SCANNING THE MARKETING

ENVIRONMENT & CONDUCTING

MARKETING RESEARCH

CHAPTER 3

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Importance of information in marketing

The major responsibility for identifying significant marketplace changes falls to the company’s marketers.

More than any other group in the company, they must be the trend trackers and opportunity seekers.

Although every manager in an organization needs to observe the outside environment, marketers have the following advantages:

They have disciplined methods for collecting information and

They spend more time interacting with customers and observing competition.

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What is a

Marketing Information System (MIS)?

A marketing information system

consists of people, equipment, and

procedures to gather, sort, analyze,

evaluate, and distribute needed, timely,

and accurate information to

marketing decision makers.

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Components of the MKIS

1. Internal company records.

2. Marketing intelligence activities.

3. Marketing research.

The company’s marketing information

system should be a cross between what

managers think they need, what managers

really need, and what is economically

feasible.

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Information Needs Probes

What decisions do you regularly make?

What information do you need to make these

decisions?

What information do you regularly get?

What special studies do you periodically request?

What information would you want that you are not

getting now?

What are the four most helpful improvements that

could be made in the present marketing information

system?

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Internal Records and

Marketing Intelligence

Order-to-Payment

Cycle

Databases,

Warehousing,

Data Mining

Marketing

Intelligence

System

Sales

Information

System

Order-to-Payment Cycle

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Internal Records and Marketing

Intelligence

Marketing mangers rely on internal reports on orders, prices, costs, inventory levels, receivables, payables, and so on. By analyzing this information, they can spot important opportunities and problems.

Order-to-Payment Cycle

The heart of the internal records systems is the order-to-payment cycle.

Sales Information Systems

Marketing managers need timely and accurate reports on current sales.

Companies must carefully interpret the sales data so as not to get the wrong signals.

Technology – software and hardware helps managers to collect, process and disseminate market information rapidly.

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Databases, Data Warehouses and

Data Mining

Today companies organize information in databases—customer databases, product databases, salesperson databases—and then combine data from the different databases.

Companies warehouse these data for easy accessibly to decision makers.

By hiring analysts skilled in sophisticated statistical methods, companies can ―mine‖ the data and garner fresh insights into:

Neglected customer segments.

Recent customer trends.

Other useful information.

The customer information can be cross-tabbed with product and salesperson information to yield still deeper insights.

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Marketing intelligence system

A marketing intelligence system is a set of

procedures and sources managers use to obtain

everyday information about developments in the

marketing environment.

Marketing managers collect marketing intelligence

by:

Reading books, newspapers, and trade publications.

Talking to customers, suppliers, and distributors.

Meeting with other company managers.

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Steps to Improve Marketing Intelligence

Train sales force to scan for new developments

Motivate channel members to share intelligence

Network internally and externally

Utilize a customer advisory panel

Utilize government data resources

Purchase information from agencies

Collect customer feedback online

The importance of market

information:

Good marketers want insights to help them

interpret past performance as well as plan

future activities.

They need timely, accurate, and actionable

information on consumers, competition, and

their brands.

They also need to make the best possible

tactical decisions in the short run and strategic

decisions in the long run.

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Types of Marketing Research Firms

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1. Syndicated-service research firms — These firms gather

consumer and trade information, which they sell for a fee.

Example: A.C. Nielsen Media Research.

2. Custom marketing research firms — These firms are hired to

carry out specific projects. They design the study and report the

findings.

3. Specialty-line marketing research firms — These firms provide

specialized research services. The best example is the field-

service firm, which sells field interviewing services to other

firms.

Small companies and MR

Small companies can hire the services of a

marketing research firm or conduct research

in creative and affordable ways, such as:

Engaging students or professors to

design and carry out projects.

Using the Internet.

Checking out rivals.

Tapping into marketing partner expertise.

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The Marketing Research Process

Define the problem

Develop research plan

Collect information

Analyze information

Present findings

Make

decision

Step 1: Problem Definition, the Decision

Alternatives and Research Objectives

Marketing management must be careful not to define the

problem too broadly or too narrowly for the marketing

researcher.

Some research is exploratory—its goal is to shed light on the

real nature of the problem, develop hypotheses and to suggest

possible solutions or new ideas. Qualitative methods – focus

groups, in-depth interviews

Some research is descriptive—it seeks to ascertain

accurately the variables being considered. Quantitative

methods - surveys

Some research is causal—its purpose is to test whether one

variable causes an effect in another4-16

Marketing research brief

Background summary: intro to company, products

Management problem: why this research is

undertaken, which business decisions are dependent

upon its outcome

Marketing research questions: a detailed list of

information necessary to make decisions

Intended scope of research: areas to be covered,

which industries, type of customer etc.

Tendering procedures (if outsourced): how agencies

are selected, inclusion of personnel CVs, referee

contact addresses, report layout etc.4-17

An example of a research brief:

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Step 2: Develop the Research Plan

The second stage of the marketing research calls for

developing the most efficient plan for gathering the

needed information.

Research Approaches: Marketers collect primary data

in five main ways:

through observation,

focus groups,

surveys,

behavioral data,

and experiments.

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Step 2: Develop the Research Plan

Data

Sources

Contact

Methods

Research

Instruments

Sampling

Plan

Research

Approach

Data Sources

Secondary data

Data that was collected for another purpose

and already exists

Primary data

Data that are freshly gathered for a specific

purpose or for a specific research project

Secondary data is the starting point for

MR- lower costs and ready availability

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Research Approaches

Observation

Focus Group

Survey Research

Behavioral Data

Experimentation

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Observational Research

Fresh data can be gathered by observing the

relevant actors and settings.

Ethnographic research is a particular observational

research approach that uses concepts and tools from

social sciences to provide a deeper understanding of

how people live and work.

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Focus Group

A focus group is a gathering of six to ten people who are

carefully selected based on certain demographic,

psychographic, or other considerations and brought together to

discuss various topics of interest at length.

A professional research moderator provides questions and

probes based on a discussion guide or agenda to ensure that

the right material gets covered.

Moderators attempt to track down potentially useful insights as

they try to discern the real motivations of consumers and why

they are saying and doing certain things.

The sessions are typically recorded.

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Survey research

Companies undertake surveys to

learn about people’s knowledge,

beliefs, preferences, and satisfaction,

and to measure these magnitudes in

the general population.

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Behavioral Data

Customers leave traces of their purchasing

behavior in store scanning data, catalog

purchases, and customer databases. Much

can be learned by analyzing these data.

Customers’ actual purchases reflect

preferences and often are more reliable than

statements offered to marketing researchers.

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Experimental Research

The most scientifically valid research is experimental

research.

The purpose of experimental research is to capture

cause-and-effect relationships by eliminating

competing explanations of the observed findings.

Experiments call for:

Selecting matched groups of subjects.

Subjecting them to different treatments.

Controlling extraneous variables.

Checking whether observed response differences are

statistically significant

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Research Instruments

Marketing researchers have a choice of

three main research instruments in

collecting primary data:

questionnaires,

qualitative measures, and

mechanical devices.

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Questionnaires

A questionnaire consists of a set of questions

presented to respondents.

Because of its flexibility, the questionnaire is by far the

most common instrument used to collect primary data.

Questionnaires need to be carefully developed, tested,

and debugged before being administered.

The researcher carefully chooses the questions, wording,

and sequence.

The form of the question can influence the response.

Marketing researchers used both closed-end and open-

end questions.

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Sampling Plan

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Sampling unit: Who is to be surveyed? Define

the target population that will be sampled.

Sample size: How many people should be

surveyed? Large samples give more reliable

results than small samples.

Sampling procedure: How should the

respondents be chosen? Probability sampling

allows the calculation of confidence limits for

sampling error.

Contact Methods

Mail Questionnaire

Telephone

Interview

Personal

Interview

Online

Interview

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Once the sampling plan has

been determined, the

marketing researcher must

decide how the subject should

be contacted: mail, telephone,

personal, or online interview.

Mail Questionnaire

The mail questionnaire is the best way to reach

people who would not give personal interviews

or whose responses might be biased or

distorted by the interviewers.

Mail questionnaires require simple and clearly

worded questions.

The response rate is usually low and/or slow.

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Personal Interviewing

Personal interviewing is the most versatile method.

The interviewer can ask more questions and record

additional observations about the respondent.

It is the most expensive method.

Subject to interviewer bias or distortion.

Personal interviewing takes two forms:

Arranged interviews.

Intercept interviews.

Online Interview: There is an increase in the use of

online methods

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Pros and Cons of Online Research

Advantages

Inexpensive

Faster

People - more honest online

More versatile

Disadvantages

Samples - small & skewed

Excessive turnover due to boredom

Prone to technological problems &

inconsistencies4-37

The Marketing Research Process

Data collection – expensive, prone to

error

Get right respondents - critical

Data collection improve - technology

Protect personal data of respondents

Step 3: Collect the Information

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The Marketing Research Process

Extract findings from collected data

Tabulate & develop frequency distribution

Averages & dispersion computed -

variables

Advanced statistical techniques &

decision models

Step 4: Analyze the Information

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The Marketing Research Process

The researcher present findings relevant to

major marketing decisions facing management

Researchers need to play a more proactive

consulting role in translating data and

information into insights and recommendations.

Step 5: Present the Findings

The Marketing Research Process

Research findings only provide additional information and insight

to managers.

Depending on their confidence in the finings, managers decide to

use it, discard it or carry out more research.

Marketing decision support system (MDSS)

Coordinated collection of data, systems, tools & techniques, with

software & hardware by which organization gathers &

interprets relevant information from business & environment &

used for marketing action

Step 6: Make the Decision

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