Course Introduction Backward Market Research Market Research Ethics

Course Introduction, Backward Market Research, Market Research Ethics Market Intelligence Julie Edell Britton Session 1 August 7, 2009

Today’s Agenda § § Course Overview: The Big Picture Some course details Responsibilities & Ethics Introduction to Backward Market Research

Who am I? Education: Ph. D. , M. S. , Graduate School of Industrial Administration, Carnegie-Mellon University; B. A. University of Nebraska in math Teaching: Fuqua in 1980, CRM, Mkt Intelligence, Consumer Behavior, Statistics, Mkting Mgmt, … Research: Consumer cognitive and emotional response to marketing actions Favorite Sports: Duke Basketball, Nebraska Football (American), Soccer Family: Married with 6 children, aged 20 – 29; 3 boys, 3 girls, 2 grandchildren and 2 cats

Who are You? Name City Company Job Function Family What you do for fun

Today’s Agenda § § Course Overview: The Big Picture Some course details Responsibilities & Ethics Introduction to Backward Market Research

John Doerr - PC Guru “There are basically four risks we have to confront in each deal. There is technical risk: Can we split the atom? There is people risk: Will the key players on the team stay together? There is financial risk: Can we keep the company well financed? And there is market risk: Can we get the dogs to eat the dog food? The most dangerous of these risks is market risk. Removing market risk is expensive … we’re risk takers but we will take a technology risk over a market risk any day of the week. ” (Perkins & Perkins, 1999, The Internet Bubble, p. 74)

Market Intelligence: 3 Skills § Backward market research: § Imagine the end of the process § Identify analysis to support choice among alternatives and determine what information / variables would be needed for the analysis § Get the data needed for the analysis § Analyze data & make recommendation § Getting data & judging its quality § Tools for classic marketing problems

3 Key Skills § Backward market research (1, 2) § Getting data, judging its quality & analyzing (2 -6) § Analysis frameworks for classic marketing problems § § Conjoint analysis for new product forecasting (7) Segmentation (8) Promotion Analysis (9) Simulated Test Markets (9, 10)

This course is designed… § for users of market intelligence in consulting, marketing management, entrepreneurship, finance § help you avoid drowning in data § help you become a more sophisticated user by assuming role of research provider and by providing practice as evaluator of research § improve your ability to use imperfect information to make decisions

…decisions relating to… § Segmentation: choosing a base, analysis § New products: § Beginning with exploratory (e. g. , focus groups) § Scientific methods for new product concept screening: surveys, conjoint analysis, simulated test markets § Pricing § Promotion

Today’s Agenda § § § Course Overview: The Big Picture Some course details Responsibilities & Ethics Introduction to Backward Market Research Set up Southwestern Conquistador Beer case

Class Tools Readings – Course Pack Cases – Almost every class Text – Essentials of Marketing Research, 2 nd Edition, Kumar, Aaker and Day (KAD) Data Analysis – SPSS Statistics 17. 0

TA for Market Intelligence Stephen Spiller (SPSS Help)

Assignments § Submit using online submission tool on the platform. § Follow submission deadlines on the platform. § Major Team Cases: WEMBA A, WEMBA C § Daily cases: § Team cases: Southwestern Conquistador Beer and WEMBA B § Individual or Team (or Team Subset) - all others

Grading Class participation (10%) Use your tent card daily. Be in class and prepared every day I will cold-call. Email me if you will be absent or unable to prepare for a class I will avoid calling on you one day during the term. Minor cases (15%) Southwestern Conquistador Beer – with your team, National Insurance, Colgate Oral Care, WEMBA B – with your team, IBM Global Mobile Computing, and Nestle Refrigerated Foods: Contadina Pizza and Pasta Major team cases (40%) – WEMBA A and WEMBA C Midterm exam (35%) – To be taken between Sessions 6 and 7 by 9/16 Fuqua Grade Distribution for electives: no more than 30% SP, 45% HP, and at least 25% P, LP, and F.

Honor Code Violations § Lying: Lying includes, but is not limited to, communicating untruths in order to gain an unfair academic advantage. § Cheating: Cheating includes, but is not limited to, using unauthorized materials to complete an assignment; copying the work of another person; unauthorized providing of material or information (e. g. , proprietary course information) to another person; using the work of another without giving proper credit (e. g. , plagiarism); and working on course material outside of the time constraints imposed by the instructor.

Honor Code Violations § Stealing: Stealing includes, but is not limited to, taking the property of another member of the Duke Community without permission, defacing or vandalizing the property of Duke University. § Failure to Report: Any party having knowledge of an Honor Code violation without reporting it will be considered an accessory to the violation and subject to penalty if found guilty.

Honor Code Applied to Marketing Intelligence § Graded exams, cases, assignments § Don’t consult old exams and cases or solutions or people who have done them § Put your name on cases submitted by your team only if you contributed materially to the solution

Class Schedule Sat. 8/8 - Problem definition & information needs, Secondary data Hypothesis formulation & elementary data analysis and reporting. Read: KAD Ch 4, 5, 12 (pp. 361 -366) and “What’s Behind the Numbers? ” Case Discussion – Southwestern Conquistador Beer Fri. 8/21 - Database hypothesis testing exercise, Identifying customer needs, SPSS Tutorial Read: KAD pp. 384 -390, “The Elaboration Model. ” (pp. 402 -403), Review SPSS online Tutorial and Help Session handout. Sat. 8/22 - Intro to survey research, Measurement Read: KAD pp. 178 -191; 197 -202; 209 -229; 247 -266; and “Comparative Advertising: Measurement Scales and Data Analysis” Case Discussion - National Insurance Fri. 9/4 – Focus Groups, Questionnaire design, Survey sampling Read: KAD pp. 283 -290; 306 -316; “Conducting the Focus Group, ” and “Thoughts on Qualitative Research…” Case Discussion – Colgate Oral Care Focus Group

Class Schedule Sat. 9/5 – Causal Research and Experiments Read: KAD pp. 97 -101 Case Discussions – Milan Foods SPSS Sampling Assignment (no slides) and Wall Street Journal/ Harris Interactive Survey of MBA Program Recruiters (no slides) Fri. 9/25 – New Product Concept Screening and Conjoint Analysis Read: “Factorial Designs, ” pp. 357 -359 and “Conjoint Analysis: A Manager’s Guide” Case Discussion – WEMBA B and Entitle Direct Title Insurance (no slides) Sat 9/26 – Market Segmentation Read: “Segmenting Markets” including the appendix Case discussions – Cola Exercise and IBM Mobile Computing

Class Schedule Fri. 10/9 – Regression analysis for promotion analysis, Debrief WEMBA C Case, Simulated Test Markets Read: “Regression Analysis Applied to Sales Promotion, ” and “It’s Better to Fly a Simulator Than Crash the Real Thing” Sat 10/10 – Course Wrap-Up Case discussions – Nestle Refrigerated Foods: Contadina Pasta and Pizza (A) Other Important Dates 9/3 – 8 pm Colgate Case Slides Due 9/16 – 8 pm Mid-Term Exam Due 9/20 – 8 pm WEMBA A Team Case Write-up Due 9/24 – 8 pm WEMBA B Team Case Slides Due 9/25 – 10 pm IBM Global Mobile Computing Case Slides Due 10/8 – 10 pm WEMBA C Team Case Write-up Due 10/10 – 8 am Nestle: Contadina Pasta Case Slides Due

Questions

Today’s Agenda § § Course Overview: The Big Picture Some course details Responsibilities & Ethics Introduction to Backward Market Research

Responsibilities § 3 Parties in the Research Process: § Client (User, Sponsor) § Supplier (Market Research Firm, Provider) § Respondent (Customer, Subject) § Respondents’ Rights (for primary research) § § Privacy (informed consent) Safety Be informed of research purpose Learn of research results

Client’s Responsibilities § To respondents: § avoid using respondent list for sales leads § avoid deception (no sugging or frugging) § To suppliers § Avoid dishonesty (free-riding) § Provide accurate inputs to research § To business partners, investors, colleagues: § Decision research, not advocacy research § Non-zero value of information

Nonzero Value of Information Many managers use Market Research the way a drunk uses a light pole – more for support than illumination

“Decision Research” = Nonzero Value of Information

Supplier’s Responsibilities § Client confidentiality § Freedom from conflict of interest § Proper execution of research § Technically sound § Limitations disclosed § Meet time and $ budget agreed upon

Approaches to Ethics § Deontological versus Consequentialist You are the market research director of a pharmaceutical company, and the executive director suggests to you that company interviewers telephone physicians under the name of a fictitious market research agency. The purpose of the survey is to help assess the perceived quality of the company’s products.

Ethical Dilemma 3 John Rider is the Senior VP at ESPN The Magazine. His background is in publishing, running Spin and Rolling Stone magazines, each of which is targeted at young male readers. He describes the process of designing and launching ESPN The Magazine. He chose age as a strategic basis for segmentation and chose to design a sports magazine for 18 -34 year old men. The key to his strategy is the fact that he is actually selling to two markets – readers of sports magazines and advertisers. Most of his revenue is to come from the latter. Advertisers will pay a premium to have a highly targeted vehicle to reach

Ethical Dilemma 3 (Cont. ) the young male audience. For this all-important advertiser market, ESPN The Magazine is more attractive if it loses older customers and builds circulation among young men. The other mix element that these advertisers are sensitive to is “respectability. ” Sports magazines are respectable. The alternative, highly targeted vehicles for reaching young men tend to be not-so-respectable music and sex magazines. Thus, ESPN The Magazine would deliver the benefits these advertisers sought.

Ethical Dilemma 3 (cont. ) He is convinced of the ESPN The Magazine concept, but his bosses at ESPN are skeptical. Rider reports that he used relatively little research in launching his magazine. He relied on syndicated research showing the aging characteristics of the Sports Illustrated franchise, he ran focus groups, and he did very limited concept testing in which he showed the mock-up magazine to target readers. He confides that this limited research was more for his bosses’ consumption than for his own enlightenment. “Sometimes you do a research study to convince your bosses that you are right. ”

Ethical Dilemma 1 Jim Horsky, a marketing manager at Bell Atlantic wanted to develop a logical portfolio of access solutions for a “Custom Select” offering: The manager and internal research supplier sought to build a model that allows Bell Atlantic to simulate revenue and profit streams for all permutations of price and access combinations being considered, thus enabling the selection of the profitmaximizing solution. The process

Ethical Dilemma 1 (cont. ) was to identify 5 research suppliers and ask them to bid on the project. Typically, Bell Atlantic would ask 2 -3 suppliers to bid, but Horsky had several new managers on board and he wanted to train them to develop their ability to manage the research process. The suppliers each developed bids and research proposals, all of which were presented to Bell Atlantic managers back-to-back in a single grueling day.

Ethical Dilemma 2 Bell Atlantic develops long term relationships with research suppliers. A key research supplier drops Bell Atlantic and takes a large account with Sprint.

Conclusions § Understand the ethical responsibilities of the client (that’s you!) and recognize behaviors that might amount to a failure to honor those responsibilities. § Understand what behaviors are not unethical, though they seem on the surface to clash with an ethical responsibility. § Generate creative solutions to ethical dilemmas that serve your ethical principles while still doing what seems to be in the best interest of one’s firm. § Key is often whether the other parties are informed of facts that would cause them to change their investment in activities with you, the client. § Unethical behavior can produce negative consequences for the client and the firm in the long run.

Recap This course is for users of market research Lots of moving parts, but platform will help you keep track of things Responsibilities & Ethics Recognize affected parties, Seek 3 rd alternative when apparent ethical conflicts arise Next time: SWC Beer, Backward Market Research, Secondary data, Hypotheses formulation