PART
2
CAPTURING
MARKETING INSIGHTS
© Kotler, Keller, Ang, Leong & Tan
Marketing Management - An Asian Perspective
4th Edition
4-1
Chapter
4
CONDUCTING
Marketing Research and Forecasting
Demand
© Kotler, Keller, Ang, Leong & Tan
Marketing Management - An Asian Perspective
4th Edition
4-2
In this chapter, we
address the following
questions:
1. What constitutes good marketing research?
2. What are good metrics for measuring
marketing productivity?
3. How can marketers assess their return on
investment of marketing expenditures?
4. How can companies more accurately
Asian
measure & forecast demand?
© Kotler, Keller, Ang, Leong & Tan
Marketing Management - An
4th Edition
Perspective
4-3
Marketing Research and Forecasting Demand
LG Telecom - differentiated service - each group
- research on customerAsian
value & profitability
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Marketing Management - An
4th Edition
Perspective
4-4
The Marketing Research System
Good marketing research is
characterized by
scientific method, creativity,
multiple research methods,
accurate model building,
cost-benefit analysis,
a healthy skepticism
& an ethical focus
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The Marketing Research System
3 categories
Market Research Firms
1. Syndicated-service
2. Custom marketing
3. Specialty-line
market
© Kotler, Keller, Ang, Leong & Tan
Other ways to
conduct research



Marketing Management - An Asian Perspective
4th Edition
Engage students
Use the Internet
Check out rivals
4-6
The Marketing Research Process
Define problem
& research objective,
Develop research plan,
Collect information,
Analyze information,
Present findings to management
& Make decision
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Marketing Management - An Asian Perspective
4th Edition
4-7
Figure 4.1
The
Marketing
Research
Process
© Kotler, Keller, Ang, Leong & Tan
Marketing Management - An Asian Perspective
4th Edition
4-8
The Marketing Research Process
Step 1: Define Problem, Decision Alternatives &
Research Objectives




Marketing- studies to researcher
Define problem carefully
Survey, forecast, ad evaluation
Marketing researcher - insight customer’s attitudes & buying behavior
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Marketing Management - An Asian Perspective
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The Marketing Research Process
Step 2: Develop the Research Plan


Develop efficient plan - gather information
Design research plan calls for:
Data sources
Research approaches
Research instruments
Sampling plan
Contact methods
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Marketing Management - An Asian Perspective
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The Marketing Research Process
Step 2: Develop the Research Plan - DATA SOURCES
Secondary data

Collected for other purpose & already exist

Low cost & ready availability
Primary data

Data freshly gathered for specific purpose

Procedure - interview people – their feeling
on topic - develop instrument & proceed
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Marketing Management - An Asian Perspective
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The Marketing Research Process
Step 2: Develop the Research Plan – RESEARCH APPROACHES
Primary data collected in 5 ways
1. Observation
2. Focus groups
3. Surveys
4. Behavioral data
5. Experiments
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The Marketing Research Process
A focus group
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The Marketing Research Process
Step 2: Develop the Research Plan – RESEARCH INSTRUMENTS

Marketing researchers - 3 main research
instruments to collect primary data:
1. Questionnaires
2. Qualitative measures
3. Mechanical devices
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Marketing Management - An Asian Perspective
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Table 4.1 Types of Questions
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Table 4.1 Types of Questions
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Questionnaire Dos & Don’ts
1. Ensure questions - not biased
2. Make questions simple & specific
3. Avoid jargon
4. Avoid uncommon or ambiguous words
5. Avoid questions with a negative
6. Avoid hypothetical questions
7. Avoid words that could be misheard
8. Desensitize questions - use response bands
9. Ensure fixed responses don’t overlap
10. Allow for “other” in fixed
response questions
Asian
© Kotler, Keller, Ang, Leong & Tan
Marketing Management - An
4th Edition
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The Marketing Research Process
Step 2: Develop the Research Plan – RESEARCH INSTRUMENTS
Qualitative research techniques
 Unstructured measurement approaches
 Range of responses
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The Marketing Research Process
Step 2: Develop the Research Plan – RESEARCH INSTRUMENTS
Understand customer experience 7 techniques
1. Shadowing
2. Behavior mapping
3. Consumer journey
4. Camera journals
5. Extreme user interviews
6. Storytelling
7. Unfocus groups
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Marketing Management - An Asian Perspective
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Getting into Consumers’ Heads
with Qualitative Research

Common qualitative research approaches:
1) Word associations
2) Projective techniques
3) Visualization
4) Brand personification
5) Laddering
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The Marketing Research Process
Step 2: Develop the Research Plan – SAMPLING PLAN
After research approach & instruments,
design sampling plan
Decide on:
1. Sampling unit
2. Sample size
3. Sampling procedure
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Marketing Management - An Asian Perspective
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Table 4.2
Probability & Non-probability Samples
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The Marketing Research Process
Step 2: Develop the Research Plan – CONTACT METHODS
Once sampling plan is determined,
decide how to contact subject:
Mail Questionnaire
Telephone Interview
Personal Interview
Online Interview
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Pros and Cons of Online Research
Advantages
Inexpensive
Faster
People - more honest online than - personal
or telephone interviews
More versatile
Disadvantages
Samples - small & skewed
Prone to technological problems &
inconsistencies
Asian
4-24
© Kotler, Keller, Ang, Leong & Tan
Marketing Management - An
4th Edition
Perspective
The Marketing Research Process
Step 3: Collect the Information
 Data collection – expensive, prone to
error
 Get right respondents - critical
 Data collection improve - technology
 Protect personal data of respondents
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Marketing Management - An Asian Perspective
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The Marketing Research Process
Step 3: Collect the Information
4 surveys problems:
1.
2.
3.
4.
Respondents not home
Respondents refuse to cooperate
Respondents – biased/dishonest answers
Interviewers biased or dishonest
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The Marketing Research Process
Step 4: Analyze the Information
 Extract findings from collected data
 Tabulate & develop frequency
distribution
 Averages & dispersion computed variables
 Advanced statistical techniques &
decision models
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Marketing Management - An Asian Perspective
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The Marketing Research Process
Step 5: Present the Findings
 The researcher
present findings
relevant to
major marketing
decisions facing
management
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Marketing Management - An Asian Perspective
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The Marketing Research Process
Step 6: Make the Decision
Marketing decision support system (MDSS)
Collection of data, systems, tools & techniques
With software & hardware by which organization
gathers & interprets relevant information
from business & environment & used
for marketing action
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Marketing Management - An Asian Perspective
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Table 4.3 7 Characteristics - Good Marketing Research
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The Marketing Research Process
Overcoming Barriers to the Use of Marketing Research
 Many fail to use marketing research
sufficiently or correctly WHY?
Narrow conception of research
Uneven caliber of researchers
Poor framing of problem
Late & occasionally erroneous findings
Personality & presentational differences
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The Marketing Research Process
Failure to use marketing research properly
led to numerous gaffes:
Eg: Star Wars
 Researcher predicted science fiction film fail
– America - realism over science fiction
– “War” in title - America would stay away
 He gave information, not insight
 Failed to study script - human story - against
space backdrop
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Marketing Management - An Asian Perspective
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Marketing Research in Asia
Marketing research in Asia challenging
WHY?
1. Unreliable/no secondary data
2. Databases not comparable cross-nationally
3. Poor research infrastructure
4. Cultural differences in response
5. Variations in research capabilities
6. High rates of change in marketplace
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Marketing Research in Asia
Solutions:
1. Sequence piloting, adapting & rollout of
surveys regionally
2. External validation of data sources
3. Use samples on future demographic profiles
4. Invest on research capabilities & infrastructure
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Marketing Management - An Asian Perspective
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Measuring Marketing Productivity
 Marketers accountable for investments
 Justify marketing expenditures
Measure Marketing Productivity 2 WAYS:
1. Marketing metrics
2. Marketing mix modeling
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Marketing Management - An Asian Perspective
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Measuring Marketing Productivity
- Marketing Metrics
Marketing metrics
 set of measures - to quantify, compare &
interpret marketing performance
 customer/company-level concerns
– Eg: 3M tracks sales % from recent innovation
 Processes - maximize metrics value
 Measures - marketing dashboard synthesis & interpretation
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Marketing Management - An Asian Perspective
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Table 4.4
© Kotler, Keller, Ang, Leong & Tan
Sample marketing metrics
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Measuring Marketing Productivity
2 scorecards
- Performance & warning signals:
1. Customer-performance scorecard
– Annual performance - customer-based measures
2. Stakeholder-performance scorecard
– Tracks satisfaction of those with critical interest in
& impact on performance
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Marketing Management - An Asian Perspective
4th Edition
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Table 4.5
Sample Customer-Performance Scorecard Measures
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Measuring Marketing Productivity
- Measuring Marketing Plan Performance
 4 tools to check on plan performance:
1. Sales analysis
2. Market share analysis
3. Marketing expense-to-sales analysis
4. Financial analysis
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Measuring Marketing Productivity
- Measuring Marketing Plan Performance
SALES ANALYSIS
 Measure & evaluate actual sales - goals
2 tools:
1. Sales-variance analysis - relative contribution
of factors to gap in sales performance
2. Microsales analysis - products, territories
that failed to produce expected sales
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Measuring Marketing Productivity
- Measuring Marketing Plan Performance
MARKET SHARE ANALYSIS
Market share measured in 3 ways:
1. Overall market share:
–
sales as % of total market sales
2. Served market share:
–
–
sales as % of sales to served market
always > overall market share
3. Relative market share:
–
market share in relation to largest competitor
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Marketing Management - An Asian Perspective
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Measuring Marketing Productivity
- Measuring Marketing Plan Performance
MARKET SHARE ANALYSIS
Assumptions (not true/valid always):
1. Outside forces affect firms- same way
2. Performance - against average of industry
3. New firm- industry– each firm’s market share
falls


Market share decline - deliberate - profits
Market share - fluctuate - many minor reasons
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Marketing Management - An Asian Perspective
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Measuring Marketing Productivity
- Measuring Marketing Plan Performance
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Marketing Management - An Asian Perspective
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Measuring Marketing Productivity
- Measuring Marketing Plan Performance
MARKETING EXPENSE-TO-SALES ANALYSIS





Annual-plan control - company not overspend
-achieve sales goals
Key ratio - marketing expense-to-sales
Find how & where company makes money
Abnormal fluctuations - cause for concern
Period-to-period fluctuations tracked control chart
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Figure 4.2 The Control-Chart Model
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Measuring Marketing Productivity
- Measuring Marketing Plan Performance
FINANCIAL ANALYSIS
 Find profitable strategies beyond sales
 Factors - rate of return on net worth
Return on net worth =
return on assets x financial leverage
 To improve return on net worth
– Increase net profits to assets ratio
– Increase assets to net worth ratio
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Marketing Management - An Asian Perspective
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Figure 4.3
Financial Model of Return on Net Worth
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4th Edition
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Measuring Marketing Productivity
- Measuring Marketing Plan Performance
FINANCIAL ANALYSIS
Return on assets =
profit margin x asset turnover
Improve performance - HOW? 2 ways:
1. Increase profit margin
–
increase sales/cut costs
2. Increase asset turnover
–
increase sales/reduce assets for given sales level
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Marketing Management - An Asian Perspective
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Measuring Marketing Productivity
- Profitability Analysis
 Deep financial analysis – benefits firm
 Determine if any product/marketing
activity- expanded, reduced or removed
 Analyze profitability of: Products,
territories, customer groups, segments,
trade channels, order sizes
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Measuring Marketing Productivity
- Profitability Analysis
MARKETING-PROFITABILITY ANALYSIS
Step 1: Identify Functional Expenses
 Table 4.6 & 4.7
Step 2: Assign Functional Expenses to
Marketing Entities
 Table 4.8
Step 3: Prepare Profit-and-Loss Statement
for each Marketing Entity
 Table 4.8 & Table 4.9
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Table 4.6
Simplified Profit-and-Loss Statement
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Marketing Management - An Asian Perspective
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Table 4.7
Mapping Natural Expenses into Functional Expenses
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Table 4.8
Bases for Allocating Functional Expenses to Channels
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Table 4.9
Profit-and-Loss Statements for Channels
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Marketing Management - An Asian Perspective
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Measuring Marketing Productivity
- Profitability Analysis
DETERMINING CORRECTIVE ACTION
Marketing-profitability analysis
 Only indicate relative profitability of
channels, product etc
 Not to drop unprofitable entities
 Not to show profit if entities dropped
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Measuring Marketing Productivity
- Profitability Analysis
DIRECT VERSUS FULL COSTING
 Allocate full costs OR only direct & traceable
costs to evaluate entity’s performance
3 types of costs:
1. Direct costs
2. Traceable common costs
3. Non-traceable common costs
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Measuring Marketing Productivity
- Profitability Analysis
Full-cost approach

All costs imputed to get true profit
3 major weaknesses:
1. Profit shift if cost allocation replaced
2. Demoralizes managers
3. Weaken real cost control
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Measuring Marketing Productivity
- Profitability Analysis
Activity-based cost accounting (ABC)
 Quantify true profitability of activities
 Refocus from only standard to full cost
 Capture actual costs of supporting
individual products, customers & others
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Marketing Management - An Asian Perspective
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Measuring Marketing Productivity
- Marketing-Mix Modeling
 Marketing-mix models
– Analyze data - effects of marketing
– But not how elements work together
– Eg: Multivariate analyses
– How each marketing element
influences outcomes
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Forecasting & Demand Measurement
 Marketing research - opportunities
 Sales forecasts
– Raise investment, hire workers
– Based on estimates of demand
 Managers need to define market
demand
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Forecasting & Demand Measurement
 Importance of defining market correctly:
– Eg: Coke’s sales believed to be maxed out
– New CEO changed that view
– Coca-Cola: tiny % of fluid world drank daily
– “The enemy is coffee, milk, tea, water”
– Ushered in a huge period of growth
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The Measures of Market Demand
 Companies can prepare up to 90 types of
demand estimates
 Each demand measure - specific purpose
– Eg: Company forecasts regional demand for
major product line to decide whether to set
up regional distribution
 Forecasts also depend on type of market
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Marketing Management - An Asian Perspective
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Figure 4.4 Ninety Types of Demand
Measurement (6 × 5 × 3)
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The Measures of Market Demand
Productive ways to break down market:
1. The potential market
2. The available market
3. The target market
4. The penetrated market
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Marketing Management - An Asian Perspective
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The Measures of Market Demand
- A Vocabulary for Demand Measurement
MARKET DEMAND
Total product volume bought
by defined customer group
in defined geographical area
in defined time period
in defined marketing environment
under defined marketing program
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Marketing Management - An Asian Perspective
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The Measures of Market Demand
- A Vocabulary for Demand Measurement
 Marketing sensitivity of demand
– Distance between market minimum & potential
 Expansible market
– Total size affected by marketing expenditures
 Market penetration index
– Compare current demand to potential demand
 Share penetration index
– Compare current to potential market share
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Marketing Management - An Asian Perspective
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Figure 4.5 Market Demand Functions
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Figure 4.5 Market Demand Functions
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The Measures of Market Demand
- A Vocabulary for Demand Measurement
MARKET DEMAND
MARKET FORECAST
 expected market demand
MARKET POTENTIAL
 market demand from high expenditure
– more effort, little demand
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The Measures of Market Demand
- A Vocabulary for Demand Measurement
MARKET DEMAND
 COMPANY DEMAND
 Estimated share of demand at levels of
marketing in given time period
 COMPANY SALES FORECAST
 Expected sales based on marketing &
environment
 COMPANY SALES POTENTIAL
 Sales limit by demand as marketing increases
relative to competitors
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The Measures of Market Demand
- Estimating Current Demand
TOTAL MARKET POTENTIAL
 Maximum sales to industry in period, given level
of industry marketing & environmental
conditions
AREA MARKET POTENTIAL
 Sales available to territory given a level of
conditions
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The Measures of Market Demand
- Estimating Current Demand
2 methods to assess Area Market Potential:
1. Market-Buildup Method
–
Identify buyers in market & estimate purchases
–
Accurate but not easy to gather
2. Multiple-Factor Index Method
–
Estimate area market potentials
–
Single factor not complete indicator of sales
–
Multiple-factor – each assigned specific weight
–
Numbers are weights - to variable
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Table 4.10
Calculating the Brand Development Index (BDI)
Asian
BDI: Index of brand sales to category
sales
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4th Edition
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The Measures of Market Demand
- Estimating Current Demand
INDUSTRY SALES AND MARKET SHARES


Actual industry sales in market
Competitors & estimate their sales
How?
1. Published total industry sales
2. Buy reports from marketing research
firm - audits total sales & brand sales
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The Measures of Market Demand
- Estimating Future Demand
3-stage procedure - sales forecast
1. Macroeconomic forecast
2. Industry forecast
3. Company sales forecast
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The Measures of Market Demand
- Estimating Future Demand
How do firms develop their forecasts?

–




Internally or buy forecasts
Forecasts built on:
what people say
what people do or
what people have done
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The Measures of Market Demand
- Estimating Future Demand
SURVEY OF BUYERS’ INTENTIONS

Forecasting - Anticipate what buyers do
given conditions

Consumer surveys:
–
Buying intentions
–
Personal finances
–
Expectations about economy
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The Measures of Market Demand
- Estimating Future Demand
SURVEY OF BUYERS’ INTENTIONS
Shifts in buying intentions

–
Firms adjust production & marketing
Business buying

–
Surveys done on plant, equipment &
materials
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The Measures of Market Demand
- Estimating Future Demand


Buyer-intention surveys - estimate
demand – product purchase
Value increases if:
1. Cost to reach buyers is small
2. Few buyers
3. Clear intentions
4. Implement intentions
5. Willingly disclose intentions
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The Measures of Market Demand
- Estimating Future Demand
SALES FORCE OPINIONS
 Involve sales to forecast future sales
 Encourage better estimate - incentives
Benefits:
1. Sales reps - insight into trends
2. Reps > confidence in quota & achieve it
3. “Grassroots” forecast - detailed estimates by
product, territory, customer & sales rep
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The Measures of Market Demand
- Estimating Future Demand
EXPERT OPINIONS
 Experts: distributors, suppliers,
consultants & trade associations
1. Buy forecasts - forecasting firms
– More data available & forecasting expertise
2. Invite experts to prepare forecast
 Group-discussion method
 Pooling of individual estimates
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The Measures of Market Demand
- Estimating Future Demand
PAST-SALES ANALYSIS
1.Time series analysis
– past time-series - projects them into future
2.Exponential smoothing
– project sales – use past average & recent sales
3.Statistical demand analysis
– measure impact causal factors on sales
4.Econometric analysis
– equations to describe system & fit parameters
statistically
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The Measures of Market Demand
- Estimating Future Demand
MARKET-TEST METHOD
 Direct-market test
– Buyers purchases not carefully
planned or
– Experts not available/reliable
 Forecast new/established product
sales in a new distribution
channel/territory
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Final discussion
Marketing Debate What is the Best Type of Marketing Research?
Many market researchers have their favorite research approaches or
techniques, although different researchers often have different
preferences. Some researchers maintain that the only way to really
learn about consumers or brands is through in-depth, qualitative
research. Others contend that the only legitimate & defensible form
of marketing research involves quantitative measures.
Take a position:
Marketing research should be quantitative versus Marketing research
should be qualitative.
Marketing Discussion
When was the last time you participated in a survey?
How helpful do you think was the information you provided?
How could the research have been done differently to make it more
effective?
© Kotler, Keller, Ang, Leong & Tan
Marketing Management - An Asian Perspective
4th Edition
4-85
Video Links
Primary Video to watch:
 Burke, Inc. (9:01 min)
Secondary Videos to watch:
 Sony Metreon (8:30 min)
 Wild Planet (9:21 min)
Click here to watch the video clips from the US
Website.
© Kotler, Keller, Ang, Leong & Tan
Marketing Management - An Asian Perspective
4th Edition
4-86