1. Marketing Research Decision-Support Systems, and Sales Forecasting
Chapter 8
Marketing Research Decision-Support Systems, and Sales Forecasting

2. Chapter Objectives
Describe the development of the marketing research function and its major activities.
Explain the steps in the marketing research process
Distinguish between primary and secondary data and identify the sources of each type.
Explain the different sampling techniques used by marketing researchers.
Identify the methods by which marketing researchers collect primary data.
Explain the challenges of conducting marketing research in global markets.
Outline the most important uses of computer technology in marketing research.
Explain how the use of information technology, particularly marketing decision support systems (MDSSs), can enhance and refine market research and it’s impact on decision making.
Identify the major types of forecasting methods.

3. The Marketing Research Function
Marketing research: the process of collecting and using information for marketing decision-making
Development of the Marketing Research Function
First organized marketing research project done by N.W. Ayer in 1879
First commercial research department in the U.S. established by Charles C. Parlin for the Curtis Publishing Co. in 1911
Parlin counted soup cans in garbage to convince the Campbell soup Company that working-class families would buy canned soup

4. L'Oreal Kids
Using Marketing Research to Match New Products to Potential Customers.
The Tangle Free Shampoo and the Bottle Design Resulted From Research Among Mothers and Children.

5. Who Conducts Marketing Research
The size and organizational form of the marketing research function is typically tied to a given company’s structure
Many firms depend on independent marketing research firms

6. Types of questions Marketing Research can help answer

7. Syndicated Services
Organizations that regularly provide a standardized set of data to all customers
Nielsen
IRI

8. Full-Service Research Suppliers
Organizations that contract with clients to conduct complete marketing research projects

9. Limited-Service Research Suppliers
A marketing research firm that specializes in selected activities like:
Field or telephone interviews
Data-processing
Focus groups

10. Customer Satisfaction Measurement Programs
Procedure for measuring customer feedback against customer satisfaction goals and developing a plan of action for improvement
Figure 8.2
Research Designed to Assess Levels of Customer Satisfaction

11. The Marketing Research Process

12. Step 1: Define the Problem
Avoid confusing symptoms of a problem with the problem itself
The problem(s) should be agreed upon by all concerned parties
Doing so helps to keep everyone concerned in agreement and to keep the project focused on solving the problem(s)
Doing so also helps to prevent the all-too-common tendency to spend resources attempting to answer “interesting, but not necessary” questions

13. Step 2: Conduct exploratory research
An Informal investigation seeking to discover the cause of a problem by discussing it with informed internal and external sources
Company records such as sales and profit analyses
Competitive data
Using Internal Data
Sales records, Financial statements, and Marketing cost analyses
Sales analysis

14. Step 3: Formulate a Hypothesis
Hypothesis: a tentative explanation for some specific event – a statement about the relationship among variables that carries a clear implication for testing this relationship
Sets the stage for more in-depth research by further clarifying what researchers need to test
Not all marketing research tests specific hypotheses

15. Step 4: Create a Research Design
Research design: a series of decisions that, taken together, comprise a master plan or model for conducting marketing research
Must ensure that the study will measure what the marketer intends to measure
Must also ensure an appropriate selection of respondents

16. Step 5: Collect Data
Secondary data is data from previously published or compiled sources (e.g. Census data)
Almost always less expensive to gather
Less time is usually necessary to locate and use it
Primary data refers to data collected for the first time specifically for a marketing research study
Can provide richer, more detailed information than secondary data

17. Step 6: Interpret and Present Research Information
Findings must be presented to decision-makers in a format that allows them to make effective judgments
Cardinal rule of presenting marketing research requires that it assists decision-making rather than being an end in itself

18. The Research Report and Presentation: Linking the Study and the Research User

19. Marketing Research Methods

20. Secondary Data Collection
Government Data
Nation’s most important source of marketing data
Most frequently used government statistics
Census information available at no charge
TIGER System: Topographically Integrated Geographic Encoding and Referencing System P.265
The system combines topographic features like railroads, highways, and rivers with census data such as household income figures

21. Persuading People to Participate in Census 2000

22. Secondary Data Collection
Private Data
Encyclopedia of Associations
Urich’s Guide to International Periodicals
Sales & Marketing Management’s Annual Survey of Media Markets
Dialog’s ABI/Inform
CompuServe’s Knowledge Index
Find/SVP’s FindEx, the Directory of Market Research Reports, Studies, and Surveys
Starch Readership Reports
A. C. Nielsen’s SalesNet

23. Harris InfoSource
One of many providers of secondary data

24. Secondary Data Collection
Online Sources of Secondary Data
Cyberspace sometimes simplifies the search for secondary data
A Web-based research project can cost less, and can yield significantly faster results than offline research
Caveat Emptor should guide Internet searches for secondary data

25. Bureau of Labor Statistics

26. Sampling Techniques
Sampling: the process of selecting survey respondents or other research participants
Population (universe): total group that researchers want to study
Census: a collection of data on all possible members of a population or universe

27. Probability sample: sample that gives every member of the population a known chance of being selected
Simple random sample – every member of the relevant population has a equal opportunity of selection [draft lottery]
Stratified sample – randomly selected sup samples of different groups represented in the total sample [opinion polls, groups share divergent views]
Cluster sample – a sample in which researchers select areas [clusters] from which to draw respondents
Non-probability sample: arbitrary grouping that produces data unsuited for most standard statistical tests
Convenience sample – respondents selected who are readily available [mall intercepts]
Quota sample – a sample that is divided to maintain representations for different segments [three McDonalds users, two Burger King users, one Wendy’s user]

28. Primary Research Techniques

29. Primary Research Techniques
Observation Method
Researchers actually view, or watch, the overt actions of the research subjects
Useful in helping to understand how consumers actually behave in certain situations
Can be as simple as counting passing cars or as sophisticated as people meters recording household TV-viewing habits
Interpretive Research – a researcher observes a customer or group of customers in their natural setting [grocery shoppers]. Their behavior is interpreted based on an understanding of the social and cultural characteristics of that setting

30. Survey Method
Telephone Interviews
An inexpensive and quick method for obtaining a small quantity of relatively impersonal information
Relatively high response rates
Limitations include:
Only simple, clearly worded questions draw appropriate responses
Personal information difficult to obtain
Respondents can’t view pictures
Caller-ID

31. Survey Method
Personal Interviews
Best means for obtaining detailed information about consumers
Interviewer can explain confusing or vague questions
Offer Good Flexibility
Mall intercepts
Limitations:
Slow
Expensive

32. Survey Method
Focus Groups
A Focus Group is an information gathering procedure in marketing research that typically brings together 8 to 12 individuals to discuss a given subject
Can provide quick and relatively inexpensive insights
May not produce completely honest responses to questions

33. Figure 8.7
Focus Groups: Insights into Consumer Perceptions

34. Figure 8.8
Benefits of Online Focus Groups

35. Survey Method
Mail Surveys
Cost Effective
Provides anonymity that may encourage respondents to give candid answers
Limitations include:
Typically low response rates
Take a long time to conduct
Questionnaires cannot answer unanticipated questions that occur to respondents as they complete the forms
Complex questions may not be suitable
Bias from nonresponse

36. Survey Method
Fax Surveys
Low response rates and long follow-up times associated with mail surveys have spurred interest in the alternative of faxing survey documents
Faxing provisions may supplement mail surveys
Or, faxing may be the primary method for contacting respondents and obtaining their answers

37. Survey Method
Online Surveys and Other Internet-Based Methods
Growing number of Internet users has sparked interest in going online to conduct surveys and even focus groups
Benefits include the lack of geographic restrictions, faster turn-around time, and dramatically lower costs
Growth of the Internet is creating a need for new research techniques to measure and capture information about website visitors

38. Survey Method
Experimental Method
Scientific investigation in which a researcher manipulates test group(s) and compares the results with those of a control group that did not receive the experimental controls or manipulations
The most common use to date has been test marketing
Major problem with controlled experiments comes from the failure to account for all variables in a real-life situation
Expensive to conduct

39. Conducting International Marketing Research
As corporations expand globally, they need to gather knowledge about consumers in other countries
The basic steps are the same as for domestic studies, however, face some different challenges
A major secondary information source is the U.S. Department of Commerce
Foreign Economic Trends and Their Implications for the United States
Overseas Business Reports

40. Interpretative Research
Observes a customer or group of customers in their natural settings and then interprets their behavior based on an understanding of social and cultural characteristics of that setting
Ethnographic
Focuses on understanding the meaning of a product or the consumption experience in a consumer’s life
Takes time and is expensive

41. Computer Technology in Marketing Research
Marketing Information System (MIS)
A planned, computer-based system designed to provide managers with a continuous flow of information relevant to their specific decisions and areas of responsibility [raw data, i.e. sales reports]

42. Marketing Decision Support System (MDSS)
Consists of computer software that helps users quickly obtain information and apply that information in a way that supports marketing decisions
An MDSS can create simulations or models to illustrate the likely results of changes in marketing strategies or marketing conditions [manipulation of the raw data into graphs, charts, trend lines, etc.]

43. Data Mining
The process of searching through computer files to detect patterns
Focuses on identifying relationships that are not obvious to marketers
The data is stored in a huge database called a data warehouse
Can be an efficient way to make sense of huge amounts of data
Can help create customer profiles, pinpoint reasons for customer loyalty or the lack thereof, analyze the potential returns on changes in pricing or promotion, and sales forecasts

44. Business Intelligence
Process of gathering information and analyzing it to improve business strategies, tactics, and daily operations
Competitive Intelligence
Form of business intelligence that focuses on finding information about competitors using published sources, interviews, observations by salespeople and suppliers in the industry, government agencies, public filings and other secondary sources including the Internet

45. Sales Forecasting
Estimate of company revenue for a specified future period.
Qualitative Forecasting Techniques
Quantitative Forecasting Techniques

46. Qualitative Forecasting Techniques
These techniques rely on subjective data that repots opinions rather than exact historical data.
Jury of Executive Opinion – top executives
Delphi Technique – “Blue Chip” economic forecasts
Sales Force Composite – good starting point
Survey of Buyer Intentions – very subjective, limited application

47. Techniques Benefits Limitations
Jury of executive opinion
Opinions come from executives in many different departments; quick; inexpensive
Managers may lack sufficient knowledge and experience to make meaningful predictions
Delphi technique
Group of experts can accurately predict long-term events such as technological breakthroughs
Time-consuming; expensive
Sales force composite
Salespeople have expert customer, product, and competitor knowledge; quick; inexpensive
Inaccurate forecasts may result from low estimates of salespeople concerned about their influence on quotas
Survey of buyer intentions
Useful in predicting short-term and intermediate sales for firms that serve only a few customers
Intentions to buy may not result in actual purchases; time-consuming; expensive

48. Quantitative Forecasting Techniques
This method uses statistical computations such as trend extensions, computer simulations, and economic models.
Market Tests
Trend Analysis
Exponential Smoothing

49. Techniques
Benefits
Limitations
Market test
Provides realistic information on actual purchases rather than on intent to buy
Alerts competition to new product plans; time-consuming; expensive
Trend analysis
Quick; inexpensive; effective with stable customer demand and environment
Assumes the future will continue the past; ignores environmental changes
Exponential smoothing
Same benefits as trend analysis, but emphasizes more recent data
Same limitations as trend analysis, but not as severe due to emphasis on recent data

50. End of Chapter Eight