Chapter 1

Marketing Research for Managerial Decision Making

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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Learning Objectives

• Describe the impact marketing research has on marketing decision making

• Demonstrate how marketing research fits into the marketing planning process

• Provide examples of marketing research studies

• Understand the scope and focus of the marketing research industry

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Learning Objectives

• Recognize ethical issues associated with marketing research

• Discuss new skills and emerging trends in marketing research

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The Growing Complexity of Marketing Research

• Technology and growth of global business are increasing the complexity of marketing research

• New data collection tools, including Twitter, clickstream tracking, and GPS, pose serious questions in regard to consumer privacy

• Current variety of available tools and techniques makes choosing a method for a particular research project increasingly challenging

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The Growing Complexity of Marketing Research

• Marketing research is a systematic process • Tasks include:– Designing methods for collecting information– Managing the information collection process– Analyzing and interpreting results– Communicating findings to decision makers

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The Role and Value of Marketing Research

• Marketing research draws heavily on the social sciences both for methods and theory

• Marketing research methods:– Are diverse– Span a wide variety of qualitative and quantitative

techniques – Borrow from disciplines such as psychology,

sociology, and anthropology

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The Role and Value of Marketing Research

• Marketing research can be applied to a wide variety of problems involving the four Ps: – Price– Place– Promotion– Product

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Marketing Research and Marketing Mix Variables

• Product - Product decisions are varied and include:– New product development and introduction– Branding– Positioning products

• Perceptual mapping: Used to picture the relative position of products on two or more product dimensions important to consumer purchase decisions

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Marketing Research and Marketing Mix Variables

• Place/Distribution - Decisions include choosing and evaluating:– Locations – Channels– Distribution partners

• Retailing research: Focus on trade area analysis, store image/perception, in-store traffic patterns, and location analysis

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Marketing Research and Marketing Mix Variables

• Behavioral targeting: Displays ads at one website based on the user’s previous surfing behavior

• Shopper marketing: Marketing to consumers based on research of the entire process consumers go through when making a purchase

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Marketing Research and Marketing Mix Variables

• Promotion - Important influences on any company’s sales– Essential that companies know how to obtain

good returns from their promotional budgets

• Most common research tasks in integrated marketing communications:– Advertising effectiveness studies– Attitudinal research– Sales tracking

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Marketing Research and Marketing Mix Variables

• Price - Pricing decisions involve:– Pricing new products– Establishing price levels in test marketing– Modifying prices for existing products

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Marketing Research and Marketing Mix Variables

• Marketing research provides answers:– How large is the demand potential within the

target market at various price levels? • What are the sales forecasts at various price levels?

– How sensitive is demand to changes in price levels?

– Are there identifiable segments that have different price sensitivities?

– Are there opportunities to offer different price lines for different target markets?

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Consumers and Markets – Segmentation Studies

• Major focuses of a marketing research project:– Creating customer profiles – Understanding behavioral characteristics

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Consumers and Markets – Segmentation Studies

• Benefit and lifestyle studies: Examine similarities and differences in consumers’ needs– Researchers use these studies to identify two or more

segments within the market for a particular company’s products

• Marketers use ethnographic research – To study consumer behavior as activities embedded in

a cultural context and laden with identity– Requires extended observation of consumers in

context

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Marketing Theory

• Important to many businesses– Can be useful in thinking business problems and

opportunities

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Types of Marketing Research Firms

• Internal or external• Custom or standardized• Brokers or facilitators

Types of Marketing Research Firms

Internal• Organizational units that

reside within a company• Benefits:

– Research method consistency– Shared information across the

company– Lower research costs– Ability to produce actionable

research results

External• Perform all aspects of the

research• Benefits:– Objective suppliers– Less subject to company politics

and regulations– Specialized talent for the same

cost – Greater flexibility in scheduling

studies and specific project requirements

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Types of Marketing Research Firms

• Customized research firms: Provide tailored services for clients

• Standardized research firms: Provide general results following a standard format so that results of a study conducted for one client can be compared to norms– Syndicated business services: Services provided

by standardized research firms that include data made or developed from a common data pool or database

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Changing Skills for a Changing Industry

• As marketing research firms expand, requirements for successfully executing marketing research projects will change

• Top five skills:– Ability to understand and interpret secondary data– Presentation skills– Foreign-language competency– Negotiation skills– Computer proficiency

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Ethics in Marketing Research Practices

• Major sources of ethical issues are the interactions among the three key groups:– Research information providers– Research information users– Respondents

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Exhibit 1.1 - Ethical Challenges in Marketing Research

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Ethical Questions in General Business Practices

• Potential ethical pitfalls for research providers:– Unethical pricing– Unnecessary or unwarranted research services– Client confidentiality issues– Use of “black-box” methodologies• Branded “black-box” methodologies: Offered by

research firms that are branded – Do not provide information about how the methodology

works

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Conducting Research Not Meeting Professional Standards

• Reasons:– Fearful of losing the business entirely– Client pressure to perform research to prove a

predetermined conclusion– Cost cutting– Interviewers working for research firms may also

engage in unethical behavior• Curbstoning: Data collection personnel filling out

surveys for fake respondents

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Abuse of Respondents

• Potential ways to abuse respondents in marketing research:– By not providing promised incentive to

respondents for completing interviews or questionnaires

– By stating that interviews are very short when in reality they may last an hour or more

– By using “fake” sponsors

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Abuse of Respondents

• At the end of any study involving deception, subjects must be “debriefed” to explain deception – Subject debriefing: Fully explaining to

respondents any deception that was used during research

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Abuse of Respondents

• Sugging/frugging: Claiming that a survey is for research purposes and then asking for a sale or donation

• De-anonymizing data: Combining different publicly available information, usually unethically, to determine consumers’ identities, especially on the Internet

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Unethical Activities of the Client/Research User

• Requesting detailed research proposals from several competing research providers with no intention of actually selecting a firm to conduct the research

• Promising a prospective research provider a long-term relationship or additional projects in order to obtain a very low price on the initial research project

• Overstating results of a marketing research project

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Unethical Activities by the Respondent

• Providing dishonest answers – Faking behavior

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Marketing Research Codes of Ethics

• Marketing Research Society summarizes the central principles in ESOMAR’s code as follows:– Conform to all national and international laws– Behave ethically – Be particularly careful with children and other

vulnerable groups– Ensure respondents are cooperating voluntarily

and are well informed of risks

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Marketing Research Codes of Ethics

– Respect rights of respondents – Protect personal data and use only for intended

purpose– Conduct projects with accuracy, transparency,

objectivity, and quality– Conform to principles of fair competition

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Emerging Trends

• Increased emphasis on secondary data collection methods

• Movement toward technology-related data management

• Expanded use of digital technology for information acquisition and retrieval

• Broader international client base• Movement beyond data analysis toward a data

interpretation/information management environment

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Marketing Research in Action:Continuing Case: The Santa Fe Grill

• What kind of information about products, services and customers should the owners of Santa Fe Grill consider collecting?

• Is a research project actually needed?– Is the best approach a survey of customers?– Should employees also be surveyed?– Why or why not?