The Role of Marketing Research and Research Process

The Role of Marketing Research and Research Process Chapter 1

The Nature of Marketing Research • Manager of a food company may ask, – ‘Will a package change improve my brand image? ’ • A competitor may ask, – ‘How can I monitor my sales and retail trade activities? ’ • Manager in the industrial tool market may ask, – ‘To whom am I losing sales? From whom am I taking sales? ’

The Nature of Marketing Research • All of marketing questions, as well as others related to specific marketing decisions, require information about how customers, distributors, and competitors will respond to marketing decisions. • Marketing research is one of the principal tools for answering such questions because it links the consumer, the customer, and the public to the marketer.

The Nature of Marketing Research Definition of “marketing research” • The systematic and objective process of generating information to aid in making marketing decisions. (1) • This process includes specifying what info. is required, designing the method for collecting info. , managing and implementing the collection of data, analyzing the results, and communicating the findings and their implications.

The Nature of Marketing Research Definition of “marketing research” • The planning, collection, and analysis of data relevant to marketing decision making and the communication of the results of this analysis to management. (2)

Importance of Marketing Research to Management 3 functional roles of marketing research: • Descriptive function includes gathering and presenting statements of fact. – What is the historic sales trend in the industry? – What are consumers’ attitudes toward a product and its advertising?

Importance of Marketing Research to Management 3 functional roles of marketing research: • Diagnostic function includes explanation of data actions. – What was the impact on sales when the package design was changes? – How can product/service offering be altered to better serve customers and potential customers?

Importance of Marketing Research to Management 3 functional roles of marketing research: • Predictive function includes specification of how to use descriptive and diagnostic research to predict the results of a planned marketing decision. – How can the firm best take advantage of opportunities as they arise in the ever-changing marketplace?

Importance of Marketing Research to Management • The unrelenting drive for quality and customer satisfaction • Paramount importance of keeping existing customers • Understanding the ever-changing marketplace

BASIC RESEARCH AND APPLIED RESEARCH

The Nature of Marketing Research Basic research and applied research • Basic (pure) research: research conducted to expand the limits of knowledge, to verify the acceptability of given theory, or to learn more about a certain concept. • Basic (pure) research: aimed at expanding the frontiers of knowledge rather than solving a specific, pragmatic problem.

The Nature of Marketing Research Basic research and applied research • Applied research: research conducted when a decision must be made about a real-life problem. • Applied research: aimed at solving a specific, pragmatic problem—better understanding of the marketplace, determination of why a strategy or tactic failed, or reduction of uncertainty in management decision making.

The Nature of Marketing Research Basic research and applied research • Our focus is on applied research – studies that are undertaken to answer questions about specific problems or to make decisions about particular courses of action or policies. • However, the procedures and techniques used by applied and basic researchers do not differ substantially; both employ the scientific method to answer the question at hand.

The Nature of Marketing Research Basic research and applied research • The term scientific method refers to the techniques and procedures used to recognize and understand marketing phenomena. • In scientific method, empirical evidence (facts from observation or experimentation) is analyzed and interpreted to confirm or disprove prior conceptions.

Nature of Applied Research • Marketing research studies can be classified into three broad categories: – Programmatic – Selective – Evaluative

Nature of Applied Research 1. Programmatic research is conducted to develop marketing options through market segmentation, market opportunity analysis, or consumer attitude and product usage studies. - It arises from management’s need to obtain a market overview periodically. For example: inadequate/outdated market information to support marketing decision making

Nature of Applied Research 2. Selective research is used to test decision alternatives. Some examples are testing concepts for new products, advertising copy testing, and test marketing. - - This typically is conducted after several viable options have been identified by programmatic research. If no one alternative is clearly superior, product management usually will wish to test several alternatives.

Nature of Applied Research 3. Evaluative research is done to assess program performance; it includes tracking advertising recall, doing organizational image studies, and examining customer attitudes on a firm’s quality of service. - The need for this type arises when the effectiveness and efficiency of marketing programs must be evaluated.

The managerial value of marketing research for strategic decision making • Developing and implementing a marketing strategy involves four stages: 1. Identifying and evaluating opportunities 2. Analyzing market segments and selecting target markets 3. Planning and implementing a marketing mix that will satisfy customers’ needs and meet the objectives of the organization 4. Analyzing marketing performance

Deciding Whether to Conduct Market Research • A manager faced with several alternative solutions to a problem should not instinctively call for applied marketing research. • The first decision to be made is whether to conduct marketing research at all.

In a number of situations, it is best not to conduct market research: • A Lack of Resources – Two situations: • lack of funds • insufficient funds to implement decisions from research

In a number of situations, it is best not to conduct market research: • Research Results Would Not Be Useful • Clients may be hard-pressed to use the information • Poor Timing in the Marketplace • Marketing research should not be undertaken if the opportunity for successful entry into a market has passed.

In a number of situations, it is best not to conduct market research: • The Decision Has Already Been Made • Marketing research may be used improperly. • When Managers Cannot Agree on What They Need to Know to Make a Decision • The wrong phenomena might be studied • When Decision-Making Already Exists • Further research may be redundant and costly

In a number of situations, it is best not to conduct market research: • When the Costs of Conducting Research Outweigh the Benefits • Potential new products with large profit margins may have a greater potential

Deciding Whether to Conduct Market Research Market Size Small Profit Margin Large Profit Margin Cost likely to be greater than benefit; e. g. , Possible benefits greater than cost; e. g. , • eyeglasses replacement screw • ultraexpensive Lambeggehni-type sportswear • tire valve extension DON’T CONDUCT MARKETING RESEARCH PERHAPS CONDUCT MARKETING RESEARCH

Deciding Whether to Conduct Market Research Market Size Large Small Profit Margin Large Profit Margin Benefits likely to be greater than costs; e. g. , • Stouffers frozen entries • medical equipment • Crest’s tarter control toothpastes • high-definition TV PERHAPS CONDUCT MARKETING RESEARCH

INTERNET ON MARKETING RESEARCH

Profound Impact of the Internet on Marketing Research Growth drivers of Internet marketing research: • The Internet provides more rapid access to business intelligence and thus allows for better and faster decision making. • The Internet improves a firm’s ability to respond quickly to customer needs and market shifts. • The Internet facilitates conducting follow-up studies and longitudinal research. • The Internet slashes labor-and time-intensive research activities (and associated costs), including mailing, telephone solicitation, data entry, data tabulation, and reporting.

Profound Impact of the Internet on Marketing Research Advantages of Internet marketing research: • • • Rapid development, real-time reporting Dramatically reduced costs Personalization Higher response rates Ability to conduct the hard-to-reach: doctors, high-income professionals, and top management in a large firms

MARKETING RESEARCH INDUSTRY

Structure of the Marketing Research Industry Organization • Level 1. Corporate marketing departments • Level 2. Ad agencies • Level 3. Research suppliers a) Syndicated service firms b) Custom, or ad hoc, research firms • Level 4. Field service firms

Structure of the Marketing Research Industry • Level 1: Primary Information Users (Corporate marketing departments) • They are the ultimate users of the research data provided by their marketing research departments. • Their primary business is the sale of products and services.

Structure of the Marketing Research Industry • Level 2: Information Users (Ad Agencies) • They are also in the position of serving corporate clients. • Their primary business is the development and execution of advertising campaigns. To properly fulfill this role, they often need marketing research data.

Structure of the Marketing Research Industry • Level 3: Research Suppliers (Custom and syndicated marketing research firms) • They represent the front line of the research industry. • They sell research services, design research studies, analyze the results, and make recommendations to clients. They may also buy data collection and other services from field service firm.

Structure of the Marketing Research Industry • Level 3: Research Suppliers 1. custom, or ad hoc, research firms – Companies that carry out customized marketing research to address specific projects for corporate clients 2. syndicated service research firms – Companies that collect, package, and sell the same general market research data to many firms.

Structure of the Marketing Research Industry • Level 4: Data Collectors (Field Service Firms) • They collect data for syndicated research firms, custom research firms, ad agencies, and corporate marketing departments. • They are the interviewers who actually collect the data. They typically work on a part-time, as needed basis and may work for several different field service firms.

1 st Homework • What are the steps in the marketing research process?