1. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University CHAPTER 7 Turning Marketing Information into Action 7 - 1

2. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 8-5 After reading this chapter you should be able to: Identify the four-step marketing research approach leading to marketing actions. Describe how secondary and primary data are used in marketing, including the uses of questionnaires, observations, experiments, and panels. 7 - 2

3. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University After reading this chapter you should be able to: Be able to identify and correct typical problems in designing questions for a questionnaire. Understand how information technology enables information systems to be used to link massive amounts of marketing information to meaningful marketing actions. Recognise alternative methods to forecast sales and use the lost-horse and linear trend extrapolation methods to make a simple forecast. 7 - 3

4. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University The Role of Marketing Research To place marketing research in perspective, we can describe: 1.what it is, 2.some of the difficulties in conducting it and 3.the four steps marketing executives can use in conducting marketing research. What Is Marketing Research? 7 - 4

5. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University What Is Marketing Research? Marketing research is the process of defining a marketing problem and opportunity, systematically collecting and analysing information, and recommending actions to improve an organisation’s marketing activities. Although marketing research isn’t perfect at predicting consumer reaction, it can reduce risk and uncertainty to help marketing managers take more effective marketing actions. 7 - 5

6. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Why Good Marketing Research Is Difficult Often marketing researchers face difficulties in asking consumers questions about new, unknown products. Imagine if you, as a consumer, were asked about your personal hygiene habits. Even though you knew the answer, would you reveal it? When personal or status questions are involved, will people give honest answers? A task of marketing research is to overcome difficulties like these and obtain as much information as needed to make reasonable estimates about what consumers will or won’t buy. 7 - 6

7. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Four-Step Marketing Research Approach Marketers have tried to improve the results of their research by using more formal, systematic approaches such as that shown in Figure 7–1. This four-step sequence starts with: 1.defining the problem carefully. 2.developing a research plan for collecting the most appropriate information to try to solve the problem. 3.Collecting the relevant data and finally; 4.Developing a report to management that converts the data into findings and recommendations. 7 - 7

8. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University The Marketing Research Process 7 - 8

9. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Boy with Fisher-Price toy How do you do marketing research with kids? 7 - 9

10. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What is marketing research? 2.What are the four steps marketing researchers use to help develop marketing actions? 3.1. Marketing research is the process of defining a marketing problem an opportunity, systematically collecting and analysing information, and recommending actions to improve an organisation’s marketing activities. 4.2. The four-step sequence is: (1) define the problem; (2) develop a research plan; (3) collect the relevant data; and (4) develop a report that converts data into findings and recommendations. 7 - 10

11. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Step 1: Define the Problem The first part of defining a problem involves two key elements: –setting the research objectives and –identifying possible marketing actions suggested by the research. Set the Research Objectives –Objectives are specific, measurable goals the decision maker seeks to achieve in solving a problem. Identify Possible Marketing Actions –Effective decision makers develop specific measures of success, which are criteria used in evaluating proposed solutions to the problem. –Different research outcomes- based on the measure of success—lead to different marketing actions. 7 - 11

12. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Step 2: Develop the Research Plan The second step in the marketing research process involves: 1.identifying the data needed for marketing decisions. 2.determining how to collect the data. Identify Data Needed for Marketing Decisions –Often marketing research studies amass large amounts of data that are interesting but irrelevant for marketing decisions. –So the study must focus on collecting data that help managers make a clear choice. Determine How to Collect Data –Determining how to collect useful marketing research data is often as important as actually collecting the data. –Two key elements in deciding how to collect the data are concepts and methods. 7 - 12

13. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.How do research objectives relate to marketing actions? 2.What is the difference between concepts and methods? 1.Research objectives are specific, measurable goals the decision maker seeks to achieve in solving a problem. Marketing research is then conducted to identify possible marketing actions. Those implemented can be compared to the objectives to assess their success. 2. Concepts are ideas about products or services whereas methods are the approaches that can be used to collect data. 7 - 13

14. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Step 3: Collect Relevant Information Collecting enough relevant information to make a rational, informed marketing decision sometimes simply means using your knowledge to decide immediately. At other times it entails collecting an enormous amount of information at great expense. Figure 7–2 shows how the different kinds of marketing information fit together. Data, the facts and figures related to the problem, are divided into two main parts: 1.secondary data 2.primary data. 7 - 14

15. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Primary and Secondary Data Collection 7 - 15

16. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Secondary Data Secondary data are facts and figures that have already been recorded before the project at hand. Secondary data is divided into two parts—internal and external secondary data. 1.Data that have already been collected and exist inside the business firm or other organisation are internal secondary data. 2.Published data from outside the organisation is external secondary data. 7 - 16

17. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Oral-B How do you do marketing research on this product? 7 - 17

18. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What are data? 2.What is the difference between secondary and primary data? 3.What are some advantages and disadvantages of secondary data? 1.Data are the facts and figures related to the problem, and are divided into two main parts: secondary data and primary data. 2.Secondary data are facts and figures that have already been recorded before the project at hand, whereas primary data are facts and figures that are newly collected for the project. 3.Advantages: time savings, low cost, and a greater level of detail. Disadvantages: data may be out of date, the definitions or categories may not be right, and not being specific enough for the project. 7 - 18

19. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Primary data The two principal ways to collect new or primary data for a marketing study are: 1.observing people and 2.asking them questions. Both can be accomplished in a variety of ways. Observational methods include: –Mechanical and electronic observation –Personal observation Asking Questions –Surveys/questionnaires. –Focus groups 7 - 19

20. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Focus Group Interviewing Room Why are focus groups better than or not as good as individual interviews? 7 - 20

21. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Weight Watchers Example How might a company like Weight Watchers collect primary and secondary information on consumers who wanted to lose weight? 7 - 21

22. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.A mail questionnaire asks: ‘Do you regularly eat pizza?’ What is the difficulty with this question? 2.Which survey provides the greatest flexibility for asking probing questions: –mail, telephone or personal interview? 3.What is the difference between a panel and an experiment? 1. The word “regularly” is ambiguous. It means different things to different people. 2.Personal interview survey. 3.A panel is a sample of consumers or stores from which researchers take a series of measurements. An experiment involves changing a variable in a customer purchase and seeing what happens. 7 - 22

23. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Making the Most of Information Technology The Internet and the PC provide a gateway to exhaustive sources of information on the competition, the market and the consumer. Sources feeding this database range from internal data about sales and customers to external data from marketing research services such as TV ratings. Information technology involves designing and managing computer and communication networks that can store and process data. Such systems make data accessible to managers who can query a system to analyse information in various ways and with the results make effective marketing decisions. 7 - 23

24. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Step 4: Deliver the Final Report Marketing data and information have little value unless they are translated into findings and recommendations that lead to marketing actions for the marketing managers. How do we prepare the work so that managers can use it to support actions? Step 4 in the marketing research approach involves delivering a useful report to marketing managers by: –Analysing the data, –Presenting the findings –Making recommendations 7 - 24

25. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University How did it go at Tony’s Pizza’s? How are sales going? To see how marketers at Tony’s Pizza assessed this question and the reasons why they came up with this ad, read the text. 7 - 25

26. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.How does data mining differ from traditional marketing research? 2.In the marketing research for Tony’s Pizza, what is an example of (a) a finding and (b) a recommendation? 1. Marketing research develops a hypothesis about a variable and then collects data to see if it’s true. In contrast, data mining extracts hidden predictive information already collected and stored in databases. 2. (a) Figure 7-6A shows a finding that summarises annual sales from 1999 to 2002. (b) Figure 8-6A shows a finding that leads to a recommendation would be to develop an ad that targets children 6 to 12 years old. 7 - 26

27. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Sales Forecasting Techniques The term sales forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. Forecasting or estimating potential sales is often a key goal in a marketing research study. Good sales forecasts are important for a firm as it schedules production. Three main sales forecasting techniques are often used: 1.judgments of the decision maker, 2.surveys of knowledgeable groups and 3.statistical methods. 7 - 27

28. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University 7 Wilson Tennis Racquets How might marketers forecast sales thru 2010? 7 - 28

29. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Sales Forecasting Techniques 1.Judgments of the decision maker: –Probably 99 per cent of all sales forecasts are simply the judgment of the person who must act on the results of the forecast—the individual decision maker. –A direct forecast involves estimating the value to be forecast without any intervening steps. 2.Surveys of knowledgeable groups –Two common groups that are surveyed to develop sales forecasts are prospective buyers and the firm’s salesforce. 3.Statistical methods. –The best known statistical method of forecasting is trend extrapolation, which involves extending a pattern observed in past data into the future. –When the pattern is described with a straight line, it is linear trend extrapolation. 7 - 29

30. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Concept Check 1.What are the three kinds of sales forecasting techniques? 2.How do you make a lost-horse forecast? 3.What is linear trend extrapolation? 1. They are (1) judgments of the decision maker, (2) surveys of knowledgeable groups, and statistical methods. 2.Start with the last known value of the item being forecast, (2) list the factors that could affect the forecast, (3) assess whether the factors have a positive or negative impact, and (4) make the final forecast. 3. Linear trend extrapolation involves extending a pattern observed in past data as a straight line into the future to generate the forecast values for a specific time period. 7 - 30

31. © 2 Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: The Core by Kerin et al Slides prepared by Andrew Hughes, Australian National University Finish Questions? 7 - 31