketing Mix Research: Promotion Research

• Focuses on:

  • The communication function of the firm responsible for informing and persuading buyers.

  • Investigates effectiveness of advertising, promotions, public relations, and sales promotions.

  • Companies allocate significant resources toward advertising research.

The Integrated Marketing Mix

• Integrated Marketing Communication:

  • Encompasses all promotional efforts (advertising, public relations, personal selling, etc.) coordinated for a consistent image.

  • Research indicates that firms with a consumer orientation are more focused on integrating all marketing aspects into a coherent message.

Stage 4: Analyzing Marketing Performance

• Total Value Management:

  • Encompasses managing and monitoring the process through which consumers receive benefits.

• Performance-Monitoring Research:

  • Regularly provides feedback for evaluation and control of marketing activity.

  • Common forms include market-share analysis and sales analysis.

• Marketing Metrics:

  • Quantitative methods for monitoring and assessing marketing performance.

  • Enables firms to evaluate return on investment (ROI) from marketing activities.

When is Marketing Research Needed?

• Determination of the need for research focuses on:

  • Time constraints:

  • Systematic research requires adequate time.

  • Availability of data:

  • Research should not occur if adequate data cannot be obtained timely.

  • Nature of the decision:

  • More strategically or tactically important decisions are more likely to warrant research.

  • Benefits versus costs:

  • Assessing the value of research information relative to associated costs.

Questions for Deciding on Marketing Research

1. Is the potential payoff worth the investment?

2. Will marketing research improve the decision quality enough to justify the costs?

3. Is the proposed research expenditure the best use of available funds?

Exhibit: Should We Conduct Marketing Research?

• Decision Factors:

  1. Time:

  • Conduct if sufficient time is available.

  • Do not conduct if time pressure exists.

  1. Data Availability:

  • Conduct if data can be obtained.

  • Do not conduct if firm has access to relevant data already.

  1. Nature of Decision:

  • Conduct for decisions of considerable strategic importance.

  • Do not conduct for less critical decisions.

  1. Benefits versus Costs:

  • Conduct if potential value exceeds research costs.

  • Do not conduct if costs exceed potential value.

Marketing Research in the Twenty-First Century

• Communication Technologies:

  • Near-universal connectivity.

  • Rapid information exchange.

  • Basic laptops can perform complex statistical analyses.

  • Smartphones facilitate access to software and data through cloud computing, reducing needs for specialized software.

• Global Marketing Research:

  • Increasingly global nature necessitates understanding diverse markets.

  • Customization of marketing strategies may be required.

  • Need for cultural cross-validation to ensure that findings from one market apply similarly in another.