The Role of Marketing Research
and Research Process
Chapter 1
The Nature of Marketing Research
• Manager of a food company may ask,
– ‘Will a package change improve my brand image?’
• A competitor may ask,
– ‘How can I monitor my sales and retail trade
activities?’
• Manager in the industrial tool market may
ask,
– ‘To whom am I losing sales? From whom am I
taking sales?’
The Nature of Marketing Research
• All of marketing questions, as well as others
related to specific marketing decisions, require
information about how customers, distributors,
and competitors will respond to marketing
decisions.
• Marketing research is one of the principal tools
for answering such questions because it links the
consumer, the customer, and the public to the
marketer.
The Nature of Marketing Research
Definition of “marketing research”
• The systematic and objective process of generating
information to aid in making marketing decisions.
(1)
• This process includes specifying what info. is required,
designing the method for collecting info., managing
and implementing the collection of data, analyzing the
results, and communicating the findings and their
implications.
The Nature of Marketing Research
Definition of “marketing research”
• The planning, collection, and analysis of data
relevant to marketing decision making and the
communication of the results of this analysis
to management.
(2)
Importance of Marketing Research
to Management
3 functional roles of marketing research:
• Descriptive function includes gathering and
presenting statements of fact.
– What is the historic sales trend in the industry?
– What are consumers’ attitudes toward a product
and its advertising?
Importance of Marketing Research
to Management
3 functional roles of marketing research:
• Diagnostic function includes explanation of
data actions.
– What was the impact on sales when the package
design was changes?
– How can product/service offering be altered to
better serve customers and potential customers?
Importance of Marketing Research
to Management
3 functional roles of marketing research:
• Predictive function includes specification of
how to use descriptive and diagnostic
research to predict the results of a planned
marketing decision.
– How can the firm best take advantage of
opportunities as they arise in the ever-changing
marketplace?
Importance of Marketing Research
to Management
• The unrelenting drive for quality and
customer satisfaction
• Paramount importance of keeping existing
customers
• Understanding the ever-changing
marketplace
BASIC RESEARCH AND
APPLIED RESEARCH
The Nature of Marketing Research
Basic research and applied research
• Basic (pure) research: research conducted to expand
the limits of knowledge, to verify the acceptability of
given theory, or to learn more about a certain
concept.
• Basic (pure) research: aimed at expanding the
frontiers of knowledge rather than solving a specific,
pragmatic problem.
The Nature of Marketing Research
Basic research and applied research
• Applied research: research conducted when a
decision must be made about a real-life
problem.
• Applied research: aimed at solving a specific,
pragmatic problem—better understanding of
the marketplace, determination of why a
strategy or tactic failed, or reduction of
uncertainty in management decision making.
The Nature of Marketing Research
Basic research and applied research
• Our focus is on applied research – studies that are
undertaken to answer questions about specific
problems or to make decisions about particular
courses of action or policies.
• However, the procedures and techniques used by
applied and basic researchers do not differ
substantially; both employ the scientific method to
answer the question at hand.
The Nature of Marketing Research
Basic research and applied research
• The term scientific method refers to the techniques
and procedures used to recognize and understand
marketing phenomena.
• In scientific method, empirical evidence (facts from
observation or experimentation) is analyzed and
interpreted to confirm or disprove prior conceptions.
Nature of Applied Research
• Marketing research studies can be classified
into three broad categories:
– Programmatic
– Selective
– Evaluative
Nature of Applied Research
1. Programmatic research is conducted to develop
marketing options through market
segmentation, market opportunity analysis, or
consumer attitude and product usage studies.
-
-
It arises from management’s need to obtain a
market overview periodically.
For example: inadequate/outdated market
information to support marketing decision
making
Nature of Applied Research
2. Selective research is used to test decision
alternatives. Some examples are testing
concepts for new products, advertising copy
testing, and test marketing.
-
-
This typically is conducted after several viable
options have been identified by programmatic
research.
If no one alternative is clearly superior, product
management usually will wish to test several
alternatives.
Nature of Applied Research
3. Evaluative research is done to assess program
performance; it includes tracking advertising
recall, doing organizational image studies, and
examining customer attitudes on a firm’s quality
of service.
- The need for this type arises when the
effectiveness and efficiency of marketing
programs must be evaluated.
The managerial value of marketing
research for strategic decision making
• Developing and implementing a marketing
strategy involves four stages:
1. Identifying and evaluating opportunities
2. Analyzing market segments and selecting target
markets
3. Planning and implementing a marketing mix that
will satisfy customers’ needs and meet the
objectives of the organization
4. Analyzing marketing performance
Deciding Whether to Conduct
Market Research
• A manager faced with several alternative
solutions to a problem should not instinctively
call for applied marketing research.
• The first decision to be made is whether to
conduct marketing research at all.
In a number of situations, it is best
not to conduct market research:
• A Lack of Resources
– Two situations:
• lack of funds
• insufficient funds to implement decisions from
research
In a number of situations, it is best
not to conduct market research:
•
Research Results Would Not Be Useful
• Clients may be hard-pressed to use the information
• Poor Timing in the Marketplace
• Marketing research should not be undertaken if the
opportunity for successful entry into a market has
passed.
In a number of situations, it is best
not to conduct market research:
• The Decision Has Already Been Made
• Marketing research may be used improperly.
• When Managers Cannot Agree on What They Need to
Know to Make a Decision
• The wrong phenomena might be studied
• When Decision-Making Already Exists
• Further research may be redundant and costly
In a number of situations, it is best
not to conduct market research:
• When the Costs of Conducting Research Outweigh
the Benefits
• Potential new products with large profit margins may
have a greater potential
Deciding Whether to Conduct Market Research
Market Size
Small
Small Profit Margin
Large Profit Margin
Cost likely to be greater
than benefit; e.g.,
Possible benefits greater
than cost; e.g.,
• eyeglasses replacement
screw
• ultraexpensive
Lambeggehni-type
sportswear
• tire valve extension
DON’T CONDUCT
MARKETING
RESEARCH
PERHAPS CONDUCT
MARKETING
RESEARCH
Deciding Whether to Conduct Market Research
Market Size
Large
Small Profit Margin
Large Profit Margin
Benefits likely to be
greater than costs; e.g.,
Benefits likely to be
greater than costs; e.g.,
• Stouffers frozen entries
• medical equipment
• Crest’s tarter control
toothpastes
• high-definition TV
PERHAPS CONDUCT
MARKETING
RESEARCH
CONDUCT
MARKETING
RESEARCH
INTERNET ON MARKETING
RESEARCH
Profound Impact of the Internet on
Marketing Research
Growth drivers of Internet marketing research:
• The Internet provides more rapid access to business
intelligence and thus allows for better and faster decision
making.
• The Internet improves a firm’s ability to respond quickly to
customer needs and market shifts.
• The Internet facilitates conducting follow-up studies and
longitudinal research.
• The Internet slashes labor-and time-intensive research
activities (and associated costs), including mailing, telephone
solicitation, data entry, data tabulation, and reporting.
Profound Impact of the Internet on
Marketing Research
Advantages of Internet marketing research:
•
•
•
•
•
Rapid development, real-time reporting
Dramatically reduced costs
Personalization
Higher response rates
Ability to conduct the hard-to-reach: doctors, high-income
professionals, and top management in a large firms
MARKETING RESEARCH INDUSTRY
Structure of the Marketing
Research Industry
Organization
• Level 1. Corporate marketing departments
• Level 2. Ad agencies
• Level 3. Research suppliers
a) Syndicated service firms
b) Custom, or ad hoc, research firms
• Level 4. Field service firms
Structure of the Marketing
Research Industry
• Level 1: Primary Information Users
(Corporate marketing departments)
• They are the ultimate users of the research
data provided by their marketing research
departments.
• Their primary business is the sale of products
and services.
Structure of the Marketing
Research Industry
• Level 2: Information Users
(Ad Agencies)
• They are also in the position of serving
corporate clients.
• Their primary business is the development
and execution of advertising campaigns.
To properly fulfill this role, they often need
marketing research data.
Structure of the Marketing
Research Industry
• Level 3: Research Suppliers
(Custom and syndicated marketing research
firms)
• They represent the front line of the research
industry.
• They sell research services, design research studies,
analyze the results, and make recommendations to
clients. They may also buy data collection and other
services from field service firm.
Structure of the Marketing
Research Industry
• Level 3: Research Suppliers
1. custom, or ad hoc, research firms
– Companies that carry out customized marketing
research to address specific projects for corporate
clients
2. syndicated service research firms
– Companies that collect, package, and sell the
same general market research data to many firms.
Structure of the Marketing
Research Industry
• Level 4: Data Collectors
(Field Service Firms)
• They collect data for syndicated research firms,
custom research firms, ad agencies, and corporate
marketing departments.
• They are the interviewers who actually collect the
data. They typically work on a part-time, as needed
basis and may work for several different field service
firms.
1st Homework
• What are the steps in the marketing research
process?