MARKETING RESEARCH The Research Process 1

Marketing Research: Definition and Purpose Many definitions of Marketing Research: “Marketing research is the systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the company.” [Philip Kotler “the systematic gathering, recording and analyzing of all data about problems relating to the marketing of goods and services.” [The American Marketing Association] Basic Purpose of Marketing Research Marketing research reduces uncertainty or error in decision-making. The information collected by conducting marketing research is used for problem solving and decision making in various areas of marketing. 5

Marketing Research ... Can help the marketing manager to: (1) Identify and define marketing problems and opportunities accurately; (2) Understand markets and customers and offer reliable prediction about them; (3) Develop marketing strategies and actions to provide a competitive edge; and refine and evaluate them; (4) Facilitate efficient expenditure of funds; (5) Monitor marketing performance; and (6)Improve the understanding of marketing as a process. Is important because of Rapid changing marketing environment; Need for up-to-date information for strategically important areas; Importance of research as an integral part of better operation. 14

THE MARKETING INFORMATION SYSTEM AND MARKETING RESEARCH Marketing research is not the only source of information that marketing managers need in making decisions. Information may also be generated by various components of the Marketing Information System (MIS) consisting of a series of interactive components (Figure 1.1). There are four subsystems of the MIS: internal reports, marketing intelligence, marketing research, and marketing decision support. 12

THE MARKETING INFORMATION SYSTEM

When Marketing Research may not be necessary Marketing research is almost always problem-oriented. Whether to conduct marketing research depends on the manager’s experience and wisdom; nature of decision situation [repetitive or atypical]; degree of uncertainty; and the value and importance of the research. Marketing research may not be necessary if: Information is available/outcomes known. Insufficient time for marketing research. Non-availability of resources. Cost Vs Value of the Research. Outcomes known. 23

MAIN DIVISIONS OF MARKETING RESEARCH 1. Market and Sales Research 2. Product Research 3. Price Research 4. Distribution (Place) Research 5. Promotion Research. 27

Types of Research II Combinations of types such as applied qualitative research, basic primary research are common A sample of questions commonly answered by conducting primary applied research include: What price should we charge for our product? What distribution channels should be used? How well does the product match up with the competitor’s product? How effective is the company’s advertising? How will the consumers receive this new product? What percentage of market penetration does Product X have? What is Product X’s image in the consumer’s mind? 25

Qualitative Vs Quantitative Research Qualitative research involves collecting, analyzing, and interpreting data by observing what people say or do. Uses a smaller number of individuals and ‘observes’ them for a time span of between 1 and 2 hours. -----“soft approach” Quantitative research is the traditional mainstream of marketing research. It is also called “survey research”. Involves the use of questions and large number of respondents within a brief span of time, say 15 to 45 minutes. Its purpose is very specific-- e.g. a nationwide survey on the Road Pricing System for cars. The ‘hard approach’ to marketing research. 26

THE MARKETING RESEARCH PROCESS Every research project is different and unique. However, research procedures and activities are common and constitute the marketing research process . This process: is an well-organized sequence of ten steps involved in the systematic collection and analysis of marketing data. provides a description of how a marketing investigation is designed and implemented, and helps to guide the execution of a research project. is interactive, a researcher may not follow the ten steps exactly in the order presented here. 4 4

Ten Steps in the Marketing Research Process 1. Define the Problem 2. Establish Research Objective 3. Determine Research Design 4. Identify Information Needs and Sources 5. Determine Methods of Data Collection 6. Design Instrument for Data Collection 7. Determine Sample Plan and Sample Size 8. Collect Data 9. Analyze Data 10. Prepare and Present Final Report 5 5

Step 1: Define the research problem I The very first, and the most important step in research: “A problem well-defined is half solved” Nature of the problem determines the type of study to conduct. Symptoms, for example, declining sales, profit, market share, or customer loyalty are not problems. A research problem must be accurately and precisely defined, otherwise the task of designing a good research difficult. Marketing problems may be difficulty-related or opportunity-related. For both, the prerequisite of defining the problem is to identify and diagnose it. Conduct situation analysis. It provides the basic motivation and momentum for further research. 7 7

Step 1: Define the research problem II Get the right answer to the question: “What exactly does the firm want (or need) to know?” The basic question to address is: “How to know that there is a problem?” Problems may become apparent from: deviation from the business plan, company records and reports, customer complaints and grievances, conversations with company employees, and observation of inappropriate behavior or conditions in the firm; the success of the firm’s competitors, and published materials reporting issues such as, changes in market or environmental trends, new government regulations, anticipated changes in the economy, etc.) 9 9

Step 1: Define the research problem III Once the symptoms of a problem are detected.. Conduct some initial fact finding to determine the nature of the true problem. Talk to others about the problem and conducting a preliminary literature search on the topic. In the initial stage, a problem may be recognized in a very broad and general form only. This may restrict the research program from being comprehensively designed. Both the researcher and the marketing manager (or the research client ) need to work together to formulate the problem into a precise and definite statement. This fact-finding exercise helps the researcher to refine his educated guess to a more accurate problem statement. 10

Step 2: Establish Research Objectives “If you do not know what you are looking for, you won’t find it” Research objectives are related to and determined by the problem definition. In establishing research objectives, the researcher must answer the following questions: i) What specific information should the project provide? ii) If more than one type of information will be developed from the study, which is the most important? and finally, iii) What are the priorities? When specifying research objectives, development of hypotheses, might be very helpful. When achieved, objectives provide the necessary information to solve the problem. 10 11

Step 3: Research Design 3. Research Design step involves the development of a research plan for carrying out the study. There are a number of alternative research designs. The choice will largely depend on the research purpose. 11 14

Secondary information Primary information Step 4: Specify the information required. Step 5: Design the method of collecting the needed information. 4. After defining the problem the researcher must determine what kind of information will best meet the research objectives. Secondary information Primary information 5. Marketing research information may be collected in many ways: via mail, telephone, fax, Internet, or personal interview. using consumer panels, consisting of individuals who have agreed to provide purchasing and media viewing behavior.

Step 6: Design the questionnaire. A primary responsibilities of a marketing researcher is to design the data collection instrument or questionnaire in a manner so that it is easily understood by the respondent and administered to them. 13 15

Step 7: Decide on the sampling design Step 7: Decide on the sampling design. Step 8: Manage and implement the data collection. The researcher must determine the criteria that would enable a respondent to take part in a study. The sampling design must result in the proper sample of respondents being selected. Different sampling designs are available to researchers. The researcher must properly manage and oversee the data collection process. If interview method is used, the researcher must train interviewers and develop procedures for controlling the quality of the interviewing. [This is not necessary if survey methodology is used, where the research instruments are completed by the respondents. ] 15 16

Step 9:Analyze and interpret the results Step 9:Analyze and interpret the results. Step 10: Communicate the findings and implications. The ‘raw’ research data needs to be edited, tabulated and analyzed to find the results and to interpret them. the method used may be manual or computer based. The analysis plan follows from the research objective of the study. Association and relationships of variables are identified and discussed in the light of the specific marketing problem. The researcher has to submit a written report and often make an oral presentation to management or the client. In conducting all the marketing research activities; the marketing researchers must adhere to ethical standards. 16 17

Marketing Problems Versus Research Problems Not all marketing problems are researchable. To clearly define a researchable problem, the researcher must define the scope of the problem during the initial investigation, and try to determine probable cause-and-effect relationships between the variables by answering the following questions: What is (are) the symptom(s) that indicate(s) that there is (are) a problem (s)? What is (are) the likely cause(s) of the problem? What information will be needed to find a solution to the problem? What possible course(s) of action may be taken if information is available? 19 19

Phrasing a Researchable Problem I A marketing problem that can be researched, must be ‘translated’ or written into a form that includes: A relationship between two (or among several) variables. Each variable is operationally defined, A population for the research is implied or identified. Consider the observation, “We need to find why our store’s image seem to be have gone down?” This “problem” is not researchable because it does not clarify (I) the relationships that are described; (ii) how the conclusion seems to be have gone down? is reached, and (iii) ‘gone down’ compared to what? 21 22

Phrasing a Researchable Problem II This research problem suffers because the terms are not specifically defined. When “image” is referred to, what does it mean? The number of customer that frequent the store? The number of complaints lodged by customers? The store’s market share? Or what? Similarly, what does “gone down” actually mean? Is it referring to reduction in the number of people frequenting the store? Or what? Finally, what population is being implied? Does it refer to all sales to all customers or particular types of customers? 23

Operational Definitions of a Variable It is a definition that is determined by the operations needed to measure the variable in question. A term may not have only one, universal meaning. In the statement, “I want to buy a car”, the variable ‘car’ is not operationally defined. A car may mean, among others, a sedan, a sports car, a pick-up or a mini van; it may also refer to an American, or a Japanese built car. Hence just saying car could be misleading. One must be specific as to what it exactly means. Operational definitions reduce ambiguity. 22 24

Variables and Constructs A “variable” is a factor that: (i) causes some other factor(s) to vary, and (ii) may assume different numerical values. Price is a variable since it can cause sales levels to vary and may assume different numerical values. A “Construct” is a variables with special interpretation. Constructs are concepts that are deliberately invented or adopted for a special scientific purpose. In statistical analysis, a variable is generally identified by a symbol, such as X or Y. If a researcher is using SPSS, or other computer packages, he or she may use the name of the variable itself or its abbreviated form e.g., ‘age’ ‘marstat’ (for marital status), ‘occupn’ (for occupation), etc. 20 20

Classification of Variables 1.Categorical or Classificatory Variables: have a limited number of values, e.g., gender (male or Female) , marital status (married, single, widowed/ widower) etc. 2.Continuous variables: have an infinite number of values, e.g., temperature, sales in $ or number, profit in $. 3. Dependent Variables: Variables expected to be predicted or explained. 4. Independent Variables: Variables that are expected to influence, predict or explain another. For example, in the following relationship: Income (I) = F (Age, Level of education), Income is a dependent variable; Age and Level of education are independent variables. An independent variable is something that the researcher can control. 21

Constructs Widely Used by Marketing Researchers Marketing Constructs Operational definitions Attitudes towards brands Number of people with positive, negative or neutral feeling Brand Awareness Percent of respondents that have heard of the brand Brand familiarity Consumers that have tried or seen the brand Brand loyalty How many times the respondent bought (used) the product Comprehension of product benefits Respondents opinion as to what the product does to them Demographics Respondents’ age, sex, marital status etc. Past purchase or use Percent of respondents that bought(used) the product/service Psychographics How consumers think and behave Purchase intention Number (%) of respondents planning to buy a product Reach The number (%) of households exposed to an advertisement schedule during a given period of time. Satisfaction How the respondents evaluate the performance of the product or the service 28

RESEARCH PROPOSAL I A research proposal a plan showing step by step description of how a proposed research project will be undertaken. reflects the researcher’s understanding of the problem and ability to conduct the research. If the research is to be conducted through a research agency, the research proposal acts as an important selection criterion. Upon its acceptance, the research proposal becomes the basis for the contract or agreement between the research agency and the client, and serves as a record of what was agreed on. 24 27

RESEARCH PROPOSAL II There is no fixed or standard format for a research proposal as it is dependent on the nature of the specific research project. However, most research proposals contain the following items. 1. Introduction 2. Statement of the Marketing Problem 3. Specification of the Research Objectives 4. Details of the Proposed Research Plan 5. Time schedule 7. Research team