Marketing Research - Unit1

8/18/2019 Marketing Research - Unit1

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MARKETING RESEARCH

UNIT – I

What is Market Research?

Market research is a process of gathering, analyzing and interpreting raw data about targetmarket, product or service, competitors and about past, present and potential consumers to deriveusable business information.

What Questions Can Be nswered !hrough Market "esearch

• Who are my target audience# What do they need# What are their wants# Which

geographies have sales potential# What can be the distribution channel# Why they willneed$want my product and services# Who will be our competitors# %ow&s the marketenvironment# What can ' do to make my product and service more attractive# What are(overnment rules and regulations in my target market# What is the best entry strategyfor my target market#

Where Market "esearch Can Be )sed*

Case +* We foreign manufacturer- want to know if there is a market in 'ndia for electronic products which operate on alternative energy systems. Can you tell us#

"esearch olution* 'n this case an opportunity assessment study will be conducted to find out if there is a market in 'ndia for targeted products i.e. products which operate on alternative energysystems.

Case /* ' have a product which is superior to the products currently available in the market. Canyou test and tell me if consumers also think so#

"esearch olution* 'n this case a product testing study will be conducted to find out how thetargeted product fares in the market against its competitors.

Case 0* ' can launch this product only if it can manage 12& volumes. Can you do a research and

tell me it would generate 12& volumes#

"esearch olution* 'n this case a market research study will be conducted to find out if thatmarket will be able to meet e3pectations in terms of demand for target product.


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Role & Scope of Marketing Research:

1.Business I ntelligence BI is the ability to access d ata from multiple sou rces within and outside an organization for the purpose of analysis. It

the disparate operation systems to the end users of the data, thuscreating an environment with free ow of information. It offers a reliable

barometer of the business performance.2.BUSINESS INTELLIGENCE Operations Intelligence Finance and Accounting Intelligence Marketing Intelligence HR Intelligence Back-End Analysis.

3.Need for Marketing Intelligence MI focuses on the use of information as asource of strategic advantage. Need to have a thorough knowledge ofcustomers, their attitudes, tastes and preferences. Need to analyze

competition for benchmarking and making price, product, market andsegment decisions.

4.Marketing Information System A continuing and interacting structure ofpeople, equipment and procedures designed to gather, sort, analyze,evaluate, and distribute pertinent, timely and accurate information tomarketing decision making MIS Uses 3 Types of Information Recurringmarket and accounting data from market analysis and accountingactivities Intelligence relevant to future strategy of business Marketing

research studies n ot of a recurring nature.5.Role of Marketing Research in Decision Making Four Stages of MarketPlanning Process Situation analysis Strategy development marketingprogram development Implementation.

6.Situation Analysis of Market environment Market characteristicsConsumer behavior Research Approaches Organize information obtainedfrom prior studies (secondary) Focus grou ps.

7.Strategy Development Market Research provides information to assistmanagement with three critical decisions, what business should we be

in? How will we compete? What are the objectives for the business?8.Marketing Program Development Programs embrace specic tasks Action

program usually focuses on a single objective in support of one element ofoverall business st rategy.


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9.Factors Inuencing Marketing Research Decisions Relevance Type andNature of Information Sought Timing Availability of Resources Cost-

benet Analysis.10.Understand the environment and the market Identify threats and

opportunities Assess t he competitive position Dene the business scopeand served market segments Establish competitive advantages Setperformance objectives. Product and channel decision Communicationdecisions Pricing Personal selling decisions Performance monitoringRening strategies and program Situation Analysis Strategy DevelopmentMarketing Program Development Implementation.

11.Conquering Latino Homes Hispanics account for nearly 13% of the U.S.population. Research shows that Latino households spend $600 billion of$1.3 trillion purchasing power of multicultural population. In 1998 only2.5% of total advertising dollars in the United States was focused onLatinos. By 2050, Hispanic population would represent 25% of USpopulation. Who can tell me what the problem is?

12.Marketing Research in Practice Programmatic Research Develops marketoptions through market segmentation, market opportunity analysis, orconsumer attitude and product usage studies Selective Research Testsdifferent decision alternatives such as new product testing, advertisingcopy testing, pre-test marketing, and test marketing Evaluative Research

Evaluation of performance of programs.13.Marketing Decision Support System Combines marketing data from

diverse so urces into a single database, enabling product managers, salesplanners, market researchers, nancial analysts, and productionschedulers to share information.

14.Marketing Decision Support Systems Managers’ needs for decisionrelevant information: Routine comparisons of current performanceagainst past trends on each of the key measures of effectiveness Periodicexception reports to assess which sales territories or accounts have notmatched previous years’ purchases Special analyses t o evaluate the salesimpact of particular marketing programs, and to predict what wouldhappen if changes were made.

15.Marketing Decision Support Systems Contd. Characteristics of MDSS:Interactive Flexible Discovery oriented User f riendly.


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16.Marketing Decision Support Systems Four components of MDSS:Database Reports a nd Displays Analysis ca pabilities Models.

17.Gaining Insight from a MDSS Manager Modeling Analysis DisplayDatabase Environment.

18.Participants in marketing research activities Information UsersInformation Suppliers: Inside Company Information Suppliers: OutsideCompany General management Planning Marketing and sales managersProduct managers Lawyers Marketing research department Sales analysisgroup accounting department Corporate strategic planning Researchconsultants m arketing research suppliers a dvertising agencies.

Limitations of marketing research:

(1)Marketing research offers su ggestions a nd not decisions:Marketing research is n ot a substitute for decision making process. Itonly offers possible suggestions/solutions to marketing problems. Itactually acts as a tool that facilitates decision-making process. I tguides marketing managers in taking balanced, result-oriented andrational decisions. The suggestions offered by marketing researchersare usually possible/probable solutions but n ot the exact solutions.

MR does not provide readymade solutions to marketing problems. Itonly provides indicators. It may not provide conclusive information onmarketing problems.

(2)Marketing resear ch cannot predict accurately:In MR, efforts are bei ng made to estimate or pred ict the possible futuresituation. For this/ certain research studies a re undertaken. However,the results/ conclusions arrived at may not be complete, perfect oraccurate. Future is always uncertain and exact prediction about thefuture is just not possible through marketing researc h. This is b ecausemarket environment is ever changing consumer behavior is difficult toestimate correctly and reliable data for research purpose may not beavailable. As a result, the decisions taken and policies framed on the

basis of such research studies may not be accurate and useful forsolving current marketing problems.

(3)MR conclusions are not always dependable:


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There are many who are skeptics of MR. Their criticism is that MRconclusions are not dependable. There are examples where theresearch failed to deliver d esired results or a product failed even whenthe research had shown promising market demand and consumer

support. The classical example is that of Coke. It’s MR showed that68% customers in US liked the taste of the new formula developed bythe Coca-Cola Corporation. However, the New Coke failed and in lessthan six months of its launch, the Coke management had to re-launchold Coke under the brand name Coke Classic. However, this failure ofMR was mainly due to conventional approach of researchers.

(4)Not an exact science:Since marketing research plates to consumers, it cannot be acceptedas an exact science. Both quantiable and non-quantiable factorshave to be assessed with the help of various techniques available toformulate marketing policies that will help to achieve maximum sales.

The technical part of marketing research comes into operationparticularly while collecting, analyzing, and interpreting facts andgures. No amount of s ophistication makes the subject an exactscience. Because, as st ated earlier, it concerns primarily the consumeras a human being Study of human behavior precludes absolutemathematical accuracy Probable trends, at the most can be indicated

within pre-determined limits. This sets a basic limitation to marketingresearch.

(5)Time lag in presentation and implementation: There are other constraints as well that make for qualied utility of

marketing research in decision-making. For example, there is thelimitation of time. Collection of data, their ch ecking as to accu-racyand analysis and presentation often involve considerable time. Theformulation of policies and their implementation as also their

subsequent evaluation, which are a necessary follow-up, also taketime. People’s tastes a nd preferences are subject to frequent changes.It is, therefore necessary, keeping in mind the scope and nature ofmarketing research, that the projects sh ould be completed in time toensure their u tility. In this process, at times, as a compromise some


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accuracy may have to be sacriced, but the degree of it can be decidedin relation to the sp ecic circumstances.

(6)Limitations of personnel: Another constraint that is experienced pertains to personnel and its

quality. Trained, well-equipped and well-directed research personnelcan improve the quality and utility of marketing research. In theabsence of this, research is likely to be costly and unreliable. Correctand complete information has to be collected from the respondentstactfully. The interviewer has to be reasonably aware of thepsychological make-up of the persons that ar e being interviewed andshould be able to analyze their thoughts and reactions. Apart fromthis, interviewers may have their own failings and weaknesses. Hencethe training interviewers an d investigators i s a m ust.

(7)A cost-generating operation:Marketing research is expensive. The existence of sellers’ market or asheltered market in many developing countries in particular h as also

been responsible for an apathetic approach to marketing research.However, with the growth and development of their economies, themarketing conditions are ch anging in favor of buyers and the need forand the value of marketing resear ch are b eing increasingly recognized

by the enterprises in these countries also. With the communication

between the purchaser and the manufacturer becoming indirect,meagre and unsatisfactory and as a result of competition, themanufacturer is increasingly becoming anxious to know the

(8)Marketing research cannot study all marketing problems:Marketing research is rather very wide in scope. However, it cannotstudy all marketing problems particularly where it is d ifficult to collectrelevant data. Similarly, research study is not possible where value

judgments are involved. Even it is not useful for dealing with urgentmarketing problems where quick decisions and follow-up actions arenecessary. Thus, all marketing problems are not researchable and allresearch problems are not answerable.

(9)Resistance by marketing execu tives:Researchers study marketing problems and offer information andguidance to marketing executives in their decision making process.However, some executives are r eluctant to use the solutions su ggested


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by the researchers. They feel that such extensive use will act as athreat to their personal status. Findings of the research work may

bring them in difficulties if the policy-decisions taken accordinglyprove to be wrong.

(10) Lengthy and time consuming activity:MR is a lengthy and time-consuming activity. It involves variousstages/steps, which need to be completed in an orderly manner. It isnot desirable to conduct research work in a haphazard manner.Naturally, the research work takes longer period for completion andthe ndings when available may prove to be old and outdated. Evendata collected very soon become old or historical due to fast changingmarket environment. As a result, research ndings based on them

become irrelevant in the changed situation.(11) Complexity of the subject:

Marketing research fails to give complete and full proof solutions tomanagement. This is because marketing research itself is not an exactscience. It is concerned with the study of human beings and human

behavior is always difficult to predict, errors in drawing conclusionsare possible due to this human element in marketing researchactivities. Errors in the research studies are also possible due touncertainty of human behavior and also because of no availability of

reliable d ata.

(12) Non-availability of qualied staff:For scientic MR, professional marketing researchers with properqualications, training and experience a re necessary. Research work islikely to be incomplete/ unreliable in the absence of such expert staff.Companies nd it difficult to have the services of such expert staff.

They nd it difficult to pay high salary to professional consultants.

Research activities a re conducted in limited areas d ue to no availabilityof properly qualied staff. Such staff includes statisticians,psychologists, sociologists, economists a nd computer exp erts.

(13) Changing behavior of consumers:Consumer is the focal point in marketing research. However, his

buying motives are difficult to judge precisely and accurately. This


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brings some sort of uncertainty in the conclusions drawn from theresearch activity. The ndings of the resea rch work (particularly in thecase of consumer research) may not prove to be accurate.

(14) Absence of effective communication:

The research activity will be useful and result-oriented only whenthere is meaningful dialogue between the marketing management andmarketing research team. However, such dialogue is ineffective inmany organizations. This make’ research activity ineffective.

The Market Research Process:

The market research process is a systematic methodology for informing business decisions. The gure below breaks the process down into six

steps:


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Step 1. Dene the Objective & Your “Problem”

Perhaps the most important step in the market research process is dening thegoals of the project. At the core of this understands the root question thatneeds to be informed by market research. There is typically a key businessproblem (or opportunity) that needs to be acted upon, but there is a lack ofinformation to make that decision comfortably; the job of a market researcheris to inform that decision with solid data. Examples of “business problems”might be “How should we price this new widget?” or “Which features should we

prioritize?”

By understanding the business problem clearly, you’ll be able to keep yourresearch focused and effective. At this point in the process, well before anyresearch has been conducted, I like to imagine what a “perfect” nal researchreport would look like to help answer the business qu estion(s). You might evengo as far as to mock up a fake report, with hypothetical data, and ask youraudience: “If I produce a report that looks so mething like this, will you have th einformation you need to make an informed choice?” If the answer is yes, now

you just need to get the real client/audience until the objective is clear, and be happy about thedisappointment you’ve prevented and the time you’ve saved.


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Step 2. Determine Your “Research Design”

Now that you know your research object, it is time to plan out the type of

research that will best obtain the necessary data. Think of the “researchdesign” as your detailed plan of attack. In this step you will rst determine

your market research method (will it be a survey, focus group, etc.?). You willalso think through specics about how you will identify and choose yoursample (who are we going after? where will we nd them? how will weincentivize them?, etc.). This is also the time to plan where you will conduct

your research (telephone, in-person, mail, internet, etc.nce again,remember to keep the end goal in mind–what will your nal report look like?Based on that, you’ll be able to identify the types of data analysis you’ll beconducting (simple summaries, advanced regression analysis, etc.), whichdictates th e st ructure of questions you’ll be a sking.

Your choice of research instrument will e are trying to collect. There are t hree cl assications to consider:

Exploratory Research – T his form of research is u sed when the topic is not welldened or understood, your hypothesis is not well dened, and your knowledgeof a topic is vague. Exploratory research will help you gain broad insights,narrow your focus, and learn the basics necessary to go deeper. Commonexploratory market research techniques include secondary research, focusgroups an d interviews. Exploratory research is a qu alitative form of research.

Descriptive Research – I f your research objective calls for m ore d etailed data ona specic topic, you’ll be conducting quantitative descriptive res earch . The goalof this form of market research is to measure sp ecic topics o f interest, usuallyin a quantitative way. Surveys are the most common research instrument fordescriptive resea rch.

Causal Research – T he most specic type of research is causal research, whichusually comes in the form of a eld test or experiment. In this case, you aretrying to determine a ca usal relationship between variables. For exam ple, doesthe music I play in my restaurant increase dessert sales (i.e. is t here a causalrelationship between music and sales?).

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Step 3. Design & Prepare Your “Research Instrument”

In this step of the market r esearch process; it’s time to design your researchtool. If a survey is the most ap propriate tool (as determined in step 2), you’ll

begin by writing your questions and designing your questionnai

group is your instrument of ch oice, you’ll start preparing questions andmaterials for the moderator. You get the idea. This is the part of the process

where you start executing your plan.

By the way, step 3.5 should be to test your survey instrument with a smallgroup prior to broad deployment. Take your sample data and get it into aspreadsheet; are t here any issues with the data structure? This will allow youto catch potential problems ea rly, and there are al ways problems.

Step 4. Collect Your Data

This is the meat and potatoes of your project; the time when you areadministering your survey, running your focus groups, conducting yourinterviews, implementing your eld test, etc. The answers, choices, andobservations are all being collected and recorded, usually in spreadsheet form.Each nugget of information is precious and will be part of the masterfulconclusions you will soon draw.

Step 5. Analyze Your Data

Step 4 (data collection) has drawn to a close and you have heaps of raw datasitting in your lap. If it’s on scraps of paper, you’ll probably need to get i t inspreadsheet form for further a nalysis. If it’s a lready in spreadsheet form, it’s


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time to make sure you’ve got i t structured properly. Once that’s all done, thefun begins. Run summaries with the tools provided in your software package(typically Excel , SPSS , Minitab , etc.), build tables and graphs, segment yourresults by groups t hat make sen se (i.e. age, gender, etc.), and look for t he m ajor

trends in your data. Start to formulate the st ory you will tell.

Step 6. Visualize Your Data and Communicate Results

You’ve spent hours poring through your raw data, building useful summarytables, charts and graphs . Now is the time to compile the most meaningfultake-away into a digestible report or presentation. A great way to present thedata is to start with the research objectives and business problem that wereidentied in step 1. Restate those business questions, and then present yourrecommendations based on the data, to address those issues.

When it comes time to presenting your results, remember topresent insights , answers and recommendations , not just charts a nd tables.

If you put a chart in the report, ask yourself “what does this mean and whatare th e implications?” Adding this additional critical thinking to your nalreport will make your research more actionable and meaningful and will set

you apart from other researchers.

While it is important to “answer the orresearch is one input to a business d ecision (usually a strong input), but notthe only factor.

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The gure below walks through an example of this process in actin with a business problem of “how should we price thii


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The Marketing Research Process:


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1.Learning Objectives to learn the steps in the marketing research process. To understand how the steps in the marketing research process are

interrelated and that the steps may not proceed in order. To be able toknow when market research may be needed and when it may not be

needed. To know which step is the most important in the marketingresearch process.It is rare in practice a research project follows all the exact st eps.Research is an interactive process where a researcher by discoveringsomething may move forward or backwards in the process. May notinvolve every step shown. The research problem may be resolved, forexample by a review of secondary data, thereby eliminating the need todetermine a sample plan or size.

What’s important is although every research project is different; enough commonalities to follow the eleven steps of marketing resear ch.

Step 1:

Establish the Need for Marketing Research, A good monitoring system will alert the marketing manager to a problem that can be attacked by

marketing research. Regardless of the monitoring system used a goodmonitoring system constantly searches for hints that the companies

marketing mix may be out of “sync” in the market place. Marketingresearch may not be needed Information is already available There isinsufficient time for marketing research R esources are not available Costsoutweigh the value of the research

Step 2:

Dene the Problem Dening the problem is the single most importantstep in the marketing research process. Often studies are com missioned

without a clear understanding of the problem that needs to beaddressed. Exploratory research is needed to dene the problem soresearch may be conducted. Problem denition involves: Specifying thesymptomsItemising the possible causes of the symptoms listing thereasonable alternative courses of action that t he marketing manager canundertake to solve the problem.


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Step 3:

Establish the Research Objectives Research objectives identify whatspecic pieces of information are n ecessary t o solve the problem at hand.Research objectives step is the specication of the specic types ofinformation useful to the managers as they grapple for a solution to themarketing problem at hand.

Step 4:

Determine Research Design: There are three types of research design: Exploratory Research Design -is dened as collecting information in an unstructured and informalmanner. Examples: Reading periodicals, visiting competitors premises,examine company sales and prots vs. industry sales and prot, clippingservice.Descriptive Research Design - refers to a set of methods and procedurethat d escribe marketing variables. Portray these variables by answering

who, what, why and how questions. example: consumer attitude survey

to your companies servi ces.Casual Research Design – designs allow us to isolate causes and theireffects. Casual research is conducted by controlling various factors todetermine which factor is cau sing the problem.By changing one factor, say price, we can monitor its effect on a keyconsequence, such as sales. In other words, casual design allows us todetermine causality, or w hich variable is causing another variable tochange.

Step 5:

Identify Information Types an d Sources.Basically two types of data information available to a marketingresearcher:


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Secondary d ata – as it name implies, refers to information that h as beencollected for som e other p urpose.Primary d ata- r efers t o information that has been gathered specically toserve t he research objectives at h and.

Step 6:

Determine Methods of Accessing Data Once the researcher hasdetermined which type or types of information are needed, he or shemust determine methods of accessing data. Methods of accessingexternal secondary data have improved over the last ve years:

Information processing technology. Easy and Quick retrieval. Internaldata- company reports, salespersons, executives, MIS and otherinformation sources. There are several different methods of collectingprimary data including: Telephone surveys Mail surveys Door-to-doorinterviews Mall-intercept studies New data collection methods areemerging.

Step 7:

Design Data collection:Data Collection Forms Questionnaires and observation forms must bedesigned with great car e. Questionnaires – which record the informationcommunicated by respondents or t he respondent’s behavior as ob served

by the researcher Structured Questionnaires - list questions that havepre-specied answer choices. Unstructured questionnaires – have openended questions and/or questions that are asked based on a response.Disguised-true object of the study is not identied. Undisguised-

respondent is made fully aware of the purpose/or spon sor of the su rvey.

Step 8:

Determine Sample Plan and Size: A sample plan identies who is to be sampled and how to select them for

study. A sample element refers to a unit of the entity being studied


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sample Frame is a l ist from which the sample elements are drawn for thesample. A sample plan species how to draw the sample elements fromthe sample plan. Methods are available to help the researcher determinethe sa mple size required for the research study.

Step 9:

Data collection is u sually done by trained interviewers who are employed

by eld data collection companies to collect primary data. Being ware of errors that may occur is important. Non-sampling Errors ar e attributableto factors other than sampling errors. Wrong sample elements tointerview Securing participants who refuse to participate Not a homeInterviewing subjects who give the wrong information. Hiringinterviewers who cheat an d ll out ctitious su rvey questionnaires.

Step 10:

Data analysis involves en tering data into computer les, inspecting it forerrors and running tabulations and various statistical tests. Datacleaning – p rocess by which the raw data are checked to verify that thedata has been correctly inputted from the data collection form to thecomputer software program. Use SPSS Coding – is the process ofassigning all response categories a numerical value males=1,females=2.Tabulation – which refers to the actual counting of the numberof observations that fall into each possible response ca tegory.

Step 11:

Prepare and Present the Final Research Report Preparing the marketingresearch report involves describing the process used, buildingmeaningful tables, and using presentation graphics for clarity. Preparing


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the SPSS software allows you to prepare graphics to enhance your written or oral presentation.

Summary : Virtually all market research projects a re different. Some are limited

to review of secondary data; others require complex designs involving largescale collection of primary data. Understand the eleven steps of the researchprocess. Steps ca n give researchers an overview of the entire resear ch process.Gives researchers a procedure to follow and a framework. Many steps outlinedare interactive and the researcher may decide which ones to use.

MAJOR TYPES OF MARKET RESEARCH DESIGN:

4earning 5b6ectives

o !o understand what research design is and why it is significant.

o !o learn how e3ploratory research helps the researcher gain a feel for the problem.

o !o know the fundamental 7uestions addressed by descriptive research anddifferent types of descriptive research.

o !o e3plain what is meant by casual research and to describe four types of e3perimental research designs.

o !o know the different types of test marketing and how to select test market cities.

"esearch 8esign

o Marketing research methods vary from focus groups to stimulated test markets tolarge, nationally representative sample surveys.

o "esearch design is a set of advance decisions that make up the master planspecifying the methods and procedures for collecting and analyzing data.

o 9ach research problem is uni7ue. %owever,


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o !here are similarities among research problems to allow us to use the best plan tosolve the problem.

o !here are basic research designs that can be successfully matched to a givenresearch problem.

!hree !ypes of "esearch 8esign

o "esearch designs are classified into three categories*

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o 93ploratory research is systematic and fle3ible and allows the researcher toinvestigate whatever sources he or she desires.

o uch research may consist of going to the library and reading published secondarydata@ of asking 7uestions, salespersons ac7uaintances for their opinions about a

company, its products and services, and prices@ or of simply observing everydaycompany practices.

o 93ploratory "esearch is used in a number of situations*

+. (ain background information= When very little is known about the problem or whenthe problem has not been clearly formulated.

o Airms having an M' in which a review of internal information tracked over timecan provide useful insights into the background of the company, brand, salesterritories etc.


/. 8efine !erms 93ploratory research helps to define terms and concepts.

o What is 0M&s image# !he researcher learns that >image? is composed of severalcomponents innovative products, friendly sales$customer service, goodcorporate citizen and so on.


0. Clarify :roblems and %ypotheses 93ploratory research allows the researcher todefine the problem more precisely and to generate a hypothesis for the upcoming study.

o i.e.* banks have three types of customers* retail customers, commercial customersand other banks for which services are performed for fees. 8efine which group

bank image should be measured.


. 9stablish "esearch :riorities 93ploratory research can be used to priorities researchtopics in order of importance, especially when it is faced with conducting severalresearch studies.


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o 8escriptive "esearch* which provides answers to 7uestions such as who, what,where, where and how, as they are related to the research problem.

o Who= may be defined as firms competitors- customers#

o What= defined as brands, brands, sizes that are being purchased.

o Where= places where customers are purchasing products#

o Why= we cannot conclusively answer the 7uestion of why using descriptiveresearch. Eeed to use causal research designs.

Classification of DESCR"PT"#E Research Design Stu ies!

!o describe and measure marketing phenomena at point in time.

+. Cross=sectional studies= are very prevalent in market research, outnumberinglongitudinal studies and casual studies.

o Because cross=sectional studies are one time measurements.

o 5ften described as >snapshots? of the population.

o '.e. used to describe the readership of a magazine in terms of demographics.

o Classification of 8escriptive "esearch tudies*

/. 4ongitudinal studies= repeatedly measure the same population over a period of time.

o 5ften described as >movies? of the population.

o !o be successful researchers must have access to the same members of thesample, called a panel

o "efer EA5 Eational Aamily 5pinion-


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Classification of CA$SAL Research Design Stu ies !

0. Causality= may be thought of as understanding a phenomenon in terms of conditionalstatements of the form >'f 3, then y.? !hese >if=then? statements become our way of manipulating variables of interest.

o 'f ' spend more on advertising will sales increase#

o Casual is difficult in terms of if=then in understanding business problems.

• 93periments

o n 93periment is defined as manipulating an independent variable to see how itaffects a dependent variable, while also controlling the effects of additionale3traneous variables

o !ypes of e3periments*

o 4aboratory e3periments are desirable when the intent of the e3periment is toachieve high levels of internal validity.

o Aield e3periments those in which independent variables are manipulated and themeasurements of the dependent variable are made on test units in their naturalsetting.

• !est Marketing

o !est Marketing is the phase commonly used to indicate an e3periment, study, or test that is conducted in a field setting#

o Companies may use one or several test market cities, which are geographicalareas selected in which to conduct the test.

o !here are two broad classes of uses of test markets*


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o !o test the sales potential for a new product or service

o !o test variations in the marketing mi3 for a product or service.

!ypes of !est Markets*

tandard test market is one in which a firm tests the product and$or marketing mi3

variables through the company&s normal distribution channels.Controlled test markets are conducted by outside research firms who guaranteedistribution of the product through pre specified types and numbers of distributors.9lectronic test markets in which a panel of consumers has agreed to carry an id card thatthey present when buying goods and services.

imulated test markets !Ms- are those in which a limited amount of data on consumer response to a new model are fed into a model containing certain assumptions regarding

planned marketing programs, which generates likely sales volumes.

Consumer versus 'ndustrial !est Markets*

o With industrial test markets, prototype products are tested, revised, and retestedunder actual conditions.

o i.e. 0M are e3perimenting with this concept

>4ead Country? !est Markets*

o 's test marketing conducted in specific foreign countries that seem to be good predictors for an entire continent#

o '.e. Colgate :almolive use lead country test marketing when it launched its

:almolive 5ptims shampoo and conditioner.

:ros and Cons of !est Marketing*

o !est markets are considered by some to be the >ultimate? way to test a new product.

o !est markets are costly and sub6ect to competitive sabotage.


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o :redicting changing consumer behavior is difficult.

ummary

o "esearch design refers to a set of advance decisions made to develop the master

plan to be used in the conduct of the market research.

o 'f very little is known about the pro6ect e3ploratory research is appropriate.

o 8escriptive research measures market phenomena and answers 7uestions such aswho, what, where, when and how.

o 't can be cross sectional or longitudinal

o 'f we know 7uite a bit about our research we can use causal relationships.

o 4aboratory e3periments are used for achieving internal validity while fielde3periments suited for achieving e3ternal validity.

o !est marketing is a form of e3perimentation and takes various forms standard,controlled, electronic, simulated, consumer, industrial and lead country.

Date post:	07-Jul-2018
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Marketing Research - Unit1

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