Determining When to Conduct Marketing Research Time constraints

Determining When to Conduct Marketing Research • • Time constraints Availability of data Nature of the decision Benefits versus costs

Determining When to Conduct Marketing Research Time Constraints Availability of Data Is sufficient time available? Information already on hand inadequate? No Yes No Nature of the Decision Yes Benefits vs. Costs Is the Does the decision of Yes information Yes strategic value or tactical exceed the importance? research cost? No Do Not Conduct Marketing Research No Conduct Marketing Research

Value versus Costs • Potential Value of a Marketing Research Effort Should Exceed Its Estimated Costs

Value Should Exceed Estimated Costs Value • Decreased certainty • Increased likelihood of a correct decision • Improved marketing performance and resulting higher profits • Research expenditures • Delay of marketing decision and possible disclosure of information to rivals • Possible erroneous research results

Information Reduces Uncertainty I don’t know if we should enter the Australian Market?

Table contains alternatives, states of nature, and consequences

Conditional Probability of Getting Each Test Market Result Given Each State of Nature Read by Row (Zk) within Column (Sj)

Revision of Prior Probabilities in Light of Possible Test Market Results Sj=State of Nature; Zk=Level of Success in Test