Ch01a The Nature And Scope Of Mr

Chapter 1 The Nature and Scope of Marketing Research

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First Edition

Chapter Objectives • Identify the role of marketing research in strategic decision making • Define the process of marketing research • Identify the three principles for generating information useful to managers • Explain why marketing research requires analysis and interpretation of data Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Chapter Objectives (Cont’d) • Discuss the relationship between marketing research and decision making • Describe the wide variety of applications for marketing research • Identify various career opportunities in marketing research

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e-Bay: Listening to Customers • •

Vision: To help practically anyone trade practically anything on earth To achieve the vision, e-Bay: – Blends marketing research with its overall business strategy – Forms voice of the customer group to keep itself informed about the needs and preferences of its customers – Creates Feedback Forum for users to give each other ratings for each transaction

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Exhibit 1.1 Role of Marketing Research in Strategic Planning and Decision Making Strategic Marketing Plan: Organizational Resources,Objectives,Marketing Strategy, Implementation and Control informs Marketing Research influences Marketing Strategy/Marketing Mix Product-Price-Promotion-Distribution Customer/Society Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Marketing Strategy • A plan that enable an organization to make the best use of its resources to meet marketing objectives

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Marketing Plan • A formal document that specifies the organization’s resources, objectives, strategy and implementation and control efforts in marketing the specific products

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Basic Components of Marketing Plan • Identifying marketing opportunities and constraints • Developing and implementing marketing strategies • Evaluating the effectiveness of marketing plans

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Identifying Market Opportunities •

and Constraints Who are our potential competitors and how strong

are their market positions? • How satisfied are consumers with current offerings on the market ? Are there any unmet consumer needs ? • How is our offering likely to be perceived by consumers relative to competitors’ offerings ? • Marketing Research can help answer these and other questions of interest to marketers Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Identifying Marketing Opportunities and Constraints • Identify – Potential customers’ strengths and weaknesses – Consumer satisfaction with current market offerings – Consumer perceptions of the offer relative to competitors

• Goal – Maintain competitiveness Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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T.G.I.Friday’s: Using Marketing Research to Identify New Opportunities • How the Research Was Conducted: – Formal interviews with parents and children – Observation of young customers’ likes and wants

• Research Showed – Young customers want something beyond ordinary drinks – T.G.I Friday’s created special kids’ drinks like Banana Kong Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Marketing Research to Track Product Performance and Customer Satisfaction of Products and Services • Research Showed – Consumers wanted abundance of toppings

• Marketing research led to revamping of pizza toppings

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Embracing the Marketing ConceptNeed to gain a good understanding of customers • Importance of conducting marketing research in the early stages of formulating marketing strategies: • Unilever PLC – Developed new detergent brand, Power – Ignored warnings about the catalyst used in the product – Forced to withdraw the product Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Understanding the Competitive Environment • Who are Blockbuster’s competitors? • Direct Broadcast Satellite (DBS) – Cable movie and pay TV channels – Supermarket video rentals

• How should Blockbuster react to competitive threats?

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Developing and Implementing Marketing Strategies Develop an effective Marketing Mix

Product

Promotion

Price

Place

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Developing and Implementing Marketing Plans • Renaissance Spirometry -- NPB – Conducted marketing research • interviews,focus groups, telephone surveys, usage experiences, usage frequencies from doctors

– Quality deployment function: translate customer requirements into engineering specifications – Potential users evaluate product through each step of product development Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Evaluating the Effectiveness of Marketing Plans • Controlling or the Control Function – Getting feedback from the marketplace – Taking necessary or corrective actions

• Example Questions – Is the market share rising/declining/not moving? Why? – Who uses the product? – Are the answers consistent with company goals?

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Common Views of Marketing Research • • • • • • •

Gathering data from markets Conducting customer surveys Determining the needs of customers Evaluating customer response to advertising Testing products in the market place Estimating the potential sales of product Gathering sales and market share data of competitors

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Exhibit 1.2 Role of Marketing Research in the Organization/Business Organizational / Business Decision Makers informs Marketing Research influences Marketing Decisions

Customer/Society Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Marketing Research Definition • A set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers who are involved with marketing goods, services or ideas

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Principles of Marketing Research • Principle #1: –

Attend to the timeliness and relevance of research

• Principle #2: –

Define research objectives carefully and clearly

• Principle #3: –

Do not conduct research to support decisions already made

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Principle # 1: Attend to the Timeliness and Relevance of Research

Ariel High Suds Marketing Research

1985

1986

1987

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Launch

1988

Lag Time

1989

LOW SALES RATES

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Research and Decision Making • P&G’s Ariel High Suds – Research-related decisions--the timing of the research studies prior to launch

• Decision to forgo additional research to understand the impact of changed economic conditions – contributed to the initial lackluster performance of the product

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Principle # 2: Define Research Objectives Carefully and Clearly • Coca Cola tested New Coke against Coke Classic • They didn’t account for consumer reaction to lack of choice between the two! • End Result: New Coke failed

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Principle # 3:Do Not Conduct Research to Support Decisions Already Made

• Indianized Yogurt:

– Decision was made to produce yogurt – Yogurt plant was constructed – Marketing research determined there was only a very small market – Product failed in the marketplace

• Nestlé's Dahi is a recent entrant in the yogurt market Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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The Role of Marketing Research in Analysis and Interpretation • Marketing Research can be used to identify “profitable customers” and “not-profitable customers” – Profitable Customers: those who are more likely to spend large amounts of money and become repeat customers – Not-Profitable Customers: those who are more likely to spend less money on each transaction and might not return Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Importance of Analysis and Interpretation Few Customers, Large Volume/per Customer – Profitable Target Market

Large Number of Customers, Low Volume/per Customer -- Not-Profitable Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Research Results and Management Decisions • Kellogg sought foreign markets in which to expand Latvians prefer a hearty plate of sausage, cold cuts,potatoes,eggs, and a few slices of thick, chewy buttered bread. Mexicans and Indians prefer hot, spicy breakfasts. Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Research Results and Management Decisions • Marketing research conducted by Kellogg did not forecast enthusiastic response in the countries—Kellogg decided to pursue these markets, anyway ! • Kellogg cereals’ appeal is limited to a small health-conscious group. • Will it work?

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Exhibit 1.3 Marketing Research’s Relationship to Decision Making Activity Marketing Research Marketing situation calling for decision(s)

Decisionmaking activity

Final decision(s)

Organization’s internal and external environments

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Marketing Research Applications • • • •

Gathering data from markets Conducting customer surveys Determining the needs of your customers Evaluating customer response to advertising

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Marketing Research Applications (Cont’d) • Gathering sales and market share data on your competitors • Testing your products in the marketplace • Estimating potential product sales

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Classification of Marketing Research • Basic Research : to generate or create knowledge – Journal of Marketing articles

• Applied research – To solve a problem – To develop strategies for products and services

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Marketing Services • Claritas Inc -- Specializes in providing marketing information to companies • Key supplier of information containing the profiles and life-styles of U.S. consumers on a zip code-by-zip code basis • Developed a information base by combining U.S. Census Bureau demographic data with lifestyle/attitudinal data generated through various regional surveys Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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How Do You Recruit a Nun? Marketing Research Comes to the Rescue • St.Benedictine Convent: – Majority of Sisters 70+ years – Inability to attract new recruits

• Conducted Focus Groups: – To determine why they were not able to recruit young members – Research showed people perceived nuns to have a dull existence

• Launched New Ad campaign • Recruited an average of three nuns a year Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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In-house Marketing Research • Formal Marketing Department – Centralized: one marketing department for all product lines – Decentralized: separate marketing departments for individual product lines – Hybrid : combination of centralized and decentralized

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External Marketing Research • Large Commercial Firms: – AC Nielsen provides full service, planning through recommendations

• Small Commercial Firms – Specialize in one part of the process – Custom Research Inc. provides marketing research,customer satisfaction, and database marketing services Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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External Marketing Research (Cont’d) Academic Consultants Professors and students’ research projects

Trade Associations International trade site (www.fita.org)

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Exhibit 1.4 Illustrative Centralized Marketing Research Function in a Multibrand Company Corporate Marketing Research Department Responsibilities include: •

Designing Studies

•

Constructing Questionnaires

•

Selecting Samples

•

Collecting Data

•

Analyzing Data

•

Preparing Reports

•

Choosing External Research Providers

Corporate Marketing Department

Research Reports

Research Requests

Marketing of Brand A

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Marketing of Brand B

Marketing of Brand C

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Exhibit 1.5 Illustrative Decentralized Marketing Research Function in a Multibrand Company Corporate Marketing Department

Marketing of Brand A

Requests

Marketing of Brand B

Reports

Marketing Research Department for Brand A Responsibilities Include: • Designing Studies • Constructing Questionnaires • Selecting Samples • Collecting Data • Analyzing Data • Preparing Reports • Choosing External Research Providers

Requests

Marketing of Brand C

Reports

Marketing Research Department for Brand B Responsibilities Include: • Designing Studies • Constructing Questionnaires • Selecting Samples • Collecting Data • Analyzing Data • Preparing Reports • Choosing External Research Providers

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Requests

Reports

Marketing Research Department for Brand C Responsibilities Include: • Designing Studies • Constructing Questionnaires • Selecting Samples • Collecting Data • Analyzing Data • Preparing Reports • Choosing External Research Providers 1-40

Exhibit 1.6 Illustrative Mixed-Structure Marketing Research Function in a Multibrand Company Corporate Marketing Research Department

Corporate Marketing Department

Responsibilities include: •

Collecting Data

•

Analyzing Data

•

Preparing Reports

•

Choosing External Research Providers Research Reports

Shared Responsibilities for Research

Marketing of Brand A

Marketing of Brand B

Marketing of Brand C

Research Requests

Research Requests

Research Requests

Marketing Research Department for Brand A Responsibilities Include:

• Designing Studies • Constructing Questionnaires Copyright © by Houghton Mifflin Company, Inc. All rights reserved

Marketing Research Department for Brand B Responsibilities Include:

• Designing Studies • Constructing Questionnaires

Marketing Research Department for Brand C Responsibilities Include:

• Designing Studies • Constructing Questionnaires

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MR at BK -- Brand Research and Analysis Department • Decentralized Function: Four separate groups within the department help to segment out the research into areas of specialty – – – –

Consumer research Sales analysis group Competitive/secondary information Customer satisfaction

• Centralized Function: Director of the department keeps the 4 groups unified in their goals and task allocation Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Careers in Marketing Research • The field of marketing research provides a vast array of job opportunities ranging from titles such as: – Data Entry Clerk; Tabulation Specialist; Programmer – Interviewer (telephone or field) – Research Analyst – Marketing Research Manager/Director Copyright © by Houghton Mifflin Company, Inc. All rights reserved

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Careers in Marketing Research

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Careers in Marketing Research (Cont’d)

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