Part 2
MARKET RESEARCH AND
TARGET MARKETS
Dr. Chen, Principle of Marketing
4: Marketing Research and
Information Systems
5: Target Markets:
Segmentation and Evaluation
Dr. Chen, Principle of Marketing
Chapter 4
Marketing Research and
Information System
Professor Jason C. H. Chen, Ph.D.
School of Business Administration
Gonzaga University
Spokane, WA 99258
chen@jepson.gonzaga.edu
Dr. Chen, Principle of Marketing
Learning Objectives
 To gain perspective on the importance of
marketing research
 To differentiate between the two major types of
marketing research
 To describe the basic steps in conducting
marketing research
 To understand how technology is used to
facilitate information gathering and analysis
 To identify key ethical and international
considerations in marketing research
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4
Marketing Research
 Marketing research is the systematic design, ________,
collection
interpretation and reporting of information
____________,

To help marketers solve specific marketing problems or
take advantage of marketing opportunities
 Benefits of marketing research
 Increases the firm's ability to make informed
decisions and respond to customer _______:
needs
_________
Facilitates strategic planning
Better understand market opportunities/threats for particular
goods and services
Ascertain new products' potential for success
Determine feasibility of a marketing strategy
Improve marketer’s ability to make decisions
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Types of Research
 Marketing research involves two forms of data
Qualitative
 ___________
data - Yields descriptive nonnumerical information
 ___________
Quantitative data - Yields information that can be
communicated through numbers
 To collect data marketers conduct:
 Exploratory
research
 General: to generate insights about a situation
 Conclusive
research
Specific: to verify insights and aid in selecting a course
of action
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6
Exploratory Research
 Research conducted to:
 Gather
more information about a problem
 Make a tentative hypothesis more specific
How are consumers’ car buying habits changing?
 Purpose
 Better
understand a problem or situation
 Help identify additional data needs or decision
alternatives
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7
Exploratory Research
advisory boards: Small groups of
 Customer _________
actual customers who:
 Serve
as sounding boards for new-product ideas
 Offer insights into their feelings and attitudes
toward a firm
Focus
 _________
group: Brings together multiple
people (8-12) to discuss a specific topic in a
group setting facilitated by a moderator
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Conclusive Research
 Designed to verify insights through an objective
procedure to help marketers make decisions

What percentage of consumers will consider an electric car
purchase?
 Used when the marketer has one or more alternatives
in mind and needs assistance in the final stages of
decision making
 Studies are:



Quantitative
Formal
Specific
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Table 4.1 - Differences between Exploratory and Conclusive Research
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10
Fig. 4.1 - Five Steps of Marketing Research Process
1. Locating and defining problems
or issues
2. Designing the research project
3. Collecting data
4. Interpreting research findings
5. Reporting research findings
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11
Step 1: Locating and Defining Problems of
Research Issues
 Focus on uncovering the nature and boundaries of a
situation

First sign of a problem is a departure from normal
functioning
relationship management (CRM) is
 Customer ___________
essential to attracting and retaining loyal customers

Marketers should not to be distracted by superficial
symptoms
 Refining a problem into a precise research statement is
a prerequisite for the next step in the research process
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Step 2: Designing the Research Project
Research design
_________
• Overall plan for obtaining the information needed to address a
research problem
Hypothesis
____________
• Informed guess or assumption about a certain problem or set of
circumstances
• Accepted or rejected hypotheses act as conclusions for the research
effort
Reliability
___________
• Condition that exists when a research technique produces almost
identical results in repeated trials
Validity
• Condition that exists when a research method measures what it is
supposed to measure
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Step 3: Collecting Data
 Helps prove or disprove the research hypothesis
Primary Data
_________
• Observed and
recorded or collected
directly from
respondents
• Collected to address a
specific problem that
cannot be answered
by secondary data
alone
Dr. Chen, Principle of Marketing
Secondary
_________ Data
• Compiled both inside
and outside the
organization for some
purpose other than the
current investigation
• Useful for research if
the information
contained is pertinent
to the hypothesis
marketers are testing
14
Table 4.2 - Sources of Secondary Information
Government sources
Economic census
www.census.gov
Export.gov - country and industry
market research
www.export.gov/mrktresearch/index.asp
National Technical Information
Services
www.ntis.gov
Strategis - Canadian trade
www.strategis.ic.gc.ca
Trade associations and shows
American Society of Association
Executives
www.asaecenter.org
Directory of Associations
www.marketingsource.com/associations
Trade Show News Network
www.tsnn.com
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Table 4.2 - Sources of Secondary Information (cont.)
Magazines, Newspapers, Video, and Audio News Programming
Google Video Search
www.google.com/videohp?hl=en
Media Jumpstation
www.directcontactpr.com/jumpstation
Google News Directory
www.google.com/Top/News
Yahoo! Video Search
www.video.search.yahoo.com
Corporate Information
The Public Register Online
www.annualreportservice.com
Bitpipe
www.bitpipe.com
Business Wire – press releases
www.businesswire.com
Hoover’s Online
www.hoovers.com
Open Directory Project
www.dmoz.com
PR Newswire – press releases
www.prnewswire.com
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Methods of Collecting
Primary Data
1. Sampling
________
Survey
2. ________
methods
3. Observation
__________
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Sampling
Population
____________
• Elements, units, or individuals of interest to researchers
for a specific study
Sample
_________
• Limited number of units chosen to represent the
characteristics of a total population
Sampling
_________
• Process of selecting representative units from a population
Because the time and resources available for research are limited, it is
almost impossible to investigate all the members of a target market or
other population.
Dr. Chen, Principle of Marketing
18
How Types of Sampling Align
Sampling
Probability
Nonprobability
Random Sampling
Stratified Sampling
Quota
Dr. ©
Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
2-19
Types of Sampling
 Probability sampling: Every element in the
known chance
population being studied has a ______
of being selected for study
 Random
sampling: All the units in a population
have an equal chance of appearing in the sample
 Stratified sampling: Population of interest is
divided into groups according to a common
attribute, and a random sample is then chosen
within each sub-group
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20
Types of Sampling
 Nonprobability sampling: There is no way to
calculate the probability that a specific element
of the population being studied will be chosen
 Quota
sampling: Researchers divide the population
into groups and then arbitrarily choose participants
from each segment
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21
Survey Methods
 The results are used to describe and analyze
buying behavior
 Survey method chosen depends on:
Nature
 _______
of the problem or issue
hypothesis
 Data needed to test the __________
 Resources available to the researcher
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Types of Survey Methods
Mail survey
• Questionnaires are sent to respondents who are
encouraged to complete and return them
Telephone survey
• Interviewer records respondents’ answers to a
questionnaire over the phone
• Telephone depth interview: Combines the
traditional focus group’s ability to probe with the
confidentiality provided by a telephone survey
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23
Types of Survey Methods
Personal interview survey
• Participants respond to questions face-to-face


In-home interview: Personal interview that takes
place in the respondent’s home
Shopping mall intercept interviews: Interviewing
a percentage of individuals who pass by an
intercept point in a mall
 On-site computer interview
Online and Social Media Surveys
• Questionnaires can be transmitted to respondents either
through e-mail or via a website
Crowdsourcing Way for marketers to gather input
• _______________:
straight from willing consumers and to actively listen to
people’s ideas and evaluations on products
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What Are the Benefits of a
Personal Interview?
 Establishes rapport
 More in-depth interviewing:

Probes

Follow-up questions

Psychological tests
 Longer in duration
 Yields more information
 Respondents can be carefully selected, reasons for
nonresponse explored
 Gives the interviewer greater flexibility
Dr. ©
Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
5-25
Table 4.3 - Comparison of the Four Basic Survey
Methods
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26
Questionnaire Construction
 Questions should be:
 Clear
_____
 Easy
to understand
 Directed toward a specific objective
 Designed to elicit information that meets the study’s
data requirements
 Impartial
 Carefully worded so as not to offend respondents
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27
Question Types
Open-ended question
• What is your general opinion about coffee shops?
(please describe) __________________________
Dichotomous question
____________
• Have you ever purchased a coffee product?


Yes
No
Multiple-choice question
• What income group are you in?




Dr. Chen, Principle of Marketing
$0-$19,000
$20,000-$59,999
$60,000-$99,000
more than $100,000
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Observation Methods
 Avoid direct contact with subject to reduce
possible awareness of observation process
 Researchers:
 Record
individuals’ overt behavior
 Take note of physical conditions and events
 Avoid direct contact with subject
 Use ethnographic techniques
 May be combined with interviews
 Data gathered may be influenced by observer
bias
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Step 4: Interpreting Research Findings
 The first step in drawing conclusions from most
research is displaying the data in table format
 The data must be analyzed next:
 Statistical interpretation: Focuses on what is
typical and what deviates from the average
 Analysis of data may lead researchers to accept or
reject their hypothesis
 Managers must understand the research results and
relate them to a context that permits effective decision
making
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Step 5: Reporting Research Findings
 Analyze findings to determine completion of
the research
 Prepare a formal, written document
 Determine level of detail
 Clear and objective presentation
 Consider the intended audience
 Point out deficiencies in the data
 Researchers give their summary and
recommendations first
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Using Technology to Improve Marketing
Information Gathering and Analysis
 Enhanced customer relationship management
 Permits
internal research and quick information
gathering
 Permits internal research and quick information
gathering
 Access array of valuable information sources
such as:
 Industry
forecasts
 Business trends
 Customer buying behavior
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Marketing Information Systems
 Marketing Information Systems (MIS) is a
framework for managing and structuring
information gathered regularly from sources inside
and outside the organization
 Focuses
on:
Data storage and retrieval
Computer capabilities and management’s information
requirements
 Helps
producing regular sales reports by:
Product or market categories
Data on inventory levels and records of salespeople’s
activities
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Databases
 Databases is an organized collection of logically related data
files.

GU databases includes data files of students, faculty, staffs, library,
account payable and receivable and more. But, not from city of
Spokane, or Florence.
CRM employs database marketing techniques to:
 ______
 Build a database of current and potential consumers
 Deliver messages according to consumer preferences
 Monitor the costs of retaining individual customers
 Single-source data: Information provided by a single firm on:
 Household demographics and purchases
 Television viewing behavior
 Responses to promotions
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Customer Relationship Management (CRM)
 Employs database marketing techniques to identify
different types of customers and develop specific
strategies for interacting with each customer:

Identifying and building a database of current and potential
consumers, including a wide range of demographic, lifestyle,
and purchase information
Delivering differential messages according to each
consumer’s preferences and characteristics through
established and new media channels
 Tracking customer relationships to monitor the costs of
retaining individual customers and the lifetime value of their
purchases
 We will learn BI – RapidMiner a dataming tool for exploring
“Market Basket” and “Target Market” if time is allowed.

Dr. ©
Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
5-35
CRM Applications

Customer Relationship Management (CRM) systems store data
in a single database and link CRM processes to one another.
Fig (Extra) CRM Applications
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36
Marketing Decision Support Systems
 Customized computer software that aids
marketing managers in decision making
 By
helping them anticipate effects of certain
decisions
 Has a broader range and offers greater
computational and modeling capabilities
 Major
component of a company’s marketing
information system
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Marketing Decision Support
Systems (MDSS)
Marketing decision support system
(MDSS)
 Customized computer software that aids
marketing managers in decision making
 Have a broader range and offer greater
computational and modeling capabilities than
spreadsheets
 MDSS software is often a major component of a
company’s marketing information system
Dr. ©
Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
5-38
Importance of Ethical Marketing Research
 Necessary because of the ethical and legal
issues that can develop in gathering marketing
research data
 Marketers should remain ethical at all times to
retain:
trust
 Consumer and stakeholder ______
 Positive
reputation
 Organizations have developed codes of conduct
and guidelines to promote ethical marketing
research
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39
Table 4.4 - Guidelines for Questionnaire Introduction
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40
International Issues in Marketing Research
 Marketers must modify data-gathering methods
keeping an account of global and regional
differences
 Sociocultural
 Economic
 Political
 Legal
 Technological
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41
International Issues in Marketing Research
Use two-pronged approach to international marketing
research:
 1) A detailed search for and analysis of secondary data
to: (why secondary data?)
 Gain understanding of a particular marketing
environment
 Pinpoint key regional issues that could affect primary
research data
 2) Conduct field research using the methods described
earlier to:

refine a firm’s understanding of specific customer needs
and preferences
Dr. Chen, Principle of Marketing
5-42
Video Case 4.1 (p. 113)
 MARKETING RESEARCH REVEALS
MARKETING OPPORTUNITIES IN
THE BABY BOOMER GENERATION
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43
 Summary

 This case illustrates how a variety of marketing research
techniques can help marketers meet the needs of a target
market. Baby Boomers are a profitable demographic, and
with approximately 20 percent of the U.S. population
estimated to be 65 years or older by 2030, marketers are
beginning to research better ways to market to this
population.
 Baby Boomers desire to have a variety of products available
to them, and many of the products traditionally thought to
belong to the younger generation are actually bought the most
by older generations, such as cars and technological products.
As they age, Baby Boomers are also creating a market for
new products and services.
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44
 1. Why are Baby Boomers such a lucrative market?

 Baby Boomer spending has been increasing, and they
are estimated to have $3.4 trillion in annual buying
power. Baby Boomers desire to have a variety of
products available to them, and many of the products
traditionally thought to belong to the younger
generation are actually bought the most by older
generations, such as cars and technological products.
 With approximately 20 percent of the U.S. population
estimated to be 65 years or older by 2030, the
spending potential for this market is growing.
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45
 2. How has the marketing research process been
used to understand how Baby Boomers shop and
interact in stores?

 Because marketers often target younger generations
of consumers, little thought has been given to how
accessible stores and products are for older
generations.
 Businesses are using marketing research to
understand the customer preferences of Baby
Boomers, including how they shop, what they desire
in products, and how to customize promotions to
attract this lucrative demographic.
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46
 3. How have stores used marketing research findings to
tailor their stores and products to appeal to Baby
Boomers?

 Many businesses have used marketing research findings to
customize their retail environments and their products. CVS
lowered its shelves, made its store lighting softer, and
installed magnifying glasses for hard-to-read labels.
 Diamond Foods Inc. designed the packaging of its Emerald
snack nuts to be more easily opened and decreased the time
it takes to rotate the caps to open its products. However,
because Baby Boomers don’t like to be reminded that they
are getting older, companies avoid directly mentioning how
their changes help “aging” consumers.
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