“Problems” in Marketing Research

MAR 6648: Marketing ResearchJanuary 6, 2010

Overview

• What are the steps we take when conducting marketing research?

• How do figure out what to do with our research?

• How do we decide when to do research?

Marketing Research is…

• The process of monitoring the environment:– Customers, competitors, other influences (legal,

political, global…)• The eyes and ears of a corporation• A tool to help you get close to your customers• A decision aid for marketing strategies and tactics• A tool to reduce uncertainty in outcomes• Costly in terms of time, effort, and money– It should be used when its value > its cost

Customer groups:•Consumers•Employees•Shareholders•Suppliers

Customer groups:•Consumers•Employees•Shareholders•Suppliers

Controllable marketing variables:•Product•Price•Place•Promotion

Controllable marketing variables:•Product•Price•Place•Promotion

Uncontrollableenvironmental factors:•Economy•Technology•Competition•Socio-cultural•Legal/political

Uncontrollableenvironmental factors:•Economy•Technology•Competition•Socio-cultural•Legal/political

Marketing Researchers

Marketing Managers:•Segmentation•Target segments•Marketing programs•Performance and control

Marketing Managers:•Segmentation•Target segments•Marketing programs•Performance and control

Assess information needs

Assess information needs

Provide information

Provide information

Make marketing recommendationsMake marketing

recommendations

The Marketing Research Process

The Marketing Research Process

Research Purpose and Objectives

• They may sound similar, but they’re not the same thing

Research PurposeResearch Purpose

Objective 1

Objective 1

Objective 2

Objective 2

Objective 3

Objective 3 …

So, What’s a “Research Purpose”?

• The Research Purpose is managements’ answer to the question:

• “Why should we do the research?”

Managerial problem

Managerial problem

Managerial opportunityManagerial opportunity

Research PurposeResearch Purpose

Problem-Driven Research

• It’s important to distinguish between problems and their symptoms– Oh no, we’re losing money!

• Symptoms arise due to an underlying cause

SymptomSymptom

Cause A

Cause A

Cause B

Cause B

Cause C

Cause C?

?

?

Establishing Research Objectives

Research PurposeSymptom IdentificationSymptom Identification

Potential Causes of Symptoms

Potential Causes of Symptoms

Known Information

Information needed to find actual

causes

Information Gap

Known Information

Research ObjectivesResearch Objectives

Research Purpose vs. Objectives

• Example: Imagine you’ve been hired to help the manager of an independent dog chew toy company– The company has experienced declining sales– The manager is pretty sure this is related to the

online order experience

Research Purpose vs. Objectives

Opportunity-Driven Research

• With opportunity driven research, the research problem is usually about how to respond to the opportunity

OpportunityOpportunity

Action A

Action A

Action B

Action B

Action C

Action C?

?

?

Establishing Research Objectives

Research PurposeOpportunityOpportunity

Potential ActionsPotential Actions

Known Information

Information needed to determine

best action

Information Gap

Known Information

Research ObjectivesResearch Objectives

Research Purpose vs. Objectives

• Example: Imagine the dog chew toy company would like to expand his business, to buffer himself from declines in his dog toy business – He wants to know whether he can successfully

branch into cat toy sales as well

Research Purpose vs. Objectives

So, a Research Objective…

• Translates management’s purpose into specific questions that need to be answered by the research

• States as precisely as possible what information is needed to fulfill the research purpose – I.e., to close the information gap

The Marketing Research Process

Backward Marketing Research

• 1. Determine how results will be implemented• 2. Determine what final report will contain• 3. Specify analyses needed to fill in the blanks• 4. Determine data needed to carry out analysis• 5. Scan secondary data sources• 6. Design instrument and sample plan for data• 7. Collect data, analyze it, and—finally—see it

used

Marketing Research DesignsMarketing Research Designs

Exploratory Research Designs

Exploratory Research Designs

Conclusive Research Designs

Conclusive Research Designs

DescriptiveDescriptive CausalCausal•To provide insights and understanding•Information needed is loosely defined•Research process is flexible and unstructured•Sample is small and non-representative•Analysis is qualitative•Results tentative•Generally followed by further conclusive research

•To test specific hypotheses and examine relationships•Information needed is clearly defined•Research process is formal and structured•Sample is large and representative•Data analysis is quantitative•Results conclusive•Findings used as input into decision making

Research Design

Exploratory Research

Quantitative Research

Secondary Data

Qualitative Research

Descriptive Research

Causal Research

Yes No

Yes Descriptive Research (Surveys)

Exploratory Research (Focus Groups, In-Depth Interviews)

No

Descriptive Research (Observation, Projection, Counterbiasing)

Causal Research (Experiments)

Phenomenological (Post-Positivism)

Secondary Research (Internal/External)

Which research design is best?Does the researcher know the question?

Does the respondent know the answer? Will she tell you?

The Marketing Research Process

Data Collection and Survey Design

Mail survey

Database

ObservationPersonal Interview

Phone Interview

Test market

Internet survey

SAMPLE?

The Marketing Research Process

Data Analysis

Data Insights

?

Analysis

Note: The framework used for analysis determines, in part, which data we collect!

Interpretation

• Insights:– What have we learned from the analysis?

• Recommendations:– Can the findings be put into actions?– If so, how?– Is more research needed?

The Marketing Research Process

Communication: Client and Researcher

• Most important factor in predicting a good outcome of the research:– Having a close relationship between the

researcher and the corporate decision maker

• Work out precise and specific objectives of the research—jointly with the decision maker

Communication: Client and Researcher

• Typical problems:– Research questions are too broad

• Manager wants to know everything– Internal/political bias

• Incentives for the researcher?

• Think through all possible findings—how can they lead to possible actions?– Construct scenarios– This will likely sharper the original research questions

(or suggest new ones) by eliciting more specific goals for the client

The Marketing Research Process

The Value of Research

• Research can be expensive!• We do not want to do research unless it is

valuable to us• Before embarking on a research project, we

need to carefully evaluate costs and benefits– Is it worth it?– Should we always do research?

First question

• Will research findings change our actions?

The Value of Research

• Case A: Consider the following scenario:– You are considering introducing a new product– If you introduce

• With a 60% change of success ($4 million)• With a 40% change of failure (-$2.5 million)

– If you don’t introduce• $0 for sure

– If you do research you will learn the likely outcome (success or failure)

• What’s the maximum amount of $ you should spend on research?

The Value of Research

• Case B: Consider the following scenario:– You are considering introducing a new product– If you introduce

• With a 60% change of success ($4 million)• With a 40% change of failure ($1 million)

– If you don’t introduce• $0 for sure

– If you do research you will learn the likely outcome (success or failure)

• What’s the maximum amount of $ you should spend on research?

The Value of Research

• Case B: Consider the following scenario:– You are considering introducing a new product– If you introduce

• With a 0% change of success ($4 million)• With a 100% change of failure (-$2.5 million)

– If you don’t introduce• $0 for sure

– If you do research you will learn the likely outcome (success or failure)

• What’s the maximum amount of $ you should spend on research?

Remember…

• Research is valuable only if it causes us to change the optimal decision in a way that increases the expected return from the decision

Summary

• Marketing Research can be used to integrate a lot of information about products, customers, markets, etc.

• There is a general research framework to follow– Start with the end, and work your way back when

planning your research• It is also important to think about whether

you’ll do research