MARKETING Real People Real Choices Fourth Edition CHAPTER

MARKETING Real People, Real Choices Fourth Edition CHAPTER 4 Marketing Information and Research: Analyzing the Business Environment Off-line and Online

Knowledge is Power • A Marketing Information System (MIS) determines what information managers need and then gathers, sorts, analyzes, stores, and distributes relevant and timely marketing information to system users • What market info. do you need? – Should we change our ad campaign? – Should we change our packaging? 2

Four types of data • Internal Data – sales reports, old market research, complaint records, profit and loss statements, etc. – intranet • Marketing Intelligence - method to get information about the environment – newspapers, trade publications, www, observations in market place – Mystery shoppers 3

Four types of data • Marketing Research - process of collecting, analyzing, and interpreting data about customers, competitors, and the business environment to improve marketing effectiveness • Two types: – Syndicated research – Custom research 4

Four types of data • Syndicated research reports – secondary data collected and compiled by firms on a regular basis and sold to many firms. e. g. Nielsen’s TV ratings, Arbitron ratings, Simmons Market Research Bureau – CB, demographics and media usage) • Custom research reports – primary data collected to provide answers to specific questions 5

Four types of data • Acquired databases: many companies collect information about you and sell it to others at a cost • Opt out clauses • Spam and junkmail • Do-not-call lists 6

Marketing Decision Support Systems (MDSS) • MIS System + analysis (statistical and modeling software) + interactive capabilities • Allows managers to conduct their own analyses • Allows posing “what-if” scenarios • E. g. How do consumers perceive our brand w. r. t. competition? • E. g. Would withdrawing the ad campaign result in a decline in sales? 7

Differences in MIS and MDSS MIS • What were our company sales of each product during the last month and the last year? MDSS • Have our sales declines simply reflected changes in overall industry sales or is there some portion of the decline that cannot be explained by industry changes? 8

Differences in MIS and MDSS • MIS – What medium best reaches my target audience? – What were our sales this season and the same time last season? • MDSS – How much will my sales improve if I use radio instead of TV? – Was the improvement in our sales this season due to the new pricing plan? 9

Search for Gold: Data Mining • Data mining is a process in which analysts sift through data to identify unique patterns of behavior among different customer groups • 4 key applications for marketers: – customer acquisition (e. g. make offers based on matched key customer characteristics) – customer retention (isolate big-spenders and send them special offers other do not receive) – customer abandonment (Fedex and “the good, the bad and the ugly” – market basket analysis (Fingerhut and mailers for gas grilles based on purchases of outdoor patio furniture) 10

Marketing Research Process: Step 1 • Specify the research objectives • Identify the consumer population of interest • Place the problem in an environmental context – What factors may be influencing the situation 11

Step 2: Determine the Design • Can the information be acquired from existing data? – If so, secondary data sources will be utilized (e. g. if you want to know zip code-wise population clusters, you can get this data from the Census) – If not, primary research will be necessary 12

Exploratory Research • Generally provides qualitative data • May take several forms – Consumer interviews – Focus groups – Case studies – Ethnography – Projective techniques – explore underlying feelings in the face of unwillingness or inarticulation • E. g. – What thoughts come to your mind when you think of “Winthrop”? – What do you think about high gas prices? 13

Descriptive Research • Utilizes a large sample of participants as base • Generally provides quantitative data • Designs – Cross-sectional design involves the systematic collection of quantitative information from one or more samples of respondents at one point in time – Longitudinal design tracks the responses of the sample of respondents over time 14

Descriptive Research • Cross-sectional Designs: – Measuring consumer response to a new product in the market • Longitudinal Design: – Measuring consumer attitude to a brand every one month 15

Causal Research • Attempts to understand cause-andeffect relationships • Factors that might cause a change are independent variables while the variables that are affected are dependent variables • Experimental design allows researchers to control possible explanations for the effect 16

Causal Research • Example: – Measuring consumer response to a brand before and after seeing a new commercial • It is important to rule out other possible causes of the effect – E. g. Existing brand loyalties may influence the effect. This has be controlled. 17

Step 3: Choose the Data Collection Method • Communication – Mail questionnaires – Telephone interviews – Face-to-face interviews – Online questionnaires • Observation – Personal – Mechanical 18

Mail Questionnaires • Advantages – Respondents feel anonymous – Low cost – Good for ongoing research • Disadvantages – Slow return speed – Low response rates typical – Inflexible questionnaire – Length of survey is limited 19

Telephone Interviews • Advantages – Fast – Low cost – Limited interviewer bias • Disadvantages – Decreasing levels of cooperation – Limited questionnaire length – Consumers screen calls 20

Face-to-Face Interviews • Advantages – Flexibility of questioning – Long questionnaires possible – Can help explain questions – Can use visuals • Disadvantages – High cost – Interviewer bias possible – Time requirements are high 21

Online Questionnaires Advantages • Instant data collection • Low cost • No interviewer bias • Access regardless of geographic location Disadvantages • Unclear who is responding • No assurance of honesty • Limited questionnaire length • Limitations inherent with self-selected samples 22

Observation • Personal observation – traffic analysis – recording how products are used • Unobtrusive measures – pantry checks – garbage search • Mechanical observation – people meters 23

Data Quality • Reliability - extent to which research measurement techniques are free of errors. – Measuring alcohol dependency by a survey question vs. measuring it by a pantry check. • Validity - extent to which the research measures what it was intended to measure – If you intend to measure if a consumer will buy the brand, then a question that asks him how much he/she likes the brand is not a valid question. • Representativeness - extent to which consumers in the study are similar to the target of interest – If your target of interest is housewives, surveying female university students is not the appropriate sample. 24

Step 4: Design the Sample • Probability samples – each member of the population has an equal and known chance of being included in the sample – allows for inferences to be made about the population • Non-probability samples – unequal chance of being included in the sample – limits inferences to the population 25

Probability Samples • Simple random sample • Systematic random sample • Stratified sample – Divide the population into segments of interest – Random selection from each segment separately – e. g. dividing the population into males and females first and then making a random selection from each segment 26

Non-Probability Samples • Convenience sample • Quota sample – Decide a quota and once it is full stop further selection – E. g. if you decide to have 50 females in your sample, you recruit the first 50 you meet and stop any further selection. 27

Step 5: Collect the Data • Implementation phase • Special issues in data collection – Single Source Data • Data on purchasing behavior and advertising exposure are measured for members of a consumer panel using television meters, retail scanners, and split-cable technology – E. g. Did a new campaign influence brand switching? 28

Step 6: Analyze and Interpret Data • Enter, clean, and code data • Choose appropriate techniques for analysis • Interpret analysis 29

Step 7: Prepare the Research Report • • • Executive summary A description of research methods Discussion of results Limitations of study Conclusions and recommendations 30

Online Research • Online Tracking – online consumer behavior • Cookies – text files which track online consumer behavior – Tradeoff between privacy and customization • Testing, Questionnaires, and Focus Groups 31

Online Tracking • The Internet offers the ability to track and monitor consumers while they surf • Several behaviors can be monitored – What sites are visited? – How long did the visitor stay? – What types of information did they collect at the site? – Where did they go after they left? 32

Cookies • Cookies are text files inserted on a user’s hard drive by an Internet site • Cookies allow for details of a Web visit to be stored and tracked with future visits • For marketers, cookies allow a way of observing behavior and customizing Web sites and offerings to specific users • For consumers, cookies represent a trade-off between privacy and customization 33