MARKETING RESEARCH: FROM INFORMATION TO ACTION CHAPTER MARKETING RESEARCH: FROM INFORMATION TO ACTION

AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: Identify the reason for doing marketing research. Describe the four-step marketing research approach leading to marketing actions.

AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: Describe how secondary and primary data are used in marketing, including the uses of questionnaires, observations, experiments, and panels. Describe three approaches to developing a sales forecast for a company.

TEST SCREENINGS: LISTENING TO CONSUMERS TO REDUCE MOVIE RISKS What’s in a Movie Name?

TEST SCREENINGS: LISTENING TO CONSUMERS TO REDUCE MOVIE RISKS The Risks in Today’s Blockbuster Movies

THE ROLE OF MARKETING RESEARCH What is Marketing Research? Why Good Marketing Research is Difficult Four-Step Marketing Research Approach

Fisher-Price How do you do marketing research with kids?

FIGURE 8-1 Four-step marketing research approach leading to better marketing actions

1. What is marketing research? Concept Check 1. What is marketing research? A: Marketing research is the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions.

Concept Check 2. What are the four steps marketing researchers use to help develop marketing actions? A: The 4 steps are: (1) define the problem; (2) develop the research plan; (3) collect relevant data; and (4) develop a report to management that converts the data into findings and recommendations.

STEP 1: DEFINE THE PROBLEM Set the Research Objectives Identify Possible Marketing Actions Measures of Success

Toys of the Year How do you discover “hot toys” and why are good forecasts important?

Fisher-Price How do you identify data needed for marketing actions?

STEP 2: DEVELOP THE RESEARCH PLAN Identify Data Needed for Marketing Actions Concepts Methods New-Product Concept Sampling Statistical Inference

1. How do measures of success relate to marketing actions? Concept Check 1. How do measures of success relate to marketing actions? A: Measures of success are criteria or standards used in evaluating proposed solutions to the problem. Different research outcomes—based on the measures of success—lead to different marketing actions.

2. What is the difference between concepts and methods? Concept Check 2. What is the difference between concepts and methods? A: Concepts are ideas about products or services, whereas methods are the approaches that can be used to collect data.

STEP 3: COLLECT RELEVANT INFORMATION Data Secondary Data Primary Data

FIGURE 8-2 Types of marketing information

STEP 3: COLLECT RELEVANT INFORMATION Secondary Data: Internal Product Sales Salesperson Reports Secondary Data: External Census Bureau Business Periodicals Trade Associations Online/Internet Advantages and Disadvantages of Secondary Data

1. What is the difference between secondary and primary data? Concept Check 1. What is the difference between secondary and primary data? A: Secondary data are facts and figures that have already been recorded before the project at hand, whereas primary data are facts and figures that are newly collected for the project.

2. What are some advantages and disadvantages of secondary data? Concept Check 2. What are some advantages and disadvantages of secondary data? A: Advantages include time savings, low cost, and a greater level of detail. Disadvantages are that the data may be out of date, the definitions or categories may not be right, and not being specific enough for the project.

STEP 3: COLLECT RELEVANT INFORMATION Primary Data: Observing Behavior Mechanical, Electronic, and Personal Observation Observational Data Nielsen Media Research: Meter/Diary Mystery Shopper

FIGURE 8-3 Nielsen ratings of the top 10 network primetime television series for the 2004–2005 season through September 18, 2005

Nielsen Media Research “People Meter” What kind of primary data is collected? The “people Meter” collects observational data.

American Idol What determines if a TV show stays on the air?

FIGURE 8-4 Nielsen//NetRatings of the top 10 Internet websites for September 2005

Mystery Shopping How is this marketing research?

Oral-B, Scotch-Brite, and Skechers How would you do marketing research on these products.?

STEP 3: COLLECT RELEVANT INFORMATION Primary Data: Questioning Consumers Questionnaire Data Idea Generation Methods—Coming Up with Ideas Individual Interviews TRU “Me” Exercises Depth Interviews “Cool Hunters” Focus Groups

Mforma How does this firm generate design ideas?

Focus Group and Facility Why collect primary data this way? Focus groups enable marketers to hear and watch consumer reactions to a firm’s and its competitors’ products.

TRU “Me” Exercise snapshot: Mavin Why collect primary data this way?

STEP 3: COLLECT RELEVANT INFORMATION Primary Data: Questioning Consumers Idea Evaluation—Testing an Idea Types of Surveys Personal Interview Mail Telephone E-mail/Fax/Internet

FIGURE 8-A Comparison of three kinds of surveys Marketing researchers must be aware of the trade-offs when collecting primary data through the three main types of questionnaires.

FIGURE 8-5 Typical problems in wording questions

STEP 3: COLLECT RELEVANT INFORMATION Primary Data: Panels and Experiments Panel Experiment Drivers Test Markets Advantages and Disadvantages of Primary Data

How might early marketing research have been done? Wal-Mart Supercenter How might early marketing research have been done?

Concept Check 1. What is the difference between observational and questionnaire data? A: Observational data are facts and figures obtained by watching, either mechanically or in person, how people actually behave. Questionnaire data are facts and figures obtained by asking people about their attitudes, awareness, intentions, and behaviors.

A: personal interview survey Concept Check 2. Which survey provides the greatest flexibility for asking probing questions: mail, telephone, or personal interview? A: personal interview survey

3. What is the difference between a panel and an experiment? Concept Check 3. What is the difference between a panel and an experiment? A: A panel is a sample of consumers or stores from which researchers take a series of measurements over time. An experiment involves changing a variable in a customer purchase and seeing what happens.

STEP 3: COLLECT RELEVANT INFORMATION Making the Most of Information Technology Information Technology Data Mining

FIGURE 8-6 Today’s marketing managers use information from many marketing factors to increase the sales of their products or brands

Consumer Purchasing Products Why is data mining so important?

STEP 4: DELIVER THE FINAL REPORT Analyzing the Data Presenting the Findings Making Recommendations

What findings can be developed from data mining? Tony’s Pizza What findings can be developed from data mining?

FIGURE 8-7 Presenting findings to Tony’s marketing manager that lead to recommendations and actions

FIGURE 8-7A Presenting findings to Tony’s marketing manager

FIGURE 8-7B Presenting findings to Tony’s marketing manager

FIGURE 8-7C Presenting findings to Tony’s marketing manager

FIGURE 8-7D Presenting findings to Tony’s marketing manager

Concept Check 1. What is data mining? A: Data mining is the extraction of hidden predictive information from large databases to find statistical links that suggest marketing actions.

Concept Check 2. In the marketing research for Tony’s Pizza, what is an example of (a) a finding and (b) a marketing action? A: (a) Figure 8-7A shows a finding that depicts annual sales from 2002 to 2005. (b) Figure 8-7D shows a finding (the decline in pizza sales) that leads to a marketing action to develop an ad targeting children 6 to 12 years old.

SALES FORECASTING TECHNIQUES Judgments of the Decision Maker Direct Forecast Lost-Horse Forecast Surveys of Knowledgeable Groups Survey of Buyers’ Intentions Forecast Salesforce Survey Forecast

How might marketers forecast sales through 2009? Wilson Tennis Racket How might marketers forecast sales through 2009?

SALES FORECASTING TECHNIQUES Statistical Methods Trend Extrapolation Linear Trend Extrapolation

FIGURE 8-8 Linear trend extrapolation of sales revenues of Xerox, made at the start of 2000

1. What are the three kinds of sales forecasting techniques? Concept Check 1. What are the three kinds of sales forecasting techniques? A: They are: (1) judgments of the decision maker, (2) surveys of knowledgeable groups, and (3) statistical methods.

2. How do you make a lost-horse forecast? Concept Check 2. How do you make a lost-horse forecast? A: (1) Start with the last known value of the item being forecast, (2) list the factors that could affect the forecast, (3) assess whether they have a positive or negative impact, and (4) make the final forecast.

3. What is linear trend extrapolation? Concept Check 3. What is linear trend extrapolation? A: Linear trend extrapolation involves extending a pattern observed in past data into the future with a straight line.

WHAT’S NEW IN MARKETING RESEARCH? GOING ONLINE

Going Online 1. Click on the “News” link on WorldOpinion’s home page to read about the current news and issues facing the market research industry.

Going Online 2. Click on the “The Frame” link, a set of online articles published by Survey Sampling, International.

FORD CONSULTING GROUP: FROM DATA TO ACTIONS VIDEO CASE 8

VIDEO CASE 8 Ford Consulting Group

VIDEO CASE 8 Ford Consulting Group

VIDEO CASE 8 Ford Consulting Group 1. Study Table 1. (a) How does the situation in the Northeast compare with the other regions in the United States? (b) What appears to be the reason(s) that sales are soft? (c) Write a 150-word e-mail with attachments to Mark Rehborg, your boss, giving your answers to (b).

VIDEO CASE 8 Ford Consulting Group

VIDEO CASE 8 Ford Consulting Group

VIDEO CASE 8 Ford Consulting Group 2. Study Table 2. (a) What do you conclude from this information? (b) Summarize your conclusions in a 150-word e-mail with attachments to Mark, who needs them for a meeting tomorrow with Margaret, the Northeast region sales manager. (c) What marketing actions might your memo suggest?

VIDEO CASE 8 Ford Consulting Group

VIDEO CASE 8 Ford Consulting Group

VIDEO CASE 8 Ford Consulting Group

SUPPLEMENTAL LECTURE NOTE 8-1 WHAT IS “TRUTH” IN REPORTING SURVEY RESULTS? SUPPLEMENTAL LECTURE NOTE 8-1

FIGURE 8-B How ethical is this claim in an advertisement that is based on a survey of doctors? This figure poses the ethical question about reporting survey research results.

TWO BASIC APPROACHES TO FORECASTING SUPPLEMENTAL LECTURE NOTE 8-2

FIGURE 8-C Top-down forecast: Survey of Buying Power This figure poses the ethical question about reporting survey research results.

FIGURE 8-D Build-up forecast: Apple Computer’s product lines This figure poses the ethical question about reporting survey research results.

WEBSITES OF INTEREST TO MARKETING STUDENTS IN-CLASS ACTIVITY 8-1

Websites of Interest to Marketing Students American Marketing Association Career Builder Business Week American Advertising Federation Wall Street Journal iVillage AdForum Pollstar Yahoo! Drudge Report eBay Google Marketing: The Core, 2nd Edition Amazon FirstGov

PEPSI VS. COKE TASTE TEST IN-CLASS ACTIVITY 8-2

New Pepsi Challenge TV Ad

Pepsi vs. Coke Taste Test Challenge

Marketing Research Marketing research is the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions.

Measures of Success Measures of success are criteria or standards used in evaluating proposed solutions to a problem.

Data Data are the facts and figures related to the problem, and are divided into two main parts: secondary data and primary data.

Secondary Data Secondary data are facts and figures that have already been recorded before the project at hand.

Primary Data Primary data are facts and figures that are newly collected for the project.

Observational Data Observational data are the facts and figures obtained by watching, either mechanically or in person, how people actually behave.

Questionnaire Data Questionnaire data are the facts and figures obtained by asking people about their attitudes, awareness, intentions, and behaviors.

Sales Forecast A sales forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts.