Research Design Formulation MKTG 3350 MARKETING RESEARCH Yacheng

Research Design Formulation MKTG 3350: MARKETING RESEARCH Yacheng Sun Leeds School of Business 1

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Figure 3. 2 Research Design: An Overview Be an MR! Be a DM! Research Design Definition Fig 3. 3 Types of Basic Research Designs Table 3. 1 Fig 3. 4 Exploratory Research What Would You Do? Experiential Learning Opening Vignette Table 3. 2 Application to Contemporary Issues International Technology Ethics 3

Figure 3. 2 Research Design: An Overview (Cont. ) Descriptive Research Figs 3. 5 & 3. 6 Table 3. 3 Cross-Sectional Longitudinal Be an MR! Causal Research Relationship Among Exploratory, Descriptive, and Causal Research Be a DM! Fig 3. 7 Tasks Involved in Research Design Formulation What Would You Do? Experiential Learning Opening Vignette Fig 3. 8 Application to Contemporary Issues International Technology Ethics 4

Figure 3. 2 Research Design: An Overview (continued) Informational Value and the Cost of Marketing Research What Would You Do? Budgeting and Scheduling the Project Be a DM! Be an MR! Experiential Learning Opening Vignette Marketing Research Proposal Application to Contemporary Issues (Fig. 3. 9) International Technology Ethics 5

Citicorp Banks on Exploratory, Descriptive, and Causal Research Marketing Research at Citicorp is typical in that it is used to measure consumer awareness of products, monitor their satisfaction and attitudes associated with the product, track product usage and diagnose problems as they occur. To accomplish these tasks Citicorp makes extensive use of exploratory, descriptive, and causal research. Often it is advantageous to offer special financial packages to specific groups of customers. In this case, a financial package is being designed for senior citizens. The following seven-step process was taken by marketing research to help in the design. 6

Citicorp Banks on Exploratory, Descriptive, and Causal Research 1) A taskforce was created to better define the market parameters to include all the needs of the many Citicorp branches. A final decision was made to include Americans 55 years of age or older, retired, and in the upper half of the financial strata of that market. 7

Citicorp Banks on Exploratory, Descriptive, and Causal Research 2) Exploratory research in the form of secondary data analysis of the mature or older market was then performed and a study of competitive products was conducted. Exploratory qualitative research involving focus groups was also carried out in order to determine the needs and desires of the market and the level of satisfaction with the current products. In the case of senior citizens, a great deal of diversity was found in the market. This was determined to be due to such factors as affluence, relative age, and the absence or presence of a spouse. 8

Citicorp Banks on Exploratory, Descriptive, and Causal Research 3) The next stage of research was brainstorming. This involved the formation of many different financial packages aimed at the target market. In this case, a total of 10 ideas were generated. 9

Citicorp Banks on Exploratory, Descriptive, and Causal Research 4) The feasibility of the 10 ideas generated in step 3 was then tested. The ideas were tested on the basis of whether they were possible in relation to the business. The following list of questions was used as a series of hurdles that the ideas had to pass to continue on to the next step. • Can the idea be explained in a manner that the target market will easily understand? • Does the idea fit into the overall strategy of Citicorp? 10

Citicorp Banks on Exploratory, Descriptive, and Causal Research § Is there an available description of a specific target market for the proposed product? § Does the research conducted so far indicate a potential match for target market needs, and is the idea perceived to have appeal to this market? § Is there a feasible outline of the tactics and strategies for implementing the program? § Have the financial impact and cost of the program been thoroughly evaluated and determined to be in line with company practices? In this study, only one idea generated from the brainstorming session made it past all the listed hurdles and on to step 5. 11

Citicorp Banks on Exploratory, Descriptive, and Causal Research 5) A creative work-plan was then generated. This plan was to emphasize the competitive advantage of the proposed product as well as better delineate the specific features of the product. 6) The previous exploratory research was now followed up with descriptive research in the form of mall intercept surveys of people in the target market range. The survey showed that the list of special features was too long and it was decided to drop the features more commonly offered by competitors. 12

Citicorp Banks on Exploratory, Descriptive, and Causal Research 7) Finally, the product was test marketed in six of the Citicorp branches within the target market. Test marketing is a form of causal research. Given successful test marketing results, the product is introduced nationally. 13

Figure 3. 3. Steps Leading to the Formulation of a Research Design Define the Marketing Research Problem Develop an Approach to the Problem Formulate the Research Design 14

Research Design: Definition • A research design is a framework or blueprint for conducting the marketing research project. It details the procedures necessary for obtaining the information needed to structure or solve marketing research problems. 15

Research Design: Some Observations • The overall research design for a project may include one or more of these three designs as part(s) of it. • Further, if more than one design is to be used, typically we progress from Exploratory toward Causal. 16

Components of a Research Design • Define the information needed (Chapter 2) • Design the exploratory, descriptive, and/or causal phases of the research (Chapters 3 - 8) • Specify the measurement and scaling procedures (Chapters 9 and 10) • Construct and pretest a questionnaire (interviewing form) or an appropriate form for data collection (Chapter 11) • Specify the sampling process and sample size (Chapters 12 and 13) • Develop a plan of data analysis (Chapter 15) 17

Figure 3. 4. A Classification of Market Research Designs Research Design Exploratory Research Design Descriptive Research Cross-Sectional Design Conclusive Research Design Causal Research Longitudinal Design 18

Table 3. 1 Differences Between Exploratory and Conclusive Research Exploratory Conclusive Objective: To provide insights and understanding. Characteristics: Information needed is defined only loosely. To test specific hypotheses and examine relationships. Information needed is clearly defined. Research process is flexible and unstructured. Research process is formal and structured. Sample is small and nonrepresentative Sample is large and representative. Data analysis is qualitative. Data analysis is quantitative. 19

Table 3. 1 (Cont. ) Differences Between Exploratory and Conclusive Research Exploratory Conclusive Findings: Tentative. Conclusive. Outcome: Generally followed by further exploratory or conclusive research. Findings used as input into decision making. 20

Table 3. 2 A Comparison of Basic Research Designs Exploratory Descriptive Causal Objective: Discovery of ideas and insights. Describe market characteristics or functions. Determine cause and effect relationships. Characteristics: Flexible. Marked by the prior formulation of specific hypotheses. Manipulation of one or more independent variables. Preplanned and structured design. Control of other mediating variables. Versatile. Often the front end of total research design. 21

Table 3. 2 (Cont. ) A Comparison of Basic Research Designs Method: Exploratory Descriptive Causal Expert surveys. Secondary data (quantitative). Experiments. Pilot surveys. Surveys. Case studies. Panels. Secondary data (qualitative). Observational and other data. Qualitative Research. 22

Uses of Exploratory Research • Formulate a problem or define a problem more precisely • Identify alternative courses of action • Develop hypotheses • Isolate key variables and relationships for further examination • Gain insights for developing an approach to the problem • Establish priorities for further research 23

Methods of Exploratory Research • Survey of experts (discussed in Chapter 2) • Pilot surveys (discussed in Chapter 2) • Secondary data analyzed in a qualitative way (discussed in Chapter 4) • Qualitative research (discussed in Chapter 5) 24

“If you wish to know the road up the mountain, you must ask the man who goes back and forth on it. ” -- Zenrinkusi

Use of Descriptive Research • To describe the characteristics of relevant groups, such as consumers, salespeople, organizations, or market areas • To estimate the percentage of units in a specified population exhibiting a certain behavior • To determine the perceptions of product characteristics • To determine the degree to which marketing variables are associated • To make specific predictions 26

Descriptive Research Example Weight Watchers average customer • Woman about 40 years old • Household income of about $50, 000 • At least some college education • Trying to juggle children and a job 27

Are customers born equal? • Bestbuy focuses on catering to high profit customers – sometimes by firing customers that costs it money. • “Devils” are customers who “buy products, apply for rebates, return the purchases, then buy them back at returned-merchandise discounts”. • Analysis also revealed highly profitable customer segments, such as upper income men, suburban women and technology lovers. • Bestbuy are also motivated to renovate many of its business practices

Methods of Descriptive Research • Secondary data analyzed in a quantitative as opposed to a qualitative manner (discussed in Chapters 4 and 5) • Surveys (Chapter 7) • Panels (Chapters 5 and 7) • Observational and other data (Chapter 7) 30

Figure 3. 5. Major Types of Descriptive Studies Consumer Perception And Behavior Studies Market Characteristic Studies • Market Potential • Image • Distribution • Market Share • Product Usage • Competitive Analysis • Sales Analysis • Advertising Sales Studies • Pricing 31

Cross-sectional and Longitudinal Designs • A cross-sectional design involves the collection of information from any given sample of population elements only once. • In a longitudinal design, a fixed sample (or samples) of population elements is measured repeatedly on the same variables. • A longitudinal design differs from a crosssectional design in that the sample or samples remain the same over time. 32

Figure 3. 6. Cross-Sectional vs. Longitudinal Designs Cross. Sectional Design Longitudinal Design Time Sample Surveyed at T 1 T 1 Same Sample also Surveyed at T 2 33

Table 3. 3 Relative Advantages and Disadvantages of Longitudinal and Cross-Sectional Designs Evaluation Criteria Detecting change Large amount of data collection Accuracy Representative sampling Response bias Cross-Sectional Design Longitudinal Design - + - + + - Note: A + indicates a relative advantage over the other design whereas a - indicates a relative disadvantage. 34

Cross-sectional Designs • Involve the collection of information from any given sample of population elements only once. • In single cross-sectional designs, there is only one sample of respondents and information is obtained from this sample only once. • In multiple cross-sectional designs, there are two or more samples of respondents, and information from each sample is obtained only once. Often, information from different samples is obtained at different times. • Cohort analysis consists of a series of surveys conducted at appropriate time intervals, where the cohort serves as the basic unit of analysis. A cohort is a group of respondents who experience the same event within the same time interval. 35

Consumption of Various Soft Drinks by Various Age Cohorts Percentage consuming on a typical day Age 1950 1969 1979 8 -19 20 -29 30 -39 40 -49 50+ 52. 9 45. 2 33. 9 23. 2 18. 1 62. 6 60. 7 46. 6 40. 8 28. 8 C 1 73. 2 76. 0 67. 7 58. 6 50. 0 C 2 81. 0 75. 8 71. 4 67. 8 51. 9 C 3 C 1: cohort born prior to 1900 C 2: cohort born 1901 -10 C 3: cohort born 1911 -20 C 4: cohort born 1921 -30 C 8 C 7 C 6 C 5 C 4 C 5: cohort born 1931 -40 C 6: cohort born 1940 -49 C 7: cohort born 1950 -59 C 8: cohort born 1960 -69 36

Longitudinal Designs • A fixed sample (or samples) of population elements is measured repeatedly on the same variables • A longitudinal design differs from a crosssectional design in that the sample or samples remain the same over time 37

Cross-Sectional Data May Not Show Change Brand Purchased Time Period 1 Survey Brand A Brand B Brand C Total 200 300 500 1000 Period 2 Survey 200 300 500 1000 38

Longitudinal Data May Show Substantial Change Brand Purchased in Period 1 Brand A Brand B Brand C Total Brand Purchased in Period 2 Brand A Brand B Brand C 100 25 75 200 50 100 150 300 50 175 275 500 Total 200 300 500 1000 39

Uses of Casual Research • To understand which variables are the cause (independent variables) and which variables are the effect (dependent variables) of a phenomenon • To determine the nature of the relationship between the causal variables and the effect to be predicted • METHOD: Experiments 40

Types of Experiments • Two broad classes: • Laboratory experiments: those in which the independent variable is manipulated and measures of the dependent variable are taken in a contrived, artificial setting for the purpose of controlling the many possible extraneous variables that may affect the dependent variable • Field experiments: those in which the independent variables are manipulated and measurements of the dependent variable are made on test units in their natural setting 41

Test Marketing • Test marketing is the phrase commonly used to indicate an experiment, study, or test that is conducted in a field setting. • Two broad classes: • To test the sales potential for a new product or service • To test variations in the marketing mix for a product or service 42

Types of Test Markets • Standard test market: one in which the firm tests the product and/or marketing mix variables through the companies normal distribution channels • Controlled test markets: ones that are conducted by outside research firms that guarantee distribution of the product through prespecified types and numbers of distributors 43

Criteria for Selecting Test Market Cities • Representativeness: Do demographics match the total market? • Degree of isolation: Phoenix and Tulsa are isolated markets; Los Angeles is not isolated. • Ability to control distribution and promotion: Are there preexisting arrangements to distribute the new product in selected channels of distribution? Are local media designed to test variations in promotional messages? 44

Test Marketing • Pros: • Allows most accurate method of forecasting future sales • Allows firms the opportunity to pretest marketing mix variables • Cons: • Does not yield infallible results • Are expensive • Exposes the new product or service to competitors • Takes time to conduct 45

Figure 3. 7. Some Alternative Research Designs (a) (b) (c) Exploratory Research • Secondary Data Analysis • Focus Groups Conclusive Research • Descriptive/Causal Exploratory Research • Secondary Data Analysis • Focus Groups 46

Figure 3. 8. Tasks Involved In a Research Design Define the Information Needed Design the Exploratory, Descriptive, and/or Causal Phases of the Research Specify the Measurement and Scaling Procedures Construct a Questionnaire Specify the Sampling Process and the Sample Size Develop a Plan of Data Analysis 47