buad 307 market research lars perner, instructor 1 marketing research and marketing information...

BUAD 307 MARKET RESEARCH Lars Perner, Instructor 1

MARKETING RESEARCH AND MARKETING INFORMATION SYSTEMS

• Marketing Information Systems (MkIS)

• Primary vs. secondary data– Advantages and

disadvantages of each

• Marketing research tools


Learning Objectives

• Appreciate the costs and benefits of research

• Appreciate the uses of both primary and secondary market research

• Appreciate the respective advantages and disadvantages of different primary research methods

• Develop an understanding of research method problems that can lead to misleading or incorrect conclusions.

• Understand the proper sequence of research activities.


Marketing Research

• An “investment” to reduce uncertainty

• Can help guide decisions on– Whether to enter– Product characteristics– Promotional strategy– Positioning

• Must weigh costs and benefits of research– Money– Time spent

• No perfect method—tradeoffs between methods


Marketing Information Systems (MkIS)

• Set of procedures and methods for regular collection and analysis of information for marketing decisions– Databases (internal information

—e.g., sales volumes)– Market research

• Primary• Secondary


Data Mining

• Processing of vast amounts of data to find relationships between variables—e.g.,– Items frequently purchased together

“strategic adjacencies” (items placed together in retail setting)

– Seasonal patterns in sales– Customer segments


Primary Research Methods

• Surveys• Experimentation• Observation• Focus groups• In-depth interviews• Projective techniques• Physiological Measures• Online research• Scanner data• Conjoint Analysis• Hybrid Methods


Primary Research Methods

• Exploratory Methods– Observation (can be

more definitive with larger sample sizes and focus on specific behavior)

– In-depth interviews– Focus groups– Projective techniques

• Precision Methods– Experiments– Surveys– Panel– Scanner data


Choosing a Primary Research Method

Does the question involve OPINIONS or

BEHAVIOR?

Can the respondent answer accurately?

(What someone consciously believes may

differ from “deeper” opinions; beliefs about

hypothetical products may not be well developed.)

OPINIONS

EXPLORATORY or PRECISION research?

YES

FOCUS GROUPS

INDIVIDUAL INTERVIEWS

SURVEYS

EXPLORATORY PRECISION

BEHAVIOR

NO

PROJECTIVEMETHODS

SCANNER DATA (e.g., brand choice, impact of advertising,

previous purchases, competing brands, demographics)

EXPERIMENTATION (determine causality—e.g., impact of product design,

advertising message)

PHYSIOLOGICAL (e.g., determine reactions, attention,

arousal)

OBSERVATION (e.g., how long does the shopper spend? What does he or she look at? Is

anyone else involved?)

Can the relevant behavior be

observed in the customer’s natural

environment?

NOYES


Surveys

• Forms– Mail (self-administered, single time)– Mail panel (self-administered, multiple surveys

administered over time)– Telephone (from central location)– Mall Intercept– Computer/Internet

• Planned questions– Open-ended– Closed-ended

• Need large sample sizes for precise conclusions

– Small samples will have very large standard errors and thus large margins of error

– E.g., Presidential polls (with only two choices) require a little more than n=1000 to get results accurate to +/- 3%.

SURVEY COSTS:USUALLY LOW


Characteristics of Some Problematic Questions• Difficult to answer—respondent may

not have knowledge needed– Amounts spent annually on specific

product categories may not be known

• Sensitive (embarrassing)

• Two in one—e.g., “On a scale from 1 to 10, how fast and reliable are Microsoft programs?”

• Leading questions—giving the feeling of the “desired” response– “Do you agree that soft drinks with sugar

are bad for you?”

• Non-exhaustive question

• Non-mutually exclusive answers


Continuum Scales

• Rather than asking binary (e.g., “Yes” vs. “No”) questions, it is usually better to ask about a matter of degree or extent– E.g., “On a scale from 1-10, with 1 being ‘Not all interested’ and 10

being ‘Extremely Interested,’ how interested are you in fashion?– Asking simply “Yes” or “No” on “Are you interested in fashion?” would

result in people with very little actual interest potentially answering affirmatively

5 4 3 2 1Strongly Neither Strongly Agree Agree Agree Nor Disagree Disagree

Disagree


Some Areas Suited for Continuum Ratings

• Interest• Purchase

likelihood• Satisfaction/

Dissatisfaction• Brand loyalty• Price sensitivity• Knowledge• Experience

• Involvement• Decision control• Frequency or level of

use• Awareness• Information search• Personality traits• Variety seeking


Experimentation

• Subjects in different groups treated differently– E.g., for some, “target”

product is given better shelf space

– E.g., some get coupon

• Can help isolate causes• Subject is not biased by

questions—does not know how others are treated

EXPERIMENT COSTS:HIGH


My Simulated Store…

A shopper in the everyday low price condition…


Ash’s Instant Coffee Study

GROCERY SHOPPING LIST

Ground beefPotatoesApplesFlourSugarLaundry detergentInstant coffee6 cups of yogurtPaper towelsBananas

GROCERY SHOPPING LIST

Ground beefPotatoesApplesFlourSugarLaundry detergentGround coffee6 cups of yogurtPaper towelsBananas

Respondents were asked to describe their impressions of a housewife based only on her shopping list. These shopping lists differ only on one item.


Definition

• Confound: An illusion of one variable causing another because of correlation between two variables

• E.g., does having more toys cause children to be more intelligent?


Some types of confounds

BActual causeIllusory cause

A

A appears to cause B but it is actually B that causes A

Examples:•Diversification and profitability. Diversified firms tend to have higher profit levels. This may be because more profitable firms need to find ways to re-invest profits rather than because diversification causes profitability•Sales of a brand of soda are higher during weeks of heavy advertising. However, advertising is allocated when the stakes are greatest (e.g., during holidays and summer months). Thus, anticipated sales actually cause advertising.

You will NOT be asked to draw these diagrams on the exam or to explain the specifics of the different types of confounds.



B

Actual causeIllusory cause

A

A appears to cause B but both A and B are actually caused by C

Examples:•On the average, the more toys a child has, the higher his or her IQ. Both the number of toys and IQ may be caused by family resources such as income (providing for better nutrition and better education)•Individuals taking anti-depressive medication have higher rates of suicide than the general population. This is because those who take anti-depressive medication are more likely to be depressed. In fact, individuals suffering from depression are less likely to commit suicide than those with depression who do not take medication. •On the average, students who sit in the front of the class end up with higher grades. However, students choose where they sit.

C



B

Actual causeIllusory causeCorrelation

A

A appears to cause B but both A is correlated with C, with C ultimately causing B

Examples:•Sales of laundry detergent are higher during weeks when the brand is advertised. However, when the brand is advertised, there is always a price promotion (temporary price reduction). Most of the sales increase results from the price discount with a much smaller portion coming from advertising. The deeper the discount, the greater the sales.•Members of fraternities and sororities on the average have higher GPAs than people not in the Greek system. There may be some benefits to Greek membership causing higher grades, but members of the Greek system also tend to come from more privileged backgrounds.

C


Confounds

• What is cause, what is effect, and what is coincidence?

• Correlation is not necessarily cause• “Lurking” factors may be real cause

– Does sitting in front of the room cause higher grades?

– Does Prozac cause suicide?– Do fish-heavy diets cause stomach cancer?– Does fraternity/sorority membership cause

higher grades?


Some other influences on the relationship between variables

• Restricted range: One population includes only a portion of another or the sample includes only a small portion of the population range—e.g.,

– High school GPA school is a limited predictor of college GPA since students with higher high school GPAs tend to get into more competitive colleges

– Among residents of Rancho Palos Verdes, household income does not predict dental health. In society as a whole, many people have difficulty paying for quality dental care, but most residents of Rancho Palos Verdes are relatively affluent

• “Diluting” variables: Variables not considered “drown out” much of the effect of the variable of interest—e.g.,

– Income is a limited predictor of spending. Although a certain level of income (or wealth) is needed to buy certain things (necessary condition), income is not a sufficient condition. Many high income individuals are rather stingy and many lower income individuals live above their means.

– Ethnicity is a limited predictor of food preferences. Many Caucasians, African-Americans, Latinos, and Native Americans like raw fish.


Observation

• Looking at consumes in the field—e.g.,– Searching for product category area– Number of products inspected and time

spent on each– Apparent scrutiny of labels or other

information– Involvement of others– Behavior under limiting circumstances

(e.g., time constraints)

OBSERVATION COSTS:LOW TO HIGH

(DEPENDING ON CODING AND ANALYSIS NEEDED)


Taste Tests

• Not experiments unless– Two or more groups of people are treated differently (e.g.,

get different food version) or– The same person is being treated differently at separate

times (e.g., half the participants receive new formulation, then current; half the participants receive in the opposite order)

• “Triangle” Measure– Each respondent is given three items: One current, one

new, and one duplicate of either old or new– Asked to identify the one that is different and explain why


Focus Groups

• Groups of 8-12 consumers assembled

• Start out talking generally about context of product

• Gradually “focus” in on actual product

Usually NOT the best

approach. Should

NOT be chosen as

default research

method!

MOST APPROPRIATE

AS EARLYSTAGE METHOD

FOCUS GROUP COSTS:HIGH

(ESPECIALLY FOR THE AMOUNT OF INFORMATION COLLECTED)


REMINDER

• Focus groups are most useful for identifying issues that should be studied in more detail with more precise methods

• Due to the small sample size and social influence on individual responses, it is difficult to generalize much from focus groups


In-depth interviews

• Structured vs. unstructured interviews

• Generalizing to other consumers

• Biases– Subtle, inadvertent

feedback

IN-DEPTH INTERVIEW COSTS:

HIGH


Projective Techniques

• Getting at motivations that may not be consciously known— “Tell a story about this picture.”

• Measurement of attitudes consumers are unwilling to express– It is easier to admit something embarrassing

about someone else

• Consumer discusses what other consumer might think, feel, or do

PROJECTIVE METHODS COSTS:USUALLY HIGH IF PERSONAL INTERVIEWS OR

EXTENSIVEINTERPRETATION IS NEEDED


Physiological Measures

• Consumer bodily responses are watched at various phases of advertisement or other marketing exposure

• Tracking of– Eye movements

• For areas of focus• For attention, involvement

– Heart rate– Skin conductivity– Brain waves

• State of mind• Attention

PHYSIOLOGICAL METHODS COSTS:

HIGH


Online Research—Analysis of Customer Search Queries

• Unmet demand—search for product not found on site

• Message comprehension—comparison of search terms to media message

• Consumer vocabulary• Feedback analysis

ONLINE SURVEY COSTS:USUALLY LOW


Online Surveys

• Conditional branching—direct skip to relevant question

• Quality of response– Time pressures– Willingness to write out answers or respond to

multiple closed-ended questions– Willingness to read and follow instructions is

limited

• Reliability and browser compatibility issues


Conditional Branching

• Traditional surveys: Have you bought a new car during the last six months? If not, please skip to Question 11.

• Conditional branching: Respondent will be taken to the appropriate question according to answer

• Customization of questions– E.g., consumer lists three brands subsequent

questions ask about these specific brands by name


Other Online Tools

• “Click Stream Analysis:” Analysis of “clicking” path—how does the consumer get to a desired page or product?

• Shopping cart analysis

COSTS: HIGH START-UP COSTS;LOW VARIABLE COSTS

POSSIBLE WITH DEVELOPEDALGORITHMS

USUALLY LOW



USUALLY LOW


Searching for Reports of Personal Experience• Sources

– Blogs (blogsearch.google.com)

– Photos (e.g., Flickr, Webshots, Picasaweb, Google image search)

– Video (e.g., Youtube)

• Cautions– May be “staged” or

sensationalized

– May represent what the writer or photographer wants to show

– May be limited entries on certain “mundane” tasks such as dishwashing

• Some issues– Joy, enjoyment

– Decisions

– Anxiety

– Social setting and influence


Conjoint Analysis: Determining the Relative Importance of Product Attributes

• Consumers rate several “profiles” (combinations of features)

• Statistical analysis is used to “decompose” ratings into preferences


Example

Car #1Gas mileage: 30 mpgPrice: $18,200Safety record: AveragePerformance HighReliability Poor

How would you rate car #1 overallon a scale from 1 (Very poor) to7 (Excellent?)

1 2 3 4 5 6 7

Car #2Gas mileage: 20 mpgPrice: $15,200Safety record: ExcellentPerformance PoorReliability Excellent

How would you rate car #2 overallon a scale from 1 (Very poor) to7 (Excellent?)

1 2 3 4 5 6 7

Each subject will evaluate several (usually 16+) combinations. A statistical technique determines the importance of each feature.


Conjoint Analysis: Advantages

• Reveals ultimate preferences of consumers when competing influences exist

• Able to predict desirability of combinations not actually explored

• Can estimate contribution of each factor and assess its cost effectiveness– Will consumers pay $500.00 to

reduce the weight of a laptop computer by 2 lbs?


Conjoint Analysis: Disadvantages

• May be difficult for subjects to rate many combinations

• May need a large number of subjects for accurate measurement/sufficient precision

• Must identify relevant attributes and levels in advance

• Subject must know about product category (attributes must be meaningful)


Types of scanner data

• Supermarket club. This includes purchases by the specific customer when shopping at the respective chain (assuming that the customer presents his or her card). Purchases at other locations are not counted. Demographic information may be of limited accuracy. Shoppers are often motivated to join by large discounts (often 20-30%). This is also a method of price discrimination. Members may be given individualized coupons for possible products of interest. Only available for grocery products.

• Scanner data panels. In some communities, people can sign up to be part of a “panel.” Purchases at all local retailers are included (e.g. supermarkets, gas stations, drug stores, convenience stores). For a given customer, the database also includes TV viewing and demographics. Only available for grocery products.

• Aggregated retail sales records. Records of sales volumes of products by UPC may be available from an assortment of retailers. This information is NOT tied to individual customer data and purchase history. This is available for more types of products.


Scanner Panel Data

• Panel members in test communities agree to– Swipe a card prior to each purchase– Have purchases matched to

• Demographic profiles• Media/coupon exposure• Promotional status of competing brands• Past purchases

• Problems:– Aggregation over household– Aggregation bias--averages of

disparate segments obscure!– Only available for grocery and

some drugstore products



USUALLY LOW


Scanner Data Panel Research(Some of these variables are available for supermarket club data)

TELEVISIONEXPOSURE

DEMOGRAPHICINFORMATION

ANALYSIS

RECORDEDPURCHASES

HOUSEHOLDFILE

Purchase on occasion: Yes, noTime since previous purchasePrevious purchasesCurrent pricePrevious priceCurrent promotional statusPrevious promotional statusCurrent display statusPrevious display statusDisplay status of competing brandsPromotional status of competing brandsCoupon used: Yes, noCoupon available: Yes, noCoupon available for other brands? Yes, noAmount of couponFamily size

OccupationFamily sizeIncomeHome ownership

No. of ads seen by shopperAds seen for competing brands“Split cable”


SCANNER DATA BASED METHODS OF SEGMENTATION

• Price responsiveness– Price sensitivity (impact of current price on the likelihood of purchase and/or quantity

purchased). The brand elasticity is greater than the product category elasticity.

– Deal proneness (propensity to switch to a non-preferred brand when such a competing brand price promotes through sales, coupons, or other form of discount). [This is one form of limited brand loyalty]

– Purchase acceleration (“stocking up” when an item is on deal—sale and/or coupon)

• Non-price based brand switching – Variety seeking [Another form of limited brand loyalty]

– Accommodation of preferences of different household members

• Shopping practices– Purchase frequency (within product category) (as distinct from price responsiveness

measures listed above)

– Package size preference

• Store and/or retail chain loyalty


CHOOSING A PRIMARY RESEARCH METHOD

Does the question involve OPINIONS or

BEHAVIOR?

Can the respondent answer accurately?

(What someone consciously believes may

differ from “deeper” opinions; beliefs about

hypothetical products may not be well developed.)

OPINIONS

EXPLORATORY or PRECISION research?

YES

FOCUS GROUPS

INDIVIDUAL INTERVIEWS

SURVEYS

EXPLORATORY PRECISION

BEHAVIOR

NO

PROJECTIVEMETHODS

SCANNER DATA (e.g., brand choice, impact of advertising,

previous purchases, competing brands, demographics)

EXPERIMENTATION (determine causality—e.g., impact of product design,

advertising message)

PHYSIOLOGICAL (e.g., determine reactions, attention,

arousal)

OBSERVATION (e.g., how long does the shopper spend? What does he or she look at? Is

anyone else involved?)

Can the relevant behavior be

observed in the customer’s natural

environment?

NOYES

buad 307 market research lars perner, instructor 1 marketing research and marketing information...

Documents

market research lars

precision research

secondary market research

marketing research tools

secondary data advantages

analysis of information

surveys forms mail

relevant behavior