MKT346 California State University Northridge Market Research Questions

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MKT346

California State University - Northridge

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Same as last time! Answer all questions use the text book as reference! Attached are questions and text book! thank you!

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QUESTIONS Second Exam MKT 346 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. The instructor mentioned four characteristics that a good market research questionnaire should have. What were these? In designing market research questionnaire, what factors must the researcher determine as background? The instructor cited 10 steps in developing and implementing a questionnaire. What are these 10 steps? (The first is to obtain certain background information) What is the difference between an open-end question and a closed-end question? What did the instructor say is the difference between probing and clarifying? What is a dichotomous rating question? What defines a multiple choice question? In addition to numbers, what other elements must a numerical rating scale have? What is a slider scale? What is the difference between a 1 stage and a 2 stage rating format? Give an example of a 2 stage format. What is said to be an advantage of an odd number of points in a balanced rating scale over an even number of points. What is a balanced rating scale versus an unbalanced scale? Why does an unbalanced rating scale sometimes make more sense than a balanced scale? What is the advantage of a rating scale over a ranking scale? What is a Constant Sum scale? What is a semantic differential scale? What is a ‘top 2 box’ score in presenting data from a rating scale? What did the instructor say was a problem in presenting mean scores from responses to a rating scale? For what reasons did the instructor suggest that percentage are superior to means in presenting results of a rating scale? What is a Net Promoter Score in presenting results of a satisfaction rating scale? What is a determinant attitude? What is a problem with using a 7 point agreement scale in a study conducted with kids 5-8? What is the problem with each of the following questions used in a study of the general adult public? (NOTE: 1 of these might be chosen for the exam) - I’m going to ask you to rate some upscale department stores. Do you think that overall Nordstrom’s is Excellent, Very good, Good, Fair, or Poor? - How far do you live from your closest supermarket? - How much do you agree or disagree that McDonald’s fast food restaurants are convenient? Do you Agree completely, Agree somewhat, Neither agree nor disagree, Disagree Somewhat, or Disagree completely? - On a rating scale of 1 to 10, where 1 means Poor and a 10 means Excellent, how would you rate Trix candy bars on its taste and texture? - When did you first hear about McDonald’s restaurants? - 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. Here are the names of 15 candy bars. (Then list them. E.g., Nestle Crunch, Trix, Butterfingers, Life Savers, Snickers, M&M’s, etc.) Please place them in rank order in terms of your overall preference, with 1 being the most preferred. What is a counterbiasing statement in attitude measurement, and when might one be used? What is a screening question in a market research questionnaire? Which did the instructor say should generally come before the other on a questionnaire – likes and dislikes about a product OR ratings of the product on selected attributes? And why? If a questionnaire is too long, what did the instructor mean by splitting the questions? For what kinds of factors might a questionnaire be pretested? (Length is one) What does a slow start mean in internet studies? What is a Contact Record Sheet, and why is it used? What is a Validation Form, and why is it used? How is measurement defined? What does it mean to define a concept operationally? What are the four basic levels of measurement? What are the characteristics of each of the following types of measurement scales? (NOTE: 1 of these might be chosen for the exam) Nominal Ordinal Interval Ratio How does the type of possible measurements from ratio scales differ from the possible measurements from nominal scales? Give 2 examples of a nominal scale in market research. Give 2 examples of a ratio scale in market research. Give 2 examples of an ordinal scale in market research. How does an interval scale differ from an ordinal scale? What did the instructor say regarding whether rating scales are truly interval scales? What defines a measurement as being reliable? Three types of measures of reliability were cited by the instructor. What were these? What defines a measure as being valid? What is the difference between reliability and validity, and what is the relationship between them? What does face validity refer to? What does content validity refer to? What do face validity and content validity have in common? What should the instructor of this course to ensure that the exams he give have content validity? How are predictive validity and concurrent validity similar, and what is the difference between them? 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. What makes a market research study an experiment, rather than some other type of study? What is the difference between an independent and a dependent variable? Give 3 examples of typical independent variables in market research. Give 3 examples of typical dependent variables in market research. What is the difference between a test group and a control group in experiments? To prove causation what three elements must be demonstrated? In terms of experimentation, what is the difference between external validity and internal validity? What is the difference between field settings and laboratory (or simulated) settings in market research experiments? Give examples of a field setting AND a laboratory (or simulated) setting for a market research experiment. What are the 4 basic approaches to control extraneous variables in experiments? What does physical control mean in market research experiments, and provide an example. What is wrong or missing in the following experimental design in order to establish causation? O1 X O2 In this course, what does test marketing refer to? What types of information, useful for marketing, can be obtained in field test marketing experiments? Describe how different management decisions might be made if, in field test marketing, it is found that the product is strong and marketing is weak VS. product is weak and marketing is strong. Provide reasons why in some cases it might be a good idea for a company NOT to conduct field test marketing. What are some considerations in selecting particular markets for field test marketing. Discuss the length of time to run field test marketing. How long should the test be run, once implemented? List or describe the advantages of simulated (or laboratory) test marketing over field test marketing. FM.indd 09/15/2014 Page i FM.indd 09/15/2014 Page iii Marketing Research Tenth Edition FM.indd 09/15/2014 Page v Marketing Research Tenth Edition Carl McDaniel, Jr. Professor Emeritus University of Texas at Arlington Roger Gates DSS Research FM.indd 09/15/2014 Page vi Dedicated to Mimi Olsen Abby, Will, Connor, Will, Cole, Jake, Knox VICE PRESIDENT & EXECUTIVE PUBLISHER George Hoffman EXECUTIVE EDITOR Lisé Johnson SPONSORING EDITOR Marian Provenzano PROJECT EDITOR Brian Baker EDITORIAL ASSISTANT Jacqueline Hughes ASSOCIATE EDITOR Christina Volpe CONTENT MANAGER Elle Wagner SENIOR MARKETING MANAGER Kelly Simmons DESIGN DIRECTOR Harry Nolan SENIOR PHOTO EDITOR Lisa Gee COVER PHOTO German/E+/Getty Images This book was set in Adobe Garamond by SPiGlobal, and printed and bound by Quad Graphics/Versailles. The cover was printed by Quad Graphics/Versailles. This book is printed on acid free paper. Founded in 1807, John Wiley & Sons, lnc. has been a valued source of knowledge and understanding for more than 200 years, helping people around the world meet their needs and fulfill their aspirations. Our company is built on a foundation of principles that include responsibility to the communities we serve and where we live and work. In 2008, we launched a Corporate Citizenship Initiative, a global effort to address the environment, social, economic, and ethical challenges we face in our business. Among the issues we are addressing are carbon impact, paper specifications and procurement, ethical conduct within our business and among our vendors, and community and charitable support. For more information, please visit our website: www.wiley.com/go/citizenship. Copyright © 2015, 2012, 2010, 2007, 2005 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc. 222 Rosewood Drive, Danvers, MA 01923, website www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, (201)748-6011, fax (201)748-6008, website http://www.wiley.com/go/permissions. Evaluation copies are provided to qualified academics and professionals for review purposes only, for use in their courses during the next academic year. These copies are licensed and may not be sold or transferred to a third party. Upon completion of the review period, please return the evaluation copy to Wiley. Return instructions and a free of charge return shipping label are available at www.wiley.com/go/ returnlabel. Outside of the United States, please contact your local representative. ISBN-978-1118-808849 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 FM.indd 09/15/2014 Page vii Preface THE WORLD OF MARKETING RESEARCH HAS CHANGED Some research pundits would say that the world of marketing research has completely changed since the last edition of this text was published in 2012. While we aren’t willing to go that far, we do agree that several innovations and trends have had a substantial impact on the field of marketing research. The era of Big Data has arrived! Big data analytics can offer profound insights into customers, potential customers, and markets like never before. We introduce big data in Chapter One and discuss it, where applicable, throughout the text. Further, not isolated to big data, the area of analytics has arrived with clients demanding tools that provide more direction and insight for decision making. This trend is noted at appropriate places in the text, but particularly in Chapter Eighteen. The trend toward mobile and social media marketing research is changing how decision making information is obtained and, in some cases, what data is gathered. This is discussed extensively in Chapter Seven. The availability of online survey tools, such as those offered by Survey Monkey, has resulted in many more firms diving into do-ityourself (DIY) marketing research. We cover the benefits and dangers of the trend toward DIY marketing research in Chapter Twelve. AS IN EVERY PAST EDITION, WE OFFER: REAL DATA/REAL RESEARCH/ REAL RESEARCHERS Real Data – A new Nationwide Survey on Quick Service Restaurants Created Exclusively For This Text Our new case examines how Americans 18 to 34 years old view, patronize and consume food from Quick Service Restaurant (QSR) chains such as McDonalds, Taco Bell and many more. By analyzing the data you can gain insights on what factors caused consumers to patronize a particular chain and which chains perform the best on factors such as quality of food, menu variety, atmosphere and others. The case also features a host of demographic characteristics to enable you to analyze preferences, likes and dislikes by attitudes toward health and nutrition, level of education, income, living situation, and other variables. We have retained our three popular data cases, which are based on a nationwide sample of 2,000 college-aged students. The sample was drawn by the world leader in sampling solutions, Survey Sampling International. You can find out more about them at www.surveysampling.com. Each of the three cases focuses on topics of interest to college students. They include an Online Dating Service, an Online Student Travel Service, and a new chain of combination fast-food and convenience store located near college campuses. Not only do we have demographic and attitudinal data for each respondent, FM.indd 09/15/2014 Page viii viii Preface but working with Claritas, a leading provider of marketing databases (www.claritas.com), we offer students a chance to work with PRIZM NE appended to our data sets. This version of the original PRIZM is the most widely used target marketing system in the United States! PRIZM NE is a 66-segment model. These segments are arranged to make up two standard sets of groups: Social Group and Lifestage Group. In addition to these cases, we have retained the data case, Rockingham National Bank Visa Card Survey, for the tenth edition. This was done in response to many requests from our users. We know that you will enjoy working with this student favorite! Real Research What could be more real than a new nationwide study on quick service restaurants. The sample was drawn, the questionnaire created, and data gathered by marketing research professionals at DSS Research. All end-of-chapter cases are real and most are new for this tenth edition. It is part of our commitment to you to bring the student the most authentic, realworld marketing research text on the market. Real Market Researchers Our world-view is that of marketing research. We are here every day, not as observers, but participants. Roger Gates, one of your co-authors is President of DSS Research, one of America’s largest health-care marketing research firms. You can learn more at www.dssresearch.com. Carl McDaniel was a co-founder of a marketing research company that is vibrant today. He also was a co-founder of the Master of Science in Marketing Research program at the University of Texas at Arlington. Along with Roger Gates and several others, Carl created the MSMR Advisory Board. The Advisory Board consists of leaders and shakers in the marketing research industry (go to www.uta.edu/msmr/advisory-board/advisoryboard-members.com). You are holding the only text written by marketing research insiders. It is like writing about football as you witness the game from the stands or writing about the sport as a player on the field. We are not spectators viewing marketing research from afar. Unlike authors of other research texts, we are on the field and continue to offer you the global leader in marketing research texts. AS THE FIELD OF MARKETING RESEARCH CONTINUES TO TRANSFORM, WE ARE THERE, EVERY STEP OF THE WAY, PROVIDING THE LATEST TRENDS AND METHODOLOGY IN EVERY CHAPTER New Content by Chapter: Chapter One – The Role of Marketing Research in Management Decision Making New section on “The Era of Big Data” and its impact on marketing research. New box on forces that are poised to change the world of marketing research. Dynamic new examples throughout. FM.indd 09/15/2014 Page ix Preface Chapter Two – The Marketing Research Industry and Research Ethics New material on big data analytic firms. New list of America’s largest research firms. New section on online, mobile, and Big Data analytic tracking firms. All new discussion on the state of the marketing research industry including material on research in a period of great change. Chapter Three – Problem Definition, Exploratory Research, and the Research Process Completely rewritten section on research objectives as hypothesis. New Practicing Marketing Research box on making marketing research more strategic. Chapter Four – Secondary Data and Big Data Analytics Completely rewritten chapter emphasizing the nature of secondary data and Big Data. New section on what advantages Big Data offers a firm and a discussion on how Big Data came about. New material on making Big Data actionable. A section on the growing importance of data visualization. Chapter Five – Qualitative Research Revised material on key attributes of a good focus group moderator. Discussion of a new trend in focus groups entitled “the rotated opposed view.” New discussion on getting the right respondents for focus groups. Detailed, new examples on individual depth interviews and “story telling”. Chapter Six – Traditional Survey Research New material on telephone refusal rates. New discussion on predictive dialing. New Practicing Marketing Research box on respondent respect. Important new data on the maximum length of interviews. Chapter Seven – Online Marketing Research – The Growth of Mobile and Social Media Research Major new sections on mobile internet research and social media marketing research. New material on using blogs as a form of individual depth interviews. New discussion on online bulletin board focus groups. New section on webcam online focus groups. New section on improving virtual focus groups with telepresence. Completely revised material on online individual depth interviews and participants in a research community. New discussion on the quality of online samples. Chapter Eight – Primary Data Collection: Observation Expanded discussion on ethnography. New section on neuromarketing. Completely revised section on eye tracking. New section on in-store tracking. All new material on television audience measurement and tracking. Major new sections on online tracking and social media tracking. In-depth examples of Facebook, Pinterest, and Twitter. Chapter Nine – Primary Data Collection: Experimentation and Test Marketing Eliminated some sections and focused the chapter more on the practical problems of doing experiments including new material on simulated test markets. New commentary and examples are offered throughout the chapter. Chapter Ten – The Concept of Measurement New material on construct equivalence. New Practicing Marketing Research box on designing a better questionnaire. ix FM.indd 09/15/2014 Page x x Preface Chapter Eleven – Using Measurement Scales to Build Marketing Effectiveness Expanded discussion of graphic rating scales as “sliders.” Major new section on Net Promoter Scores. Chapter Twelve – Questionnaire Design Discussed the changing nature of data collection in marketing research. Added new coverage of issues related to designing questionnaires for mobile devices, including Practicing Marketing Research covering tips for effective mobile interviewing. New discussion on how to approach the appropriate data collection method based on the options available today. Updated discussion of online interviewing tools and options. Added information on benefits and dangers of DIY research, including best practices. New case covers mobile survey research example. Chapter Thirteen – Basic Sampling Issues Major new discussion of sampling issues related to big data and social media. Updated the role of data collection methods and sampling related to mobile data collection and big data. Added Practicing Marketing Research feature discussing the blending of social media and online panels. New information on the comparability of online panel and telephone survey results is provided. Chapter Fourteen – Sample Size Determination A number of new examples are given and a new end-of-chapter case. Chapter Fifteen – Data Processing and Fundamental Data Analysis New section on quality assurance procedures for online data collection. Updated coding discussion with discussion of automated coding systems, text processing software and word clouds with an extended Practicing Marketing Research on text processing. Addressed the need for some type of text processing to address big data and the analysis of social media feeds. Also added a Practicing Marketing Research feature covering an application of Semantria text analytics and how this system can be utilized to improve market insights. Discussed the declining reliance on crosstabs and the reasons for this decline. Added case that asks students to compare traditional coding results with what they can get from Semantria. Data provided, access to Semantria is free. Chapter Sixteen – Statistical Testing of Differences and Relationships New material on statistical testing in the context of big data. New Practicing Marketing Research feature that discusses, in simple terms, the logic behind statistical testing. Chapter Seventeen – Bivariate Correlation and Regression New Practicing Marketing Research feature on regression. A second Practicing Marketing Research feature discusses using regression analysis in key driver analysis. New case provides a very realistic and current example requiring the application of regression analysis. Chapter Eighteen – Multivariate Data Analysis New Practicing Marketing Research feature covers the high demand for data scientists in marketing research. Fuzzy clustering added to cluster analysis discussion, and also neural networks. Conjoint analysis section updated with recent developments. The application of multivariate techniques to big data was added. Also, material on predictive analytics, which includes a detailed discussion of the predictive analytics process and predictive analytics implications in marketing research. Interesting finding from predictive analytics (“How Target Figured Out a Teen Girl FM.indd 09/15/2014 Page xi Preface Was Pregnant Before Her Father Did”) added as a Practicing Marketing Research feature. Case added covering predictive analytics in retail. Chapter Nineteen – Communicating The Research Results New Practicing Marketing Research feature added with tips for preparing a marketing research report for a contemporary audience. Also added a feature covering the importance of telling a story in the research report and a Practicing Marketing Research feature on how to give more effective research presentations. Chapter Twenty – Managing Marketing Research Added more emphasis on project management and provided a new Practicing Marketing Research feature covering project management. Added discussions of the RFP process and proposal preparation. Feature added on the elevation of marketing research in the corporate hierarchy and, added feature on how the future marketing organization might look. New case added covering the process of selecting a research supplier. Outstanding Resources For All Teaching Needs WileyPlus Learning Space What is WileyPLUS Learning Space? It’s a place where students can learn, collaborate, and grow. Through a personalized experience, students create their own study guide while they interact with course content and work on learning activities. WileyPLUS Learning Space combines adaptive learning functionality with a dynamic new e-textbook for your course—giving you tools to quickly organize learning activities, manage student collaboration, and customize your course so that you have full control over content as well as the amount of interactivity between students. You can: ▪ ▪ ▪ ▪ ▪ Assign activities and add your own materials Guide students through what’s important in the e-textbook by easily assigning specific content Set up and monitor collaborative learning groups Assess student engagement Benefit from a sophisticated set of reporting and diagnostic tools that give greater insight into class activity Learn more at www.wileypluslearningspace.com. If you have questions, please contact your Wiley representative. Classroom-Tested Instructor’s Manual We have done everything possible to facilitate your teaching marketing research with a comprehensive instructor’s manual. Each chapter contains the following: ▪ ▪ ▪ Suggested Lesson Plans. Suggestions are given on how to decide the chapter material, based on the frequency and duration of your class period. Chapter Scan. A quick synopsis highlights the core material in each chapter. Learning Objectives. The list of learning objectives found in the text is repeated here. xi FM.indd 09/15/2014 Page xii xii Preface ▪ ▪ ▪ ▪ ▪ General Chapter Outline. The main headers provide a quick snapshot of all the content areas within the chapter. List of Key Terms. The key terms introduced to the students in the text are repeated here. Detailed Chapter Outline. This outline fleshes out the general outline given previously. It also indicates where ancillary materials fit into the discussion: PowerPoint slides, exhibits from the text, learning objectives, and review questions. Boxed features are also included in this outline. Summary Explaining Learning Objectives. An explanation of how the learning objectives are satisfied by chapter material is the basis of the Instructor’s Manual summary. Answers to Pedagogy. Suggested answers and approaches to the critical thinking questions, the Internet activities, the cases, the cross-functional questions, and the ethical dilemmas are offered at the end of each chapter or part. Instructors can access the electronic files on the Instructor Companion Site at www. Wiley.com/College/Mcdaniel. Comprehensive PowerPoint Package We have created a comprehensive, fully interactive PowerPoint presentation with roughly 400 slides in the package. You can tailor your visual presentation to include the material you choose to cover in class. This PowerPoint presentation gives you the ability to completely integrate your classroom lecture with a powerful visual statement of chapter material. Keep students engaged and stimulate classroom discussion! The entire collection of slides will be available for download from our Web site at www.Wiley.com/College/Mcdaniel. Classroom-Tested Comprehensive Test Bank Our test bank is comprehensive and thoroughly classroom-tested. The questions range from definitions of key terms to basic problem-solving questions to creative-thinking problems. This new and improved test bank includes approximately 60 questions per chapter consisting of multiple-choice, true/false, and essay questions. Regardless of the type and level of knowledge you wish to test, we have the right questions for your students. A computerized version of this newly created test bank is also available on the book’s companion Web site so that you can customize your quizzes and exams. Instructions can access the electronic files on the Instructor’s Companion Site at www.Wiley.com/College/Mcdaniel. Focus Group Video and Lecture Launches Additional Real Research is offered through a focus group video conducted by another one of our research partners. Jerry Thomas, president of Decision Analyst (www.decisionanalysis .com). Decision Analyst, Incorporated is a large international marketing research firm. The focus group subject is online dating data case. We also offer several interviews featuring Jerry Thomas and your author, Carl McDaniel, discussing key topics in marketing research. For more information on this 45-minute video, available on DVD, please contact your local Wiley representative. New Wiley Marketing Research Video Series New interview-style video clips of top marketing research companies. Each video, six to eight minutes in length, presents interviews with key personnel to discuss how they apply the major concepts of marketing research to their business. The Marketing Wiley Research Video Series can be accessed on the student and Instructor’s Companion site at www.Wiley. com/College/Mcdaniel. FM.indd 09/15/2014 Page xiii Preface Acknowledgments As with all texts, this book is a team effort that could not have been brought to print without their support. Carl McDaniel continues to marvel at the excellent job Pam Rimer does in typing his portion of the manuscript. Thanks also Pam for the many great editorial suggestions. Roger Gates thanks Mike Foytik for his input on big data issues and analytics in general and extend special thanks to Jan Schneider for her outstanding work in keeping everything straight in his chapters. Could not have done it without her very competent assistance. We also extend our deep appreciation to the John Wiley & Sons team for making this text a reality. In particular, a special thank you goes to the team at Wiley: Brian Baker (Project Editor), Lisé Johnson (Executive Editor), and Jacqueline Hughes (Editorial Assistant). xiii FM.indd 09/15/2014 Page xv Contents PREFACE vii 1 The Role of Marketing Research in Management Decision Making 1 Nature of Marketing 1 The Marketing Concept 2 Opportunistic Nature of Marketing Research 2 External Marketing Environment 2 Marketing Research and Decision Making 3 Marketing Research Defined 3 Importance of Marketing Research to Management 4 Understanding the Ever-Changing Marketplace 6 Social Media and User-Generated Content 6 Proactive Role of Marketing Research 6 Applied Research versus Basic Research 7 Nature of Applied Research 7 Decision to Conduct Marketing Research 8 Development of Marketing Research 11 Inception: Pre-1900 11 Early Growth: 1900–1920 11 Adolescent Years: 1920–1950 11 Mature Years: 1950–2000 12 The Connected World: 2000–2010 13 ERA of Big Data: 2010–Present 14 Summary 15 Key Terms 16 Questions For Review & Critical Thinking 16 REAL-LIFE RESEARCH 1.1: Give Me a Coupon That I Can Use Online! 17 REAL-LIFE RESEARCH 1.2: Can Anyone Be a Market Researcher? 18 2 The Marketing Research Industry and Research Ethics 19 Evolving Structure of the Marketing Research Industry 20 Organizations Involved in Marketing Research 20 Consumer and Industrial Goods and Services Producers 20 Governments and Universities 22 Media Companies 22 Custom Research Firms 22 Syndicated Service Firms 22 Limited-Function Research Firms 23 Online and Mobile Tracking Firms 23 Big Data Analytic Firms 24 Specialized Service Suppliers 24 Consumer and Industrial Corporate Marketing Research Departments 25 Research Suppliers 26 Consumer Watch 26 Consumer Buy 27 Using Marketing Research—A Corporate Perspective 28 External Clients 28 Internal Clients 29 The State of the Marketing Research Industry 31 Marketing Research Ethics 32 Ethical Theories 32 Research Supplier Ethics 33 Client Ethics 36 Field Service Ethics 38 Respondents’ Rights 38 Ethics and Professionalism 40 Summary 42 Key Terms 42 Questions For Review & Critical Thinking 42 Working the Net 43 REAL-LIFE RESEARCH 2.1: Respondent Recruiters— Clean Up Your Act 43 REAL-LIFE RESEARCH 2.2: Coke Juices up a Market Test 44 3. Problem Definition, Exploratory Research, and the Research Process 46 Critical Importance of Correctly Defining the Problem 46 Recognize the Problem or Opportunity 47 Find Out Why the Information Is Being Sought 48 Understand the Decision-Making Environment with Exploratory Research 48 Use the Symptoms to Clarify the Problem 50 Translate the Management Problem into a Marketing Research Problem 51 Determine Whether the Information Already Exists 51 Determine Whether the Question Can Be Answered 52 State the Research Objectives 52 Research Objectives As Hypotheses 52 Marketing Research Process 53 FM.indd 09/15/2014 Page xvi xvi Contents Creating the Research Design 54 Choosing a Basic Method of Research 55 Selecting the Sampling Procedure 56 Collecting the Data 56 Analyzing the Data 57 Writing and Presenting the Report 57 Following Up 58 Managing the Research Process 58 The Research Request 58 Request for Proposal 59 The Marketing Research Proposal 59 What to Look for in a Marketing Research Supplier 61 What Motivates Decision Makers to Use Research Information? 61 Summary 62 Key Terms 63 Questions For Review & Critical Thinking 63 Working the Net 64 REAL-LIFE RESEARCH 3.1: Let’s Go Out to Eat! 64 APPENDIX 3A: A Marketing Research Proposal 69 Background 70 Objectives 70 Study Design 70 Areas of Questioning 70 Data Analysis 71 Personnel Involved 71 Specifications/Assumptions 71 Services 71 Cost 72 Timing 72 4. Secondary Data and Big Data Analytics 73 Nature of Secondary Data 73 Advantages of Secondary Data 74 Limitations of Secondary Data 75 Internal Databases 77 Creating an Internal Database 77 Data Mining 77 Behavioral Targeting 78 Big Data Analytics 79 Defining Relationships 79 The Big Data Breakthrough 79 Making Big Data Actionable 81 Data Visualization 81 Battle over Privacy 81 Geographic Information Systems 86 Decision Support Systems 87 Summary 88 Key Terms & Definitions 89 Questions For Review & Critical Thinking 89 Working the Net 89 REAL-LIFE RESEARCH 4.1: The Interesting and Curious World of Nate Silver 90 5. Qualitative Research 92 Nature of Qualitative Research 92 Qualitative Research versus Quantitative Research 93 Popularity of Qualitative Research 93 Limitations of Qualitative Research 94 Focus Groups 95 Popularity of Focus Groups 95 Conducting Focus Groups 96 Focus Group Trends 102 Benefits and Drawbacks of Focus Groups 104 Other Qualitative Methodologies 106 Individual Depth Interviews 106 Projective Tests 110 Future of Qualitative Research 115 Summary 116 Key Terms 116 Questions for Review & Critical Thinking 117 Working the Net 117 REAL-LIFE RESEARCH 5.1: McDonald’s Listening Tour 117 6 Traditional Survey Research 119 Popularity of Survey Research 119 Types of Errors in Survey Research 120 Sampling Error 120 Systematic Error 121 Types of Surveys 125 Door-to-Door Interviews 125 Executive Interviews 125 Mall-Intercept Interviews 125 Telephone Interviews 126 Self-Administered Questionnaires 128 Mail Surveys 129 Determination of the Survey Method 131 Sampling Precision 131 Budget 133 Requirements for Respondent Reactions 133 Quality of Data 133 Length of the Questionnaire 134 Incidence Rate 134 Structure of the Questionnaire 135 Time Available to Complete the Survey 135 Summary 135 Key Terms 136 Questions for Review & Critical Thinking 136 REAL-LIFE RESEARCH 6.1: Pitney Bowes Places a Premium on Satisfaction 137 FM.indd 09/15/2014 Page xvii Contents 7 Online Marketing Research—The Growth of Mobile and Social Media Research 139 The Online World 140 Using the Internet for Secondary Data 140 Sites of Interest to Marketing Researchers 140 Newsgroups 140 Blogs 143 Online Qualitative Research 144 Webcam Online Focus Groups 144 Improving Virtual Focus Groups with Telepresence 144 Using Channel M2 to Conduct Online Focus Groups 145 Using the Web to Find Focus Group Participants 146 Online Individual Depth Interviews (IDI) 146 Marketing Research Online Communities (MROC) 147 Online Survey Research 149 Advantages of Online Surveys 149 Disadvantages of Online Surveys 150 Methods of Conducting Online Surveys 152 Commercial Online Panels 154 Panel Recruitment 154 Respondent Participation 156 Panel Management 156 Mobile Internet Research— The Future Is Now 157 Advantages of Mobile 157 A Few Bumps at the Beginning 158 Designing a Mobile Survey 158 Social Media Marketing Research 159 Conduction a Facebook Focus Group 160 Conducting Surveys 161 Summary 161 Key Terms 162 Questions For Review & Critical Thinking 162 Woking the Net 163 REAL-LIFE RESEARCH 7.1: Procter & Gamble Uses Its Online Community to Help Develop Scents for a New Product Line 163 8 Primary Data Collection: Observation 165 Nature of Observation Research 165 Conditions for Using Observation 166 Approaches to Observation Research 166 Advantages of Observation Research 168 Disadvantages of Observation Research 168 Human Observation 169 Ethnographic Research 169 Mystery Shoppers 174 xvii One-Way Mirror Observations 175 Machine Observation 176 Neuromarketing 176 Facial Action Coding Services (FACS) 179 Gender and Age Recognition Systems 180 In-Store Tracking 180 Television Audience Measurement and Tracking 181 TiVo Targeting 182 Cablevision Targeting 182 Symphony IRI Consumer Network 182 Tracking 183 Your E-Reader Is Reading You 184 Social Media Tracking 184 Observation Research and Virtual Shopping 187 Summary 188 Key Terms 189 Questions for Review & Critical Thinking 189 Working the Net 190 REAL-LIFE RESEARCH 8.1: Eating Well and Doing Good 190 9 Primary Data Collection: Experimentation and Test Markets 193 What Is an Experiment? 194 Demonstrating Causation 194 Concomitant Variation 194 Appropriate Time Order of Occurrence 195 Elimination of Other Possible Causal Factors 195 Experimental Setting 195 Laboratory Experiments 195 Field Experiments 196 Experimental Validity 196 Experimental Notation 196 Extraneous Variables 197 Examples of Extraneous Variables 197 Controlling Extraneous Variables 199 Experimental Design, Treatment, and Effects 200 Limitations of Experimental Research 201 High Cost of Experiments 201 Security Issues 201 Implementation Problems 202 Selected Experimental Designs 202 Pre-Experimental Designs 202 True Experimental Designs 204 Quasi-Experiments 205 Test Markets 207 Types of Test Markets 210 Costs of Test Marketing 212 Decision to Conduct Test Marketing 212 Steps in a Test Market Study 213 FM.indd 09/15/2014 Page xviii xviii Contents Other Types of Product Tests 217 Summary 218 Key Terms 218 Questions For Review & Critical Thinking 219 Working the Net 220 REAL-LIFE RESEARCH 9.1: Texas Red Soft Drinks 220 REAL-LIFE RESEARCH 9.2: Alcon 221 10 The Concept of Measurement 222 Measurement Process 222 Step One: Identify the Concept of Interest 223 Step Two: Develop a Construct 224 Step Three: Define the Concept Constitutively 224 Step Four: Define the Concept Operationally 224 Step Five: Develop a Measurement Scale 226 Nominal Level of Measurement 226 Ordinal Level of Measurement 227 Interval Level of Measurement 228 Ratio Level of Measurement 228 Step Six: Evaluate the Reliability and Validity of the Measurement 229 Reliability 232 Validity 234 Reliability and Validity—A Concluding Comment 238 Summary 238 Key Terms 239 Questions for Review & Critical Thinking 239 Working the Net 240 REAL-LIFE RESEARCH 10.1: Profiles on Women Shoppers 240 11 Using Measurement Scales to Build Marketing Effectiveness 241 Attitudes, Behavior, and Marketing Effectiveness 241 Link between Attitudes and Behavior 242 Enhancing Marketing Effectiveness 243 Scaling Defined 243 Attitude Measurement Scales 244 Graphic Rating Scales 244 Itemized Rating Scales 245 Traditional One-Stage Format 248 Two-Stage Format 248 Rank-Order Scales 248 Paired Comparisons 250 Constant Sum Scales 250 Semantic Differential Scales 250 Stapel Scales 252 Likert Scales 253 Purchase-Intent Scales 254 Scale Conversions 257 Net Promoter Score (NPS) 258 Considerations in Selecting a Scale 259 The Nature of the Construct Being Measured 259 Type of Scale 259 Balanced versus Nonbalanced Scale 260 Number of Scale Categories 260 Forced versus Nonforced Choice 260 Attitude Measures and Management Decision Making 261 Direct Questioning 261 Indirect Questioning 262 Observation 262 Choosing a Method for Identifying Determinant Attitudes 262 Summary 264 Key Terms 264 Questions For Review & Critical Thinking 265 Working the Net 265 REAL-LIFE RESEARCH 11.1: Improving the Long-Term Prognosis of Pharmaceutical Brands 266 12 Questionnaire Design 271 Role of a Questionnaire 271 Criteria for a Good Questionnaire 272 Does It Provide the Necessary Decision-Making Information? 272 Does It Consider the Respondent? 273 Does It Meet Editing and Coding Requirements? 273 Does It Solicit Information In An Unbiased Manner: Questionnaire Design Process 275 Step One: Determine Survey Objectives, Resources, and Constraints 275 Step Two: Determine the Data-Collection Method 276 Step Three: Determine the Question Response Format 281 Step Four: Decide on the Question Wording 287 Step Five: Establish Questionnaire Flow and Layout 290 Model Introduction/Opening 292 Model Closing 292 Step Six: Evaluate the Questionnaire 293 Step Seven: Obtain Approval of All Relevant Parties 293 Step Eight: Pretest and Revise 294 Step Nine: Prepare Final Questionnaire Copy 294 Step Ten: Implement the Survey 295 Field Management Companies 296 Impact of the Internet on Questionnaire Development 297 Adapting to Mobile Device Questionnaires 300 Costs, Profitability, and Questionnaires 302 FM.indd 09/15/2014 Page xix Contents Summary 304 Key Terms 304 Questions for Review & Critical Thinking 304 Working the Net 305 REAL-LIFE RESEARCH 12.1: Understanding Buyer Behavior 305 REAL-LIFE RESEARCH 12.2: Sonic Goes Mobile 307 13 Basic Sampling Issues 308 Concept of Sampling 308 Population 309 Sample versus Census 309 Developing a Sampling Plan 309 Step One: Define the Population of Interest 310 Step Two: Choose a Data-Collection Method 312 Step Three: Identify a Sampling Frame 313 Step Four: Select a Sampling Method 314 Step Five: Determine Sample Size 316 Step Six: Develop Operational Procedures for Selecting Sample Elements 316 Step Seven: Execute the Operational Sampling Plan 317 Sampling and Nonsampling Errors 318 Probability Sampling Methods 318 Simple Random Sampling 319 Systematic Sampling 320 Stratified Sampling 321 Cluster Sampling 323 Nonprobability Sampling Methods 325 Convenience Samples 325 Judgment Samples 325 Quota Samples 326 Snowball Samples 326 Internet Sampling 326 Summary 328 Key Terms 328 Questions for Review & Critical Thinking 328 Working the Net 329 REAL-LIFE RESEARCH 13.1: The Research Group 329 REAL-LIFE RESEARCH 13.2: Community Bank 330 14 Sample Size Determination 331 Determining Sample Size for Probability Samples 331 Budget Available 334 Rule of Thumb 334 Number of Subgroups Analyzed 334 Traditional Statistical Methods 335 Normal Distribution 335 General Properties 335 Standard Normal Distribution 336 Population and Sample Distributions 337 Sampling Distribution of the Mean 337 Basic Concepts 338 Making Inferences on the Basis of a Single Sample 341 Point and Interval Estimates 341 Sampling Distribution of the Proportion 343 Determining Sample Size 343 Problems Involving Means 343 Problems Involving Proportions 345 Determining Sample Size for Stratified and Cluster Samples 346 Sample Size for Qualitative Research 346 Population Size and Sample Size 346 Determining How Many Sample Units Are Needed 350 Statistical Power 350 Summary 351 Key Terms 352 Questions For Review & Critical Thinking 352 Working the Net 353 REAL-LIFE RESEARCH 14.1: Concomm 353 REAL-LIFE RESEARCH 14.2: Building a Village 354 SPSS Jump Start For Chi-Square Text 355 15 Data Processing and Fundamental Data Analysis 358 Overview of the Data Analysis Procedure 358 Step One: Validation and Editing 359 Validation 359 Editing 362 Step Two: Coding 366 Coding Process 367 Automated Coding Systems and Text Processing 368 Step Three: Data Entry 372 Intelligent Entry Systems 373 The Data Entry Process 373 Scanning 374 Step Four: Logical Cleaning of Data 374 Step Five: Tabulation and Statistical Analysis 375 One-Way Frequency Tables 375 Cross Tabulations 377 Graphic Representations of Data 379 Line Charts 380 Pie Charts 381 Bar Charts 381 Descriptive Statistics 383 Measures of Central Tendency 383 Measures of Dispersion 384 Percentages and Statistical Tests 386 xix FM.indd 09/15/2014 Page xx xx Contents Summary 386 Key Terms 387 Questions For Review & Critical Thinking 387 Working the Net 389 REAL-LIFE RESEARCH 15.1: Waffle World 389 REAL-LIFE RESEARCH 15.2: Tico Taco 390 SPSS Exercises for Chapter 15 391 16 Statistical Testing of Differences and Relationships 395 Evaluating Differences and Changes 395 Statistical Significance 396 Hypothesis Testing 398 Steps in Hypothesis Testing 399 Types of Errors in Hypothesis Testing 402 Accepting H0 versus Failing to Reject (FTR) H0 403 One-Tailed versus Two-Tailed Test 403 Example of Performing a Statistical Test 404 Commonly Used Statistical Hypothesis Tests 408 Independent versus Related Samples 408 Degrees of Freedom 409 Goodness of Fit 409 Chi-Square Test 409 Hypotheses about One Mean 416 Z Test 416 t Test 417 Hypotheses about Two Means 421 Hypotheses about Proportions 422 Proportion in One Sample 422 Two Proportions in Independent Samples 423 Analysis of Variance (ANOVA) 425 P Values and Significance Testing 428 Summary 429 Key Terms 430 Questions For Review & Critical Thinking 430 Working the Net 432 REAL-LIFE RESEARCH 16.1: Analyzing Global Bazaar Segmentation Results 432 REAL-LIFE RESEARCH 16.2: AT &T Wireless 433 SPSS Exercises For Chapter 16 434 17 Bivariate Correlation and Regression 438 Bivariate Analysis of Association 438 Bivariate Regression 439 Nature of the Relationship 439 Example of Bivariate Regression 441 Correlation for Metric Data: Pearson’s Product–Moment Correlation 452 Summary 458 Key Terms 458 Questions For Review & Critical Thinking 458 Working the Net 460 REAL-LIFE RESEARCH 17.1: Axcis Athletic Shoes 460 REAL-LIFE RESEARCH 17.2: Lambda Social Hotspot 461 SPSS Exercises For Chapter 17 462 18 Multivariate Data Analysis 464 Multivariate Analysis Procedures 464 Multivariate Software 466 Multiple Regression Analysis 468 Applications of Multiple Regression Analysis 469 Multiple Regression Analysis Measures 470 Dummy Variables 470 Potential Use and Interpretation Problems 471 Multiple Discriminant Analysis 472 Applications of Multiple Discriminant Analysis 473 Cluster Analysis 473 Procedures for Clustering 473 Factor Analysis 476 Factor Scores 477 Factor Loadings 478 Naming Factors 479 Number of Factors to Retain 479 Conjoint Analysis 479 Example of Conjoint Analysis 479 Considering Features Conjointly 480 Estimating Utilities 481 Simulating Buyer Choice 482 Limitations of Conjoint Analysis 484 Big Data and Hadoop 484 Predictive Analytics 484 Using Predictive Analytics 485 Privacy Concerns and Ethics 487 Commercial Predictive Modeling Software and Applications 487 Summary 488 Key Terms 488 Questions for Review & Critical Thinking 489 Working the Net 490 REAL-LIFE RESEARCH 18.1: Satisfaction Research for Pizza Quik 491 REAL-LIFE RESEARCH 18.2: Gibson’s Uses Predictive Analytics 492 APPENDIX: Role of Marketing Research in the Organization and Ethical Issues 494 SPSS Exercises For Chapter 18 496 19 Communicating the Research Results 499 The Research Report 499 Organizing the Report 501 Interpreting the Findings 502 Format of the Report 504 Formulating Recommendations The Presentation 505 504 FM.indd 09/15/2014 Page xxi Contents Making a Presentation 508 Presentations by Internet 513 Summary 514 Key Terms 514 Questions For Review & Critical Thinking 514 Working the Net 514 REAL-LIFE RESEARCH 19.1: The United Way 515 REAL-LIFE RESEARCH 19.2: TouchWell Storefront Concept and Naming Research 516 xxi Measuring Marketing Research’s Return on Investment (ROI) 546 Summary 549 Key Terms 549 Questions for Review & Critical Thinking 550 Working the Net 550 REAL-LIFE RESEARCH 20.1: Walther Research Deals with Managing Project Managers 550 REAL-LIFE RESEARCH 20.2: Johnny Jets Drive-Ins 551 20 Managing Marketing Research 522 Marketing Research Supplier Management 523 What Do Clients Want? 523 Consolidating the Number of Acceptable Suppliers 525 Communication 525 The Key Role of the Project Manager 526 Managing the Research Process 527 Organizing the Supplier Firm 527 Data Quality Management 529 Time Management 530 Cost Management 531 Client Profitability Management 532 Staff Management and Development 533 Managing a Marketing Research Department 535 Allocating the Research Department Budget 535 Prioritizing Projects 536 Retaining Skilled Staff 537 Selecting the Right Marketing Research Suppliers 538 Moving Marketing Research into a Decision-Making Role 540 APPENDIX ONE: Statistical Tables A-1 APPENDIX TWO: Considerations in Creating a Marketing Plan (Online) APPENDIX THREE: Comprehensive Cases (Online) A Biff Targets an Online Dating Service for College Students A-14 B Freddy Favors Fast Food and Convenience for College Students A-17 C Superior Online Student Travel—A Cut Above A-21 D Rockingham National Bank Visa Card Survey A-25 ENDNOTES E-1 GLOSSARY G-1 QSR SURVEY INDEX I-1 QSR-1 © Yuri/iStockphoto c01.indd 09/15/2014 Page 1 1 C H A P T E R The Role of Marketing Research in Management Decision Making LEAR N I N G O B J ECTI V ES 1. Review the marketing concept and the marketing mix. 2. Comprehend the marketing environment within which managers must make decisions. 3. Examine the history of marketing research. Welcome to the fascinating world of marketing research! How does marketing research help managers reach their goals? How did the field of marketing research evolve? What big changes are occurring? We will explore this topic in Chapter 1. Nature of Marketing Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.1 Good customer relationships often result in exchanges; that is, a good or service is exchanged for money. The potential for exchange exists when there are at least two parties and each has something of potential value to the other. When the two parties can communicate and deliver the desired goods or services, exchange can take place. How do marketing managers attempt to stimulate exchange? They follow the “right” principle. They attempt to get the right goods or services to the right people at the right marketing The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. c01.indd 09/15/2014 Page 2 2 CHAPTER 1 THE ROLE OF MARKETING RESEARCH IN MANAGEMENT DECISION MAKING place at the right time at the right price, using the right promotion techniques. The “right” principle describes how marketing managers control the many factors that ultimately determine marketing success. To make the “right” decisions, management must have timely decision-making information. Marketing research is a primary channel for providing that information. The Marketing Concept marketing concept A business philosophy based on consumer orientation, goal orientation, and systems orientation. consumer orientation The identification of and focus on the people or firms most likely to buy a product and the production of a good or service that will meet their needs most effectively. goal orientation A focus on the accomplishment of corporate goals; a limit set on consumer orientation. systems orientation The creation of systems to monitor the external environment and deliver the desired marketing mix to the target market. To efficiently accomplish their goals, firms today have adopted the marketing concept, which requires (1) a consumer orientation, (2) a goal orientation, and (3) a systems orientation. A consumer orientation means that firms strive to identify the people (or firms) most likely to buy their product (the target market) and to produce a good or offer a service that will meet the needs of target customers most effectively in the face of competition. The second tenet of the marketing concept is goal orientation; that is, a firm must be consumer-oriented only to the extent that it also accomplishes corporate goals. The goals of profit-making firms usually center on financial criteria, such as a 15 percent return on investment. The third component of the marketing concept is a systems orientation. A system is an organized whole—or a group of diverse units that form an integrated whole—functioning or operating in unison. It is one thing for a firm to say it is consumer-oriented and another actually to be consumer-oriented. First, systems must be established to find out what consumers want and to identify market opportunities. As you will see later, identifying target market needs and finding market opportunities are the tasks of marketing research. Next, this information must be fed back to the firm. Without feedback from the marketplace, a firm is not truly consumer-oriented. Opportunistic Nature of Marketing Research Marketing research is an excellent tool for discovering opportunities in the marketplace. Midmarket hotel chains, such as Holiday Inn, (especially those with less than 150 rooms), often don’t generate enough traffic to support a full-service restaurant. Holiday Inn surveyed 10,000 guests and found that its guests were mostly business people, sales people, and government employees. These people revealed that they had no desire to simply sit in their room. They wanted to be around other people. Holiday Inn management decided that the bar should play a bigger role at the hotels. The social hub would tailor Holiday Inn’s lunch and dinner menus to bar fare that can be shared, such as gourmet meatballs, sesame chicken wings, hamburgers, and a few significant entrees, such as steaks and salmon club sandwiches. Those changes allow for more food to be served by the bar staff, which, in turn, allows Holiday Inn’s franchisees to limit their labor costs by reducing restaurant staff, especially at slow times of the day.2 External Marketing Environment marketing mix The unique blend of product/ service, pricing, promotion, and distribution strategies designed to meet the needs of a specific target market. Over time, the marketing mix must be altered because of changes in the environment in which consumers and businesses exist, work, compete, and make purchasing decisions. Some new consumers and businesses will become part of the target market, while others will drop out of the market; those who remain may have different tastes, needs, incomes, lifestyles, and purchase habits than the original target consumers. c01.indd 09/15/2014 Page 3 Marketing Research and Decision Making Although managers can control the marketing mix, they cannot control elements in the external environment that continually mold and reshape the target market. Unless management understands the external environment, the firm cannot intelligently plan its future, and organizations are often unaware of the forces that influence their future. Marketing research is a key means for understanding the environment. Knowledge of the environment helps a firm not only alter its current marketing mix but also take advantage of new opportunities. John Deal, a St. Louis resident, commissioned a marketing research study to determine the potential demand for a small (two- to three-store) chain in the local area that would feature bath and kitchen appliances and accessories. The survey results were positive and John decided to move forward. One issue that concerned John was what role the Internet should play in his stores. Fortunately, he was able to acquire a study titled “Seamless Retail” by Accenture. A few highlights were: Forty-nine percent of consumers believe the best thing retailers can do to improve the shopping experience is to better integrate in-store, online and mobile shopping channels. Eighty-nine percent of consumers said it is important for retailers to let them shop for products in the way that is most convenient for them, no matter which sales channel they choose. The report says that consistency weighs heavily on the consumer experience: 73 percent of consumers expect a retailer’s online pricing to be the same as its in-store pricing, and 61 percent expect a retailer’s online promotions to be the same as it in-store promotions. Asked what kind of information would be useful to have from their favorite retailers before going to a physical store, 82 percent of consumers selected having access to current product availability as their top choice. Forty-nine percent of those surveyed are influenced by in-store offers (promotional displays, salespeople), 56 percent are influenced by e-mail coupons and offers, and an equal amount say they are influenced by coupons mailed to their home. Sixty-nine percent and 62 percent, respectively, said that online pop-up ads and mobile banner ads would never influence their purchasing.3 After having read the report, John was then in a position to craft an effective integrated retailing strategy involving the web and a traditional store. Marketing Research and Decision Making Marketing research plays two key roles in the marketing system. First, as part of the marketing intelligence feedback process, marketing research provides decision makers with data on the effectiveness of the current marketing mix and offers insights into necessary changes. Second, marketing research is the primary tool for exploring new opportunities in the marketplace. Segmentation research and new product research help identify the most lucrative opportunities for a firm. Marketing Research Defined Now that you have an understanding of how marketing research fits into the overall marketing system, we can proceed with a formal definition of the term, as stated by the American Marketing Association: Marketing research is the function that links the consumer, customer, and public to the marketer through information—information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information 3 c01.indd 09/15/2014 Page 4 4 CHAPTER 1 THE ROLE OF MARKETING RESEARCH IN MANAGEMENT DECISION MAKING required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications. marketing research The planning, collection, and analysis of data relevant to marketing decision making and the communication of the results of this analysis to management. descriptive function The gathering and presentation of statements of fact. diagnostic function The explanation of data or actions. predictive function Specification of how to use descriptive and diagnostic research to predict the results of a planned marketing decision. We prefer another definition: Marketing research is the planning, collection, and analysis of data relevant to marketing decision making and the communication of the results of this analysis to management. Importance of Marketing Research to Management Marketing research can be viewed as playing three functional roles: descriptive, diagnostic, and predictive. Its descriptive function includes gathering and presenting statements of fact. What is the historic sales trend in the industry? What are consumers’ attitudes and beliefs toward a product? Opening a pack of bacon is a messy job. Bacon lovers have to reach into the package, and if they only pull out a few slices, there’s no easy way to store the remainder. Oscar Mayer marketing researchers hear plenty from consumers about what they disliked about its former bacon packaging. So marketers figured the best solution would be a packaging innovation that eliminated the chore of placing the opened pack in a resealable plastic bag or wrapping it in plastic or foil. This unwanted task was done so that the last piece of bacon would be as fresh as the first. Oscar Mayer Center Cut Bacon was introduced in a new “Stay-Fresh Reclosable Tray.” The flip-top lid allows easy access to the bacon inside. The top snaps closed, making it readily resealable. The flat tray makes for simplified storage in the refrigerator. The second role of research is the diagnostic function, wherein data and/or actions are explained. For example, what was the impact on sales when the Oscar Mayer package design was changed? How can product/service offerings be altered to better serve customers and potential customers? Since kids eat over 5 billion ounces of ketchup each year, Heinz decided that the heavy users (kids) should have a lot to say (via marketing research) about how to make ketchup fun. Heinz listened and watched children using ketchup, which resulted in a new bottle design and name selection. The true ketchup connoisseurs helped create Heinz EZ Squirt ketchup! The final role of research is the predictive function. How can the firm best take advantage of opportunities as they arise in the ever-changing marketplace? Bonobos is the largest apparel brand ever built on the web in the United States. They attribute customer dialogue (marketing research) for helping them create a signature line of better-fitting men’s pants. Their research brings the customer into the design process to create successful product offerings. Marketing research has identified different target markets for Bonobos such as the “Sporty Guy,” “Guy Next Door,” and “Men Who Wear Red Pants.”4 The Unrelenting Drive for Quality and Customer Satisfaction Quality and customer satisfaction are the key competitive weapons in today’s marketplace. U.S. automobile manufacturers have been among the most battered in recent years but now are running side by side with the imports. The watchwords are quality and customer service. As one auto executive puts it: If you go back to even a very short time ago, our whole idea of a customer was that we would wholesale a car to a dealer, the dealer would then sell the car to the customers, and we hoped we never heard from the customer—because if we did, it meant something was wrong. Today, we want to establish a dialogue with the customer throughout the entire ownership experience. We want to talk to our customers every step of the way. We want to be a consumer-products and services company that just happens to be in the automotive business.5 c01.indd 09/15/2014 Page 5 Marketing Research and Decision Making Where does marketing research come into play? The J. D. Power Awards rank cars based on the level of customer satisfaction. This, in turn, drives sales of specific companies and models. Lexus has always done well in a number of quality and customer satisfaction studies. This has helped increase sales of the IS, LS, and RX models. At some Lexus dealers, you can get a manicure and a massage while having your oil changed. Automobile manufacturers use marketing research to aid designers, determine what new features to add to specific models, and learn how their cars stack up with those of the competition. Quality that means little to customers usually doesn’t produce a payoff in improved sales, profits, or market share; it represents wasted effort and expense. Today, the new mantra is return on quality, which means that (1) the quality being delivered is the quality desired by the target market and (2) the added quality must have a positive impact on profitability. For example, banking giant Bank of America measures every improvement in service quality, from adding more tellers to offering new products, in terms of added profitability. REI, the Seattle-based outdoors sporting goods chain, has earned a nickname, “Return Everything Inc.” Hundreds of returned items are stacked in bins, hanging on racks and lining shelves. Tags detail the customer complaints: “Suddenly not waterproof ” on a frayed, blue, men’s rain jacket from a previous decade; “Don’t fit well” on a pair of thick, black, women’s clogs so well-worn that their original design as faded. At another REI store, a customer recently returned a pair of women’s sandals, designed for hiking and wading in rivers. The problem? According to the tag, “not sexy enough.” Several years ago, a customer in Washington State successfully returned an REI snowsuit he bought to climb Mount Rainier in 1970.6 In 2013, though, the chain announced it would henceforth take back items only within a year of purchase. In this case, over-the-top service quality was having a negative impact on the return on quality. Paramount Importance of Keeping Existing Customers An inextricable link exists between customer satisfaction and customer loyalty. Long-term relationships don’t just happen; they are grounded in the delivery of service and value, as the REI example shows. Customer retention pays big dividends for firms. Powered by repeat sales and referrals, revenues and market share grow. Costs fall because firms spend less funds and energy attempting to replace defectors. Steady customers are easy to serve because they understand the modus operandi and make fewer demands on employees’ time. A firm’s ability to retain customers also drives job satisfaction and pride, which leads to higher employee retention. In turn, long-term employees acquire additional knowledge that increases productivity. A Bain & Company study estimates that a 5 percent decrease in the customer defection rate can boost profits by 25 to 95 percent.7 Another study found that the customer retention rate has a major impact on the value of the firm.8 The ability to retain customers is based on an intimate understanding of their needs. This knowledge comes primarily from marketing research. For example, British Airways recast its first-class transatlantic service based on detailed marketing research. Most airlines stress top-of-the-line service in their transatlantic first-class cabins. However, British Air research found that most first-class passengers simply want to sleep. British Air now gives premium flyers the option of dinner on the ground, before takeoff, in the first-class lounge. Then, once on board, they can slip into British Air pajamas, put their heads on real pillows, slip under blankets, and enjoy an interruption-free flight. On arrival at their destination, first-class passengers can have breakfast, use comfortable dressing rooms and showers, and even have their clothes pressed before they set off. These changes in British Air’s first-class service were driven strictly by marketing research. return on quality Management objective based on the principles that (1) the quality being delivered is at a level desired by the target market and (2) the level of quality must have a positive impact on profitability. 5 c01.indd 09/15/2014 Page 6 6 CHAPTER 1 THE ROLE OF MARKETING RESEARCH IN MANAGEMENT DECISION MAKING Understanding the Ever-Changing Marketplace Marketing research also helps managers to understand trends in the marketplace and to take advantage of opportunities. Marketing research has been practiced for as long as marketing has existed. The early Phoenicians carried out market demand studies as they traded in the various ports on the Mediterranean Sea. Marco Polo’s diary indicates he was performing a marketing research function as he traveled to China. There is evidence that the Spanish systematically conducted marketing surveys as they explored the New World, and examples exist of marketing research conducted during the Renaissance. Social Media and User-Generated Content In the past few years, the world of promotion has been turned upside down. Previously, marketers created a message and then one, or a series, of traditional media, TV, print, radio, billboards to deliver that message to a target market. Now, more people than ever participate in blogs, forums, online communities, product/service reviews—think Trip Advisor—and social media sites that created user-generated content (UGC). The opinions expressed in the venues are unsolicited, typically honest, candid, and passionate and can be extremely thoughtful. Social media such as Twitter, Facebook, and Linked-In generate millions of comments a day about products and services. About 20 percent of all Tweets are about brands.9 In 2003, digital media accounted for less than 10 percent of advertising spending, relative to TV and print. In 2008, its share was in the low teens. By 2013, it exceeded 20 percent, according to Zenith Optimedia and TNS Media Intelligence.10 Marketing researchers are tapping into these huge streams of data to determine what people think about their products and services, as well as those of the competition. Researchers are building profiles of persons online and using this data to target their promotional efforts. Other researchers tap online communities to build new products and services. Smartphones are causing major changes in the way media are used and buying decisions are made. Add in tablets, traditional computers, and TV, and one finds that the consumer may be looking at four different screens at the same time! Researchers must now measure consumers’ consumption of content and their exposure to advertising across all four screens. ESPN, the sports network, is now gathering data across five platforms: radio, television, computers, smartphones, and tablets.11 Asking the right questions in marketing research can be as important as getting good answers. UPS found that customers wanted more interaction with their UPS driver. Go to http://www.ups.com to find out how UPS uses marketing research to better serve its customers. © David R. Frazier Photolibrary, Inc./Alamy Proactive Role of Marketing Research Understanding the nature of the marketing system is a necessity for a successful marketing orientation. By having a thorough knowledge of factors that have an impact on the target market and the marketing mix, management can be proactive rather than reactive. Proactive management alters the marketing mix to fit newly emerging patterns in economic, social, technological, and competitive environments, whereas reactive management waits for change to have a major impact on the firm before deciding to take action. It is the difference c01.indd 09/15/2014 Page 7 between viewing the turbulent marketing environment as a threat (a reactive stance) and seeing it as an opportunity (a proactive stance). Apple, for example, has been very proactive about bringing cutting-edge technology products to the marketplace. This, in turn, has generated huge profits for the company. A proactive manager not only examines emerging markets but also seeks, through strategic planning, to develop a longrun marketing strategy for the firm. A marketing strategy guides the long-term use of the firm’s resources based on the firm’s existing and projected internal capabilities and on projected changes in the external environment. A good strategic plan is based on good marketing research. It helps the firm meet long-term profit and market share goals. 7 Rex F. May Marketing Research and Decision Making “I don’t know what I’m doing—this is pure research!” Applied Research versus Basic Research Virtually all marketing research is conducted to better understand the market, to find out why a strategy failed, or to reduce uncertainty in management decision making. All research conducted for these purposes is called applied research. For example, should the price of DiGiorno frozen pizza be raised 40 cents? What name should Toyota select for a new sedan? Which commercial has a higher level of recall: A or B? By contrast, basic, or pure, research attempts to expand the frontiers of knowledge; it is not aimed at a specific pragmatic problem. Basic research is conducted to validate an existing theory or learn more about a concept or phenomenon. For example, basic marketing research might test a hypothesis about high-involvement decision making or consumer information processing. In the long run, basic research helps us understand more about the world in which we live. Managers usually cannot implement the findings of basic research in the short run. Most basic marketing research is now conducted in universities; the findings are reported in such publications as The Journal of Marketing Research and The Journal of Marketing. In contrast, most research undertaken by businesses is applied research because it must be cost-effective and of demonstrable value to the decision maker. Although basic research is still important at some firms, particularly high tech, the notion of time-to-market has changed. That is, the basic research can be fairly long term but must have a focus on ultimately solving real-world problems. Companies conducting basic research include Genentech, Cisco Systems, and Google. Google, for example, has done basic research that has led to applied research that resulted in the creation of a self-driving car. Nature of Applied Research Marketing research studies can be classified into three broad categories: programmatic, selective, and evaluative. Programmatic research is conducted to develop marketing options through market segmentation, market opportunity analysis, or consumer attitude and product usage studies. Selective research is used to test decision alternatives. Some examples are testing concepts for new products, advertising copy testing, and test marketing. Evaluative research is done to assess program performance; it includes tracking advertising recall, doing organizational image studies, and examining customer attitudes on a firm’s quality of service. Programmatic research arises from management’s need to obtain a market overview periodically. For example, product management may be concerned that the existing market information base is inadequate or outdated for present decision making, or marketing marketing strategy A plan to guide the long-term use of a firm’s resources based on its existing and projected internal capabilities and on projected changes in the external environment. applied research Research aimed at solving a specific, pragmatic problem— better understanding of the marketplace, determination of why a strategy or tactic failed, or reduction of uncertainty in management decision making. basic, or pure, research Research aimed at expanding the frontiers of knowledge rather than solving a specific, pragmatic problem. programmatic research Research conducted to develop marketing options through market segmentation, market opportunity analyses, or consumer attitude and product usage studies. selective research Research used to test decision alternatives. evaluative research Research done to assess program performance. c01.indd 09/15/2014 Page 8 8 CHAPTER 1 THE ROLE OF MARKETING RESEARCH IN MANAGEMENT DECISION MAKING plans may call for the introduction of new products, ad campaigns, or packaging. Whatever the specific situation, current information is needed to develop viable marketing options. Typical programmatic research questions include the following: ▪ ▪ ▪ ▪ Has its target market changed? How? Does the market exhibit any new segmentation opportunities? Do some segments appear to be more likely candidates than others for the firm’s marketing efforts? What new product or service opportunities lie in the various segments? Equidistant between Los Angeles and San Francisco in the Eastern Sierra Nevada Mountains, Mammoth Mountain has been serving the skiers and snowboarders of central California for more than 50 years. With the summit reaching above 11,000 feet and average annual snowfall hitting 400 inches, thousands of customers flock to the slopes and the lodges annually. Yet, the resort’s longstanding direct-mail program just wasn’t driving the traffic. While the resort wasn’t losing visitors (most resort traffic industrywide comes from existing skiers and snowboarders rather than those new to the sports), executives hoped to gain some ground in an overall stable market by injecting some life into what had become an out-of-date marketing campaign—and to increase the frequency of visits by the 900,000 customers in its database. Resort executives used programmatic research collected from an annual survey, the National Skier and Snowboarder Opinion Survey conducted on behalf of resorts across the country, and found that 94 percent of Mammoth’s users in particular acknowledge using the Internet to find information about everything from weather advisories to checking room rates at one of Mammoth’s lodges. This information led to the creation of an e-mail marketing system that reaches 18,000 subscribers. The format is chatty and informing. For example, “The weather has been beautiful here lately, and with a 12- to 14-foot base you can’t go wrong anywhere on the mountain. At 1:15 p.m. the temperature is 34 degrees at Main Lodge with clear skies and moderate to gusty winds. It’s extremely windy and cold on top at 17 degrees, so be sure to bundle up.” Skier visit numbers have been increasing 5 percent or more annually as a result of the programmatic research!1 Selective research typically is conducted after several viable options have been identified by programmatic research. If no one alternative is clearly superior, product management usually will wish to test several alternatives. However, selective research may be required at any stage of the marketing process, such as when advertising copy is being developed, various product formulations are being evaluated, or an entire marketing program is being assessed, as in test marketing. The need for evaluative research arises when the effectiveness and efficiency of marketing programs must be evaluated. Evaluative research may be integrated into programmatic research when program changes or entirely new options are demanded because of current performance, such as at Mammoth Mountain. Decision to Conduct Marketing Research A manager who is faced with several alternative solutions to a particular problem should not instinctively call for applied marketing research. In fact, the first decision to be made is whether to conduct marketing research at all. In a number of situations, it is best not to conduct research. ▪ Resources are lacking. There are two situations in which a lack of resources should preclude marketing research. First, an organization may lack the funds to do the c01.indd 09/15/2014 Page 9 Marketing Research and Decision Making ▪ ▪ ▪ ▪ ▪ research properly. If a project calls for a sample of 800 respondents but the budget allows for only 50 interviews, the quality of the information would be highly suspect. Second, funds may be available to do the research properly but insufficient to implement any decisions resulting from the research. Small organizations in particular sometimes lack the resources to create an effective marketing mix. In one case, for example, the director of a performing arts guild was in complete agreement with the recommendations that resulted from a marketing research project. However, two years after the project was completed, nothing had been done because the money was not available. Research results would not be useful. Some types of marketing research studies measure lifestyle and personality factors of steady and potential customers. Assume that a study finds that introverted men with a poor self-concept, yet a high need for achievement, are most likely to patronize a discount brokerage service. The management of Charles Schwab’s discount brokerage service might be hard-pressed to use this information. The opportunity has passed. Marketing research should not be undertaken if the opportunity for successful entry into a market has already passed. If the product is in the late maturity or decline stage of the product life cycle (such as cassette recorders or blackand-white television sets), it would be foolish to do research on new product entry. The same may be true for markets rapidly approaching saturation, such as super-premium ice cream (Häagen-Dazs, Ben and Jerry’s). For products already in the market, however, research is needed to modify the products as consumer tastes, competition, and other factors change. The decision already has been made. In the real world of management decision making and company politics, marketing research has sometimes been used improperly. Several years ago, a large marketing research study was conducted for a bank with over $800 million in deposits. The purpose of the research project was to guide top management in mapping a strategic direction for the bank during the next 5 years. After reading the research report, the president said, “I fully agree with your recommendations because that was what I was going to do anyway! I’m going to use your study tomorrow when I present my strategic plan to the board of directors.” The researcher then asked, “What if my recommendations had been counter to your decision?” The bank president laughed and said, “They would have never known that I had conducted a marketing research study!” Not only was the project a waste of money, but it also raised a number of ethical questions in the researcher’s mind. Managers cannot agree on what they need to know to make a decision. Although it may seem obvious that research should not be undertaken until objectives are specified, it sometimes happens. Preliminary or exploratory studies are commonly done to better understand the nature of the problem, but a large, major research project should not be. It is faulty logic to say, “Well, let’s just go ahead and do the study and then we will better understand the problem and know what steps to take.” The wrong phenomena might be studied, or key elements needed for management decision making may not be included. Decision-making information already exists. Some companies have been conducting research in certain markets for many years. They understand the characteristics of their target customers and what they like and dislike about existing products. Under these circumstances, further research would be redundant and a waste of money. Procter & Gamble, for example, has extensive knowledge of the coffee market. After it conducted initial taste tests, P&G went into national distribution with Folgers Instant 9 c01.indd 09/15/2014 Page 10 10 CHAPTER 1 THE ROLE OF MARKETING RESEARCH IN MANAGEMENT DECISION MAKING Coffee without further research. The Sara Lee Corporation did the same thing with its frozen croissants, as did Quaker Oats with Chewy Granola Bars. This tactic, however, does not always work. P&G thought it understood the pain reliever market thoroughly, so it bypassed marketing research for Encaprin, encapsulated aspirin. The product failed because it lacked a distinct competitive advantage over existing products and was withdrawn from the market. © Pictorium /Alamy The super-premium ice cream market is reaching saturation. At this point, it might not be wise to enter this market. However, marketing research is necessary to keep products already in the market ahead of the competition. ▪ The costs of conducting research outweigh the benefits. Rarely does a manager have such tremendous confidence in her or his judgment that additional information relative to a pending decision would not be accepted if it were available and free. However, the manager might have sufficient confidence to be unwilling to pay very much for it or wait long to receive it. Willingness to acquire additional decision-making information depends on a manager’s perception of its quality, price, and timing. The manager would be willing to pay more for perfect information (that is, data that leave no doubt as to which alternative to follow) than for information that leaves uncertainty as to what to do. Therefore, research should be undertaken only when the expected value of the information is greater than the cost of obtaining it. Two important determinants of potential benefits are profit margins and market size. Generally speaking, new products with large profit margins are going to have greater potential benefit than products with smaller profit margins, assuming that both items have the same sales potential. Also, new product opportunities in large markets are going to offer greater potential benefits than those in smaller markets if competitive intensity is the same in both markets (see Exhibit 1.1). EXHIBIT 1.1 Deciding Whether to Conduct Marketing Research Market Size Small Profit Margin Large Profit Margin Small Costs likely to be greater than benefits (e.g., eyeglass replacement screw, tire valve extension). DON’T CONDUCT MARKETING RESEARCH. Benefits possibly greater than cost (e.g., ultra-expensive Lamborghini-type sportswear, larger specialized industrial equipment such as computer-aided metal stamping machines). PERHAPS CONDUCT MARKETING RESEARCH. LEARN ALL YOU CAN FROM EXISTING INFORMATION PRIOR TO MAKING DECISION TO CONDUCT RESEARCH. Large Benefits likely to be greater than costs (e.g., Stouffers frozen entrees, Crest’s teeth whitener strips). PERHAPS CONDUCT MARKETING RESEARCH. LEARN ALL YOU CAN FROM EXISTING INFORMATION PRIOR TO MAKING DECISION TO CONDUCT RESEARCH. Benefits most likely to be greater than costs (e.g., medical equipment like CAT scanners, 3D printers). CONDUCT MARKETING RESEARCH. c01.indd 09/15/2014 Page 11 Development of Marketing Research Development of Marketing Research The many benefits that accrue to management from using marketing research served as the initial impetus to begin conducting marketing research in the United States. In light of the competitive advantage a company can gain from engaging in marketing research, it is surprising that the industry did not move out of its embryonic stage until 1900. Inception: Pre-1900 The first recorded marketing research survey was taken in July 1824 by the Harrisburg Pennsylvanian. It was an election poll in which Andrew Jackson received 335 votes; John Quincy Adams, 169; Henry Clay, 29; and William H. Crawford, 9. Later the same year, another newspaper, the Raleigh Star, canvassed political meetings held in North Carolina, “at which the sense of the people was taken.” Perhaps the first marketing researcher was John Jacob Astor, who in the 1790s employed an artist to sketch the hats worn by fashionable New York women so that he could keep abreast of fashion trends.13 The first documented use of research to make informed marketing decisions was carried out by the advertising agency N. W. Ayer in 1879. That systematic effort was a simple survey of state and local officials to determine expected levels of grain production. The purpose of the research was to develop the scheduling of advertising for a producer of farm equipment. The second documented instance of marketing research appears to have been at E. I. duPont de Nemours & Company toward the end of the nineteenth century. It involved the systematic compilation of salespersons’ reports on a variety of customer characteristics. The response to this second research effort was a harbinger of things to come. The salespersons who were responsible for obtaining and reporting the data were outraged because they didn’t like the extra paperwork. Academic researchers entered into marketing research about 1895, when Harlow Gale, a professor of psychology at the University of Minnesota, introduced the use of mail surveys to study advertising. He mailed 200 questionnaires and received 20 completed questionnaires, a 10 percent response rate. Gale’s work was quickly followed by the pioneering work of Walter Dill Scott at Northwestern University. Scott introduced the use of experimentation and psychological measurement to the fledgling practice of advertising. Early Growth: 1900–1920 It was not until after the turn of the century that consumer demand surged; the growth of mass production meant larger and more distant markets. No longer was America characterized by cottage industries where the craftsman–seller was in daily contact with the marketplace. The need arose to understand consumers’ buying habits and attitudes toward manufacturers’ wares. In response to this need, the first formal marketing research department was established by the Curtis Publishing Company in 1911. The research focused primarily on the automobile industry, as manufacturers had decided that everyone who had the money and inclination to buy a car had done so. The manufacturers were seeking a new group of consumers to which to target their promotions. A few years later, Daniel Starch pioneered recognition measures of advertising response, and E. K. Strong introduced recall measures and scaling to marketing research. Adolescent Years: 1920–1950 Percival White developed the first application of scientific research to commercial problems. White’s words express his realization of the need for systematic and continual marketing research: 11 c01.indd 09/15/2014 Page 12 12 CHAPTER 1 THE ROLE OF MARKETING RESEARCH IN MANAGEMENT DECISION MAKING Perhaps the greatest advantage of the company’s having its own market analysis department is that the work then becomes a continuous process, or at least a process which is carried forward at periodic intervals, so that altered conditions in the market and in the industry at large are always kept in view. The necessity for regarding markets as constantly changing and not as fixed phenomena should not be lost sight of.14 White’s book bore scant resemblance to this text. For example, the book avoided the use of statistics and mathematics, only briefly mentioning the U.S. Census. The 1930s saw widespread use of survey research. A. C. Nielsen entered the research business in 1922. He expanded on White’s earlier work by developing the “share of market” concept and many other services that became the foundation for one of America’s largest marketing research organizations. It was not until the late 1930s that formal courses in marketing research became common on college campuses; a substantial body of knowledge developed within both the practice and academic communities. Two events—the spread of broadcast media and World War II—helped the fledgling discipline coalesce into a welldefined profession. Social scientists found that broadcast media created interesting new phenomena and increased the variability of human behavior. By the end of the 1930s, simple examinations of respondents’ replies were becoming categorized and compared across groups classified by differences in income, gender, or family status. Simple correlation analysis came into use but was not widespread; those who would use it had to be able to go directly to the statistical sources for such techniques, using texts by some of the pioneers in the field at this time, including G. Udney Yule, Mordecai Ezekiel, and Horace Sechrist. The requirements of World War II pressed social scientists into service on a number of fronts. Tools and methods that had been novelties before the war were adopted and adapted to study the consumer behavior of soldiers and of their families on the home front. Among those tools were experimental design, opinion polling, human factors research, and operations research techniques. In the 1940s, focus groups developed under the leadership of Robert Merton. During the late 1940s, the importance of random selection in sampling became widely recognized, and major advances were made in sampling techniques and polling procedures. A small number of psychologists who had been assigned to work in the Army Quartermaster Corps found their way into industry, where they introduced techniques for consumer tests of products.15 Mature Years: 1950–2000 The change from a seller’s market to a buyer’s market (resulting from post–World War II pent-up demand) necessitated better marketing intelligence. No longer could producers sell all of anything they made. The rising costs of production “tooling up,” advertising, inventories, and other factors made the price of failure much higher than it had been in the past. Thus, research became much more important. Now, marketing research first determines what the market wants and then goods are crafted to meet those needs. The mid-1950s brought the concept of market segmentation, based largely on easily identifiable demographic characteristics of customers. The same period gave rise to motivation research, with its emphasis on why consumers behave as they do. The underlying concepts of segmentation and motivation analysis, combined with the power of survey techniques, led to such innovations as psychographics and benefit segmentation. In the 1960s, mathematical models were developed for description and prediction—stochastic models, Markovian models, and linear learning models. Even more significant was the development of the computer during the early 1960s, greatly enhancing the researcher’s ability to quickly analyze, store, and retrieve large amounts of data. c01.indd 09/15/2014 Page 13 Development of Marketing Research The Connected World: 2000–2010 The Internet has brought profound changes to marketing research. In a global survey, 94 percent of the research firms stated that they were conducting online research.16 Some firms are beginning to focus on mobile interviewing—mobile self-completion on a smartphone, iPhone, Blackberry, Droid, and the like. Today, 56 percent of American adults own a smartphone17 and over 98 percent of the U.S. population has Internet access.18 The Internet has produced many benefits for marketing researchers: ▪ ▪ ▪ ▪ Provides more rapid access to business intelligence, which allows for better and faster decision making. Improves a firm’s ability to respond quickly to customer needs and market shifts. Facilitates conducting follow-up studies and longitudinal research. Slashes labor- and time-intensive research activities (and associated costs), including mailing, telephone solicitation, data entry, data tabulation, and reporting. Conducting surveys and analyzing mountains of user data are not the sum total of the Internet revolution in marketing research. The Internet has also greatly enhanced management of the research process and dissemination of information. Specifically, the Internet has greatly affected several key areas: ▪ ▪ ▪ ▪ ▪ ▪ Libraries and various printed materials, which may be virtually replaced as sources of information. On its website, the Bureau of Census (http://www.census.gov) indicates that it plans to gradually make the Internet the major means of distributing census data. The same is true for a number of other government agencies. Information from countless databases (both governmental and nongovernmental) can be called up almost instantaneously on the user’s desktop, notebook, smartphone, Kindle, iPad, or other E-reader. The distribution of requests for proposals (RFPs) and the proposals themselves. Companies can now quickly and efficiently send RFPs to a select e-mail list of research suppliers. In turn, the suppliers can develop proposals and e-mail them back to clients. A process that used to take days now occurs in a matter of hours. Collaboration between the client and the research supplier in the management of a research project. Both the researcher and the client might look at a proposal, RFP, report, or some type of statistical analysis at the same time on their computer screens while discussing it over the telephone. This is very effective and efficient, as changes in sample size, quotas, and other aspects of the research plan can be discussed and changes made immediately. Data management and online analysis. Clients can access their survey via the research supplier’s secure Web site and monitor the data gathering in real time. The client can use sophisticated tools to actually carry out data analysis as the survey develops. This real-time analysis may result in changes in the questionnaire, sample size, or types of respondents interviewed. The research supplier and the client become partners in “justin-time” marketing research. Publishing and distribution of reports. Reports can be published directly to the Web from such programs as PowerPoint and all the latest versions of leading word processing, spreadsheet, and presentation software packages. This means that results are available to appropriate managers worldwide on an almost instantaneous basis. Reports can be searched for content of specific interest, with the same Web browser used to view the report. Oral presentations of marketing research surveys, which now can be viewed by widely scattered audiences. Managers throughout the world can see and hear the actual client presentation on password-protected websites. This saves firms both time and money, as managers no longer need to travel to a central meeting site. 13 c01.indd 09/15/2014 Page 14 14 CHAPTER 1 THE ROLE OF MARKETING RESEARCH IN MANAGEMENT DECISION MAKING ERA of Big Data: 2010–Present Big Data The accumulation and analysis of massive quantities of information. The hottest buzzword in marketing research is Big Data. Interestingly enough, most authors never bother to define the term, so it is unclear whether people are always speaking about the same thing. For our purposes, we will define Big Data as the accumulation and analysis of massive quantities of information. Every day, three times per second, we produce the equivalent amount of data that the Library of Congress has in its entire print collection. Up until recently, managers were limited to analyzing structure data. Structured data consists of fixed answers and numbers that can be arranged in rows and columns. These data are easily stored, categorized, queried, analyzed, and reported. A few examples of structured data formatting are: (1) Are you (A) male, (B) female?; (2) Did you find the restaurant (A) excellent, (B) good, (C) fair or (D) poor? The data in question 2 can be crossed with the gender data to ascertain how many men and how many women found the restaurant to be “excellent.” The analysis is simple, direct, and straight-forward. The breakthrough came in 2009 when new algorithms were created to analyze unstructured and free-form data. Now, data scientists can analyze YouTube videos, social media posts, web-click behavior, GPS tracking data, satellite imagery, video streams, public surveillance videos, in-store tracking cameras, and more. So how do marketers use Big data to improve their profitability? Here is one example. Chico’s FAS Inc., Fort Myers, Florida-based specialty retailer of private branded women’s apparel, listens to what consumers say about its brand on Facebook, Twitter and YouTube, and in discussion forums and blogs. With social media analytic tools, Chico’s can find key influencers for the brand and determine how their brand-related online conversations affect business results. Such findings ultimately guide brand and communication strategies, and customer-focused efforts. Chico’s works in real time to identify tweets related to its brands, and categorizes them based on their sentiment and the author’s degree of influence. The company can then respond to the important comments.20 McKinsey & Company, an international consulting firm, says that companies who use Big Data and the proper analytics can deliver productivity and profit gains that are 5 to 6 percent higher than the competition.21 The tremendous value of Big Data means that big data technology and services market will grow at a 31 percent rate, with revenues reaching $24 billion by 2016.22 The mathematics used in analyzing Big Data goes far beyond the scope of this text. We will, however, take a more detailed look at the nature and benefits of Big Data from a managers’ or users’ perspective in Chapter 4. Big Data is not the only change agent swirling around in the marketing research environment, as our Practicing Marketing Research box shows. P R A C T I C I N G M A R K E T I N G R E S E A R C H A Few Forces That May Change the World of Marketing Research Joseph Rydholm is the editor of Quirk’s Marketing Research Review, the industry’s most popular and influential trad...
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Explanation & Answer

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Exam 2 Solutions

1.
Characteristics of a good market research questionnaire are:
a) Questionnaire design to capture characteristics of phenomenon or find solutions
b) Reliability and validity
c) Quality of questions that ensure high participation or response rate
d) Ease of implementation and cost effectiveness

2.
Background factors for consideration include:
a) Characteristics of the phenomenon under investigation
b) Characteristics of consumers or participants
c) Qualitative or quantitative data
d) Sample size and response rate for quantitative research
e) Cost of implementation
f) Previous data or related data from other sources

3
Steps for developing and implementing a questionnaire
1: Develop Objectives, Resources, and Constraints
2: Select Data-Collection Method
3: Select Question Format
4: Select Wording
5: Develop Questionnaire Flow and Layout
6: Evaluate the Questionnaire
7: Obtain Approval of Parties
8: Pretest and Revise

9: Finalize Copy
10: Implement Survey

4
Open-ended questions do not have constraints and are like essays. Close-ended questions have
fixed responses, which customers need to select.

5
Probing is an exploratory technique, which could be done qualitatively or quantitatively. For
instance, finding what the consumer sentiment is for a technology with questions. Clarification
involves confirming the theory or consumer sentiment, which could also be done by asking
questions and other data capture tools.

6
A dichotomous rating question has a scale ranging from one divergent end to another. For
example, very unlikely to very likely.

7
A question with multiple choices has several options for the respondent. One or more answers
could be correct in a multiple-choice question.

8
A numerical rating scale has a label in addition to the number. The label describes the
characteristics of the number, for instance percentage. A numerical scale could quantitatively
describe the number of people in the category and also show the percentage of people in each
category.
9
A slider scale is a graphical rating scale. Respondents could slide the scale to indicate their
response for the phenomenon.

10
In a two-stage format, there is a second qualifier for the first stage. For example, one-stage could
ask the people about their opinion on President Trump. The second-stage could ask the level of
confidence of their opinion for the first stage.

11
An odd number of points provides a center, which could be a neutral opinion. This metric is not
available for even points.

12
Balanced scales have an equal number of positive and negative attributes. A non-balanced scale
has more weight at one of the ends of the scale.

13
If there is more of a certain type of response, say positive attitude towards a product or service,
an unbalanced scale with more positive gradients than negative ones can ascertain the degree of
positiveness.

14
In a ranking scale, the respondent needs to rank the choices. In a rating scale, the respondent
rates each choice on the scale. All the choices could have the same le...


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