4.1

Marketing Research The systematic collection, analysis and interpretation of information used to develop a marketing strategy or solve a marketing problem.

You have created a new flavour of candy You have created a new flavour of candy. You asked your 2 best friends what they think about the candy. Both of your friends say it is delicious! Have you conducted market research?

ANSWER: You have not conducted market research because: Information was not systematically collected in an organized way. There was little analysis of your friends responses. There was limited information collected and no sound decisions could be based on it.

Instead, you have gathered some opinions to support your intuitive decision. INTUITIVE DECISION: based on feelings and prior knowledge. It is made automatically and instinctively because the person has made many similar decisions in the past.

Market research provides hard data. HARD DATA: information based on supportable facts, that could be demonstrated to be true.

Why is Marketing Research Needed? Research is used by companies to make decisions on how a company should focus their marketing efforts for their product/service. It can be used to find the best location for a new store, determine what products should be made, or decide whether to advertise.

Examples of research a small business owner can do: Conduct a survey Examine local real estate listings Study the demographic statistics

Marketing Research Firms The business can conduct their own research using their marketing department. A marketing research company can be hired to collect, analyze, and interpret the data. Marketing research companies have the training to perform the statistical analysis needed to make sense of the information collected.

Gathering Secondary Data 4.2

Types of Data Companies work with two types of data when doing their research: Primary data Secondary data

Secondary Data Marketing-research information that has been collected and published by others.

Secondary Research Searching for information collected by others and analyzing and interpreting the data to improve a company’s marketing.

Sources of Secondary Data Books Databases Periodicals Internet Consultants Marketing-research professionals

Using Secondary Data Secondary data can be used by small businesses. They don’t have to hire an outside marketing firm. It is used to help develop a marketing strategy. It is also used to help marketing executives make decisions and solve problems.

Scenario You want to open a small coffee shop in Vaughan. What are some questions that relate to marketing you need answered before open your coffee shop? Where would you look for the answers?

Gathering Primary Data 4.3

Primary Data Unanalyzed, current information collected by a researcher for a specific purpose. There are two types: Qualitative Quantitative

Qualitative Research Used to measure people’s reactions, responses, or feelings toward a given subject or problem. Example: blind taste test, opinion polls.

Quantitative Research Involves collecting data by surveying a representative sample of a target-market population. Examples: surveys, observation, focus-group interviews.

Test Marketing Test Market: an area that mirrors (represents) the demographic composition of the country as a whole. Marketers may use test marketing to test how well a product might sell. They will produce a limited quantity of the product and introduce it in a test market.

Test marketers can place the product in retail stores and monitor the sales. They could change packaging, displays, pricing, or nothing at all about the product in the different stores. The test market could provide a real-world example for the marketer. It helps make the ultimate decision to go ahead and introduce the product or not.

Marketers prefer to keep the test market a secret. Why?

They keep it a secret to make sure customers perform as normal customers. They want people to try things on normal or regular conditions. This could make the results skewed, meaning the test results would not be accurate.

Test marketing is expensive and sometimes does not give accurate results. If another company knows that one company is doing a test market, they might lower their prices to show that the new product would not sell.

Internal Information Sources Sales records - provide data about the popularity of products, changes in sales by season, data on stock turnover, predict future sales. Inventory records - provide additional information on seasonal variations in sales. Advertising and promotional records - provide data concerning the success or failure about different promotions and advertisements. Production records - provide data about peak ordering periods and downtimes. This can help with the scheduling of marketing and advertising plans.

Companies develop databases that provide personal and purchasing data for customers. This can help the company target buyers with sales and promotions.

Businesses use data mining to determine relationships between personal information and purchasing behaviour. Data mining: a research process marketers use to look for unknown connections and patterns from the data and extract useful information. For example: a pizza delivery driver could check which addresses are recycling pizza boxes from other restaurants. The next month, the company could give them coupons.

Surveys A survey is a set of carefully planned questions that are used to gather data. They can be completed in writing or orally. They can be conducted in person, on the telephone, through mail, or on the Internet.

Most surveys use closed-ended questions because they are easy to answer. Yes or no Agree or Disagree A, B, C, D Scale of 1-10

People don’t like to answer questions that are too personal or private. They might lie, refuse to answer the question.

Sometimes, surveys will use open-ended questions. These are sometimes problematic because they are difficult to analyze and take more time to answer.

Random Sampling Researchers using a survey to collect data from a target market must survey a random sample. This gives every person in the target market the same chance of being selected. If the sample is truly random, the study reflects the entire market.

Observation This is a way to collect information by recording the actions of the person being observed without interacting with them. The purpose of observation is to see how people behave instead of asking them to recall their responses. Observation discourages influence by the person conducting the survey or other external factors.

Observation is expensive and can be less effective in large groups because: It is difficult to observe many people at one time Individuals tend to respond to the actions of others.

Eye-Tracking Photography This technology is used to determine where a person first looks when approaching a store display. This can show how long the person focuses on certain details - read an advertisement, looking at a shelf, etc.

Focus-Group Interviews A focus group is a small group of people brought together to discuss a particular product or problem. These people are carefully selected to represent the target market.

The interviewer should be highly skilled at asking questions that will guide discussion and generate ideas. The questions should be brief, straightforward, clear, and simple. Observers may also watch the focus group to detect any behavioural traits.