Lecture 1

AD 446 Marketing Research-The Nielsen

CompanyFall 2012-13

Özlem HESAPÇI (office:IB 514) [email protected]

Analysis...Synthesis...All punished!Either exiled or executed

Socrates (470-399 BC)The Greek philosopher. His students included Plato and Aristotle

Plato (428-347 BC)The Greek philosopher He believed that a philosophical compartment toward life would lead one to being just and ultimately happy

Aristotle (384-322 BC)The Greek philosopher and tutor to Alexander the Great.

Nicolas Copernicus (1473-1543)A Polish astronomer, proposed the heliocentric model that all the planets, including the earth orbited the sun.

Galileo Galilei (1564-1642)The Italian mathematician, constructed the first telescope and confirmed Copernicus’s view of universe.

Are you aware that we are all surrounded

by researches?

Consider Relevant Information

“The truly successful managers and leaders of the [twenty-first]

century will…be characterized not by how they can access

information, but how they can access the most relevant

information and differentiate it from the exponentially

multiplying masses of non-relevant information.”

P.Drucker

Department Store

“One day I received a phone call from a research analyst.

He was working for a department store chain and wanted help analyzing the data he had collected while conducting a marketing research study”.

What is the problem?

I found that much of the data collected was not relevant to the problem. The whole study was a waste of resources. A new study had to be designed and implemented to address the problem defined.

Then

?

WHAT IS RESEARCH?

Process of

organized, systematic, controlled, empirical, critical

investigation into a specific problem with the objective of finding answers or solutions

Characteristics of Research Methodology

1. Research requires a specific plan of action (or procedures)

2. Research originates with a question – problem

3. Research is guided by the research question(s) and often by hypotheses

4. Research usually divides the principal problem into more manageable subproblems.

5. Research demands a clear articulation of a goal

6. Research is based on facts called data

7. Research requires measurable data in attempting to resolve the problem initiated by the research.

HALLMARKS of SCIENTIFIC RESEARCH

Purposiveness: having a definite aim and purpose

Testability: applicability of testing methods

Replicability: consistent findings when repeated

Precision and Confidence: closeness to reality and probability of being correct

Generalizability: scope of applicability in different settings

Parsimony: Simplicity in explaining

Research Expenditures

Delay of Marketing Decision

Possible Disclosure of Information to Rivals

Possible Erroneous Research Results

Lack of resources to conduct quality research

Research findings cannot be implemented

Research objectives are unclear

Research question cannot be answered

Knowledge already exists

Decision has already been made

Decreased Certainity

Increased Likelihood of a Correct Decision

Improved Market Performance and Resulting Higher Profits

VALUE

COST

WHAT IS THE “VALUE” ofRESEARCH?

The difference between expected value with informationand expected value without information

WHEN TO CONDUCT RESEARCH ?

In general, research should be conducted only when the benefits exceed the costs!

Determining When to Conduct Marketing Research

Is sufficient time available before

a managerial decision must be made?

Is the information already on handinadequate for

makingthe decision?

Is the decision of considerable

strategicor tactical

importance?

Does the value of the

research informationexceed

the cost ofconducting research?

ConductMarketingResearch

Do Not Conduct Marketing Research

Time Constraints Availability of Data Nature of the Decision Benefits vs. Costs

Yes YesYesYes

No No No No

RESEARCH IS LIKE INSURANCE!

Both involve paying a fee to reduce risk...

Neither one prevents disaster!

TYPES OF RESEARCH

"Basic research "seeks to expand our knowledge of

fundamental relationships, with no specific application in mind.

"Applied research" seeks to address a specific, immediate

problem.

Most research conducted in the market is applied!

Research

Problem Identification Research

Problem Solving Research

Market Potential ResearchMarket Share Research

Market Characteristics ResearchSales Analysis Research

Forecasting ResearchTrends Research

Segmentation Research

Product Research

Promotion Research

Distribution Research

Pricing Research

PRODUCT RESEARCH

Test concept

Determine optimal product design

Test marketing

Package tests

Product modification

Brand positioning and repositioning

SEGMENTATION RESEARCHDetermine the basis of segmentationCreate lifestyle, demography, media usage profilesEstablish market potential and responsiveness for various segmentsSelect target markets

PRICING RESEARCH

Pricing policies

Product line pricing

Price elasticity of demand

Initiating and responding to price changes

PROMOTIONAL RESEARCH

Optimal promotional budget

Optimal promotional mix

Copy decisions

Media decisions

Creative advertising testing

Evaluation of advertising effectiveness

DISTRIBUTION RESEARCH

Determine…

Types of distribution channel

Location of retail and wholesale outlets

Attitudes of channel members

RESEARCH PROCESS

1- Establish a need for information 2- Specify Research Objectives,   Decision Problems , Research Problems3- Specify Information Needs and the Associated Research Design4-  Determine Sources of Data5- Develop Data Collection Forms 6- Design the Sample 7- Collect, Process, and Analyse the Data 8- Present the Results 

RESEARCH PROCESS1-Establish a need for information 

What is the purpose of the study?to identify a problem / opportunity? 

to solve a problem?

What information is needed to make the decision? 

Should research be conducted?

Intuition-Centered Decision Making

Research-CenteredDecision Making

Continuum of Marketing Research Sophistication

CHARACTERISTICS OF VALUABLE INFORMATION

CHARACTERISTICS OF VALUABLE INFORMATION

REDUCES UNCERTAINTY HELPS FOCUS DECISION MAKING

RELEVANCE

QUALITY

TIMELINESS

COMPLETENESS

RESEARCH PROCESS

1- Establish a need for information 2- Specify Research Objectives,   Decision Problems , Research Problems3- Specify Information Needs and the Associated Research Design4- Determine Sources of Data 5- Develop Data Collection Forms 6- Design the Sample 7- Collect, Process, and Analyse the Data 8- Present the Results 

2-Specify Research Objectives,  Decision Problems , Research Problems

A problem simply indicate an interest in an issue where finding the right answers might help to improve situations.

It does not necessarily mean that something is seriously wrong with a current situation!

“The formulation of the problem is

often more essential than its solution”

Albert Einstein

PROBLEM DEFINITION

Before defining the problem you should be able to answer the following questions:

What is the purpose of the research?How much is already known?Is additional background information necessary?What is to be measured ? How?Can the data be made available?Can a hypothesis be formulated?

The problem statement should be expressed as a problem--a matter of doubt, difficulty, or dissatisfaction the answer or solution to which is not immediately evident.

The problem should be stated in a way that convinces the researcher that its solution will leave the world a better place in which to live.

The statement of the problem should clearly describe the problem that will be addressed by the proposed study

It should be clear as to what is included in the problem and what is not included in the problem.

The Problem Statement

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Decision Problem vs.

Research Problem

Should the advertising campaign

be changed

Should a new product be

introduced?

To determine the effectiveness of the

current advertising campaign

To determine consumer preferences

and atitudes for the proposed

new product

Proper Definition of the Research Problem

Research Problem

Broad Statement

Specific Components

Look at the migros case in

1st lecture!

RESEARCH PROCESS

1- Establish a need for information 2- Specify Research Objectives,   Decision Problems , Research Problems3- Specify Information Needs and the Associated Research Design4- Determine Sources of Data 5- Develop Data Collection Forms 6- Design the Sample 7- Collect, Process, and Analyse the Data 8- Present the Results 

TYPES of DATA

Secondary Data

Primary Data

SECONDARY DATA

HISTORICAL ALREADY ASSEMBLED NEEDS NO ACCESS TO SUBJECTS

Classification of Secondary Data

Secondary Data

Ready to Use

Requires Further

Processing

PublishedMaterialsLiterature

Computerized Databases

Syndicated Services

Internal External

INTERNAL DATA as Secondary Source

ACCOUNTING INFORMATION SALES INFORMATION BACKORDERS CUSTOMER COMPLAINTS DATA WAREHOUSE

etc...

EXTERNAL DATA as Secondary Source

CREATED, RECORDED, OR GENERATED BY AN ENTITY OTHER THAN THE RESEARCHER’S ORGANIZATION

Published/Online Secondary Data –How to find?

Books, journals( published – online)

bookstores, libraries, e bookshttp://www.ideefixe.com/vitrin/default.asphttp://www.amazon.com http://library.bilgi.edu.tr/http://www.mediacatonline.comhttp://www.marketingturkiye.com

Census (Government Statistical Instititute – TUIK)http://www.tuik.gov.tr/http://www.worldbank.org/data/

Chambers of Commerce http://www.tr-ito.com/ITOPortal/mainIE.html

Directories of Trade Associationshttp://www.arastirmacilar.org/http://www.rv.org.tr/http://www.rd.org.tr/

 Databaseshttp://globaledge.msu.edu/ibrd/ibrd.asp

National - local newspapers

http://radikal.com.trhttp://milliyet.com.tr

International newspapers http://www.washingtonpost.com/http://www.nytimes.com/ etc........

Evaluating Secondary DataEvaluating Secondary Data

Does the data help to answer questions

set out in the problem definition?

Does the data apply tothe time period of

interest?

Does the data apply tothe population of

interest?

Applicabilityto projectobjectives

Do the other terms and variable

classifications presented apply?

Are the units ofmeasurement comparable?

If possible, go to the original source of the

data?

Evaluating Secondary Data (continued)Evaluating Secondary Data (continued)

Applicabilityto projectobjectives

Accuracy & costof the data

Is the cost of dataacquisition worth it?

Accuracyof the data

Is there a possibility of bias?

Can the accuracy of data collection

be verified?

Evaluating Secondary Data (continued)Evaluating Secondary Data (continued)

STRENGTHS of

SECONDARY DATA (vs. primary)

  cheaper

    available quickly

    easy to obtain

Possible Disadvantages

ofSECONDARY DATA

it may be:

Not Available; no prior study on this topic

Not Relevant; data may not fit current study different units of measurement different class boundaries or summarization out of date

Not Accurate; data may simply be wrong

COMMON RESEARCH OBJECTIVES FOR COMMON RESEARCH OBJECTIVES FOR SECONDARY DATA STUDIESSECONDARY DATA STUDIES

Fact Finding - Identifying consumption patterns- Tracking trends

Model building - Estimating market potential- Forecasting sales- Selecting trade areas and sites

Data Base Marketing - Development of Prospect Lists - Enhancement of Customer Lists

Literature survey!

Why Literature Survey is conducted?

In order not to ignore the important variables related with the problem concerned

Testability and replicability of the findings of the current research is enhanced.

Avoid the risk of “reinventing the wheel”

Significancy and relevancy of the problem investigated is revealed to the scientific community.

What variables to consider (parsinomy), why they are important. This helps to construct theoretical framework and develop the hypothesis for testing.

How to make use of Literature Survey?

Theoryvariable- hypothesis

Theory is a set of (network of) general propositions used to explain the relationships among certain phenomena

Theoryvariable- hypothesis

Hypothesis is a proposition that is empirically testable.

Empirical means that something is verifiable by research.

Theoryvariable- hypothesis

You need variables for stating propositions and then developing theories. A variable (or construct) is:generalized idea about a class of objects, attributes, occurrences, processes, behavior, attitude

eg; Package design, quality, brand image, taste of a product, school failure, achievement, inflation, strike, internet usage, reinforcement, productivity, aggressiveness, conformity, honesty, anxiety, brand equity

VARIABLE

A variable is anything that can take on differing, varying values

For.ex- exam score: from ‘0’ to ‘100’

For.ex- motivation: from ‘not at all’ to ‘very high motivation’

Exercise

Decision Problem: Develop a social environment for Bilgi Students

Research Problem: Analyse Life Styles

Variable / LS: AIO (Activities, Interests, Opinions) I like a lot of variety in my life.

Mostly disagree   Somewhat disagree   Somewhat agree   Mostly agree  

I follow the latest trends and fashions.Mostly disagree   Somewhat disagree   Somewhat agree   Mostly agree  

I often crave excitement.Mostly disagree   Somewhat disagree   Somewhat agree   Mostly agree  

Hypothesis: Class Level, Gender, Faculty, Department ~ AIO

TYPES of VARIABLES

Dependent VariableIndependent VariableMediating VariableIntervening Variable

DEPENDENT VARIABLE

It is the primary interest of the researcher.

The researcher’s goal is to explain the variability in the dependent variable.

DEPENDENT VARIABLEExample

A manager is concerned that the sales of a new product launched is not as high as expected.

The dependent variable is sales.

INDEPENDENT VARIABLE

It is the one that influences the dependent variable in either a positive or a negative way

INDEPENDENT VARIABLEExample

Dependent variable sales

Independent variable(s) IMC budget price of product package design of product etc....

MEDIATING VARIABLE

Presence of a third variable modifies the originally expected relationship between the dependent and independent variables

MEDIATING VARIABLEExample

Dependent variable sales

Independent variable(s) IMC budget

Mediating variable media used for advertisement

INTERVENING VARIABLE

It is one that surfaces between the time the independent variables operate to influence the dependent variable and their impact on the dependent variable

INTERVENING VARIABLEExample

Dependent variable sales

Independent variable(s) IMC budget

Mediating variable media used for advertisement

Intervening variable public reaction to the newly announced pollution created by the production process of the product

HYPOTHESIS DEVELOPMENT

Once the variables are identified, a logical reasoning must be done about the relationship among variables. And then this relation must be tested scientifically.

Formulating such testable statements is called hypothesis development

HYPOTHESIS DEVELOPMENT Example

H: There is no significant relationship between the imc budget spent for launching the new product and its sales

Exercise Solution

Dependent Dependent Variable:Variable:

sales sales

IndependenIndependent t

Variable(s):Variable(s):• IMC budget• price of product• package design of product

Mediating Mediating Variable:Variable: Media for Media for

advertisementadvertisement

Intervening Variable: Intervening Variable: public reaction to the newly announced pollution created by the production process of the product

EXERCISE

A soft drink firm will launch a new brand of beverage in two years time.

In a short time they plan to capture a significant portion of the market and they wonder about the factors of brand loyalty in soft drinks market.

Decision Problem: whether to launch a new brand of beverage.

Research Problem: the factors of brand loyalty in soft drinks market.

The research company finds out through the literature that taste, package design, price and availibility are the factors that increase loyalty.

And they also read in the literature that “recommendation of friends- word of mouth-” strengthens this relation.

VARIABLES

INDEPENDENT VARIABLES

-Taste

-package design

- price

-availibility

DEPENDENT VARIABLE

Loyalty to soft drinks

MEDIATING VARIABLE

WOM

Hypothesis

There is a significant relationship between loyalty to soft drinks and package design

There is a significant relationship between loyalty to soft drinks and price There is a significant relationship between loyalty to soft drinks and taste

There is a significant relationship between loyalty to soft drinks and availibility

There is a significant relationship between loyalty to soft drinks and WOM

EXERCISE 2

A Cosmetic Company wants to start a PR campaign in one month time. A celebrity woman will make testimonials with different products of the firm and will make speeches. To make sure of the effectiveness of the campaign they want to frame the content of speeches.

So company aims to learn the most important points to convince the customers prefer their brand.

Decision Problem: whether to start a PR campaign

Research Problem: the points of brand preference in cosmetic sector.

The research company finds out through the literature that easy pronounciation of brand name, price, fragrance and color of package

are the factors that influence brand preference.

And they also read in the literature that, education level of consumers, affect the priority of factors.

Besides the attractivenessof celebrity has high impact

VARIABLES

INDEPENDENT VARIABLES

•Easy pronunciation of brand name

•Price•Fragrance

•Color of pack

DEPENDENT VARIABLE

Brand preference in cosmetics

MEDIATING VARIABLE

Education

MEDIATING VARIABLE

Attractiveness of celebrity

INDEPENDENT VARIABLE(s)

-Demographic variables -Location of internet usage -# of hours/ week spent over Internet-Reason of Internet use-Other media consumption

MEDIATING VARIABLE

Gratification of internet use

DEPENDENT VARIABLE

Internet Addiction

EXERCISE

INDEPENDENT VARIABLE(s)

MEDIATING VARIABLE

DEPENDENT VARIABLE

Attitudes Towards an Ad

EXERCISE

Ruling out chance as an explanation

When a variable appears to have an effect on another variable, it is very important to be able to state with confidence that the effect was really due to the variable and not just due to chance.

RESEARCH PROCESS

1- Establish a need for information 2- Specify Research Objectives,   Decision Problems , Research Problems3- Specify Information Needs and the Associated Research Design4- Determine Sources of Data 5- Develop Data Collection Forms 6- Design the Sample 7- Collect, Process, and Analyse the Data 8- Present the Results 

Research Design: Definition

A research design is a framework or blueprint for conducting the research project.

It details the procedures necessary for obtaining the information needed to structure or solve research problems.

CRITERIA FOR SELECTING the RESEARCH DESIGN

What is the reason of the research? To what extent the result will affect your decision? Will it be used for a critical decision? (eg.like investment decision)What is the required degree of precision and confidence?Extent of generalization required. Is there sufficient time available for such a research?What is the budget allocated for the research?

A Classification of Research Designs

Research Design

Conclusive Research Design

Exploratory Research Design

Descriptive Research

Causal Research

EXPLORATORY RESEARCHwhen we don't know what is happening?

DESCRIPTIVE RESEARCHto learn about what is happening

CAUSAL RESEARCHto learn why something is happening

....

a given research project may contain elements of all three types of research designs !

Along with research design, the research process must be designed

setting, location for the study, unit of analysis, time horizon

SETTING & LOCATION

Natural setting; where events normally occurContrived setting; artificial

And the location specifically?

Unit of analysis

IndividualsDyadsGroupsOrganisationsCultures

TIME HORIZON

Cross Sectional

Longitudinal