Marketing Research Turning information into action

What’s in a Movie’s Name? Three movies’ initial and ultimate titles: Shoeless Joe became Field of Dreams Teenie Weenies became Honey, I Shrunk the Kids 3000 became Pretty Woman Is research on movie titles expensive? YES IT IS!! But, what is more expensive? A bad title that can kill a movie and cost a studio millions of dollars. Big budget films can cost as much as $70 million. Market research has resulted in other types of changes to movies as well.

Marketing Research is.... the process of defining a marketing problem or opportunity, systematically collecting and analyzing information, and recommending actions to improve an organization’s marketing activities.

The Goal of Marketing Research Management is faced with many choices involving possible marketing actions. The goal of marketing research is to provide management with actionable information that will allow managers to make better decisions and ultimately reduce risk.

Types of Marketing Research Techniques –Surveys –Experiments –Observation Function –Exploratory. Preliminary research conducted to clarify the scope and nature of the marketing problem. –Descriptive. Designed to describe basic characteristics of a given population. –Causal. To identify cause-and-effect relationships among variables

Marketing Research Process Marketing is conducted on the basis of the scientific method. –Reliability. The ability to replicate research results under identical environmental conditions –Validity. Whether or not the research measured what was intended to be measure.

Marketing Research Process Step 1Exploratory Research Step 2SurveyExperiment ObservationSampling Step 3 Step 4 Data collection / Analysis Conclusions / Actions

Exploratory Research Secondary and primary data Focus Group. Informal interview session in which 6 to 10 persons, relevant to the research project, are brought together in a room with a moderator to discuss topics surrounding the marketing research problem. Depth interviews are detail individual interviews with people relevant to the research project.

Research Design The basic framework for finding a solution to the problem. Outlines the methods and procedures for collecting and analyzing the required information. The design includes: source of information to be used, research methods, sampling plan, schedule and cost of research.

Research Methods (descriptive and causal) Survey. Is a technique used to generate primary data by asking people questions and recording their responses on a questionnaire. Surveys can be conducted by: mail, telephone, personal interview and internet

Research Methods (descriptive and causal) Experiment. Involves the manipulation of an independent variable (cause) and the measurement of its effect on the dependent variable (effect) under controlled conditions.(Market test) Observation. Involves watching, either mechanically or in person, how people behave.

Data Collection One method of collecting data in by sampling. There are two basic ways of sampling from a population: 1.Probability sampling involves using precise rules to select the sample such that each element of the population has a specific known chance of being selected. Probability samples can be very representative of a particular population. 2.Nonprobability samples may be used when time and budget are limited. They use arbitrary judgments to select the sample. With this method it is not known“how” representative a population might be.

Conclusions Researcher’s job is to interpret the information and make conclusions with regard to managerial decision making. Management must make a commitment to act. The solution should be monitored to ensure intended results occur.

Ethical issues Failure to report problems with research results because of incomplete data. Reporting only favourable but not unfavourable results. Using deception to collect information. Breaching the confidentiality of respondents and/or personal data if anonymity or nondisclosure was guaranteed.

Information Technology Information technology involves designing and managing computer and communication networks to provide an information system to satisfy an organization’s needs for data storage, processing, and access.

How Marketing Researchers & Managers Use Information Technology to Turn Information into Action Computer and communication network Databases Internal External Global sources Trade associations Canadian Census Internet Single-source services Customer orders Customer characteristics Inventory Sales calls Promotions Models to analyze, organize interpret, and present data Queries - who buys? - how much? - why? Results Marketing researcher or manager at desktop computer

Market or Industry Potential. Refers to the maximum total sales of a product by all firms to a segment under specified environmental conditions and marketing efforts Sales or Company Forecast. Refers to what one firm expects to sell under specified conditions for the uncontrollabe and controllable factors that affect the forecast. Market & Sales Forecasting

Two Basic Approaches to Forecasting Top-Down Forecast Buildup Forecast TOP-DOWN BUILDUP

Top-down forecast It involves subdividing an aggregate forecast into its principal components. The “Canadian Markets” survey, published annually by the Financial Post is a widely used source to estimate retail sales by region The “Buying Power Index” (BPI) calculates the estimated percent of retail sales of a particular retail store.

Buildup forecast It involves summing the sales forecast of each of the components to arrive at the total forecast. It is widely used when there are identifiable components such as products, product lines, or market segments.

Specific Sales Forecasting Techniques Judgments of the Decision Maker direct forecast lost-horse forecast Survey of Knowledgeable Groups survey of buyers’ intentions forecast sales force survey forecast jury of executive opinion forecast survey of experts forecast Statistical Methods Trend Extrapolation Time & Cost - +

Judgments of the Decision Maker Direct forecast. Involves estimating the value to be forecast without any intervening steps Lost-horse forecast. –Starting with the last known value of the item being forecast –Listing the factors that could affect the forecast –Assessing whether they have a positive of negative impact –Making the final forecast

Survey of Knowledgeable Groups Survey of buyer’s intentions forecast. Involves asking prospective customers whether they are likely to buy the product during some future time period. Sales force survey forecast. Involves asking the firm’s sales force to estimate sales of their product during some future time period. Jury of executive opinion forecast. Involves asking knowledgeable executives inside the firm about likely sales of their product. Survey of experts forecast. Involves asking experts on a topic to make a judgment about some future event

Statistical Methods Trend extrapolation. Is the best known statistical method, involves extending a pattern observed in past data into future. When the pattern is describe with a straight line, it is known as “Linear Trend Extrapolation”. To perform a linear trend extrapolation: –Plot the sales revenue data from past time periods –Fit a straight line within these points –Extend the line to the future time periods to project future values.

Linear Trend Extrapolation of Sales Revenues of Xerox, Made at the Start of 1995 Actual values available before forecast is made Linear trend extrapolation forecast Actual values after forecast is made Actual Forecast 2004 Sales revenue ($ billions)