BUAD 307 MARKET RESEARCH Lars Perner, Instructor 1
MARKETING RESEARCH AND MARKETING INFORMATION SYSTEMS
• Marketing Information Systems (MkIS)
• Primary vs. secondary data– Advantages and
disadvantages of each
• Marketing research tools
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 2
Learning Objectives
• Appreciate the costs and benefits of research
• Appreciate the uses of both primary and secondary market research
• Appreciate the respective advantages and disadvantages of different primary research methods
• Develop an understanding of research method problems that can lead to misleading or incorrect conclusions.
• Understand the proper sequence of research activities.
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 3
Marketing Research
• An “investment” to reduce uncertainty
• Can help guide decisions on– Whether to enter– Product characteristics– Promotional strategy– Positioning
• Must weigh costs and benefits of research– Money– Time spent
• No perfect method—tradeoffs between methods
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 4
Marketing Information Systems (MkIS)
• Set of procedures and methods for regular collection and analysis of information for marketing decisions– Databases (internal information
—e.g., sales volumes)– Market research
• Primary• Secondary
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 5
Data Mining
• Processing of vast amounts of data to find relationships between variables—e.g.,– Items frequently purchased together
“strategic adjacencies” (items placed together in retail setting)
– Seasonal patterns in sales– Customer segments
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 6
Primary Research Methods
• Surveys• Experimentation• Observation• Focus groups• In-depth interviews• Projective techniques• Physiological Measures• Online research• Scanner data• Conjoint Analysis• Hybrid Methods
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 7
Primary Research Methods
• Exploratory Methods– Observation (can be
more definitive with larger sample sizes and focus on specific behavior)
– In-depth interviews– Focus groups– Projective techniques
• Precision Methods– Experiments– Surveys– Panel– Scanner data
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 8
Choosing a Primary Research Method
Does the question involve OPINIONS or
BEHAVIOR?
Can the respondent answer accurately?
(What someone consciously believes may
differ from “deeper” opinions; beliefs about
hypothetical products may not be well developed.)
OPINIONS
EXPLORATORY or PRECISION research?
YES
FOCUS GROUPS
INDIVIDUAL INTERVIEWS
SURVEYS
EXPLORATORY PRECISION
BEHAVIOR
NO
PROJECTIVEMETHODS
SCANNER DATA (e.g., brand choice, impact of advertising,
previous purchases, competing brands, demographics)
EXPERIMENTATION (determine causality—e.g., impact of product design,
advertising message)
PHYSIOLOGICAL (e.g., determine reactions, attention,
arousal)
OBSERVATION (e.g., how long does the shopper spend? What does he or she look at? Is
anyone else involved?)
Can the relevant behavior be
observed in the customer’s natural
environment?
NOYES
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 9
Surveys
• Forms– Mail (self-administered, single time)– Mail panel (self-administered, multiple surveys
administered over time)– Telephone (from central location)– Mall Intercept– Computer/Internet
• Planned questions– Open-ended– Closed-ended
• Need large sample sizes for precise conclusions
– Small samples will have very large standard errors and thus large margins of error
– E.g., Presidential polls (with only two choices) require a little more than n=1000 to get results accurate to +/- 3%.
SURVEY COSTS:USUALLY LOW
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 10
Characteristics of Some Problematic Questions• Difficult to answer—respondent may
not have knowledge needed– Amounts spent annually on specific
product categories may not be known
• Sensitive (embarrassing)
• Two in one—e.g., “On a scale from 1 to 10, how fast and reliable are Microsoft programs?”
• Leading questions—giving the feeling of the “desired” response– “Do you agree that soft drinks with sugar
are bad for you?”
• Non-exhaustive question
• Non-mutually exclusive answers
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 11
Continuum Scales
• Rather than asking binary (e.g., “Yes” vs. “No”) questions, it is usually better to ask about a matter of degree or extent– E.g., “On a scale from 1-10, with 1 being ‘Not all interested’ and 10
being ‘Extremely Interested,’ how interested are you in fashion?– Asking simply “Yes” or “No” on “Are you interested in fashion?” would
result in people with very little actual interest potentially answering affirmatively
5 4 3 2 1Strongly Neither Strongly Agree Agree Agree Nor Disagree Disagree
Disagree
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 12
Some Areas Suited for Continuum Ratings
• Interest• Purchase
likelihood• Satisfaction/
Dissatisfaction• Brand loyalty• Price sensitivity• Knowledge• Experience
• Involvement• Decision control• Frequency or level of
use• Awareness• Information search• Personality traits• Variety seeking
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 13
Experimentation
• Subjects in different groups treated differently– E.g., for some, “target”
product is given better shelf space
– E.g., some get coupon
• Can help isolate causes• Subject is not biased by
questions—does not know how others are treated
EXPERIMENT COSTS:HIGH
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 14
My Simulated Store…
A shopper in the everyday low price condition…
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 15
Ash’s Instant Coffee Study
GROCERY SHOPPING LIST
Ground beefPotatoesApplesFlourSugarLaundry detergentInstant coffee6 cups of yogurtPaper towelsBananas
GROCERY SHOPPING LIST
Ground beefPotatoesApplesFlourSugarLaundry detergentGround coffee6 cups of yogurtPaper towelsBananas
Respondents were asked to describe their impressions of a housewife based only on her shopping list. These shopping lists differ only on one item.
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 16
Definition
• Confound: An illusion of one variable causing another because of correlation between two variables
• E.g., does having more toys cause children to be more intelligent?
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 17
Some types of confounds
BActual causeIllusory cause
A
A appears to cause B but it is actually B that causes A
Examples:•Diversification and profitability. Diversified firms tend to have higher profit levels. This may be because more profitable firms need to find ways to re-invest profits rather than because diversification causes profitability•Sales of a brand of soda are higher during weeks of heavy advertising. However, advertising is allocated when the stakes are greatest (e.g., during holidays and summer months). Thus, anticipated sales actually cause advertising.
You will NOT be asked to draw these diagrams on the exam or to explain the specifics of the different types of confounds.
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 18
Some types of confounds
B
Actual causeIllusory cause
A
A appears to cause B but both A and B are actually caused by C
Examples:•On the average, the more toys a child has, the higher his or her IQ. Both the number of toys and IQ may be caused by family resources such as income (providing for better nutrition and better education)•Individuals taking anti-depressive medication have higher rates of suicide than the general population. This is because those who take anti-depressive medication are more likely to be depressed. In fact, individuals suffering from depression are less likely to commit suicide than those with depression who do not take medication. •On the average, students who sit in the front of the class end up with higher grades. However, students choose where they sit.
C
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 19
Some types of confounds
B
Actual causeIllusory causeCorrelation
A
A appears to cause B but both A is correlated with C, with C ultimately causing B
Examples:•Sales of laundry detergent are higher during weeks when the brand is advertised. However, when the brand is advertised, there is always a price promotion (temporary price reduction). Most of the sales increase results from the price discount with a much smaller portion coming from advertising. The deeper the discount, the greater the sales.•Members of fraternities and sororities on the average have higher GPAs than people not in the Greek system. There may be some benefits to Greek membership causing higher grades, but members of the Greek system also tend to come from more privileged backgrounds.
C
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 20
Confounds
• What is cause, what is effect, and what is coincidence?
• Correlation is not necessarily cause• “Lurking” factors may be real cause
– Does sitting in front of the room cause higher grades?
– Does Prozac cause suicide?– Do fish-heavy diets cause stomach cancer?– Does fraternity/sorority membership cause
higher grades?
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 21
Some other influences on the relationship between variables
• Restricted range: One population includes only a portion of another or the sample includes only a small portion of the population range—e.g.,
– High school GPA school is a limited predictor of college GPA since students with higher high school GPAs tend to get into more competitive colleges
– Among residents of Rancho Palos Verdes, household income does not predict dental health. In society as a whole, many people have difficulty paying for quality dental care, but most residents of Rancho Palos Verdes are relatively affluent
• “Diluting” variables: Variables not considered “drown out” much of the effect of the variable of interest—e.g.,
– Income is a limited predictor of spending. Although a certain level of income (or wealth) is needed to buy certain things (necessary condition), income is not a sufficient condition. Many high income individuals are rather stingy and many lower income individuals live above their means.
– Ethnicity is a limited predictor of food preferences. Many Caucasians, African-Americans, Latinos, and Native Americans like raw fish.
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 22
Observation
• Looking at consumes in the field—e.g.,– Searching for product category area– Number of products inspected and time
spent on each– Apparent scrutiny of labels or other
information– Involvement of others– Behavior under limiting circumstances
(e.g., time constraints)
OBSERVATION COSTS:LOW TO HIGH
(DEPENDING ON CODING AND ANALYSIS NEEDED)
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 23
Taste Tests
• Not experiments unless– Two or more groups of people are treated differently (e.g.,
get different food version) or– The same person is being treated differently at separate
times (e.g., half the participants receive new formulation, then current; half the participants receive in the opposite order)
• “Triangle” Measure– Each respondent is given three items: One current, one
new, and one duplicate of either old or new– Asked to identify the one that is different and explain why
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 24
Focus Groups
• Groups of 8-12 consumers assembled
• Start out talking generally about context of product
• Gradually “focus” in on actual product
Usually NOT the best
approach. Should
NOT be chosen as
default research
method!
MOST APPROPRIATE
AS EARLYSTAGE METHOD
FOCUS GROUP COSTS:HIGH
(ESPECIALLY FOR THE AMOUNT OF INFORMATION COLLECTED)
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 25
REMINDER
• Focus groups are most useful for identifying issues that should be studied in more detail with more precise methods
• Due to the small sample size and social influence on individual responses, it is difficult to generalize much from focus groups
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 26
In-depth interviews
• Structured vs. unstructured interviews
• Generalizing to other consumers
• Biases– Subtle, inadvertent
feedback
IN-DEPTH INTERVIEW COSTS:
HIGH
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 27
Projective Techniques
• Getting at motivations that may not be consciously known— “Tell a story about this picture.”
• Measurement of attitudes consumers are unwilling to express– It is easier to admit something embarrassing
about someone else
• Consumer discusses what other consumer might think, feel, or do
PROJECTIVE METHODS COSTS:USUALLY HIGH IF PERSONAL INTERVIEWS OR
EXTENSIVEINTERPRETATION IS NEEDED
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 28
Physiological Measures
• Consumer bodily responses are watched at various phases of advertisement or other marketing exposure
• Tracking of– Eye movements
• For areas of focus• For attention, involvement
– Heart rate– Skin conductivity– Brain waves
• State of mind• Attention
PHYSIOLOGICAL METHODS COSTS:
HIGH
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 29
Online Research—Analysis of Customer Search Queries
• Unmet demand—search for product not found on site
• Message comprehension—comparison of search terms to media message
• Consumer vocabulary• Feedback analysis
ONLINE SURVEY COSTS:USUALLY LOW
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 30
Online Surveys
• Conditional branching—direct skip to relevant question
• Quality of response– Time pressures– Willingness to write out answers or respond to
multiple closed-ended questions– Willingness to read and follow instructions is
limited
• Reliability and browser compatibility issues
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 31
Conditional Branching
• Traditional surveys: Have you bought a new car during the last six months? If not, please skip to Question 11.
• Conditional branching: Respondent will be taken to the appropriate question according to answer
• Customization of questions– E.g., consumer lists three brands subsequent
questions ask about these specific brands by name
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 32
Other Online Tools
• “Click Stream Analysis:” Analysis of “clicking” path—how does the consumer get to a desired page or product?
• Shopping cart analysis
COSTS: HIGH START-UP COSTS;LOW VARIABLE COSTS
POSSIBLE WITH DEVELOPEDALGORITHMS
USUALLY LOW
COSTS: HIGH START-UP COSTS;LOW VARIABLE COSTS
POSSIBLE WITH DEVELOPEDALGORITHMS
USUALLY LOW
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 33
Searching for Reports of Personal Experience• Sources
– Blogs (blogsearch.google.com)
– Photos (e.g., Flickr, Webshots, Picasaweb, Google image search)
– Video (e.g., Youtube)
• Cautions– May be “staged” or
sensationalized
– May represent what the writer or photographer wants to show
– May be limited entries on certain “mundane” tasks such as dishwashing
• Some issues– Joy, enjoyment
– Decisions
– Anxiety
– Social setting and influence
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 34
Conjoint Analysis: Determining the Relative Importance of Product Attributes
• Consumers rate several “profiles” (combinations of features)
• Statistical analysis is used to “decompose” ratings into preferences
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 35
Example
Car #1Gas mileage: 30 mpgPrice: $18,200Safety record: AveragePerformance HighReliability Poor
How would you rate car #1 overallon a scale from 1 (Very poor) to7 (Excellent?)
1 2 3 4 5 6 7
Car #2Gas mileage: 20 mpgPrice: $15,200Safety record: ExcellentPerformance PoorReliability Excellent
How would you rate car #2 overallon a scale from 1 (Very poor) to7 (Excellent?)
1 2 3 4 5 6 7
Each subject will evaluate several (usually 16+) combinations. A statistical technique determines the importance of each feature.
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 36
Conjoint Analysis: Advantages
• Reveals ultimate preferences of consumers when competing influences exist
• Able to predict desirability of combinations not actually explored
• Can estimate contribution of each factor and assess its cost effectiveness– Will consumers pay $500.00 to
reduce the weight of a laptop computer by 2 lbs?
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 37
Conjoint Analysis: Disadvantages
• May be difficult for subjects to rate many combinations
• May need a large number of subjects for accurate measurement/sufficient precision
• Must identify relevant attributes and levels in advance
• Subject must know about product category (attributes must be meaningful)
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 38
Types of scanner data
• Supermarket club. This includes purchases by the specific customer when shopping at the respective chain (assuming that the customer presents his or her card). Purchases at other locations are not counted. Demographic information may be of limited accuracy. Shoppers are often motivated to join by large discounts (often 20-30%). This is also a method of price discrimination. Members may be given individualized coupons for possible products of interest. Only available for grocery products.
• Scanner data panels. In some communities, people can sign up to be part of a “panel.” Purchases at all local retailers are included (e.g. supermarkets, gas stations, drug stores, convenience stores). For a given customer, the database also includes TV viewing and demographics. Only available for grocery products.
• Aggregated retail sales records. Records of sales volumes of products by UPC may be available from an assortment of retailers. This information is NOT tied to individual customer data and purchase history. This is available for more types of products.
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 39
Scanner Panel Data
• Panel members in test communities agree to– Swipe a card prior to each purchase– Have purchases matched to
• Demographic profiles• Media/coupon exposure• Promotional status of competing brands• Past purchases
• Problems:– Aggregation over household– Aggregation bias--averages of
disparate segments obscure!– Only available for grocery and
some drugstore products
COSTS: HIGH START-UP COSTS;LOW VARIABLE COSTS
POSSIBLE WITH DEVELOPEDALGORITHMS
USUALLY LOW
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 40
Scanner Data Panel Research(Some of these variables are available for supermarket club data)
TELEVISIONEXPOSURE
DEMOGRAPHICINFORMATION
ANALYSIS
RECORDEDPURCHASES
HOUSEHOLDFILE
Purchase on occasion: Yes, noTime since previous purchasePrevious purchasesCurrent pricePrevious priceCurrent promotional statusPrevious promotional statusCurrent display statusPrevious display statusDisplay status of competing brandsPromotional status of competing brandsCoupon used: Yes, noCoupon available: Yes, noCoupon available for other brands? Yes, noAmount of couponFamily size
OccupationFamily sizeIncomeHome ownership
No. of ads seen by shopperAds seen for competing brands“Split cable”
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 41
SCANNER DATA BASED METHODS OF SEGMENTATION
• Price responsiveness– Price sensitivity (impact of current price on the likelihood of purchase and/or quantity
purchased). The brand elasticity is greater than the product category elasticity.
– Deal proneness (propensity to switch to a non-preferred brand when such a competing brand price promotes through sales, coupons, or other form of discount). [This is one form of limited brand loyalty]
– Purchase acceleration (“stocking up” when an item is on deal—sale and/or coupon)
• Non-price based brand switching – Variety seeking [Another form of limited brand loyalty]
– Accommodation of preferences of different household members
• Shopping practices– Purchase frequency (within product category) (as distinct from price responsiveness
measures listed above)
– Package size preference
• Store and/or retail chain loyalty
BUAD 307 MARKET RESEARCH Lars Perner, Instructor 42
CHOOSING A PRIMARY RESEARCH METHOD
Does the question involve OPINIONS or
BEHAVIOR?
Can the respondent answer accurately?
(What someone consciously believes may
differ from “deeper” opinions; beliefs about
hypothetical products may not be well developed.)
OPINIONS
EXPLORATORY or PRECISION research?
YES
FOCUS GROUPS
INDIVIDUAL INTERVIEWS
SURVEYS
EXPLORATORY PRECISION
BEHAVIOR
NO
PROJECTIVEMETHODS
SCANNER DATA (e.g., brand choice, impact of advertising,
previous purchases, competing brands, demographics)
EXPERIMENTATION (determine causality—e.g., impact of product design,
advertising message)
PHYSIOLOGICAL (e.g., determine reactions, attention,
arousal)
OBSERVATION (e.g., how long does the shopper spend? What does he or she look at? Is
anyone else involved?)
Can the relevant behavior be
observed in the customer’s natural
environment?
NOYES