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Marketing Research and Information System
Lecture # 2January 19, 2012
Text Reference: Principles of Marketing Phillip Kotler & Gary Armstrong
14th EditionPearson Prentice Halll
Marketing Research & Information Systems
Learning Objectives
Explain the concept of the marketing information system
Identify the ways of assessing information needs
Describe the sources used for developing information
Outline the Marketing Research Process
Compare and contrast the main ways of measuring
current demand
Explain how future demand can be forecasted
Unit 2
For Discussion Marketers are always keen on acquiring useful data
and information on their target market by way of market research. Assume the role of a Consultant Marketer explore the ,marketing research process and its value for your client.
WHY THE NEED FOR A M.I.S?
Identification of significant marketplace changes, hence….
Provision of useful information to impact the planning process as it relates to buyer wants, preferences, and behaviour.
A marketing information system (MIS)
consists of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers.
Kotler,P. & Keller, K.(2006)
Components of a MIS
(A) Internal Records system
this supplies results data
Sources include:
Sales information, payment to
order cycle, inventory levels, receivables, payables, monthly reports, etc.
B) Market Intelligence system
this supplies happening data.
Defined as:
…procedures and sources managers use to obtain everyday information about the marketing environment
Components of a MIS
Marketing Intelligence Systematic collection and analysis of publicly
available information about competitors and developers in the marketing environment
Mini quizzes Bench marking competing products (Spies)
Sources of Marketing Intelligence
1. Trained and motivated salesforce spotting and reporting developments
2. Purchasing of information from suppliers
3. A company networking regionally and internationally
4. Consumer Advisory Panel
5. Motivating intermediaries to pass along important information.
6. Government data
resources
Components of a MIS
C) MARKET RESEARCH
Market intelligence system and internal record system supplies happening and results data respectively
Marketing Research Acquisition and analysis of
information required for the making of marketing decisions. (Cole, 2006).
He highlights 2 basic areas : Markets (existing & potential) –
External markets Marketing tactics & method
Internal - response to customers, present & future
Increasing needed for Marketing Research :
Shift from local to wider internal markets
the changing emphasis from buyer needs to wants (buyer behaviour)
The trend towards competition based on non price
Name some non-price methods used by marketers
MARKET RESEARCH
Systematically
gathering, analyzing,
interpreting and
transforming data,
structures and results
into decision making
information.
Bush, R.P. et. al. (2000)
Some companies –Research Team
This info will help companies to:
Assess market potential Understand customer
satisfaction & purchase behaviour
Measure the effectiveness of pricing product, distribution & promotion activities
MARKET RESEARCH
Decision situations
marketing are created by
the awareness of :
1. Decision Problems
2. Decision Opportunities
3. Market performance symptoms.
MARKET RESEARCH CAN PROVIDE INFORMATION NECESSARY TO ALLOW FOR THESE DECISIONS
Marketing Information System
Begins with assessing information needs for users
Develops from internal database, marketing intelligence activities, & research
Analyses of data received for decision making to manage customer relations.
Internal Database Electronic collection of info
obtained from data source within the company
External source
Marketing Research Process
Define the problem & research objectives
Develop the research PlanFor collectinginformation
Implement the Research Plan
Collect & analyzedata
Interpreting & Reporting findings
Step 1- Defining the Problem & Research Objectives
(usually considered the most difficult step
Exploratory research Gathers preliminary info
that will help to define the problem (s) and suggest an hypothesis
Descriptive Research Describes marketing
problems, situations or markets- demo, cust attitude
E.g.. Would a 10% decrease at
UCC increase enrollment enough
to offset/ reduced tuition?
Casual Research This tests hypotheses about
cause & effect relationships
The statement of the problem and research objectives guides the entire research process.
In determining the research problem:
a. Determine and clarify information needs
B. Re define the decision problem as a research problem
C. Establish research objectives
Step 2 – Developing the Research Plan
An efficient plan is developed for collecting information
Plan outlines sources of
existing information Specific approach,
contact, methods instruments
Information is usually gathered from primary & secondary data source.
How customers are responding to the seasoned fish & chicken on the market.
The product may cost more, but think about convenience
What specific information would be needed?
Consumers, Retailers Demographics Economics
Step 2 – Developing the Research Plan
Secondary data
Information already exists for another purpose
Comp’s Internal database Commercial database
STATIN - Online database Usually less expensive Sometimes required info.
may not exist
(reactions to new product)
Primary Data Care must be taken
when collecting primary
data to ensure relevance
to the research being
conducted. Accuracy (reliably collected &
reported Currency (up-to-date) Impartiality
(obj. coll. & reported)
Approaches to Research
a. Observation, Observing relevant people,
actions & situations E.g. How much of a
particular product consumers purchase, traffic patterns
Mechanical Observation TVJ – Rising Stars, Kings &
Queens, Dancing Dynamites
Scanners at Supermarkets.
Do you know of any other type being used?
b. Survey Research
Gathering of data by asking questions
Knowledge, attitudes, preferences, buying patterns
Descriptive research Most widely used approach
Flexibility Advantages used to collect different type of
data
Disadvantage Some persons inability to
answer survey question- - --never thought about what they do or why or cannot remember
Persons may be unwilling to respond to unknown interviewers & what they consider private information
-Resent intrusion May give answers they think
interviewers want.
Single Source data system
Electronic monitoring systems - link consumers expend. to television advertising & promotion
(using TV meters with what they buy in stores
(store check out scanners
Approaches to Research
Approaches to Research
Experimental Research The gathering of primary data by
selecting matched groups of subjects, giving them different treatments, controlling unrelated factors and for checking for differences in group responses.
Eg. A comp introduces a new product they may use different prices in different parts of the country to test consumers response.
E.g. Burger King May have different prices in Kingston & Ocho Rios
Advantages Contact Methods -includes mail,
telephone personal interviews Mail –large qty, low cost per
respondent no interviewer bias
Disadvantage Low return rate All respondents respond in the
same order] Takes longer, no control over
sample
Approaches to Research
Telephone Advantages Best for gathering information
quickly & greater flexibility Respondents can ask for
explanation to questions or not answer
Reponses are usually higher – more controlled because the interviewer can seek persons with specific characteristics.
Disadvantages
Higher cost than mail Respondents may or may not
want to answer personal question.
There may be interviewer bias (can skew the questions to obtain particular response
Interviewer may even cheat on questionnaires
Interviewer may not interpret and record respondents’ response objectively
Personal Interviews 2 forms
Individual – in homes, offices, street, malls- offers flexib.
Interviewers probe respondents to elicit more meaningful information – explore issues.
Respondents may be able to view actual products, advt pkg & observer reactions
Group Interviews
Focus group – personal interviewing involves inviting 6-10 people to gather with a trained interviewer to talk about a product, service organ.
The interviewer focuses the group discussion on important issues.
Very popular nowadays
Focus can make use of : Video conferencing links, remote
control TV Camera computer assisted interviewing
Online Marketing Research
Collecting primary data thru internet surveys & online focus groups. (Digiport – Montego Bay)
Sampling A segment of the population
selected for marketing research to represent her population as a whole
3 decisions are required for sampling:
i. Who is to be surveyed (sampling unit)
ii. How many people should be surveyed (sample size -the larger the sample the more reliable the results
iii. (How you choose the people for sampling (procedure)
Method chosen depends on the need of the research project.
Types of sample Research Instruments
2 methods for primary data collection
Questionnaire Commonly used Flexible Open-ended question- all
possible answers Multiple choice scaled
E.g. the most importance consideration in choosing a tertiary is……
Approaches to Research
Open ended questions are useful in exploratory research (what
people think but not necessarily how many people.
Closed ended Provide answers that are easier to
interpret and tabulate.
Care should be taken with the wording of the question and ordering of the question.
Questions should be simple, direct, unbiased, and arranged in a logical manner
First question should create interest
Difficult & personal questions should be asked last.
Researchers use mechanical instrument to monitor consumer behaviour (supermarket)
Implementing the Research Plan
Involves collecting, processing and analyzing information
Check for accuracy & completeness and code analysis
Results – tabulated & computed
Interpreting & Reporting the Findings
Application of the finding in the decision-making process
Computer aided techniques may be used for more detailed findings.
Measuring Current DemandOne very important reason For conducting market
research
to identify potential marketing opportunities.
When a company finds an attractive market it must carefully estimate that market’s:-
1. Current size
2. Future potential
Companies can lose profits by overestimating or underestimating the market:
• overly optimistic estimates of current or future demand can result in costly overcapacity or excess inventories.
• Underestimating demand can mean missed sales and profit opportunities.
A. CURRENT SIZE
Measurement of Current Market Demand
For this demand marketers need three (3) important pieces of information:
I. Total market demand
II. Area market demand
III. Actual sales and market shares
Measurement of Current Market Demand I. Total market demand
Definitions:i) Total market demand-
The volume of a product or service that would be boughtby a defined customer group in a defined geographicarea in a defined time period in defined marketingenvironment under defined level and mix of industrymarketing effort. (Kotler & Armstrong,2008)
Measurement of Current Market Demand
Definitions:
ii) Primary Demand
Total demand for
product/service class or
form
iii) Selective Demand
Demand for a given brand of product or service
Total market demand (cont’d)
According to Fig.1.1 Market minimum (Q1) this would take place without stimulated marketing activities.
As expenditure increase then demand will be positively impacted.
Measurement of Current Market Demand
Total market demand (cont’d)
However, expenditure beyond a certain point
would not stimulate further demand hence:
Market Potential:
This relates to the upper limit of market demand.
Estimating total market demand
Common way to do this is as follows:
Q=n*q*pWhere :Q = total market demandN = number of buyers in
the marketq = quantity purchased
by average buyer per year
p = price of an average unit
Thus:
If 20 million buyers of bottled water each year, with an average buyer buying 60 bottles per year @$50, then the total market demand for bottled is :
20,000,000*60*$50 = $60billion
II. Estimating Area Market Demand
In selecting the best sales territories, companies need to estimate the market potential (upper limit for market demand) for different cities, states and countries.
Two commonly used methods are:
i) Market build up method (for business goods)
ii) Market factor Index method (consumer markets)
i) Market Build up or Index Method
(consumer markets
Procedure: Identify all the potential
buyers in each business market
Then estimate their potential purchases.
Estimating Area Market Demand
ii) Market Index factor
Procedure:
Identify all the potential buyers in each consumer market
estimate their potential purchases.
Estimating Area Market Demand
ii) Market index factor
A common example used by Sales & Marketing
Management –Survey of Buying Power, is the
Buying Power Index (BPI).
This estimates the buying power (ability to buy)
for a region.
Estimating Area Market Demand Market index factorThis is based on three
(3) factors :- area’s share of the
total population
- Effective buying income
- Retail sales
Thus:
BPI= .2* % of Nat. pop.
+ .5*% of buy. Income
+.3% of Nat. ret. sales
Estimating Area Market Demand Market index factor
E.g: If a soft drinks manufacturer looks at St. Ann area and finds that .5596% of Nat. pop. is within this region &
.5984% of nation’s effective buying power is also from this region along with .6594% of the nation’s retail sales.
Then
BPI=
(.2*.5596)+(.5*.5984)
+(.3*.6594) =.6089
Therefore St. Ann would account for .6089% of the
total potential demand for soft drinks in the Island
III. Estimating Actual Sales & Market Shares
A company must
identify its competitors and
estimate their sales
This will provide a
greater understanding of
the position of the firm
in the industry as it
relates to market share.
Total sales information can be acquired from:
a) Document and reports published by trade associations.
b) Marketing research firms that audit total sales and brand sales
B. FUTURE POTENTIAL
Forecasting future Demand
Definition:
‘This relates to the art of estimating future demand by anticipating what buyers are likely to do under given conditions.’
Forecasting future Demand
Companies commonly use a three step approach
to forecast sales:
i) Macroeconomic Forecast (environmental forecast)
ii) Industry forecast (Trade Ass. & Mktg firms)
iii) Company Sales forecast (past sales info.)
Forecasting Future Demand
All forecasts are built on:
‘what people say’, Involves the use of
surveys of buyers’ opinion
‘what people do’, Involves the use of
test markets for product/services and measure buyer response
‘what people have done’.
b. Involves analysis of past buying activities and behaviour and/or using various statistical tools to forecast sales from past records
SUMMARY
• Current and future demand measures are important in providing information to the marketer about the opportunities that exist in the marketplace.
• Market potential estimates and industry and company sales forecasts are important for the development of corporate marketing strategies and products objectives.
• Middle management decisions regarding size and allocation of marketing expenditures depend heavily on sales forecasts.
Review and Discussion
Explain the importance of information to the company and its understanding of the marketplace
Explain the steps in the Marketing research process
Marketing information has no value unless it is used to make better decision, explain how companies can analyze and distribute marketing information.
What are some of the unique issue facing marketers in terms of public policy, ethics
How can marketers use technology to improve marketing. Identify some weaknesses of this method.
Consumer Markets and
Consumer Buyer behaviourLecture # 3Lecture # 3
January 2012January 2012
Class Objectives
• Identify the Major Models of Consumer Behaviour
• Outline the Major Characteristics Affecting Consumer Behaviour
• Distinguish the Major Consumer Buying Roles
• Explain the Buyer Decision Process
Model of Consumer Behaviour
ConsumerPsychology
MotivationPerceptionLearningMemory
Other Stimuli
EconomicTechnologicalPoliticalCultural
ConsumerCharacteristics
Cultural SocialPersonal
MarketingStimuli
Products & services Price, DistributionCommunications
BuyingDecisionProcess
Problem recognitionInformation searchEvaluation ofAlternativesDecisionPost-purchasebehavior
Purchase Decision
Product choiceBrand ChoiceDealer ChoicePurchase AmountPurchase timingPayment Method.
CONSUMER BUYING BEHAVIOUR
Marketers are forced to understand and be cognizant of the buying behavior of the consumer, especially with today’s technologically savvy and well informed consumers.
Consumer buyer behaviour refers to:
the buying behaviour of final consumers – individuals and households who buy goods and services for personal consumption. All of these final consumers combine to make up the consumer market.
CONSUMER BUYING BEHAVIOUR
Consumer market refers to all the individuals and households who buy or acquire goods and services for personal
consumption.
Consumers may make many buying decisions every day and hence consumer buyer behaviour and the consumer market are very dynamic. Marketers can study actual consumer purchases to find out what they buy, where and how much.
Consumer’s buying behavior is impacted by:
1. Consumer characteristics
2. Consumer Psychology
Consumer purchases are influenced strongly by cultural, social, personal and psychological characteristics.
CONSUMER BUYING BEHAVIOUR
1.Consumer characteristics
I.) Cultural
II). Social
III). Personal
2. Consumer psychology
I). Motivation
II). Learning
III). Perception
IV). Memory
1. Consumer Characteristics
Cultural Factors
These refer to beliefs, perceptions, values, wants and normative patterns of behavior that is transmitted to the individual by society from family and other important institutions.
Culture is the most basic cause of a person’s wants and behaviour. Human behaviour is largely learned.
Culture is transmitted from
generation to generation via:
i) Family
ii) Church
iii) School
iv) Groups
v) Media
vi) Peers
Consumer CharacteristicsCulture
Impact on marketing:
Both culture and subculture will impact the buying behaviour of consumers.
Consumer products/services choice, use and buying patterns are are overwhelming impacted by the cultural exposure of the consumer.
Impact on marketing:
Companies that are able to absorb multicultural activities and strategies in their overall marketing programs are at an advantage in capitalizing on the great potential of this factor
Consumer CharacteristicsSocial
Social factors
Social forces represents all the forces that will allow for the social development and maturity of the individual. They are closely intertwined in the cultural background of the individual.
These include:
Reference groups
Social roles
Status
family
1. Consumer Characteristics Social
Reference groups
All the groups that have direct or indirect impact on an individual’s attitudes and behavior
Groups with direct influence are membership groups and are two types:
i) Primary -family, friends, neighbours,
co-workers, etc.
ii) Secondary - religious, professional groups,
etc.
1. Consumer Characteristics Social
Impact on marketing:Reference groups will influence consumers in three (3) ways:
i) Exposing individuals to new lifestyles, behaviors and experiences that will impact attitude towards brands, products, etc.
ii) Creating pressure for conformity which may impact product choice, brand and usage rate.
ii) Exposing individuals to groups that they are hoping to belong or whose values they reject.
1. Consumer Characteristics Social
Social roles and status
An individual membership in a group will assign him roles (activities) and each role carries a status.
1. Consumer Characteristics -Social
Impact on marketing:
Consumers will select products that symbolizes and will communicate their roles and ultimately their status in society.
Marketers can maximize on this in branding and positioning of products/services to the consumer.
1. Consumer Characteristics Social
FamilyThis can be categorized as the most powerful
institution of consumer buying in any society.
Family structure and organization are implications of socio cultural orientations.
1. Consumer CharacteristicsSocial
The consumer behaviour is determined by the families that they were exposed to (family orientation) and this behavior is transferred to the family they create (family procreation)
Impact on marketing:
Changes in family size and structure will result in changes in the buying behavior of the consumer.
1. Consumer Characteristics -
Personal factors
These include:
1. Age, stage, and life cycle (baby Boomers)
2. Occupation and economic circumstances
3. Personality and self concept
4. Lifestyles and value.
1. Consumer Characteristics Personal
Impact on marketing:
A. People’s purchasing pattern and choice as it relates to products/services will reflect changes as they move from age to age and as they move through life events situations like marriage, childbirth, retirement, etc.
B. Economic situations can impact product choice and ultimately demand. One’s occupation may be a strong indicator of product consumption pattern.
1. Consumer Characteristics Personal
Impact on marketing:
C. Each person possesses personality characteristics and self concept that will impact his/her buying behavior. Brands are chosen base on how well the brand personality is in sync with the consumer’s personality.
Brand Personality- this refers to the mix of human traits that can be attributed to a particular brand.
1. Consumer Characteristics Personal
Consumers will more than often select brands that will have brand personality that are consistent with their own:
- Actual self- Ideal self concept- Others’ self concept
1. Consumer Characteristics Personal
Impact on marketing:
D. Lifestyles and values also help to shape consumers’ taste and buying patterns.
Lifestyle relates to an individual’s pattern of living in the
world as expressed in activities, interests and opinions.
Marketers can aim the brand more closely to reflect the
consumer’s lifestyle or changes within the lifestyle.
2. Consumer Psychology
Consumer psychology can be divided into the following factors impacting consumer behavior:
a. Motivationb. Perceptionc. Learningd. Memory
2. Consumer Psychology Motivation
Motivation‘A motive is a need that is sufficient to cause to cause a
person to act’
Kotler,P. (2006)
Numerous theories have been tabled to explain this concept in general which can generally be applied to consumer behaviour. They include:
Motivation‘A motive is a need that is
sufficient to cause to cause a person to act’ Kotler,P. (2006)
Numerous theories have been tabled to explain this concept in general which can generally be applied to consumer
behaviour. They include:
Maslow’s Theory of needs
Hertzberg’s Two-factor Theory
Freud’s Theory
2. Consumer Psychology Motivation
Maslow’s Theory of needsProducts/services ultimately fit into the overall plan, goals and lives of the consumer base on their situation in the hierarchy of needs.
Hertzberg’s Two-factor TheoryIn selling products, marketers should increase satisfiers and decrease dissatisfiers in order to attract customers.
2.Consumer Psychology Motivation
Freud’s Theory
Product can meet deeper innate needs of consumer based on motives.
Products/services also represent different things to consumer based on the projected needs by the marketer.
2.Consumer Psychology Perception
PerceptionProcess by which an individual selects, organizes, and interprets input information to give meaning and greater understanding of the world.
It is perception and not reality that consumers respond to which will impact their behavior in the marketplace or marketspace.
2.Consumer Psychology Perception
As it relates to perception there is :
- Selective attention
- Selective distortion
- Selective retention
- Subliminal perception
2. Consumer Psychology
Learning
Learning relates to permanent change in behavior.
Memory
Information and experiences that individuals encounter throughout their lives.
Model of Consumer Behaviour
ConsumerPsychology
MotivationPerceptionLearningMemoryOther Stimuli
EconomicTechnologicalPoliticalCultural Consumer
Characteristics
Cultural SocialPersonal
MarketingStimuli
Products & services Price, DistributionCommunications
BuyingDecisionProcess
Problem recognitionInformation searchEvaluation ofAlternativesDecisionPost-purchasebehavior
Purchase Decision
Product choiceBrand ChoiceDealer ChoicePurchase AmountPurchase timingPayment Method.