Decision Support Systems and Marketing Research Lamb, Hair, McDaniel Chapter 8 Decision Support Systems and Marketing Research 2010-2011 CHAPTER 9 Decision Support Systems and Marketing Research Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization.

Chapter 8 Decision Support Systems and Marketing Research Learning Outcomes LO 1 Explain the concept and purpose of a marketing decision support system LO 2 Define marketing research and explain its importance to marketing decision making LO 3 Describe the steps involved in conducting a marketing research project

Chapter 8 Decision Support Systems and Marketing Research Learning Outcomes LO 4 Discuss the profound impact of the Internet on marketing research LO 5 Discuss the growing importance of scanner-based research LO 6 Explain when marketing research should be conducted LO 7 Explain the concept of competitive intelligence

Marketing Decision Support Systems Chapter 8 Decision Support Systems and Marketing Research Marketing Decision Support Systems Explain the concept and purpose of a marketing decision support system Notes: Marketing decision making relies on accurate and timely information. Good information is used to maximize sales, to use scarce company resources efficiently, and to prepare and adjust marketing plans. The system used for gathering marketing information is called a marketing decision support system. LO1

Marketing Decision Support Systems Chapter 8 Decision Support Systems and Marketing Research Marketing Decision Support Systems An interactive, flexible computerized information system that enables managers to obtain and manipulate information as they are making decisions. Characteristics: Interactive Flexible Discovery Oriented Accessible LO1

Marketing Decision Support Systems Chapter 8 Decision Support Systems and Marketing Research Marketing Decision Support Systems The creation of a large computerized file of customers’ and potential customers’ profiles and purchase patterns. The key tool for successful one-to-one marketing. Database Marketing Notes: The fastest-growing use of DSSs is for database marketing. It is usually the key for successful one-to-one marketing, which relies on specific market information. LO1

The Role of Marketing Research Chapter 8 Decision Support Systems and Marketing Research The Role of Marketing Research Define marketing research and explain its importance to marketing decision making LO2

The Role of Marketing Research Chapter 8 Decision Support Systems and Marketing Research The Role of Marketing Research Marketing Research The process of planning, collecting, and analyzing data relevant to a marketing decision. Notes: Marketing research plays a key role in the marketing system. It provides data on the effectiveness of the marketing mix and insights for necessary changes. Marketing research is a main data source for management information systems and DSS. LO2

Marketing Research Studies LO2 Chapter 8 Decision Support Systems and Marketing Research Marketing Research Studies Products Advertising Prices Packages Names and Logos Services Buying habits Colors Uses Awareness Familiarity New concepts Traffic patterns Wants Needs Politics Notes: About $7 billion is spent each year on marketing research in the U.S. Studies include the listings on this slide.

The Role of Marketing Research Chapter 8 Decision Support Systems and Marketing Research The Role of Marketing Research Diagnostic Predictive Descriptive Gathering and presenting factual statements Explaining data “What if?” Notes: Marketing research has three roles: descriptive, diagnostic, and predictive. Descriptive: What is the historic sales trend in the industry? What are consumers’ attitudes toward a product? Diagnostic: What was the impact on sales after a change in the package design? Predictive: “What if questions,” such as how can descriptive and diagnostic research be used to predict the results of a marketing decision? LO2

Management Uses of Marketing Research Chapter 8 Decision Support Systems and Marketing Research Management Uses of Marketing Research Improve the quality of decision making Trace problems Focus on keeping existing customers Understand the marketplace Alert them to marketplace trends Gauge the value of goods and services, and the level of customer satisfaction Beyond the Book NOTE: Supplemental content – not in book. LO2

The Importance of Marketing Research Chapter 8 Decision Support Systems and Marketing Research The Importance of Marketing Research Why marketing research? Improve quality of decision making Trace problems Focus on keeping existing customers Understand changes in marketplace LO2

Steps in a Marketing Research Project Chapter 8 Decision Support Systems and Marketing Research Steps in a Marketing Research Project Describe the steps involved in conducting a marketing research project Notes: The scope of a marketing research project may range from several hundred dollars to millions of dollars. In any case, the same general research process should be followed. LO3

The Marketing Research Process Chapter 8 Decision Support Systems and Marketing Research The Marketing Research Process 1 Collect Data Specify Sampling Procedure Plan Design/ Primary Data Define Problem Analyze Prepare/ Present Report Follow Up 2 3 4 5 6 Notes: Exhibit 8.1 traces the steps in the marketing research process. The research process begins with the recognition of a marketing problem or opportunity. As changes occur in the firm’s external environment, marketing managers must decide on changes to the existing marketing mix. 7 LO3

Sources of Secondary Data Chapter 8 Decision Support Systems and Marketing Research Sources of Secondary Data Government Agencies Trade and Industry Associations Business Periodicals News Media Internal Corporate Information Online Coca-Cola Store When you are asked for your opinion on the Coke Store Web site, is Coca-Cola doing marketing research, or gathering information for a DSS? Read the whole survey before deciding. Which did you pick and why? LO3

Advantages of Secondary Data Chapter 8 Decision Support Systems and Marketing Research Advantages of Secondary Data Saves time and money if on target Aids in determining direction for primary data collection Pinpoints the kinds of people to approach Serves as a basis of comparison for other data LO3

Disadvantages of Secondary Data Chapter 8 Decision Support Systems and Marketing Research Disadvantages of Secondary Data May not give adequate detailed information May not be on target with the research problem Quality and accuracy of data may pose a problem LO3

The New Age of Secondary Information: The Internet Chapter 8 Decision Support Systems and Marketing Research The New Age of Secondary Information: The Internet 1 2 3 4 5 Analyze your topic Test run a word or phrase in a search engine Learn as you go and vary your approach Don’t bog down in strategy that doesn’t work Return to earlier steps better informed Notes: Before the availability of the Internet’s widely accessible information, collection of secondary information was tedious and boring, often requiring visits to the library or communication with government agencies, trade associations or other secondary data providers. By typing a description of the desired secondary data into a Web browser, the Internet may provide a wide range of information. However, keep in mind that the Internet is a self-publishing medium and the information quality may vary. LO3

Marketing Research Aggregators Provide small- to medium-sized companies with information they could not afford to research on their own Increases the revenue generated by large, expensive reports by slicing and repackaging them http://www.marketresearch.com/ http://www.aroq.com/ LO3

Planning the Research Design Chapter 8 Decision Support Systems and Marketing Research Planning the Research Design Which research questions must be answered? How and when will data be gathered? How will the data be analyzed? ? LO3

Chapter 8 Decision Support Systems and Marketing Research Primary Data Information collected for the first time. Used for solving the particular problem under investigation. Advantages: Answers a specific research question Data are current Source of data is known Secrecy can be maintained Notes: The main advantage of primary data is that they will answer a specific research question that secondary data cannot answer. Primary data are current and the source of data is known. Moreover, the information is proprietary. LO3

Disadvantages of Primary Data Chapter 8 Decision Support Systems and Marketing Research Disadvantages of Primary Data Expensive “Piggybacking” may confuse respondents Quality declines if interviews are lengthy Reluctance to participate in lengthy interviews Disadvantages are usually offset by the advantages of primary data. Notes: The cost of primary data may range from a few thousand dollars for a limited survey to several million for a nationwide study. To save money, firms may cut back on the number of interviews, or piggyback studies by gathering data on two different projects using one questionnaire. LO3

Survey Research LO3 Survey Research Chapter 8 Decision Support Systems and Marketing Research Survey Research Survey Research The most popular technique for gathering primary data in which a researcher interacts with people to obtain facts, opinions, and attitudes. LO3

Forms of Survey Research Chapter 8 Decision Support Systems and Marketing Research Forms of Survey Research Focus Groups Executive Interviews Mail Surveys Telephone Interviews Mall Intercept Interviews In-Home Interviews Notes: In home personal interviews: Provide high-quality information, but are expensive because of travel time and mileage costs for the interviewer. Not a popular survey tool. Mall Intercept interviews: Conducted in shopping malls or in a marketing research office in the mall. Surveys must be brief. It is hard to get a representative sample of the population. However, probing is possible. Telephone interviews: Cost less and provide one of the best samples of any traditional survey procedure. Many facilities for telephone interviews utilize computer-assisted interviewing, where information is directly input into a computer application. The federal “Do Not Call” law does not apply to survey research. Mail Surveys: Benefits are the low cost, elimination of interviews, centralized control, and anonymity for respondents. However, mail questionnaires usually produce low response rates. Consequently, the resulting sample may not represent the surveyed population. However, mail panels, consisting of a sample of households recruited to participate for a given period, yield response rates of 70 percent. Executive interviews: Survey involves businesspeople at their offices regarding industrial products or services. This type of interviewing is expensive, due to the process of finding, qualifying, and interviewing respondents. Focus groups: A type of personal interviewing, characterized by seven to ten people gathered in a meeting place. The interaction provides group dynamics, with an interplay of responses yielding richer information than individual interviews. LO3

Questionnaire Design LO3 Open-Ended Question Closed-Ended Chapter 8 Decision Support Systems and Marketing Research Questionnaire Design Open-Ended Question Closed-Ended Scaled- Response An interview question that encourages an answer phrased in respondent’s own words. An interview question that asks the respondent to make a selection from a limited list of responses. A closed-ended question designed to measure the intensity of a respondent’s answer. Notes: Questionnaires contain three basic types of questions: Open-ended questions Closed-ended questions Scaled-response questions. LO3

Beyond the Book Questionnaire Design LO3 Chapter 8 Decision Support Systems and Marketing Research Questionnaire Design On the other hand, unless the researcher designs the closed-ended question very carefully, an important choice may be omitted. Closed-ended and scaled-response questions are easier to tabulate than open-ended questions because response choices are fixed. Beyond the Book As mentioned in the slide, unless a researcher designs closed-ended questions very carefully, important choices may be omitted. For example, suppose a food study asked this question: “Besides meat, which of the following items do you normally add to a taco that you prepare at home?” A varied selection is provided. But suppose a respondent answers by saying, “I usually add a green, avocado-tasting hot sauce” or “I cut up a mixture of lettuce and spinach.” How would you code these replies? As you can see, the questionnaire needs an “other” category. LO3 NOTE: Supplemental content – not in book.

Reasonable terminology Chapter 8 Decision Support Systems and Marketing Research Questionnaire Design Clear and concise No ambiguous language Unbiased Reasonable terminology Only one question Online CreateSurvey.com Design a marketing questionnaire to post on your class Web site using the tools offered by Create Survey. Visit the demo polls on the site for ideas and tips. Online http://www.surveymonkey.com/ LO3

Observation Research LO3 Observation Research Chapter 8 Decision Support Systems and Marketing Research Observation Research Observation Research A research method that relies on three types of observation: people watching people people watching an activity machines watching people Notes: Observation research is the systematic process of recording the behavioral patterns of people, objects, and occurrences without questioning them. LO3

Observational Situations Chapter 8 Decision Support Systems and Marketing Research Observational Situations Situation People watching people People watching phenomena Machines watching people Machines watching phenomena Example Mystery shoppers in a supermarket Observer at an intersection counting traffic Video cameras recording behavior Traffic-counting machine monitoring traffic flow Notes: Observation research depends on watching what people do. It may be conducted by human observers or machines. LO3

Ethnographic Research Chapter 8 Decision Support Systems and Marketing Research Ethnographic Research Ethnographic Research The study of human behavior in its natural context; involves observation of behavior and physical setting. Notes: Ethnographic research comes from the field of anthropology, and is becoming popular in commercial marketing research. Ethnographers directly observe the population they are studying to gain richer insights into the culture and behavior of people. LO3

Virtual Shopping Allows customers to “shop” with realistic complexity and variety Tests can be altered quickly Computer automatically collects data Virtual Grocery Store LO3

Non-Probability Samples Chapter 8 Decision Support Systems and Marketing Research Sampling Procedure Universe Sample Probability Samples Non-Probability Samples Notes: Once the researchers decide how to collect primary data, the next step is to select the sampling procedures being used. Not all possible users of a new product can be interviewed, therefore a firm must select a sample of the larger population. The population or universe must first be defined. Then it is determined if the sample must be representative of the population. If the answer is yes, a probability sample is needed. LO3

Non-Probability Samples Chapter 8 Decision Support Systems and Marketing Research Types of Samples Probability Samples Simple Random Sample Stratified Sample Cluster Sample Systematic Sample Non-Probability Samples Convenience Sample Judgment Sample Quota Sample Snowball Sample Notes: Exhibit 8.4 describes each of these types of samples. LO3

Probability Samples LO3 Probability Sample Random Sample Chapter 8 Decision Support Systems and Marketing Research Probability Samples Probability Sample A sample in which every element in the population has a known statistical likelihood of being selected. Random Sample A sample arranged so that every element of the population has an equal chance of being selected. Notes: The most desirable feature of a probability sample is that statistical rules can be used to ensure that the sample represents the population. One type of probability sample is the random sample—where every element of the population has an equal chance of being selected as part of the sample. LO3

Nonprobability Samples Chapter 8 Decision Support Systems and Marketing Research Nonprobability Samples Nonprobability Sample Any sample in which little or no attempt is made to get a representative cross-section of the population. Convenience Sample A form of nonprobability sample using respondents who are convenient or readily accessible to the researcher. Notes: A nonprobability sample is a sample where little or no attempt is made to get a representative cross section of the population. A common form of nonprobability sample is the convenience sample, a selection of convenient respondents such as employees, relatives, or friends. Because of their lower cost, nonprobability samples are the basis of much marketing research. LO3

Types of Errors LO3 Error when there is a difference Measurement Chapter 8 Decision Support Systems and Marketing Research Measurement Error Error when there is a difference between the information desired and the information provided by research Sampling Error Error when a sample somehow does not represent the target population. Frame Error Error when a sample drawn from a population differs from the target population. Notes: Error is common to all surveys, yet it is often not reported or is underreported. When errors are ignored, misleading results can result in poor information and bad decisions. Whenever a sample is used in marketing research, major types of errors may occur: measurement error and sampling error. Frame error arises if the sample drawn from a population differs from the target population. Random error occurs when the selected sample is an imperfect representation of the overall population. Random Error Error because the selected sample is an imperfect representation of the overall population. LO3

Field Service Firms provide: Chapter 8 Decision Support Systems and Marketing Research Collecting the Data Field Service Firms provide: Focus group facilities Mall intercept locations Test product storage Kitchen facilities Retail audits Notes: Most primary data is collected by marketing research field service firms. Field service firms conduct interviews, provide focus-group facilities, mall intercept locations, test product stores, and kitchen facilities to prepare test food products. LO3

Analyzing the Data LO3 Cross- Tabulation Chapter 8 Decision Support Systems and Marketing Research Analyzing the Data Cross- Tabulation A method of analyzing data that lets the analyst look at the responses to one question in relation to the responses to one or more other questions. Notes: After data is collected, the next step is to analyze data. The purpose of data analysis is to interpret and draw conclusions from the collected data. Data is organized by one-way frequency counts, cross-tabulations, and sophisticated statistical analysis. One-way frequency counts record the responses to a question. They provide a general picture of the study’s results. A cross-tabulation looks at the associations between certain responses, such as association between gender and product choice. LO3

Preparing and Presenting the Report Chapter 8 Decision Support Systems and Marketing Research Preparing and Presenting the Report Concise statement of the research objectives Explanation of research design Summary of major findings Conclusion with recommendations Notes: After data analysis is completed, the report is prepared, and conclusions and recommendations are communicated to management. The report should be tailored to the audience, beginning with a statement of research objectives, followed by a brief explanation of the research design. A summary of major findings is next, followed by a conclusion with recommendations. LO3

Following Up LO3 Were the recommendations followed? Chapter 8 Decision Support Systems and Marketing Research Following Up Were the recommendations followed? Was sufficient decision-making information included in the report? What could have been done to make the report more useful to management? Notes: The final step in the marketing research process is to follow up. The researcher should determine why management did or did not carry out the recommendations of the report. LO3

Impact of the Internet on Marketing Research Chapter 8 Decision Support Systems and Marketing Research Impact of the Internet on Marketing Research Discuss the profound impact of the Internet on marketing research LO4

Impact of the Internet LO4 Allows better and faster decision making Chapter 8 Decision Support Systems and Marketing Research Impact of the Internet Allows better and faster decision making Improves ability to respond quickly to customer needs and market shifts Makes follow-up studies and tracking research easier Slashes labor- and time-intensive research activities and costs Notes: Online Internet marketing research is being used by 88 percent of U.S. research firms. The reasons for its success are shown on this slide. LO4

Advantages of Internet Surveys Chapter 8 Decision Support Systems and Marketing Research Advantages of Internet Surveys Contact with the hard-to-reach Improved respondent participation Personalized questions and data Reduced costs Rapid development, Real-time reporting Notes: Rapid development, real-time reporting: Survey results can be tabulated and broadcast in a much shorter time frame. Reduced costs: Costs can be cut by 25 to 40 percent with results in half the time required for traditional telephone surveys. Personalized questions and data: Personalization allows relevance to each respondent’s own situation, thus speeding the response process. Improved respondent participation: Internet surveys take half as much time to complete as phone interviews and can be accomplished at the respondent’s convenience. Contact with the hard-to-reach: Doctors, management, and high-income professionals are among the most surveyed and the most difficult to reach. Many of these groups are well represented online. LO4

Uses of the Internet by Marketing Researchers Chapter 8 Decision Support Systems and Marketing Research Uses of the Internet by Marketing Researchers Other types of marketing research Conduct focus groups Administer surveys Online Greenfield On-line Find out how online focus groups work by signing up to be a participant. Check out some of Greenfield’s online surveys in the Survey Center. Online http://www.greenfieldonline.com LO4

Methods of Collecting Online Surveys Web Survey Systems Survey Design and Web Hosting Sites Online Panel Providers LO4

Process for Online Focus Groups Chapter 8 Decision Support Systems and Marketing Research Process for Online Focus Groups Build a database of respondents via Web site screening questionnaire Identify qualified individuals via e-mail Develop a discussion guide Moderator runs group by typing in questions online for all to see Environment is similar to a chat room Firm captures the complete text of the focus group LO4

Types of Online Focus Groups Chapter 8 Decision Support Systems and Marketing Research Types of Online Focus Groups Real-time online focus groups Time-extended online focus groups Notes: Real-time online focus groups are live, interactive sessions with four to six participants and a moderator in a chat room format. The session is no longer than 45 to 50 minutes. Time-extended online focus groups follow a message board format and usually last five to ten days. The 15 to 20 participants must comment at least 2-3 times per day and spend 15 minutes a day logged in to the discussion. This format translates into richer content and deeper insights. LO4

Advantages of Online Focus Groups Chapter 8 Decision Support Systems and Marketing Research Advantages of Online Focus Groups Speed Cost-effectiveness Broad geographic scope Accessibility Honesty Do online focus groups offer any advantages over the traditional variety? *In addition to savings on travel, online focus groups often can be accomplished faster than traditional groups because respondents are recruited from online panel members who are qualified to match research criteria. *They completely eliminate the high cost of travel and lodging for several observers, *They provide a way to achieve broad geographical dispersion within each group, *Space, time, and location are no barriers to real-time communication, *They offer a quick, convenient, cost-effective way to talk to a wide variety of people simultaneously, *They promote more direct, honest answers because anonymity virtually eliminates "the peer pressure" often associated with face-to-face groups. LO4

Web Community Research A carefully selected group of consumers who agree to participate in an ongoing dialogue with a particular corporation. Web communities: Engage customers Achieve customer-derived innovations Establish brand advocates Offer real-time results LO4

Role of Blogs in Marketing Research Chapter 8 Decision Support Systems and Marketing Research Role of Blogs in Marketing Research Refined technologies allow companies to mine data available in Internet blogs. Companies can identify the most influential bloggers and learn exactly what they are saying (and how they are saying it). Notes: In addition to the Internet uses shown on this slide, blogs are being used. Products, such as BlogPulse, monitors keywords and phrases, detects authors’ sentiments, classifies data in terms of relevance, and uncovers specific facts and data points about products or services. Another company offering blog monitoring is 3iYing. LO4

Other Uses of the Internet by Marketing Researchers Chapter 8 Decision Support Systems and Marketing Research Other Uses of the Internet by Marketing Researchers Viewing of presentations of marketing research surveys Publication and distribution of reports Data management and online analysis Collaboration between client and research supplier Distribution of requests for proposals (RFPs) and proposals LO4

Scanner-Based Research Chapter 8 Decision Support Systems and Marketing Research Scanner-Based Research Discuss the growing importance of scanner-based research LO5

Scanner-Based Research Chapter 8 Decision Support Systems and Marketing Research Scanner-Based Research A system for gathering information from a single group of respondents by continuously monitoring the advertising, promotion, and pricing they are exposed to and the things they buy. BehaviorScan InfoScan Panel information from Specific groups of people, enables researchers to manipulate variables and see real results Aggregate consumer information on all bar-coded products Notes: Scanner-based research is used for gathering information by monitoring the marketing mix and purchase behavior of a single group of respondents. The two major scanner-based suppliers are Information Resources, Inc. and the A.C. Nielson Company. IRI’s first product is called BehaviorScan, which uses assigned ID cards to track grocery and drugstore purchases of household panel participants. InfoScan is IRI’s tracking service for consumer goods. Data are collected weekly from more than 32,000 supermarkets, drugstores, and mass merchandisers. LO5

Scanner-Based Research BehaviorScan With such a measure of household purchasing, it is possible to manipulate marketing variables, such as television advertising or consumer promotions, or to introduce a new product and analyze real changes in consumer buying behavior. InfoScan Retail sales, detailed consumer purchasing information (including measurement of store loyalty and total grocery basket expenditures), and promotional activity by manufacturers and retailers are monitored and evaluated for all bar-coded products. Data are collected weekly from more than 34,000 supermarkets, drugstores, and mass merchandisers. LO5

Competitive Intelligence Chapter 8 Decision Support Systems and Marketing Research Competitive Intelligence Explain when marketing research should be conducted LO6

When Should Marketing Research Be Conducted? Chapter 8 Decision Support Systems and Marketing Research When Should Marketing Research Be Conducted? Where there is a high level of uncertainty When value of research information exceeds the cost of generating the information LO5

Competitive Intelligence Chapter 8 Decision Support Systems and Marketing Research Competitive Intelligence Explain the concept of competitive intelligence LO6

Competitive Intelligence Chapter 8 Decision Support Systems and Marketing Research Competitive Intelligence An intelligence system that helps managers assess their competition and vendors in order to become more efficient and effective competitors. Competitive Intelligence Online Society for Competitive Intelligence Professionals (SCIP) Find out more about competitive intelligence at the SCIP Web site. Research a career in CI by checking out the job marketplace at SCIP. Online http://www.scip.org LO6

Sources of Competitive Intelligence LO6 Chapter 8 Decision Support Systems and Marketing Research Sources of Competitive Intelligence Internet Company Salespeople Experts CI Consultants Government Agencies UCC Filings Suppliers Periodicals Yellow Pages Trade Shows