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Marketing Research Marketing Research and Information Systemsand Information Systems

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.

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AgendaAgenda

Differences between Business and Differences between Business and Consumer Marketing ResearchConsumer Marketing Research

The Business Marketing Research The Business Marketing Research ProcessProcess

Developing Information SourcesDeveloping Information Sources Marketing Research Versus a Marketing Marketing Research Versus a Marketing

Information SystemInformation System Reasons for Marketing Research and Reasons for Marketing Research and

Information GatheringInformation Gathering

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.

Differences between Business and Differences between Business and Consumer Marketing ResearchConsumer Marketing Research

Preparing to researchPreparing to research Complicated: Talk with asComplicated: Talk with as Relatively simple: Talk to the Relatively simple: Talk to the many employees who havemany employees who have senior marketing, advertising orsenior marketing, advertising orcontact with the customer ascontact with the customer as product manager to define product manager to define possible, at all levels in the possible, at all levels in the problem.problem.organization. Then, organization. Then, summarize findings andsummarize findings andtalk to head managers totalk to head managers tofinalize identification of thefinalize identification of theproblem.problem.

Relationship with theRelationship with the Close: Think about usingClose: Think about using Relatively distant: Treat theRelatively distant: Treat the Customer Customer the research as a way tothe research as a way to respondent with respect andrespondent with respect and

improve or enhanceimprove or enhance care but it is unlikely that thecare but it is unlikely that thecustomer relations.customer relations. Organization will ever have one-Organization will ever have one-

to-one contact with individual to-one contact with individual respondents in the future.respondents in the future.

BusinessBusiness Consumer Consumer Exhibit 5-1

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Differences between Business and Differences between Business and Consumer Marketing ResearchConsumer Marketing Research

Respondent definitionRespondent definition Different people in the sameDifferent people in the same Individuals that are aware of a Individuals that are aware of a and relationshipand relationship company may contribute to company may contribute to category or brand, users of a category or brand, users of a

the decision to buy. So, the decision to buy. So, of a category or brand, those of of a category or brand, those of there may be multiple there may be multiple a particular demographica particular demographicrespondents from eachrespondents from each criteria. Each respondent iscriteria. Each respondent iscustomer business thatcustomer business that likely to be independent from alllikely to be independent from allto be surveyed.to be surveyed. other respondents.other respondents.

Sample sizeSample size Small. Fairly limited inSmall. Fairly limited in Large. Dependent on categoryLarge. Dependent on categorytotal population and eventotal population and even under investigation but usuallyunder investigation but usuallymore so if within a definedmore so if within a defined more or less unlimited. Theremore or less unlimited. Thereindustry or NAICSindustry or NAICS are about 72.5 million U.S.are about 72.5 million U.S.category.category. Households and over 250 Households and over 250

million Americans.million Americans.

BusinessBusiness Consumer Consumer Exhibit 5-1

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Differences between Business and Differences between Business and Consumer Marketing ResearchConsumer Marketing Research

Research approach andResearch approach and Surveys are often administeredSurveys are often administered Surveys are usually Surveys are usually

MethodologyMethodology personally (e.g., via one-on-onepersonally (e.g., via one-on-one administered administered impersonally impersonally interviews) interviews) e.g., via mail, the e.g., via mail, the Internet, Internet, or phone)or phone)

BusinessBusiness Consumer Consumer Exhibit 5-1

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The Business Marketing The Business Marketing Research ProcessResearch Process

Define the Research ProblemDefine the Research Problem Develop Research Objectives and QuestionsDevelop Research Objectives and Questions Formulate a Research Plan (think about Formulate a Research Plan (think about

cost/benefit)cost/benefit)• Observational studiesObservational studies• Survey researchSurvey research• Experimental researchExperimental research

Execute Research DesignExecute Research Design Prepare and Analyze DataPrepare and Analyze Data Prepare and Communicate Results (be aware Prepare and Communicate Results (be aware

of “politics”)of “politics”)

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Developing Information SourcesDeveloping Information Sources Secondary Data SourcesSecondary Data Sources

• Internal Sources Internal Sources - - financial statements, research financial statements, research reports, sales reports, customer lettersreports, sales reports, customer letters

• External Sources External Sources - - published marketing researchpublished marketing research

• Secondary Data on the Web - Secondary Data on the Web - (but, as always, (but, as always, consider the source)consider the source)

• Government Sources Government Sources - - published marketing published marketing researchresearch

NAICSNAICS SECSEC State Industrial DirectoriesState Industrial Directories

• Companies listed by product, then grouped by location, Companies listed by product, then grouped by location, by NAICS code, and alphabeticallyby NAICS code, and alphabetically

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Developing Information SourcesDeveloping Information Sources

Secondary Data Sources (con’t.)Secondary Data Sources (con’t.)• Commercial Sources Commercial Sources - - suppliers, banks, suppliers, banks,

consultants, ad agenciesconsultants, ad agencies Thomas Register of American Manufacturers, D&BThomas Register of American Manufacturers, D&B

• Professional Publications Professional Publications - - trade associations, trade associations, journals, showsjournals, shows

Association Membership Directories—lists members Association Membership Directories—lists members alphabetically, by company, and sometimes by state or alphabetically, by company, and sometimes by state or county.county.

Trade publicationsTrade publications

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NAICS CodesNAICS Codes NAICSNAICS = North American Industrial Classification = North American Industrial Classification

System; replaced SIC (Standard Industrial Classification) System; replaced SIC (Standard Industrial Classification) codescodes

Common for NAFTA countriesCommon for NAFTA countries NAICS hierarchical structure:NAICS hierarchical structure:

XXXX Industry sector Industry sector XXX XXX Industry subsectorIndustry subsectorXXXXXXXX Industry groupIndustry groupXXXXXXXXXX IndustryIndustryXXXXXXXXXXXX U.S., Canadian, or Mexican national U.S., Canadian, or Mexican national

specificspecific

http://www.naics.com/cgi-bin/search.plhttp://www.naics.com/cgi-bin/search.pl(continued)(continued)

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NAICS CodesNAICS Codes

Divides economy into 20 major industry sectors Divides economy into 20 major industry sectors (at two-digit level):(at two-digit level):

11 Agriculture, Forestry, Fishing,11 Agriculture, Forestry, Fishing, 54 Professional, Scientific, and Technical 54 Professional, Scientific, and Technical and Huntingand Hunting services services

21 Mining 21 Mining 55 Management of Companies and 55 Management of Companies and 22 Utilities 22 Utilities Enterprises Enterprises23 Construction23 Construction 56 Administrative and Support, Waste 56 Administrative and Support, Waste 31–33 Manufacturing 31–33 Manufacturing Management, and Remediation Management, and Remediation ServicesServices42 Wholesale Trade 42 Wholesale Trade 61 Education Services 61 Education Services 44–45 Retail Trade44–45 Retail Trade 62 Health Care and Social Assistance 62 Health Care and Social Assistance 48–49 Transportation 48–49 Transportation 71 Art, Entertainment, and Recreation 71 Art, Entertainment, and Recreation 51 Information 51 Information 72 Accommodation and Food Services72 Accommodation and Food Services52 Finance and Insurance 52 Finance and Insurance 81 Other services (except Public 81 Other services (except Public 53 Real Estate, Renting, 53 Real Estate, Renting, Administration) Administration)

and Leasing and Leasing 92 Public Administration92 Public Administration(continued)(continued)

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NAICS CodesNAICS Codes

Example of additional digits making the product more specific:Example of additional digits making the product more specific:

Sector Sector 31–33 31–33 ManufacturingManufacturing

SubsectorSubsector 334 334 Manufacturing computer and Manufacturing computer and electronic productselectronic products

Industry group Industry group 33463346 Manufacturing of magnetic and Manufacturing of magnetic and optical optical media media

3346133461 Manufacturing of magnetic mediaManufacturing of magnetic media334611334611 Software reproductionSoftware reproduction

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Developing Information SourcesDeveloping Information Sources

Disadvantages of Secondary DataDisadvantages of Secondary Data• Recency of dataRecency of data• Coverage of data (adequate for your Coverage of data (adequate for your

purposes?)purposes?)• Sample size (adequate?)Sample size (adequate?)• Bias (by sponsor or objectives of original Bias (by sponsor or objectives of original

survey) survey) • Data sourceData source

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Developing Information SourcesDeveloping Information Sources

Primary Data SourcesPrimary Data Sources• Personal InterviewsPersonal Interviews• Telephone SurveysTelephone Surveys• Mail SurveysMail Surveys• Internet SurveysInternet Surveys

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5-5

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Developing Information SourcesDeveloping Information Sources

Disadvantages of Primary Data Disadvantages of Primary Data • ExpensiveExpensive• Time intensiveTime intensive• Requires experimental design/survey design Requires experimental design/survey design

skillskill• Unwillingness (or inability) of respondent to Unwillingness (or inability) of respondent to

provide informationprovide information• Nonrepresentative, nonrespondent problemNonrepresentative, nonrespondent problem

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Marketing Research Versus a Marketing Research Versus a Marketing Information SystemMarketing Information System

Marketing information system Marketing information system uses people, procedures, uses people, procedures, hardware, and software to accumulate, integrate, and hardware, and software to accumulate, integrate, and disseminate important data through reports to key disseminate important data through reports to key marketing decision makers. In contrast, marketing marketing decision makers. In contrast, marketing research is problem or project oriented.research is problem or project oriented.

Can also be defined as a system that scans and collects Can also be defined as a system that scans and collects data from the environment, makes use of data from data from the environment, makes use of data from transactions and operations within the firm, and then transactions and operations within the firm, and then filters, organizes, and selects data before presenting it filters, organizes, and selects data before presenting it as information to marketing management.as information to marketing management.

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MARKETING INFORMATION SYSTEMMARKETING ENVIRONMENT

Internal marketing

environment

Employees

Financial resources

Operating data

External marketing

environment

Customers

Competition

Government

Suppliers

Key Marketing Decision Makers

Marketing

Information

MARKETING MANAGERS

Analytical marketing

system

Data organization

EditingStorage

Data analysis

Modeling and simulation

Report generation and dissemination

Routine information

Nonroutine information

Information

Internal reports system

Marketing intelligence

system

Marketing research system

Exhibit 5-6

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Reasons for Business Marketing Reasons for Business Marketing Research and Information GatheringResearch and Information Gathering Market PotentialMarket Potential

• maximum total sales and profit potential of maximum total sales and profit potential of existing and new products existing and new products

Market-Share Analysis Market-Share Analysis • ratio of sales revenue of the firm to the total ratio of sales revenue of the firm to the total

sales revenue of all firms in the industrysales revenue of all firms in the industry Market CharacteristicsMarket Characteristics

• factors that identify buyers and potential factors that identify buyers and potential buyersbuyers

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Reasons for Business Marketing Reasons for Business Marketing Research and Information GatheringResearch and Information Gathering Sales AnalysisSales Analysis

• a.k.a. microsales analysisa.k.a. microsales analysis• measuring sales as they relate to customer measuring sales as they relate to customer

and product characteristics, geographic and product characteristics, geographic region, order size, and price or discount classregion, order size, and price or discount class

Forecasting Forecasting • Estimates of amount a firm expects to sell Estimates of amount a firm expects to sell

during a specific time period under specific during a specific time period under specific conditions and to specific segmentsconditions and to specific segments

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Reasons for Business Marketing Reasons for Business Marketing Research and Information GatheringResearch and Information Gathering CRM and Database DevelopmentCRM and Database Development

• Customer Relationship Management—Customer Relationship Management—an integrated software system which typically an integrated software system which typically includes:includes: Customer service and communicationCustomer service and communication Sales force automationSales force automation Campaign managementCampaign management Business intelligenceBusiness intelligence

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The CRM ProcessThe CRM Process

Determine Current Level of Customer Relationships

within the Firm

Establish Interaction with Current Customer Base

Acquire and Capture Customer Data Based on

Interactions

Use Technology to Store and Integrate Customer

Data

Analyze Data for Profitable/Unprofitable

Segments

Leverage and Disseminate Customer Information throughout

Firm

Exhibit 5-7 A Simple Flow Model of the Customer Relationship Management Process

Adapted from: Hair, Bush & Ortinau, Marketing Research Within a Changing Information Environment, 2nd Ed. (2003), p. 128.

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Reasons for Business Marketing Reasons for Business Marketing Research and Information GatheringResearch and Information Gathering Other ApplicationsOther Applications

• Setting sales quotasSetting sales quotas• Setting sales territoriesSetting sales territories• PricingPricing• Test-marketing auditsTest-marketing audits• Business trendsBusiness trends• New product acceptanceNew product acceptance• Advertising researchAdvertising research• Competitive differencesCompetitive differences

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Marketing Research Assignment: Marketing Research Assignment: A Second ChanceA Second Chance

Scenario:Scenario:

Clemson Electronics Inc. is a high-tech electronics manufacturer Clemson Electronics Inc. is a high-tech electronics manufacturer that has designed a mobile, quick-responding device to measure that has designed a mobile, quick-responding device to measure and identify hazardous waste in soils. Traditionally, soil samples and identify hazardous waste in soils. Traditionally, soil samples are collected, brought to a lab, and processed through a series of are collected, brought to a lab, and processed through a series of tests by a trained chemist. The new device is brought to the site, tests by a trained chemist. The new device is brought to the site, requires no special training, and can quickly provide an accurate requires no special training, and can quickly provide an accurate analysis. The general manager has assigned you to develop analysis. The general manager has assigned you to develop information upon which strategic planning will be based.information upon which strategic planning will be based.

How would you respond?How would you respond?