Market Research

Essentials of Essentials of Marketing ResearchMarketing Research

MALHOTRAHALLSHAW OPPENHEIM

AN APPLIED ORIENTATION

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1- 2Malhotra Hall Shaw Oppenheim Essentials of Marketing Research © Copyright 2004 Pearson Education Australia

PART ONE

Chapter 1

The Marketing Research The Marketing Research ProcessProcess

1-3Malhotra Hall Shaw Oppenheim Essentials of Marketing Research © Copyright 2004 Pearson Education Australia

Chapter ObjectivesAfter reading this chapter, you should be able to:

Understand the nature and scope of marketing research. Explain the role of marketing research in business

management decision-making. Discuss the types and roles of research suppliers. Explain the importance of ethical behaviour Appreciate the components of the marketing research

process. Learn about the process used for defining the marketing

research problem. Discuss the background and environmental factors

affecting the definition of the research problem. Clarify the distinction between the management decision

problem and the marketing research problem.


Chapter Objectives (cont’d)

Understand the link between the research problem and the research design.

Understand the importance of clearly specifying the information required from research.

Define the elements of the research brief. Understand the relationship between the research brief

and the research proposal.


History of Market Research

19th Century The Birth

1900-1930s Childhood

1930-1950s Adolescence

1950-1960’s Teenage

1960-1970s Young Adult

1970-1980s New Executive

1980-1990s Professional

1990-2000 Maturity

2000 onwards Wisdom (or Second Childhood?)


Marketing Research (MR) is the systematic and objective identification, collection, analysis, and dissemination of information for the purpose of assisting management in decision- making related to the identification and solution of problems and opportunities in marketing.

Definition


MR and Decision Making

MR should produce information that is: Relevant

Accurate

Reliable

Valid

Timely


Figure 1.2 The Central Role of Marketing Research


Figure 1.3 A Typology of Business Decision Making


Classification of MR

Problem Identification Research

Identifies problems not yet apparent

Often undertaken for survival and long term growth of the company

Problem Solving Research

Used once the problem has been identified

Used in making decisions to solve problems


Examples of Problem Identification Research

Market potential research Market share research Image research Market characteristics research Sales analysis research Forecasting research Business trends research


Examples of Problem Solving Research

Segmentation research

[lifestyle, demographics]

Product research

[concepts, packaging]

Pricing research

[price elasticity, price line pricing]

Promotion research

[advertising effectiveness, sales promotion] Distribution research

[location of retail outlets]


MMIS and DSS

Marketing Management Information System A formalised set of procedures for generating,

analysing, storing, and distributing information to marketing decision makers on an ongoing basis.[invoices, annual reports, previous research]

Decision Support Systems Integrated system including hardware,

communications network, database, model base, software base and the DSS user that collects and interprets information for decision making.


MMIS vs DSS

Marketing Management Information System

Structured problems Use of reports Rigid structure Information displaying

restricted Can improve decision

making by clarifying raw data

Decision Support Systems

Unstructured problems Use of models User-friendly interaction Adaptability Can improve decision

making by using “what if” analysis


Figure 1.6 Market Research Suppliers and Services


Some Australian Research Companies

AC Nielsen amrinteractive Australian Fieldwork Solutions BIS Shrapnel Chant Link & Associates Colmar Brunton Fieldforce FieldWorks Lynx Millward Brown Australia Quantum Market Research Roy Morgan Research Sweeney Research Wallis


MR Job advertisement

FMCG - Market Research role

Reporting to the MR Manager you will be required to undertake and manage market research projects, ensuring these results are objectively analysed and interpreted. You will prepare summaries and develop independent conclusions and recommendations so that consumer understanding is integrated into key strategies and brand development activities. In addition, you will be responsible for ensuring that presentations are timely, relevant and address key business issues.

A clear thinker and strategist, you will have tertiary qualifications in marketing, psychology and/or statistics. Experience as a market research supplier or buyer is essential for this position.

Conceptual and analytical skills combined with influential communication skills are essential. An insight and understanding of marketing principles is desired.


Skills and Knowledge required by Market Researchers

Knowledge of marketing, psychology and consumer behaviour

The ability to understand and interpret secondary data

The ability to complete projects on time Presentation skills Foreign-language competency Negotiation skills Computer proficiency Interpersonal skills Statistical skills Think creatively


Marketing Research Process

Marketing or business definition problem or opportunity

Development of an approach and specifying research objectives

Research design formulation

Field work or data collection

Data preparation and analysis

Report preparation and presentation


Ethics in Marketing Research

Address whether action is right or wrong, good or bad

Most ethical decisions have extended or long term effects

Ethical decisions are rarely black and white

Alternatives have both positive and negative outcomes


Stakeholders in MR

Public Respondents

Client Researcher


Unethical Practices

Problem definition Using surveys as a guise for selling or fundraising Following personal agendas of the researcher or client Conducting unnecessary research

Approach to the problem Soliciting proposals to gain research expertise without

pay Using findings and models for specific clients or

projects for other projects


Unethical Practices cont.

Research design Formulating a research design more suited to the

researcher’s rather than the clients needs Using secondary data that are not applicable Disguising the purpose of the research Not maintaining anonymity of respondents Disrespecting privacy of respondents Misleading questions Embarrassing or putting stress on respondents Using measurement scales of questionable reliability

and validity Designing overly long questionnaires or sensitive

questions Using inappropriate sampling procedures and sample

size


Unethical Practices cont

Fieldwork Increasing the discomfort level of respondents Following unacceptable fieldwork procedures

Data Preparation and analysis Identifying and discarding unsatisfactory respondents Using statistical techniques when the underlying

assumptions are violated Interpreting the results and making incorrect

conclusions and recommendations

Report Preparation and Presentation Using incomplete, biased and inaccurate reporting


Code of Professional Behaviour

Market Research Society of Australia

www.mrsa.com.au

Code of Professional Behaviour covers: Responsibilities to respondents Researchers’ professional responsibilities Researchers’ and Clients mutual rights and

responsibilities


Importance of Defining the Problem

Problem definition involves stating the general problem and identifying the specific components of the marketing research problem.

Critical in setting the directions for all subsequent phases of the marketing research process.

Inadequate problem definition is a leading cause of failure of marketing research projects.


Case: Where did Coca-Cola go wrong?

Coca-Cola conducted blind taste tests in the early 1980s to determine consumer taste preferences.

Results indicated that consumers preferred a sweeter product, similar to Pepsi Cola. Coca-Cola introduced the new taste Coke and named it “New Coke” and discontinued the original Coke.

In less than 3 months, New Coke was discontinued after customer outrage that the original Coke was removed.

It has been suggested that Coca-Cola narrowly defined the research problem.

Coca-Cola failed to measure the emotional attachment and loyalty to the existing brand name and its effect on subsequent

purchase and consumption behaviour.

Source: Shields, M.J. 1985 ‘Coke Fizzles, Fails to Factor in Customer Loyalty’, Adweek, 15 July, p.8.


Tasks involved in the Problem Definition Process

Collect the background information

Consider the environmental context of the problem

Conduct problem or opportunity audit

Step 1: Marketing or Business Problem Definition

Specify the Management Decision Problem

State the Purpose of the project

Define the Marketing Research Problem

Prepare the Marketing Research Brief


Collect the Background Information

Discussion with decision makers Interviews with industry experts Reviewing existing information Secondary data analysis Exploratory qualitative research


Environmental Context of the Problem

Past information and forecasts Resources and constraints Organisational and decision maker’s objectives Buyer behaviour Legal environment Economic environment Marketing and Technological skills


The Problem or Opportunity Audit

Management decision problems and marketing research problems encompass both problems and opportunities.

Conduct a problem audit to understanding the origin and nature of the problem. Discussion with decision maker should uncover: Symptoms Alternative course of action Background information Suspected causes and possible solutions Anticipated consequences Corporate culture of the organisation


The Problem or Opportunity Audit (cont)

Symptoms

Declining sales Decline in profits Losing market share Inability to meet sales

forecasts Low traffic Dissatisfied customers

Management



Possible Causes

Low-quality product or service

Incorrect pricing Inappropriate

distribution channels Low awareness of

company or brands Poor image of the

company Unmotivated sales

force Researcher



The interaction between the decision maker and the researcher should be characterised by the 7Cs

Co-operationConfidence

Candour

Closeness

Continuity

CreativityCommunication


MDP and MRP

Management Decision Problem (MDP) What the decision maker needs to do? Action oriented

eg. Should the advertising campaign be changed?

Marketing Research Problem (MRP) What information is needed and how that

information can be obtained effectively and efficiently?

Information orientedeg. To determine the effectiveness of the current advertising campaign


Defining the MRP

Broad statement

To understand the decision making process of potential university students in their choice of university .

Specifically,

To determine the factors potential students consider to be important in selecting a university.

To determine when decisions regarding university selection are made.

To determine sources of information and people who influence potential students decision regarding choice of university.


Estimating the value of research and setting a budget

Expected Value (EV) = Probability (Pr) x Value of Outcome (Vr)

Project Return (profit)$2million

EV with$2 x 0.7 = $1.4 million

EV with$2 x 0.3 = $0.6 million

Difference contributed by research (A – B)

1.4 – 0.6 = $0.8million

A

B

With Research

Without research

Probability of success 0.3

Probability of success 0.7


Contents of Marketing Research Brief

Executive summary Introduction Background Management decisions - Research Purpose Research Objectives (research information) Scope of the Project Proposed Research Approach


Contents of Marketing Research Brief cont.

Reporting Requirements Timing Budget Materials Contractual Arrangements Requirements for proposals Project Management