Conducting Marketing Research and

Forecasting Demand

3

Chapter Questions• What constitutes good marketing

research?• What are good metrics for measuring

marketing productivity?• How can marketers assess their return

on investment of marketing expenditures?

• How can companies more accurately measure and forecast demand

Gillette Used Extensive Market Research When Designing the Venus

What is Marketing Research?

Marketing research is the systematic design, collection, analysis, and

reporting of data and findings relevant to a specific marketing situation facing

the company.

The Marketing Research Process

Define the problem

Develop research plan

Collect information

Analyze information

Present findings

Makedecision

Step 1: Define the Problem

• Define the problem• Specify decision alternatives• State research objectives

Step 2: Develop the Research Plan

Data Sources

ContactMethods

ResearchInstruments

SamplingPlan

Research Approach

Research Approaches

Observation

Focus Group

Survey

Behavioral Data

Experimentation

Ethnographic

Research Approach• Observational Research (Gather fresh data by observing

relevant actors and unobtrusively observing as they shops or consumers products. Sometimes hold informal interview)

• Ethnographic Research (A particular observational research that uses tools from anthropology. Try to uncover unarticulated desires that might not surface. BKASH)

• Focus Group Research (A qualitative research try to revealed some specific issues under skilled moderator from six to ten homogeneous representative groups)

• Survey (Survey best suited for descriptive research to learn about people’s knowledge, belief, preference and satisfaction. It requires questionnaire)

• Behavioral Data (Observe the behavior of people in purchase decision)

• Experiment Research (Capture cause and effect relationship)

Research Instruments

QuestionnairesQualitative MeasuresTechnological Devices

Questionnaire Do’s and Don’ts

• Ensure questions are free of bias

• Make questions simple• Make questions specific• Avoid jargon• Avoid sophisticated

words• Avoid ambiguous words

• Avoid negatives• Avoid hypotheticals• Avoid words that could

be misheard• Use response bands• Use mutually exclusive

categories• Allow for “other” in fixed

response questions

Qualitative Measures

Word Association

Projective Techniques

Visualization

Brand Personification

Laddering

Research Instrument• Questionnaire (Consists of a set of questions presented to

respondents. Main purpose of collecting primary data)• Qualitative Measures (A unstructured approach to identify

possible responses)• Word Association (What does the Timex name means to you?)

• Projective Technique (Incomplete stimulus and ask them to complete)

• Visualization (Ask to draw perceptions)

• Brand personification (Brand personality delivers a picture of the more human qualities of the brand)

• Laddering (Ask why someone wants to buy a Nokia cell phone. ‘They look well built-attribute’)

• Technological Device

Technological Devices

Galvanometers

Tachistoscope

Eye cameras

Audiometers

GPS

Nielsen Outdoor Leverages GPS to Track Billboard Reach

Sampling Plan

• Sampling unit: Who is to be surveyed?• Sample size: How many people should be

surveyed?• Sampling procedure: How should the

respondents be chosen?

Types of Samples

Probability Samples• Simple random• Stratified random• Cluster

Nonprobability Samples• Convenience• Judgment• Quota

Types of SampleSimple Random Samples

• Every individual or item from the frame has an equal chance of being selected

• Selection may be with replacement or without replacement

• Samples obtained from computer random number generators

• Decide on sample size: n• Divide frame of N individuals into groups of k

individuals: k=N/n• Randomly select one individual from the 1st

group • Select every kth individual thereafter

Types of SampleSystematic Samples

N = 64

n = 8

k = 8 First Group

Types of Sample: Stratified Samples

• Population divided into two or more subgroups (called strata) according to some common characteristic

• Simple random sample selected from each subgroup

• Samples from subgroups are combined into one

PopulationDividedinto 4strata

Sample

Types of Sample: Cluster Samples• Population is divided into “clusters,” each

representative of the population• A simple random sample of clusters is

selected• All items in the selected clusters can be used, or items can be

chosen from a cluster using another probability sampling technique

Population divided into 16 clusters. Randomly selected

clusters for sample

Types of Sample Convenience Sampling

Convenience sampling attempts to obtain a sample of convenient elements. Often, respondents are selected because they happen to be in the right place at the right time.

• use of students, and members of social organizations

• mall intercept interviews without qualifying the respondents

• department stores using charge account lists

• “people on the street” interviews

Types of SampleJudgmental Sampling

Judgmental sampling is a form of convenience sampling in which the population elements are selected based on the judgment of the researcher.

• test markets

• purchase engineers selected in industrial marketing research

• expert witnesses used in court

Types of SampleQuota Sampling

Quota sampling may be viewed as two-stage restricted judgmental sampling.

• The first stage consists of developing control categories, or quotas, of population elements.

• In the second stage, sample elements are selected based on convenience or judgment.

Population Samplecomposition composition

ControlCharacteristic Percentage Percentage NumberSex Male 48 48 480 Female 52 52 520

____ ____ ____100 100 1000

Contact Methods

Mail Questionnaire

TelephoneInterview

PersonalInterview

OnlineInterview

Pros and Cons of Online Research

Advantages• Inexpensive• Fast• Accuracy of data,

even for sensitive questions

• Versatility

Disadvantages• Small samples• Skewed samples• Technological

problems • Inconsistencies

FORECASTING AND DEMAND MEASUREMENT

Forecasting and Demand MeasurementThe Measures of Market Demand

PotentialMarket

PenetratedMarket

TargetMarket

AvailableMarket

The Measures of Market Demand

• Market Potential: Set of consumers with sufficient level of interest in a market offer

• Available Market: Set of consumers who have interest, income and access to a

particular offer

• Target Market: Part of qualified available market the company decides to pursue.

• Penetrated Market: The set of consumers who are buying the company’s product

Vocabulary for Demand Measurement• Market demand (Total volume that would be bought by defined

consumer group in defined geographical area in a defined period in time under defined marketing program)

• Market forecast (The market demand corresponding to this level is called the market forecast)

• Market potential (The limit approached by market demand as industry)

• Company demand (The company’s estimated share of market demand with a marketing effort in a given time period)

• Company sales forecast (Expected level of company sales based on a chosen marketing plan)

• Company sales potential (The sales limit approached by company demand as company marketing effort increases relative to that of competitors)

Market Demand Functions

Market Demand Functions

How Can We Estimate Current Demand?

• Total market potential: The maximum sales available to all firms in a industry during given period under industry marketing effort TMP= Potential number of buyers X Average quantity purchased by a buyer X The price

• Area market potential• Market buildup method: Identifying all the potential

buyers in each market and estimating their potential purchases

• Multiple-factor index method

Calculating Brand Development Index

BDI indicates that Chicago and Toledo has high BDI and Portland is lowest. That indicates that brand has highly developed in first two places comparing to last place. There is scope of increasing brand sales.

Estimating Future Demand

• Survey of Buyers’ Intentions• Composite of Sales Force Opinions• Expert Opinion• Past-Sales Analysis• Market-Test Method

END

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-40

Question Types—Dichotomous

In arranging this trip, did you contact American Airlines?

Yes No

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-41

Question Types—Multiple Choice

With whom are you traveling on this trip?

No one

Spouse

Spouse and children

Children only

Business associates/friends/relatives

An organized tour group

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-42

Question Types—Likert Scale

Indicate your level of agreement with the following statement: Small airlines generally give better service than large ones.

Strongly disagree

Disagree

Neither agree nor disagree

Agree

Strongly agree

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-43

Question Types—Semantic Differential

American Airlines

Large ………………………………...…….Small

Experienced………………….….Inexperienced

Modern……………………….…..Old-fashioned

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-44

Question Types—Importance Scale

Airline food service is _____ to me.

Extremely important

Very important

Somewhat important

Not very important

Not at all important

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-45

Question Types—Rating Scale

American Airlines’ food service is _____.

Excellent

Very good

Good

Fair

Poor

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-46

Question Types—Intention to Buy Scale

How likely are you to purchase tickets on American Airlines if in-flight Internet access were available?

Definitely buy

Probably buy

Not sure

Probably not buy

Definitely not buy

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-47

Question Types—Completely Unstructured

What is your opinion of American Airlines?

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-48

Question Types—Word Association

What is the first word that comes to your mind when you hear the following?

Airline ________________________

American _____________________

Travel ________________________

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-49

Question Types—Sentence Completion

When I choose an airline, the most important consideration in my decision is: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-50

Question Types—Story Completion

“I flew American a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings.” Now complete the story. __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-51

Question Types—Picture (Empty Balloons)

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 4-52

Question Types—Thematic Apperception Test

Make up a story that reflects what you think is happening in this picture.