Chapter One The Nature and Scope of Marketing Research

Copyright © Houghton Mifflin Company. All rights reserved.1 | 2 Chapter Objectives Identify the role of marketing research in strategic decision making Define the process of marketing research Identify the three principles for generating information useful to managers Explain why marketing research requires analysis and interpretation of data

Copyright © Houghton Mifflin Company. All rights reserved.1 | 3 Chapter Objectives (Cont’d) Discuss the relationship between marketing research and decision making Describe the wide variety of applications for marketing research Identify various career opportunities in marketing research

Copyright © Houghton Mifflin Company. All rights reserved.1 | 4 Marketing Research at Volvo The automobile industry is a heavy consumer of marketing research. Conducts approximately 400 marketing research studies annually. Best viewed as part of the new product development process.

Copyright © Houghton Mifflin Company. All rights reserved.1 | 5 Research Topics at Volvo Sales research involves Rating customer satisfaction with products and dealers for both sales and service New product design (i.e., trendier car designs) Image studies Managing customer relationships

Copyright © Houghton Mifflin Company. All rights reserved.1 | 6 Exhibit 1.1 Role of Marketing Research in Strategic Planning and Decision Making

Copyright © Houghton Mifflin Company. All rights reserved.1 | 7 Marketing Strategy Strategic marketing decisions are those decisions directly related to the marketing of goods, services, or ideas to specific customers Those decisions are then formulated into a Marketing Plan.

Copyright © Houghton Mifflin Company. All rights reserved.1 | 8 Marketing Plan A formal document that specifies the organization’s resources, objectives, strategy, implementation, and control efforts in marketing the specific products

Copyright © Houghton Mifflin Company. All rights reserved.1 | 9 Basic Components of the Marketing Plan Identifying marketing opportunities and constraints Developing and implementing marketing strategies Evaluating the effectiveness of marketing plans

Copyright © Houghton Mifflin Company. All rights reserved.1 | 10 Identifying Market Opportunities and Constraints Who are our potential competitors and how strong are their market positions? How satisfied are consumers with current offerings on the market ? Are there any unmet consumer needs? How is our offering likely to be perceived by consumers relative to competitors’ offerings ? Marketing research can help answer these and other questions of interest to marketers

Copyright © Houghton Mifflin Company. All rights reserved.1 | 11 Identifying Marketing Opportunities and Constraints (Cont’d) Identify –Potential customers’ strengths and weaknesses –Consumer satisfaction with current market offerings –Consumer perceptions of the offer relative to competitors Goal –Maintain competitiveness

Copyright © Houghton Mifflin Company. All rights reserved.1 | 12 How the Research Was Conducted –Formal interviews with customers –Requesting servers to be observant of customer likes and dislikes Research Showed –Customers were increasingly looking for low-carb menu items –T.G.I Friday’s joined with Adkins Nutrionals to develop new low carb menu items T.G.I.Friday’s: Using Marketing Research to Identify New Opportunities

Copyright © Houghton Mifflin Company. All rights reserved.1 | 13 Research showed –The primary decision maker was Mom –Mom was interested in satisfying multiple demands from the family This research led to “4forAll,” a totally new concept in pizza Marketing Research to Track Product Performance and Customer Satisfaction of Products and Services

Copyright © Houghton Mifflin Company. All rights reserved.1 | 14 Embracing the Marketing Concept-Need to Gain a Good Understanding of Customers Importance of conducting marketing research in the early stages of formulating marketing strategies –Nokia: N-gage Combination of a phone and handheld gaming system. Insufficient research on customers’ expectations. As a result it required massive redesign that allowed competitors like Sony and Nintendo time to introduce their own products.

Copyright © Houghton Mifflin Company. All rights reserved.1 | 15 Understanding the Competitive Environment Who competes with Netflix? –Competitors both inside and outside the movie rental arena –How should Netflix react to competitive threats?

Copyright © Houghton Mifflin Company. All rights reserved.1 | 16 Developing and Implementing Marketing Strategies Develop an Effective Marketing Mix PricePlace ProductPromotion

Copyright © Houghton Mifflin Company. All rights reserved.1 | 17 Developing and Implementing Marketing Plans Volvo – Your Concept Car (YCC) –Very little research had been conducted on female car buyers –Females purchase 49% of new vehicles and 55% of used vehicles –400 female respondents assisted Volvo in understanding the images and features desired by female car buyers

Copyright © Houghton Mifflin Company. All rights reserved.1 | 18 Evaluating the Effectiveness of Marketing Plans Controlling, or the Control Function –Getting feedback from the marketplace –Taking necessary or corrective actions Example Questions –Is the market share rising/declining/not moving? Why? –Who uses the product? –Are the answers consistent with company goals?

Copyright © Houghton Mifflin Company. All rights reserved.1 | 19 Common Views of Marketing Research Gathering data from markets Conducting customer surveys Determining the needs of customers Evaluating customer response to advertising Gathering sales and market share data of competitors Testing products in the market place Estimating the potential sales of product

Copyright © Houghton Mifflin Company. All rights reserved.1 | 20 Exhibit 1.2 Role of Marketing Research in the Organization/Business

Copyright © Houghton Mifflin Company. All rights reserved.1 | 21 Marketing Research Definition A set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers who are involved with marketing goods, services or ideas

Copyright © Houghton Mifflin Company. All rights reserved.1 | 22 Principles of Marketing Research Principle #1 –Attend to the timeliness and relevance of research Principle #2 –Define research objectives carefully and clearly Principle #3 –Do not conduct research to support decisions already made

Copyright © Houghton Mifflin Company. All rights reserved.1 | 23 Principle # 1: Attend to the Timeliness and Relevance of Research Ford and GM developed extremely successful SUV’s Recent concerns over fuel prices have changed consumers’ perceptions and purchase intentions of SUV’s Volvo, Porsche and Volkswagen entered the SUV market in 2004 after significant investment in R&D conducted prior to the recent shift in consumers opinions

Copyright © Houghton Mifflin Company. All rights reserved.1 | 24 Principle # 2: Define Research Objectives Carefully and Clearly Microsoft e-Home devices –Marketing research demonstrated consumers acceptance of this concept –Implementation was stalled because associated Internet-enabled technologies were not yet available or just entering the market

Copyright © Houghton Mifflin Company. All rights reserved.1 | 25 Sony Mini-disc Players –Successful product in Japan –Launched in the US and failed miserably due to popularity of competing technologies (i.e., Apple iPod) Principle # 3: Do Not Conduct Research to Support Decisions Already Made

Copyright © Houghton Mifflin Company. All rights reserved.1 | 26 The Role of Marketing Research in Analysis and Interpretation Marketing Research can be used to identify “profitable customers” and “not-profitable customers” –Profitable Customers: those who are more likely to spend large amounts of money and become repeat customers –Not-Profitable Customers: those who are more likely to spend less money on each transaction and might not return

Copyright © Houghton Mifflin Company. All rights reserved.1 | 27 Importance of Analysis and Interpretation Few Customers, Large Volume/per Customer Profitable Target Large Number of Customers, Low Volume/per Customer Not-Profitable

Copyright © Houghton Mifflin Company. All rights reserved.1 | 28 Research Results and Management Decisions Kellogg sought foreign markets in which to expand Latvians prefer a hearty plate of sausage, cold cuts,potatoes,eggs, and a few slices of thick, chewy buttered bread Mexicans and Indians prefer hot and spicy breakfasts

Copyright © Houghton Mifflin Company. All rights reserved.1 | 29 Research Results and Management Decisions (Cont’d) Marketing research conducted by Kellogg did not forecast enthusiastic response in the countries—Kellogg decided to pursue these markets, anyway! Kellogg cereals’ appeal is limited to a small health-conscious group Will it work?

Copyright © Houghton Mifflin Company. All rights reserved.1 | 30 Exhibit 1.3 Marketing Research’s Relationship to Decision Making Activity

Copyright © Houghton Mifflin Company. All rights reserved.1 | 31 Marketing Research Applications Gathering data from markets Conducting customer surveys Determining the needs of your customers Evaluating customer response to advertising

Copyright © Houghton Mifflin Company. All rights reserved.1 | 32 Marketing Research Applications (Cont’d) Gathering sales and market share data on your competitors Testing your products in the marketplace Estimating potential product sales

Copyright © Houghton Mifflin Company. All rights reserved.1 | 33 Classification of Marketing Research Basic Research: to generate or create knowledge –Journal of Marketing articles Applied research –To solve a problem –To develop strategies for products and services

Copyright © Houghton Mifflin Company. All rights reserved.1 | 34 Marketing Services Claritas Inc. – Specializes in providing marketing information to companies –Key supplier of information containing the profiles and life-styles of U.S. consumers on a zip code-by-zip code basis –Developed an information base by combining U.S. Census Bureau demographic data with life-style/attitudinal data generated through various regional surveys

Copyright © Houghton Mifflin Company. All rights reserved.1 | 35 How Do You Recruit a Nun? Marketing Research Comes to the Rescue St.Benedictine Convent –Majority of Sisters 70+ years –Inability to attract new recruits Conducted Focus Groups –To determine why they were not able to recruit young members –Research showed people perceived nuns to have a dull existence Launched new ad campaign Recruited an average of three nuns a year

Copyright © Houghton Mifflin Company. All rights reserved.1 | 36 In-house Marketing Research Formal Marketing Department –Centralized: one marketing department for all product lines –Decentralized: separate marketing departments for individual product lines –Hybrid : combination of centralized and decentralized

Copyright © Houghton Mifflin Company. All rights reserved.1 | 37 External Marketing Research Large Commercial Firms –AC Nielsen provides full service planning through recommendations Small Commercial Firms –Specialize in one part of the process –Custom Research Inc. provides marketing research,customer satisfaction, and database marketing services

Copyright © Houghton Mifflin Company. All rights reserved.1 | 38 External Marketing Research (Cont’d) Academic Consultants Professors and students' research projects Trade Associations International trade site (

Copyright © Houghton Mifflin Company. All rights reserved.1 | 39 Exhibit 1.4 Illustrative Centralized Marketing Research Function in a Multibrand Company

Copyright © Houghton Mifflin Company. All rights reserved.1 | 40 Exhibit 1.5 Illustrative Decentralized Marketing Research Function in a Multibrand Company

Copyright © Houghton Mifflin Company. All rights reserved.1 | 41 Exhibit 1.6 Illustrative Mixed-Structure Marketing Research Function in a Multibrand Company

Copyright © Houghton Mifflin Company. All rights reserved.1 | 42 MR at BK – Brand Research and Analysis Department Decentralized Function: Four separate groups within the department help to segment out the research into areas of specialty –Consumer research –Sales analysis group –Competitive/secondary information –Customer satisfaction Centralized Function: Director of the department keeps the 4 groups unified in their goals and task allocation

Copyright © Houghton Mifflin Company. All rights reserved.1 | 43 Careers in Marketing Research The field of marketing research provides a vast array of job opportunities ranging from titles such as –Data Entry Clerk; Tabulation Specialist; Programmer – Interviewer (telephone or field) – Research Analyst – Marketing Research Manager/Director