Arab World Edition Kotler, Keller, Hassan, Baalbaki and Shamma Marketing Management Arab World Edition Kotler, Keller, Hassan, Baalbaki and Shamma Chapter 4 Conducting Marketing Research and Forecasting Demand

Chapter Questions What constitutes good marketing research? What are good metrics for measuring marketing productivity? How can marketers assess their return on investment of marketing expenditures? How can companies more accurately measure and forecast demand? Copyright © 2012 Pearson Education 4-2

The Marketing Research System Chapter Question 1: What constitutes good marketing research? The Marketing Research System Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. P&G has a dedicated Consumer & Market Knowledge (CMK) market research function. Copyright © 2012 Pearson Education 4-3

The Marketing Research System Chapter Question 1: What constitutes good marketing research? The Marketing Research System Marketing research is often done by an outside research firm. There are three categories of marketing research firm: Syndicated-service research firms: gather consumer and trade information which they sell for a fee. Custom marketing research firms: hired to carry out specific projects. Specialty-line marketing research firms: provide specialist service such as field interviews. Copyright © 2012 Pearson Education 4-4

The Marketing Research System Chapter Question 1: What constitutes good marketing research? The Marketing Research System Small companies use creative and affordable ways to conduct research such as: Engaging students or professors to design and carry out projects Using the internet Checking out rivals. Many small companies routinely visit their competitors Copyright © 2012 Pearson Education 4-5

The Marketing Research Process Chapter Question 1: What constitutes good marketing research? The Marketing Research Process Effective marketing research follows the six steps shows in Figure 4.1. Fig. 4.1: The Marketing Research Process Copyright © 2012 Pearson Education 4-6

Step 1: Define the Problem and Research Objectives Chapter Question 1: What constitutes good marketing research? Step 1: Define the Problem and Research Objectives Define the problem Specify decision alternatives State research objectives Copyright © 2012 Pearson Education 4-7

Step 2: Develop the Research Plan Chapter Question 1: What constitutes good marketing research? Step 2: Develop the Research Plan To design a research plan, we need to make decisions about: Data sources: Primary data or secondary data? Research approach – could involve: Observational research Ethnographic research Focus-group research Survey research Behavioral data Experimental research A focus group in session Copyright © 2012 Pearson Education 4-8

Step 2: Develop the Research Plan Chapter Question 1: What constitutes good marketing research? Step 2: Develop the Research Plan (Decisions to make, continued): Research instruments: Questionnaires Copyright © 2012 Pearson Education 4-9

Question Types – Dichotomous Chapter Question 1: What constitutes good marketing research? Question Types – Dichotomous In arranging this trip, did you contact American Airlines?  Yes  No Copyright © 2012 Pearson Education 4-10

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Multiple Choice With whom are you traveling on this trip?  No one Spouse Spouse and children Children only Business associates/friends/relatives An organized tour group Copyright © 2012 Pearson Education 4-11

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Likert Scale Indicate your level of agreement with the following statement: Small airlines generally give better service than large ones.  Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree Copyright © 2012 Pearson Education 4-12

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Semantic Differential Royal Jordanian Airlines Large ………………………………...…….Small Experienced………………….….Inexperienced Modern……………………….…..Old-fashioned Copyright © 2012 Pearson Education 4-13

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Importance Scale Airline food service is _____ to me.  Extremely important Very important Somewhat important Not very important Not at all important Copyright © 2012 Pearson Education 4-14

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Rating Scale Royal Jordanian Airlines’ food service is _____.  Excellent Very good Good Fair Poor Copyright © 2012 Pearson Education 4-15

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Intention-to-Buy Scale How likely are you to purchase tickets on American Airlines if in-flight internet access were available?  Definitely buy Probably buy Not sure Probably not buy Definitely not buy Copyright © 2012 Pearson Education 4-16

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Completely Unstructured What is your opinion of American Airlines? Copyright © 2012 Pearson Education 4-17

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Word Association What is the first word that comes to your mind when you hear the following? Airline ________________________ Royal Jordanian __________________ Travel ________________________ Copyright © 2012 Pearson Education 4-18

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Sentence Completion When I choose an airline, the most important consideration in my decision is: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________. Copyright © 2012 Pearson Education 4-19

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Story Completion “I flew by American Airways a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings.” Now complete the story. __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Copyright © 2012 Pearson Education 4-20

What constitutes good marketing research? Chapter Question 1: What constitutes good marketing research? Question Types – Picture (Empty Balloons) Copyright © 2012 Pearson Education 4-21

Step 2: Develop the Research Plan Chapter Question 1: What constitutes good marketing research? Step 2: Develop the Research Plan (Decisions to make, continued): Research instruments: Qualitative measures Word association Projective techniques Visualization Brand personification Laddering Copyright © 2012 Pearson Education 4-22

Step 2: Develop the Research Plan Chapter Question 1: What constitutes good marketing research? Step 2: Develop the Research Plan (Decisions to make, continued): Research instruments: Technological devices Galvanometers Tachistoscope Eye cameras Audiometers GPS Copyright © 2012 Pearson Education 4-23

Step 2: Develop the Research Plan Chapter Question 1: What constitutes good marketing research? Step 2: Develop the Research Plan (Decisions to make, continued): Sampling plan Sampling unit: Who is to be surveyed? Sample size: How many people should be surveyed? Sampling procedure: How should the respondents be chosen? Contact methods Mail questionnaire Telephone interview Personal interview Online interview Insights from Kraft-sponsored online communities helped the company develop its popular line of 100-calorie snacks. Copyright © 2012 Pearson Education 4-24

Step 2: Develop the Research Plan Chapter Question 1: What constitutes good marketing research? Step 2: Develop the Research Plan Table 4.3: Probability and Nonprobability Samples Copyright © 2012 Pearson Education 4-25

Step 3: Collect the Information Chapter Question 1: What constitutes good marketing research? Step 3: Collect the Information Data-collection phase is generally the most expensive and the most prone to error. Problems collecting survey data include: Respondents not at home/not contactable Respondents refuse to cooperate Respondents give biased or dishonest answers Interviewers are biased or dishonest Copyright © 2012 Pearson Education 4-26

Step 4: Analyze the Information Chapter Question 1: What constitutes good marketing research? Step 4: Analyze the Information Extract the findings by: Tabulating the data Working out averages and measures for spotting patterns Applying statistical techniques and decision models Testing different hypotheses and theories Applying sensitivity analysis to test strength of conclusions Copyright © 2012 Pearson Education 4-27

Step 5: Present the Findings Chapter Question 1: What constitutes good marketing research? Step 5: Present the Findings Researcher presents findings relevant to the major marketing decisions facing management. Researchers are often asked to add their opinion and recommendations, to act as consultants. Copyright © 2012 Pearson Education 4-28

Step 6: Make the Decision Chapter Question 1: What constitutes good marketing research? Step 6: Make the Decision Many organizations use a marketing decision support system (MDSS) to help marketing managers make better decisions. A MDSS is a coordinated collection of data, systems, tools, and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and the environment and turns it into a basis for marketing action. Copyright © 2012 Pearson Education 4-29

Table 4.5: The Seven Characteristics of Good Marketing Research Chapter Question 1: What constitutes good marketing research? Table 4.5: The Seven Characteristics of Good Marketing Research Copyright © 2012 Pearson Education 4-30

Overcoming Barriers to the Use of Marketing Research Chapter Question 1: What constitutes good marketing research? Overcoming Barriers to the Use of Marketing Research Many companies fail to use marketing research sufficiently or correctly. Reasons for this include: A narrow conception of the research Uneven caliber of researchers Poor framing of the problem Late and sometimes incorrect findings Personality and presentational differences Copyright © 2012 Pearson Education 4-31

Measuring Marketing Productivity Chapter Question 2: What are good metrics for measuring marketing productivity? Measuring Marketing Productivity Marketing metrics are the set of measures that helps marketers quantify, compare, and interpret marketing performance. Copyright © 2012 Pearson Education 4-32

What are good metrics for measuring marketing productivity? Chapter Question 2: What are good metrics for measuring marketing productivity? Marketing Metrics Companies should ask themselves five questions to review how they measure their marketing performance: Do you routinely research consumer behavior (retention, acquisition, usage) and why consumers behave that way? Do you routinely report the results of this research to the board in a format integrated with financial marketing metrics? In those reports, do you compare the results with the levels previously forecasted in the business plans? Do you also compare them with the levels achieved by your key competitor using the same indicators? Do you adjust short-term performance according to the change in your marketing-based asset(s)? Copyright © 2012 Pearson Education 4-33

Table 4.6: Sample Marketing Metrics Chapter Question 2: What are good metrics for measuring marketing productivity? Table 4.6: Sample Marketing Metrics Copyright © 2012 Pearson Education 4-34

Marketing-Mix Modeling Chapter Question 3: How can marketers assess their return on investment of marketing expenditures? Marketing-Mix Modeling Marketing-mix models analyze data from a variety of sources, such as retailer scanner data, company shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of specific marketing activities. Copyright © 2012 Pearson Education 4-35

Chapter Question 3: How can marketers assess their return on investment of marketing expenditures? Marketing Dashboards A customer-performance scorecard records how well the company is doing year after year on customer-based measures. A stakeholder-performance scorecard tracks the satisfaction of various constituencies who have a critical interest in and impact on the company’s performance including employees, suppliers, banks, distributors, retailers, and stockholders. Copyright © 2012 Pearson Education 4-36

Box 4.1: Sample Customer-Performance Scorecard Measures Chapter Question 3: How can marketers assess their return on investment of marketing expenditures? Box 4.1: Sample Customer-Performance Scorecard Measures Copyright © 2012 Pearson Education 4-37

Fig. 4.2: Marketing Measurement Pathway Chapter Question 3: How can marketers assess their return on investment of marketing expenditures? Fig. 4.2: Marketing Measurement Pathway Copyright © 2012 Pearson Education 4-38

Fig. 4.3: Example of a Marketing Dashboard Chapter Question 3: How can marketers assess their return on investment of marketing expenditures? Fig. 4.3: Example of a Marketing Dashboard Copyright © 2012 Pearson Education 4-39

Forecasting and Demand Measurement Chapter Question 4: How can companies more accurately measure and forecast demand? Forecasting and Demand Measurement The Measures of Market Demand Fig. 4.4 shows 90 different types of demand measurement. But there are productive ways to break down the market, for example: Potential market Available market Target market Penetrated market Fig. 4.4: Ninety Types of Demand Measurement Copyright © 2012 Pearson Education 4-40

How can companies more accurately measure and forecast demand? Chapter Question 4: How can companies more accurately measure and forecast demand? A Vocabulary for Demand Measurement Market demand Market forecast Market potential Company demand Company sales forecast Company sales potential Copyright © 2012 Pearson Education 4-41

Fig. 4.5: Market Demands Functions Chapter Question 4: How can companies more accurately measure and forecast demand? A Vocabulary for Demand Measurement Fig. 4.5: Market Demands Functions Copyright © 2012 Pearson Education 4-42

How can companies more accurately measure and forecast demand? Chapter Question 4: How can companies more accurately measure and forecast demand? Estimating Current Demand Marketing managers want to estimate: Total market potential Use: chain-ratio method Area market potential Use: market-buildup method, or multiple-factor index method Industry sales and market shares Identify competitors and estimate their sales Copyright © 2012 Pearson Education 4-43

How can companies more accurately measure and forecast demand? Chapter Question 4: How can companies more accurately measure and forecast demand? Estimating Future Demand How do companies develop their forecasts? Survey of buyers’ intentions Composite of sales force opinions Expert opinion Past-sales analysis Market-test method Copyright © 2012 Pearson Education 4-44

Credits Slide 1 Camera Press Ltd: Richard Wayman Slide 3 Press Association Images: Wilfredo Lee / AP Slide 8 Alamy Images: Adams Picture Library t / a apl Slide 24 Alamy Images: Jeff Greenberg Slide 34 “What does marketing success look like?”, Marketing Management, Vol 10 (1), pp.12–18, (Ambler, T., 2001), copyright © American Marketing Association. Reproduced by permission of AMA and the author Slide 30 Adapted from Patrick LaPointe, Marketing by the Dashboard Light – How to Get More Insight, Foresight, and Accountability from Your Marketing Investments. © 2005, Patrick LaPointe