marketing research 1

Introduction, Nature & Scope of Marketing Research

Dr. A. K. Dey

Res Method _ 1: Dr. Dey 2

Reference Books

• Business Research Methods– Cooper & Schindler

• Marketing Research an Applied Orientation– Naresh Malhotra

• Marketing Research – Text & Cases– Boyd, Westfall & Stasch


Objectives

• Understand Marketing Research (MR)• Understand relevance of MR for

marketing decisions• Develop appreciation of MR & its

applications• Know the procedure of conducting • Develop familiarity with each step of

procedure


What is Business Research?

• A systematic Inquiry whose objective is to provide information to solve managerial problems.


Why Study Research?

• Research provides you with the knowledge and skills needed for the fast-paced decision-making environment


Why Managers need Better Information

• Global and domestic competition is more vigorous

• Organizations are increasingly practicing data mining and data warehousing


The Value of Acquiring Research Skills

• To gather more information before selecting a course of action

• To do a high-level research study • To understand research design• To evaluate and resolve a current

management dilemma • To establish a career as a research

specialist


Types of Studies Used for Research

• Reporting• Descriptive• Explanatory• Predictive

Types of Marketing Research are different from type of studies


Types of Studies

• Reporting– To provide an account or summation

of some data or generate some statistics

• Descriptive– To discover answers to questions

who, what, when, where and sometimes how


• Explanatory– It goes beyond description and

attempts to explain the reasons for the phenomenon that the descriptive study only observed

– Correlation Study or Hypothesis testing

Types of Studies


• Predictive– To predict when and in what

situations the event will occur– To also control a phenomenon once

we can explain and predict it

Types of Studies


Different Styles of Research

• Applied Research– Emphasis on solving practical (specific) problems– It could be exploring opportunities also

• Rectifying an inventory system that is resulting into lost sales

• Opportunity to increase stockholder wealth by acquiring another firm

• Pure Research/Basic Research– Emphasis on problem solving but of a general nature

(not specific)• Effect of coupon as against rebate to stimulate demand


What is Good Research?

• Following the standards of the scientific method– Purpose clearly defined– Research process detailed– Research design thoroughly planned– Limitations frankly revealed– High ethical standards applied


What is Good Research? (cont.)

• Following the standards of the scientific method (cont.)– Adequate analysis for decision-

maker’s needs– Findings presented unambiguously– Conclusions justified– Researcher’s experience reflected


The Manager-Researcher Relationship

• Manager’s obligations– Specify problems– Provide adequate background information– Access to company information gatekeepers

• Researcher’s obligations– Develop a creative research design– Provide answers to important business

questions


Manager-Researcher Conflicts

• Management’s limited exposure to research

• Manager sees researcher as threat to personal status

• Researcher has to consider corporate culture and political situations

• Researcher’s isolation from managers


When Research Should be Avoided

• When information cannot be applied to a critical managerial decision

• When managerial decision involves little risk

• When management has insufficient resources to conduct a study

• When the cost of the study outweighs the level of risk of the decision


Need for MR

• A manager takes decisions• His responsibility is to reduce risk of failure in

decision making• Risk arises due to lack of relevant information• A manager always seeks information to

improve quality of decision making• Information can be collected through MR• Hence, MR is an important tool for managerial

decision making


MR & Marketing Decisions

• For Production, Finance, Personnel– Most of the required info are available within the

organization; Hence easy to collect & analyze– Formal procedures are used to improve quality :

Stats Methods for QC, PERT & CPM, Queuing Theory, Optimization Techniques etc

• For Marketing – information mostly exist outside the organization– In consumer behaviour, perception, minds– In competitive moves– In new government rules & regulations– In social & political changes


MR & Marketing Decisions

• Other problems for collecting information required for marketing decisions are– Being external – collection is cumbersome &

expensive– Variables are often qualitative & dynamic –

making measurements difficult & inaccurate– Variables are complex & interact with each

other


Risk of using wrong information

• Choice of wrong information may lead to– Excessive expenditure– Decision going astray – Hind Sanitaryware– Becoming uncompetitive & losing out – S

Kumars Internet centers & Modular Kitchen– Market may vanish all of a sudden – fashion

garments


Sources of Knowledge• Empiricists attempt to describe, explain,

and make predictions through observation• Rationalists believe all knowledge can be

deduced from known laws or basic truths of nature

• Authorities serve as important sources of knowledge, but should be judged on integrity and willingness to present a balanced case


The Essential Tenets of Science

• Direct observation of phenomena• Clearly defined variables, methods, and

procedures• Empirically testable hypotheses• Ability to rule out rival hypotheses• Statistical justification of conclusions• Self-correcting process


Ways to Communicate

• Exposition – descriptive statements that merely

state and do not give reason

• Argument– allows us to explain, interpret,

defend, challenge, and explore meaning


Important Arguments in Research

• Deduction is a form of inference that purports to be conclusive

• Induction draws conclusions from one or more particular facts


The Building Blocks of Theory

• Concepts• Constructs• Definitions• Variables• Propositions and Hypotheses• Theories• Models


Understanding Concepts

• A concept is a bundle of meanings or characteristics associated with certain events, objects, conditions, situations, and behaviors

• Concepts have been developed over time through shared usage


Understanding Concepts

• The success of research hinges on:– how clearly we conceptualize– how well others understand the

concepts we use


What is a Construct?

• A construct is an image or idea specifically invented for a given research and/or theory-building purpose.


Types of Variables

• Independent • Dependent• Moderating• Extraneous• Intervening


• Independent & Dependent– Leadership style & Employee performance

or Job satisfaction– Price of a product & Demand

• Independent– Cause, Stimulus, Predictor, Antecedent

• Dependent– Effect, Response, Criterion, Consequence

Types of Variables


• Moderating– In each relationship there is one

Independent Variable (IV) & one Dependent Variable (DV)

• Four day work week (IV) will lead to higher productivity (DV)

– Moderating variable is a second independent variable that has significant effect on the originally stated IV–DV relationship

• Four day work week (IV) will lead to higher productivity (DV), especially among young workers (MV)

Types of Variables


• Extraneous– Infinite number of extraneous variables (EV)

exist that might effect the relationship– Most of such variables have little or no

effect on the given situation and these may be ignored

– Others may have highly random occurrence as to have little impact

– For productivity example: election of a new mayor, rainy days, bird flu, strike etc

Types of Variables


• Intervening– Intervening variable (IVV) is defined

as a factor which theoretically effects the observed phenomenon but can not be seen measured or manipulated

– Its effect can be inferred from the effects on the observed phenomenon• Four day work week (IV) will lead to

higher productivity (DV) by increasing job satisfaction (IVV)

Types of Variables


Propositions & Hypotheses

• Proposition– A statement about concepts that may

be judged as TRUE or FALSE if it refers to observable phenomenon

– Proposition formulated for empirical testing is Hypothesis

– Example• Infosys employees have higher than

average achievement motivation


The Role of the Hypothesis

• Guides the direction of the study• Identifies facts that are relevant• Suggests which form of research

design is appropriate• Provides a framework for

organizing the conclusions that result


Characteristics & Types of a Good Hypothesis

• A good hypothesis should fulfill three conditions:– Must be adequate for its purpose– Must be testable– Must be better than its rivals

• Hypothesis types– Descriptive– Relational: Correlation & Causal


Types of Hypothesis• Descriptive

– Describes the existence, size, form or distribution of some variables

– Eighty percent of shareholders of HLL favour increasing the company’s cash dividend

• It can also be stated as research question– Do shareholders of HLL favour an increased cash

dividend?• Either form is acceptable, but descriptive

hypothesis format has advantages– Encourages researcher to crystallize thinking– Encourages to think about implications of either an

accepted or rejected finding– Useful for testing statistical significance


• Relational– Statements that describe the

relationship between two variables with respect to some case

– Foreign (variable) refrigerators are perceived to be of better quality (variable) by Indian consumers (case)

Types of Hypothesis


• Two types: Correlation & Causal• Correlation

– Merely states that variables occur together without implying that one causes the other• People in Kerela give more importance to

education than people in Punjab• In an office old employees are more

responsive than young employees

Types of Relational Hypothesis


• Causal (or Explanatory)– There is an implication that existence

of (or a change in) one causes or leads to a change in the other• Causal variable is called Independent

variable and the other Dependent variable

• Advertisement causes higher sales• Increase in income leads to higher

savings

Types of Relational Hypothesis


The Value of a Theory

• Narrows the range of facts we need to study

• Suggests which research approaches will yield the greatest meaning

• Suggests a data classification system• Summarizes what is known about an

object of study• Predicts further facts that should be

found


Definition of Marketing Research

• American Marketing AssociationMR is the systematic gathering, recording and

analyzing of data about problems related to the marketing of goods & services

• Philip KotlerMR is the systematic design, collection,

analysis & reporting of data & findings relevant to a specific marketing situation facing the company

It may be relevant to add the word “continuous” to the above definitions


Purpose of MR

• To improve quality of decision making process by providing information

• To help reduce the risk associated with managerial decision making– Risk due to two types of uncertainties:

• About the expected outcome• About the future environment

Example : FORD Edsel – car for youth

• To discover opportunity & exploit profitably

For example : Frooti, Velvette, Mother Dairy, Dhara, Pan Parag


Scope of MR

• Consumers of products & servicesBuyer behaviour, Influencers, Buying habits, Incentives

• Product & product designPricing, Sourcing, Physical attributes

• Distribution ChannelsPerformance, Dealer Satisfaction, Own vs Multi-brand

• Advertising ImpactImage, Positioning, Media Planning, Message Content &

Prioritizing • Macro Level Phenomenon

Govt spending. Mood of the Industry, State of Economy


MR Procedure

• Five Steps1.Problem Definition2.Research Design3.Field Work4.Data Analysis5.Report Preparation & Implementation


The Management-ResearchQuestion Hierarchy

1 Management Dilemma

Measurement QuestionsInvestigative

Questions

Research Questions

Management Questions

Management Decision

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45

6


The Management-ResearchQuestion Hierarchy

1 Why are sales declining in south while sales are booming in all other regions?

Conduct an employee survey for outcomes of change in compensation structure

If compensation scheme is changed, will good sales persons leave?

How can we improve sales in south?

Introduce individual incentive? Quota based incentive? Advertise more?

Management Decision

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4

56


Working with the Hierarchy

• Management Dilemma– The symptom of an actual problem– Not difficult to identify a dilemma,

however choosing one to focus on may be difficult

– Needs proper prioritizing



• Management Question Categories– Choice of purposes or objective– Generation and evaluation of

solutions– Troubleshooting or control

situation



• Fine tune the research question– Examine concepts and constructs – Break research questions into specific

second-and-third-level questions– Verify hypotheses with quality tests– Determine what evidence answers

the various questions and hypothesis– Set the scope of your study



• Investigative Questions– Questions the researcher must

answer to satisfactorily arrive at a conclusion about the research question



• Measurement Questions– The questions we actually ask to

extract information from respondents


Other Processes in the Hierarchy

• Exploration– Recent developments– Predictions by informed figures about

the prospects of the technology– Identification of those involved in the

area– Accounts of successful ventures and

failures by others in the field


Research Process Problems

• The Favored Technique Syndrome• Company Database Strip-Mining• Unresearchable Questions• Ill-Defined Management Problems• Politically Motivated Research


MR Procedure

• Five Steps1.Problem Definition2.Research Design3.Field Work4.Data Analysis5.Report Preparation & Implementation


1. Problem Definition

• Any situation requiring further investigation is a problem

• Not all problems require fresh MR to be carried out. Many can be decided upon based on past data, trend, experience

• Distributor Credit• Manufacturing out put• Stocking level

• Problem Definition should be• Specific – neither too broad nor too narrow• Target outcome should be precise• Should be manageable within time & resource

available


1. Problem Definition – an example

Incomplete Problem Definition

Better Problem Definition

1. Product Refrigerator Refrigerator – Ordinary & Frost free

2. Market West Zone West Zone with spl ref to Mumbai, Nashik, Pune & Nagpur

3. Market Segment

---- Office & Institutional Sector & NOT Households

4. Current Mkt Share

Not available 12% over all3% in Office & Inst

5. Problem Sales not picking up at the rate at which they should

Last year our growth 5%Industry grew by 25%

6. MR Problem To find out the reason

To find out the reasons for shortfall in our growth rate in office & inst segments & suggest specific strategies followed by Brands A & B


2. Research Design

• It spells out how to achieve stated MR objectives

• Consists of – Data Collection Method– Specific Research Instruments– Sampling Plan


2. Research Design

– Data Collection Method• Secondary Data• Primary Data

– Observation– Survey (Most widely used)– Experimentation

– Specific Research InstrumentsCamera, Tape, People Meter, Tally Sheet, Questionnaire

– Sampling Plan– Who is to be surveyed? Sampling unit– How many? Sample size– How are they to be selected? Sampling Procedure– How are they to be reached? Sampling Media


Questionnaire Design – Some comments• Arrangement should be from easy to difficult• Easy to understand language• Sequencing should be proper – no back & forth

references• Only important questions must be asked• Short questionnaire helps in obtaining better

response• More close ended questions – they help in

analysis• Response should be captured on proper scaling• Decide whether to give incentive to respond or

not


3. Field Work

• Involves planning, execution, supervision & checking for errors

• MR must be planned & executed well so as to complete within resource & time limits

• Progress to be closely monitored to avoid time & cost overrun

• Extensive back checks & spot checks will improve the quality of MR output


4. Data Analysis

• Done in two phases– Classification of raw data

• Quantitative vs Qualitative• Chronological, Geographical,

Demographic

– Summarizing the data• Frequency distribution, Mean, Median,

Mode, Range, Variance, Standard Deviation

• Data Analysis Methods – Four classes


4. Data Analysis……….Contd.

• Analytical Methods – Four classes:– Tests of Significance :Sampling Statistics,

Chi Square Analysis & Analysis of Variance– Explaining Observed difference I: Cross

Tabulation, Correlation & Regression – Explaining Observed difference II: Linear

Discriminant Analysis & Automatic Interaction Detector

– Identifying Interdependencies: Cluster, Factor & Conjoint Analysis


5. Report Presentation

• Report must have following sections– Executive Summary– Objectives & Methodology– Summary, Conclusion, Recommendation– Sample Characteristics & Basis of selection– Detailed findings– Questionnaires & other supporting

documents


Marketing Research


Secondary Research

Secondary DataInexpensiveMay not be relevantMay be old


Internal Sources

• Company Accounts• Internal Reports and Analysis• Stock Analysis• Retail data - loyalty cards, till data, etc.


External Sources

• Government Statistics • Trade publications• Commercial Data – IMRB, Gallup, Mintel, etc.• Household Expenditure Survey• Magazine surveys• Other firms’ research• Research documents – publications, journals,

etc.


Sampling MethodsSampling Methods:Probability Methods: Random,

Stratified Random, Cluster Non Probability Methods: Convenience, Quota, & Judgment


Sampling Methods - Probability

• Sampling Methods:• Random Samples – equal chance

of anyone being picked– May select those not in the target

group – indiscriminate– Sample sizes may need to be large to

be representative– Can be very expensive



• Stratified or Segment Random Sampling– Samples on the basis of a

representative strata or segment– Still random but more focussed– May give more relevant information– May be more cost effective


• Cluster Sampling– Primarily based on geographical areas

or ‘clusters’ that can be seen as being representative of the whole population



Sampling Methods – Non Probability

• Quota Sampling– Again – by segment– Not randomly selected– Specific number on each segment are

interviewed, etc.– May not be fully representative– Cheaper method


Sampling Methods – Non Probability

• Multi-Stage Sampling– Sample selected from multi stage

sub-groups

• Snowball Sampling– Samples developed from contacts of

existing customers – ‘word of mouth’ type approach!


Primary Research


Primary Research

• Primary Research– First hand information– Expensive to collect, analyse and evaluate– Can be highly focussed and relevant– Care needs to be taken with the approach

and methodology to ensure accuracy– Types of question – Closed – limited

information gained; Open – useful information but difficult to analyse


Qualitative & Quantitative

• Quantitative and Qualitative Information:

• Quantitative – based on numbers – 56% of eighteen year olds drink cold drink at least four times a week.Doesn’t tell you why, when, how.

• Qualitative – more detail – tells you why, when and how!


Purpose of Marketing Research


Marketing Research

• Advantages of Marketing Research– Helps focus attention on objectives– Aids forecasting, planning and strategic

development– May help to reduce risk of new product

development– Communicates image, vision, etc. – Globalisation makes market information

valuable (HSBC adverts!!)


Marketing Research

• Disadvantages of Marketing Research– Information only as good as the

methodology used– Can be inaccurate or unreliable– Results may not be what the business wants

to hear!– May stifle initiative and ‘gut feeling’– Always a problem that we may never know

enough to be sure!

marketing research 1

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