Description
JUiCY Fruit Gum, the oldest brand of the Wm. Wrigley Jr. Company, wasn't chewing up the teen market, gum's top demographic. In 1997, the company found itself under pressure from competitors. Sales and market share were down .
CHAPTER3
MARKETING RESEARCH: ANAID TO
DECISION MAKING
LEARNING OBJ ECT IVES
Having completed this chapte r, you should '
• Understand the role of marketing research .
• Understand the marketing research process and the techniques
employed .
DISCOVERING WHY THEY CHEW
JUiCY Fruit Gum, the oldest brand of the Wm. Wrigley Jr. Company, wasn't chew-
ing up the teen market, gum' s top demographic. In 1997, the company found itself under
pressure from competitors. Sales and market share were down. How could Wrigley make
more kids chomp on Juicy Fruit?
What qualit ies about Juicy Fruit might appeal to teens? Wrigley went to the source
to find out. It found kids who chew five sticks or more of Juicy Fruit each week and
promptly gave them a homework assignment. Find pictures that remind them of the gum
and write a short story about it. From the focus group, Wrigley learned that teens chew
Juicy Fruit because it' s sweet. It refreshes and energizes them.
Their ad agency, BBDO, confirmed what the teens were saying. BBDO asked
more than 400 heavy gum chewers to rate various brands by attributes that best repre-
sented them. For Jui cy Fruit, respondents picked phrases such as "has the right amount
of sweetness" and "is made with natural sweetness."
Another study by BBDO looked into why teens chew gum. Was it because they're
stressed out-or because they forgot to brush their teeth before going to school? Nearly
three out of four kids said they stick a wad into their mouth when they crave something
sweet. And Juicy Fruit was the top brand they chose to fulfill that need (Big Red was a
distant second).
Sources: "How Sweet It Is," American Demographics, March 2000, p, S18; "Flavor du Jour," American Demographics, March
2000, p, SI 0; Erika Rasmusson, "Cool for Sale," Sales & Marketing Management , March 1998, pp. 20-22,
INTRODUCTION
Although the marketing research conducted by the Wrigley Co. was fairly simple, it pro-
vided a new direcLion for their marketing strategy. BBDO developed four TV commercials
53
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54 CHAPTER 3 MARKETING RESEARCH: AN AI DTO DECISION MAKI NG
Marketing
research
FIGURE 3.1 The marketing planning process
with the "Gatta Have Sweet" theme. Rougi1ly 70 percent of respondents voluntarily recalled
the Juicy Fruit name after watching the commercial (the average recaJI for a brand of sugar
gum is 57 percent). Sales of 100-stick boxes of ~ u y Fruit rose 5 percent after the start of
the ad campaign, reversing a 2 percent decline prior to it. Juicy Fruit's market share also
increased from 4.9 percent to 5.3 percent, the biggest gain of any established chewing gum
brand during the year following the campaign.
Marketing research addresses the need for quicker, yet more accurate, decision mak-
ing by the marketer. The impetus for this situation is the complex relationship between the
business firm and the ever-changing external environment. In particular, most marketers are
far removed from their customers; yet must know who their customers are, what they want,
and what c o m p e t i t o r s are doing. Often the marketer relies on salespeople and dealers for
information, but more and more the best source of information is marketing research.
It should be noted that most marketing decisions are still made without the use of
formal marketing research. In many cases, the time required to do marketing research is
not available. In other cases, the cost of obtaining the data is prohibitive or the desired data
cannot be obtained in reliable form. Ultimately, successful marketing executives make deci-
sions on the basis of a bl end of facts and intuition.
In this chapter, we provide an overview of the marketmg research process. We start
the discussion with a look at business information. As noted in Figure 3.1, marketing research
is applicable throughout the marketing planning process.
THE NATURE AND IMPORTANCE
OF MARKETING RESEARCH
Informal and, by today' s standards, crude attempts to analyze the market date back to the
earliest days of the marketing revolution. Only in recent years, however, has the role of
research as it relates to management been clearly recognized.
Reflecting this change in orientation, the foJIowing definition of marketing research
is offered: marketing research is the scientific and controlled gathering of nonroutine mar-
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WHAT NEEDS RESEARCHING IN MARKETING? 55
keting information undertaken to help management solve marketing problems. There is often
hearty disagreement over the answer to the question of whether marketing research is a sci-
ence. One's answer depends on the employed definition of "science." To be specific, a research
activity should use the scientific method. In this method, hypotheses (tentative statements
of relationships or of :;olutions to problems) are drawn from informal observations. These
hypotheses are then tested. Ultimately, the hypothesis is accepted, rejected, or modified
according to the results of the test. In a true science, verified hypotheses are turned into
"jaws." In marketing research, verified hypotheses become the generalizations upon which
management develops its marketing programs. (To simplify our discussion, we will use "ques-
tions" as a synonym of "hypothesis.")
The mechanics of marketing research must be controlled so that the right facts are
obtained in the answer to the correct problem. The control of fact-finding is the responsi-
bility of the research director, who must correctly design the research and carefully super-
vise its execution to ensure ~ h t it goes according to plan. Maintaining control in marketing
research is often difficult because of the distance that separates the researcher and the mar-
ket and because the services of outsiders are often required to complete a research project. I
WHAT NEEDS RESEARCHING IN MARKETING?
An easy, and truthful, answer to this question is "Everything." There is no aspect of mar-
keting to which research cannot be applied. Every concept presented in this marketing text
and every element involved in the marketing management process can be subjected to a
great deal of careful marketing research. One convenient way to focus attention on those
matters that especially need researching is to consider the elements involved in marketing
management. Many important questions relating to the consumer can be raised. Some are:
• Who is/are the customer(s)?
• What does he/she desire in the way of satisfaction?
• Where does he/she choose to purchase?
• Why does he/she buy, or not buy?
• When does he/she purchase?
• How does he/she go about seeking satisfaction in the market?
Another area where research is critical is profits. Two elements are involved. First,
there is the need to forecast sales and related costs- resulting in profits. Second, there is
the necessity to plan a competitive marketing program that will produce the desired level
of ~ l s ~ an appropriate cost. Sales forecasting is the principal tool used in implementing
the profit-direction element in the marketing management concept. Of course, the analy-
sis of past sales and interpretation of cost information are important in evaluation of per-
formance and provide useful facts for future planning.
A great deal of marketing research is directed toward rather specialized areas of man-
agement. These activities are broken down into five major areas of marketing research. Briefly,
these activities are:
1. Research on markets- market trends, market share, market potentials, market char-
acteristics, completion, and other market intelligence.
2. Research on sales-sales analysis, sales forecasting, quota-setting, sales territory
design, sales performance measurement, trade channels, distribution costs, and
inventories.
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56 CHAPTER 3 IViARKETING RESEARCH: AN AIDTO DECISION
3. Research on products-new research, product features, brand image, con-
cept tests, product tests, and market tests. (See the following Newsline. )
4. Research on advertising and promotion-promotion concepts, copy research, media
research, merchandising. packaging, adve;tising effectiveness measurement.
5. Research on corporate growth and development--econorrUc and technological fore-
casting, corporate planning inputs, corporate image, profitability measurement,
merger and acquisition and facilities location.
NEWSLINE: HOWEXECS USE RESEARCH
Creating and introducing new products is the most important
research priority among marketing executives. The Marketing Science
Institu te of Cambridge, Massachusetts, surveyed 160 executives from
its sponsoring organizations. The executives, representing 60 major
consumer and industrial goods and services corporations , were asked
to divide 100 points among several research areas.
After successful new product introductions, the executives said
that market orientation and customer relationships are the next most
important areas . Those issues displaced improving the use of market-
ing information and measuring brand eqUity as the second- and
third-highest concerns, respectively, in the previous survey.
"The new research priorities indicate that a shift is taking place in
marketing practice," notes Donald Lehmann, executive director of the
institute. "Market orientation has taken hold and the increasing
power of the consumer is apparent in the movement away from prod-
uct-driven strategies. Marketers also realize that they need to make
choices about who their customers should be and whose needs they
are best eqUipped to meet ... and most significantly, they are looking
for better ways to anticipate adoption and diffusion of really new
products." Said Marni Clippenger, communications director at MSI,
"Companies seem to be shifting away from usi ng the brand to really
figuring out what customers want."
Source: Rachel Rosenthal. "New Products Reign as Research Priority," Adver-
tising Age, August 8. 1994, p. 26; Robert McMath, 'To Test or Not To Test ,"
American Demographics, June 1998, p. 64; John McManus, "Mission Invisi-
ble," American Demographics, Marcb 1999, p. 6.
MARKETING CAPSULE •
1. Markcting research is the scientific and cont(Qlled gath-
ering of nonroutine marketing informati on undertaken to
help management solve marketing problems.
2. Any business that is consumer-oriented will benefit from
marketing research.
3. Research can be applied to every facet of marketing.
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Sales forecasts
Cost forecasts
Product testing
Consumer needs
Consumer attitudes
Consumer product usage
Market size/trends
Product replacement
PROCEDURES ANDTECHNIOUES IN MARKETING RESEARCH 57
Demographic trends
Legislative impact
Price testing
Marketing communication testing
Channel locations
Competition
Psychographic trends
Environmental trends
FIGURE 3.2 Areas of research application
PROCEDURES ANDTECHNIQUES
IN MARKETING RESEARCH
Considering the relatively short span of time in which marketing research has developed
since the 1930s, it is quite remarkable that so sophisticated and thorough a collection of
procedures and techniques should have been developed. In many respects, marketing research
has advanced faster than any other specialized area in marketing management. In view of
the highly specialized nature of marketing research, it is not possible in this discussion to
present more than an outline of the basic procedures and techniques.
It is important for a marketing manager to be familiar with the basic procedures and
techniques of marketing research. It is true that many businesspeople will never have occa-
sion to engage personally in marketing research. However, it is quite likely that they will
be faced with a need either to supervise an internal marketing research activity or to work
with an outside marketing research firm. The manager who understands the research func-
tion is in a position to judge intelligently the proposals made by research specialists and to
evaluate their findings and recommendations. Occasionally, the manager herself will have
to seek solutions to marketing problems. It may not be possible to obtain the services of
marketing research specialists. The manager familiar with the basic procedures of fact-find-
ing in marketing should be able to supervise a reasonably satisfactory search for the infor-
mation required.
There is no single set of steps in a market research procedure that is accepted by all.
Indeed, each marketing research problem requires, to some degree, its own peculiar pro-
cedure. However, there is general agreement that four major activities should be performed
in a thorough marketing research project. These are: (1) making a preliminary investiga-
tion; (2) creating the research design; (3) conducting the investigation; and (4) processing
the data/reporting results (see Figure 3.3) 2
Making a Preli minary Investigation
There are two phases of activity in the preliminary investigation. The first of these involves
the determination of the purpose and scope of the research. The second involves an inves-
tigation into the marketing environment called the informal assessment.
Determining the Purpose and Scope o f the Research
The basic and critical problem in marketing research is seldom the problem that appears
on the surface. It is therefore necessary to explore beneath the surface to ascertain the nature
and size of the problem. This is the vital first step and must be done correctly, since every
subsequent phase of the project is directed at solving the basic problem. For the research
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58 CHAPTER 3 MARKETING RESEARCH: AN AIDTO DECISION MAKING
Conduct
preliminary
investigation
Purpose/scope
of research
Create the
research design
Conduct
the research
Process
the data
Report
the results
FIGURE 3.3 The marketing research process
to be worthwhile (indeed, for it not to be a waste of resources), the problem must be stated
clearly and correctly. Failure to do so is the most serious of mistakes in this project.
Correctly defining the research problem should lead to the establishment of the research
parameters. A research study could be restricted by (advertising); customer group
(heavy users); market (Far East); and time frame (1999-2001). Because research is so costly,
it is imperative that parameters are establi shed and maintained.
The Informal Assessment
The second important phase of the preliminary investigation is calied the informal assess-
ment. This is an unstructured search of the marketing environment. It enables the researcher
to become familiar with the problem setting. This is particularly important for the outside
consultant who needs to become acquainted with the company, its customers, its products,
and all of the marketing conditions surrounding the problems. But it is also wise for the
company researcher to refresh hislher knowledge of those internal factors bearing on the
problem and also to discover the external elements irvolved.
The informal investigation goes beyond merely "getting acquainted" with the prob-
lem and its marketing setting, however. T h e final result of the preliminary investigation is
the creation of a set of research questions. In marketing research, theses questions can be
stated as a tentative explanation of the problem that the research is designed to solve. For
example, if a marketing manager is trying to solve a problem that involves an important
loss of market share in a particular area of the country, an informal investigation might reveal
three possible reasons for the decline in market position. These until verified b y
thorough study, can best be stated as research statements:
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PROCEDURES ANDTECHNIQUES IN MARKETING RESEARCH 59
1. The decline in market share is the result of increased competitive advertising in
the area.
2. The decline in market share is the result of the te:: t marketing of a new product
by a major competitor.
3. The decline in market share is the result of "stock outs" at the retail level caused
by a trucking strike in the area.
In attempting to verify one or more of these hypothetical statements, the researcher exam-
ines company records to uncover new sources of information or to discover relationships
in old data with bearing on the current problem. Interviews with company executives and
operating personnel are often conducted. Interviews are also conducted with various per-
sons outside the company whose opinions might be expected to have some relevance to the
problem. The preliminary search is always limited to obtaining an insight into the problem
and into possible. solutions for it.
in the final phase of the preliminary investigation, the analyzes the results
he has so far obtained and restates them in the form of research questions to be tested in
the subsequent research steps.
Creating the Research Design
The design of a marketing research project is the plan proposed for the research ques-
tions as wel1 as collecting and processing infoITiation. The administratioD of the project
according to the design insures that the fact-finding process wiIl be adequately control1ed.
"Design" means more than simply using good market research procedures. Every research
project should be individually designed to produce the kinds of information needed to solve
a particular problem. For this reason, nc two market research projects are ever exactly alike.
3
Six steps are involved in creating a research design: choosing the approach, deter-
mining types of data needed, locating data sources, choosing a method of collecting data,
selecting the sample, and anticipating/col1ecting the results.
Choosing the Approach Three alternative approaches are possible in creating a
research design. They are not mutually exclusive, but in most cases, the design of a research
plan is limited to the use of one of the three.
The first approach is the experimental approach. This approaCh requires that certain
procedural rules must be followed. Essentially, the variable of interest---c.g., price, message-
must be manipulated and everyone participating in the experiment must have a known and
equal chance of being selected.
In a market experiment, information relating to the basic problem is obtained through
the use of a small-scale simulated program designed to test a research hypothesis.
Suppose, for example, that we wish to test the question that families of similar size and
economic characteristics living in three different cities purchase different amounts ofa par-
ticular formula of a soft drink, such as Dr. Pepper. The first step would be to establish the
research question: "For a given t;me period, the average fluid ounces of a Formula A, B,
or C purchase in each city were the same." Next, a sample of the families in each city would
be selected and randomly assigned either A, B, or C. Next, a survey would be taken to deter-
mine the number of ounces purchased by each family. Once thi s was done, a statistical test
would be used to test the research question. If statistically significant differences in pur-
chases of Formula A, B, or C of Dr. Pepper were noted, it could be concluded that taste
does influence the amount of this soft drink purchased by families with the same social and
economic characteristics. Of course, other hypotheses about soft drink purchasing could
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60 CHAPTER 3 MARKETING RESEARCH: AN AIDTO DECISION MAKING
also have been tested using a slightly different method. For example, the effect of televi-
sion advertising on the purchase of Dr. Pepper might have been studied by inspecting pur-
chases in two or more cities that are in the same general area of the country (such as the
Southwest) but in which different levels of television advertising had been used.
The second approach is the historical. In this approach, reliance is placed on past expe-
riences in soiutions to marketing problems. Historical marketing facts are relevant
only to the degree that they can be projected into the future. Fortunately, in many areas of
marketing, this can be done with a good deal of confidence. Certain types of changes, such
as populations and income distribution, come about rather slowly. The day-to-day effect of
these changes on marketiJlg is almost imperceptible. Projections of future population, gross
national product, and consumer purchasing power are practically foolproof. Historical analy-
ses of such factors as consumer behavior, competitive selling tactics, and distributors' buy-
ing practices tend also to be fairly reliable indicators of future behavior by these same
marketing components. Often, it is possible to trace the experience of organizations si mi-
lar to yours and assess how they dealt with similar problems. There are literally hundreds
of case studies on companies such as Microsoft that are useful to many business functions.
Learning from the mistakes of others makes good business sense.
The third approach that can be used in designing a marketing research plan is the sur-
vey approach. In the survey approach, marketing infonnation is collected either from obser-
vation or by quest:.onnaire or interview. In contrast to the experimental and historical
in which the data are more or less directly related to the problem, the survey approach nec-
essarily involves far more subjectivity and intuition on the part of the researcher.··.;yalch-
ing a customer make a purchase of a new TV reveals something about his motives:
asking him why he is buying it is much better. Drawing conclusions from either observa-
tions of behavior or from the opinions offered by a respondent create important insig;1ts.
The survey method is flexible. It can be adapted to almost any type of research design. For
thi s reason, and because of the difficulties in creating marketing experiments and in col-
lecting pertinent historical data, the survey approach is the most often used in marketing
research.
Determining the Types of Data Needed Three types of data are used: facts, opin-
ions, and motivational information. The types of data required are partly identified by the
nature of the problem to be solved. For instance, if the problem relates to production and
inventory scheduling, the facts that are needed relate to market and sales potential. On the
other hand, if the problem revolves around the choice between two new products, the opin-
ions of potential customers are important considerations. Finally, if a problem involves the
choice of an appropriate selling appeal, buyers ' motivations are probably be most impor-
tant. Facts are quantitative or infonnation that can be verified. Opinions are ideas
relating to a problem that are expressed by people involved in the solution. Motivat;ons are
basic reasons, recognized or unrecognized, that explain action. They are extremely diffi-
cult to discover.
Locating the Sources of Data There are two general sources of data, secondary
sources and primary sources.
Secondary source information has been previously published and can be either inter-
nal or external. Company recurds and previously prepared marketing research reports are
typical of internal source material. External secondary sources are widely avail-
able and can be found outside the organization. Excellent bibliographies of secondary data
sources are available, especially online. There are eight primary sources of secondary mar-
ket information:
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PROCEDURES AND TECHNIQUES IN MARKETING RESEARCH 61
1. Public libraries.
2. Universities-library facilities and bureaus of business and economic research.
3. Government agencies--especially departments of commerce, agriculture, and labor.
4. Professional and trade associations.
5. Commercial publishers--especially trade publications.
6. Research and nonprofit organizations.
7. Conferences and personal contact.
8. Computer-provided search systems.
There are tremendous advantages in using data from secondary sources. In the first
place, the expense of gathering information from secondary sources is a fraction of the cost
of collecting primary data. The time required to collect data is also less. Frequently, the
information required to solve a management problem must be quickly. Thanks to
computer technology, it is now possible to gather, merge, and reformulate many second-
ary sources of data. This capability has made secondary data even more attractive.
The inherent limitations of using secondary sources data are twofold. First, the infor-
mation is frequently dated. Second, seldom are secondary data collected for precisely the
same reasons that the information is sought to solve current marketing problem. In spite
of these limitations, the advantages of secondary research are so great that it is a common
procedure not to proceed with the collection of primary data until after a thorough search
of secondary information source has been completed.
Primary information is obtained directly from its source. It involves data that are
not available in published form or in company records. It is gathered specifically to answer
your research question. The sources of primary information, however, cannot be as eas-
ily identified as can the sources of secondary market data. Having identified the information
required to help management solve a problem, it is usually possibie to identify the person
or persons possessing the information desired. In some cases, the infor:nation can be obtained
from one of several sources. In other situations, the information can be obtained only by
contacting specific sources. For example, a manufacturer of vitamins for children discovered
that it was necessary to obtain information from the users (children), purchasers (parents),
sellers (for the most part, druggists), and purchase influencers (pediatricians). Similarly,
a manufacturer of feed for dairy cattle found it desirable to seek market information from
farmers, feed dealers, and dairy specialists. Obviously, it is expensive to collect market-
ing information from multiple sources, and often it is ratner time-consuming. These two
disadvantages are offset by the fact that the informati on so obtained is tailored to the spe-
cific problem at hand. Ultimately, the question as to which source of market information
to use depends on the value of the information in relationship to the time and cost required
to gather it.
4
Choosing the Method of Collecting Data There are various methods of collect-
ing data, both secondary and primary. Secondary sources of information, listed earlier, can
be gathered through a number of means. A company may establish a data-gathering/stor-
age system as part of their computer system. Sales, expenses, inventory, returns, and cus-
tomer complaints are then gathered automatically. Or a company can subscribe to one or
more public research companies that gather relevant information. Finally, a company can
obtain information on a problem-by-problem basis.
There are three common methods used to collect primary information: observation,
questionnaire, and self-report. Observational data collection may be the oldest method.
Since the beginning of commerce, merchants have been watching their customers and
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62 CHAPTER 3 MARKETING RESEARCH: AN AI DTO DECISI ON MAKING
Eoncustomers engage in a variety of behaviors. Examples include shopping, purchase, return,
complaint behavior, and so forth. A local fast food manager might simply observe the expres-
sion on customers' as they eat a new sandwich. More formal observation techniques
are also employed. Video cameras or audio systems can be targeted at customers. Researchers
can also be hired to do license plate surveys in parking lots or simply record observations
in a prescribed manner. There are even observational techniques that are quite intrusive.
For instance, in the case of a pantry (cabinet) audit, the researcher comes to the consumer's
home and actually takes an inventory of products found. Ethnography requires that the
researcher practically move in with the and observe various relevant behaviors.
This technique is illustrated in the Newsline box that follows.
NEWSLINE: WHERE'S THE BEEF?
A woman in suburban Baltimore is shopping for her family's meals
for the week. She cruises past the poultry section, stopping only
momentarily to drop a couple of packages of boneless chicken breasts
into her cart. Then, the dreaded sea of red looms before her. Tenta-
tively, she picks up a package of beef. "This cut looks good, not too
fatty," she says, juggling her two-year-old on her hip. "But 1 don't
know what it is. I don't know how to cook it," she confesses, and
trades it for a small package of sirloin and her regular order of
ground beef.
Scenes like these are replayed daily in supermarkets across the
country. But this time, it's being captured on videotape by New York
City-based PortICo Research, part of a recent ethnographic study of
beef consumers for the National Cattleman's Beef Association (NCBA)
and major grocery retailers. And due in part to the trepidation of this
one mother in Baltimore, many grocers' meat cases are now being
rearranged to display beef by cooking method, rather than by cuts of
meat. Simple, three-step cooking instructions will soon be printed on
the packages
Ethnographic research, which combines intense observation with
customer interviews, shows companies how people live with
products-how they purchase and use them in their everyday lives.
Knowing what consumers do with beef is vital to the NCBA. The study
cost th e NCBA approximately $60,000 (studies might range from
$5,000 to $800,000). PortiCo videotaped consumer's purchasing
behavior as well as their preparation habits at home. The researchers
interviewed them each step of the way what they thought about beef,
why they did (or didn't) select particular cuts, and how they prepared
the family meal. The r etailers couldn't believe how little consumers
knew about something that seemed as familiar to them as sliced
bread or soft drinks.
Sources: Kendra Parker, "How Do You Like Your Beef?" American Demograph-
ics, January 2000, pp. 35-38; Jennifer Lach, "Meet You in Aisle Three," Ameri-
can Demograpnics, April 1999, pp. 41-42.
The observation technique can proVIde important research insights, especially if con-
sistent patterns are noted. This method is relatively inexpensive and can be implemented
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PROCEDURES ANDTECHNIQUES IN MARKETING RESEARCH 63
and completed quickly. Unfortunately, interpreting an observation is still very subjective
and mistakes arc made.
Gathering information through a questionnaire format reflects the most popular research
technique. There are two interrelated issues: the design of the questionnaire and the admin-
istration of the questionnaire.
There are several rules of thumb that should be followed when designing a ques-
tionnaire. For example, a good questionnaire should be like a well-written story: it should
be logical, relevant, easy to follow, and interesting to the reader/respondent. There are also
a host of techniques and related guidelines. For example, Figure 3.4 illustrates the forms
questions can take. A yes/no question is considered a closed-ended dichotomous question;
i.e., respondenl must check one of two possible answers. Questions 4 and 5 are two types
of scaled questions. Questions 6-8 are open-ended, in that respondent can provide any answer
desired. Closed-ended questions are best used when the researcher desires a particular set
of answers or feels the respondent is unli kely to come up with an original answer. Open-
ended questions allow the respondent to come up with personal answers. Of course, there
is a risk that the respondent will have no answer.
Other considerations are whether to place the easier questions at the beginning of the
questionnaire, group similar questions, or place demographic questions at the end of the
questionnaire. Again, the goal is to enaole the respondent to answer the questionnaire eas-
ily and accuratejy.
The design of a questionnaire is a function of how the questionnaire is administered,
and vice versa. Four techniques for administering a questionnaire are currently used: mail ,
telephone, personal interview, and online. In the mail technique, the questionnaire is dis-
tributed and returned through the mail. A typical packet might contain a cover letter explain-
ing the purpose of the research, a copy of the questionnaire, a stamped self-addressed return
envelope, and an incentive for compliance (cash, merchandise, contribution to charity, or
copy of report). Mail questionnaires allow the researcher to ask a large number of ques-
tions over a broad range of topics. They also allow the respondent to answer the question-
naire at their leisure. Finally, the standardized format does not allow for subjective bias.
Unfortunately, these advantages can become limitations. The longer the questionnaire, the
less likely the individual will respond. in fact, a response rate of 10-20% is common with-
out an incentive. Control is lost through the mail process. Did the targeted person answer
the questionnaire? Did the respondent understand the questions? Did she/he complete the
questionnaire? Was the questionnaire returned on time? The loss of control also means that
the interviewer cannot probe further into an interesting or controversial answer.
A more convenient and faster way of gathenng marketing information is to conduct
a telephone survey. Names and related telephone numbers can be obtained directly from a
telephone directory or from an intcrnally or externally generated database. Telephone sur-
veys are limited in several important ways, such as the difficulty of reaching the correct
respondent, the problem of completing the interview if the respondent decides to hang up,
and the inability to eliminate the bias introduced by not interviewing those without phones
or individuals WIth unlisted numbers. Also, 10- 15 questions are likely to be the maximum
number to be asked. Therefore, only a limited number of topics can be addressed. In spite
of these the telephone survey method has grown in popularity. The costs are
relatively low, research can provide well-trained and technically supported inter-
viewers, and the technique works if the research questions are limited and require a quick
answer. Still, it would be better if they didn't call while you were eating dinner.
Although often very costly and time-consuming, personal interviews may constitute
the best way of collecting survey information. Once compliance is gained, the well-trained
interviewer can make sure the right person is answering, ask as many questions as necessary,
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64 CHAPTER 3 MARKETING RESEARCH: AN AID TO DECISION MAKING
A. DIRECT QUESTIONS/CLOSED-ENDED
1. HAVE YOU PURCHASED A NEW AUTOMOBILE SINCE JANUARY 1 OF THIS
YEAR:
DYES D NO
2. IF YOU HAVE PURCHASED A NEW AUTOMOBILE, WHAT MAKE AND
MODEL DID YOU BUY?
MAKE: MODEL: _
3. IF YOU HAVE NOT PURCHASED A CAR SINCE JANUARY 1, DO YOU NOW
PLAN TO BUY A NEW AUTOMOBILE BEFORE DECEMBER 31 OF THIS
YEAR?
DYES DNO D NOT DECIDED
4. IF YOU HAVE NOT DECIDED WHETHER OR NOT YOU WILL BUY A NEW
AUTOMOBILE, DO YOU NOW THINK THAT IT IS
_ EXTREMELY LIKELY
_QUITE LIKELY
UNLIKELY
_EXTREMELY UNLIKELY
THAT YOU WILL BUY A NEW AUTOMOBILE BETWEEN NOW AND
DECEMBER 31 ?
5. I TEND TO RELY H V ~ L Y ON THE REPUTATION OF A CAR BRAND
DiSAGREE
2 3 4
AGREE
5
B. DEPTH QUESTIONS/OPEN-ENDED
6. IF YOU HAVE NOT PURCHASED A NEW AUTOMOBILE, WHAT IS THE MOST
IMPORTANT REASON FOR YOUR DECISION NOT TO BUY A NEW CAR?
7. THAT IS VERY INTERESTING. TELL ME MORE ABOUT THAT.
8. ANY OTHER REASONS?
FIGURE 3.4 Examples of questions used in marketing research
make sure questions are understood, probe in order to address new issues, and encourage
the respondent to complete the questionnaire. With freeaom comes bias. It is sometimes
difficult for an interviewer to maintain objectivity. Asking questions with a certain intona-
tion, changing the wording, or changing the ordering of questions can all modify responses.
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PROCEDURES ANDTECHNIQUES IN MARKETING RESEARCH 65
There are several online information-gathering techniques that allow the respondent
more freedom in providing answers. As one would expect, there has been a recent rapid
technological evolution in this area. Online questionnaires can help web site sponsors to
gauge customer satisfaction, profile visitors, and provide a way to measure traffic for adver-
tisers beyond banner c1ick-throughs. By using research tools such as exit surveys, e-tailers
can find out why people are leaving their sites-and why they might not come back.
There are four popular types of online research. Pop-up surveys occur when visitors
are intercepted when they leave certain pages of the web site. A questionnaire then appears
in a box on top of their main browser screens asking for responses. With e-maiUweb sur-
veys, a company sends an e-mail message asking the recipient to complete a survey. Some-
times the survey is embedded in the e-mail itself. Other times the e-mail lists either a
passworded location to visit or a unique location that only the addressee can access to fill
out the survey. Online groups are much like traditional focus groups, but are conducted in
a web-based chat room where select individuals are invited by the company or its research
firm. Finally, in the case of moderated e-mail groups, discussions take place over a period
of time with a group communicating bye-mail. A moderator compiles the answers and sends
the summary back to the group for comments and follow-up.
The third technique used to gather research information is self-reporting. This tech-
nique allows the respondent to deliver the information in a somewhat unstructured format.
One very popular of this technique is focus group. A focus group takes place
in a room where approximately 8-10 individuals and a trained mocerator gather to discuss
a particular business problem or set of problems. Often, the room contains a two-way mir-
ror, which the sponsors of the research sit behind in order to observe the process. The pro-
ceedings are audiotaped and/or videotaped. Focus groups have been an extremely popular
type of data collecting for a long time. A great deal of diverse information can be gathered
quickly (assuming there is a well-trained moderator). However, there are serious limitations.
It's still a subjective process and interpretation is necessary. It is also expensive; often sev-
eral thousand dollars per focus group. Finally, it is difficult to control the behavior of
the participants. Some dominate and some say nothing. And some become the equivalent
of professional focus group me;ubers and no longer are able to provide the hoped-for
spontaneity.
According to a psychologically proven premise, it is possible by impersonalizing ques-
tions to obtain information from a respondent that he would not, or could not, otherwise
provide. This method involves the use of the projective technique, and represents a second
type of self-report technique. The intent of the projective technique is to give respondents
an opportunity to answer questions without the embarrassment or confusion created by direct
involvement. Several projective techniques are employed:
1. Word association tests. In the word association test, the respondent is asked to
say the first word that comes into his mind upon of another word
stimulus. The most obvious applications of this test are in research on brand recog-
nition, company image, and advertising appeals.
2. Sentence completion tests. In a sentence completion test, the respondent is asked
to complete a number of sentences with the first words that come to mind. A series
of sentence completion questions used by a supermarket chain were: (a) I like to
shop in an AG supermarket because . . .; Cb) I think that food prices are .
(c) The thing that bothers me most about food shopping in an AG store is .. . .
The sentence completion test is relatively simple to administer and easy to
interpret. It is usually difficult, however, to reduce the finding from a sentence
completion test to stati stical form.
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66 CHAPTER 3 MARKETING RESEARCH: AN AIDTO DECISION MAKING
3. Fsychodrama. In the psychodramatic type of question, the respondent is asked to
project himself into an artificial marketing situation. The obvious artificiality of
the situation makes the psychodrama a "role-playing" experiment in which the
re:.;pondent provides information based on his personal attitudes through his expla-
nation of the artificial situation.
Perhaps the greatest deficiency of projective techniques is the difficulty of present-
ing the findings. The identification of attitudes, motives, opinions, and :;0 forth is not dif-
ficlllt; however, it is extremely hard to measure the importance of these
Selecting the Sample In most marketing research, it is necessar y to con-
duct a complete census; i .e. , to talk to 100% of the target segment. To do s o time-con-
smning and expensive. For thi s reason most marketing st:rveys make use of smaples. A sample
is a group of elements (persons, stores, financial reports) chosen from among a "total pop-
ulation" or "universe." The value of a research project is directly affected by how well the
sample has been conceived and constructed.
s
The selection of the sample to be investigated requires a master list, or a framework,
from which they may be selected. The sampling frame is the "population" or statistical "uni-
verse" from which the sample units will be selected. The frame for a survey of attitudes of
credit customers of a department store would be the company's list of customers using charge
accounts.
Although there are many kinds of sample designs, all of them can be classified as
either probability samples or nonprobability samples. In a probability sa:nple, each unit has
a known chance of being selected for inclusion in the sample. simplest version is the
simple random sample, in which each unit in the sample frame has exactly ' he same chance
of selection. Examples of this ii1clude flipping a fair coin, whose sides have a 50% chance
of turning up, and throwing an unloaded die, whose sides have a 162/3% chance of turn-
ing up. This same plinciple can be applied to the previous depar:ment ::. lore example. A
sample of names could be selected from the company's list of charge customers according
to a random process, such as that of using a table of random digits.
'While in Cl probability sample the sampling units have a known chance of being selected,
in a nonprobability sampie the sampling units are selected arbitrarily. To return to our depart-
ment store example, instead of using a table of random numbers to select a sample of charge
customers, an arbitrary and more convenient method would oe to take the first fifty or sixty
names on the list.
Anticipating the ResultslMaking the Report The research plan should provide
for: (1) procedures for processing the data; (2) procedures for interpretation and analysis
of the findings; and (3) an outline of the final report. In reaching these decisions, it is usu-
ally helpful to work from the form and content of the final report. The report should pres-
ent a summary of findings and recommendations for management action drawn up in the
light of the reasons for the research. 'The of facts to be presented and the manner of
their presentation dictates the type of analysis to be undertaken. The kinds of analysis will ,
in turn, often suggest the method of data processing. Data processing in general refers to
the procedures for sorting, assembling, and reporting data. It can be done manually by the
use of work sheets or by computer programming. The method of data processing has impor-
tant bearing upon L'1e manner in which data are collected and reported. Thus, the design
of the project is often expedited by a thorough consideration of the kinds of results that are
expected and how they will be handled in the fina: report.
Anticipating the results of the and preparing a "dummy" final report has another
advantage. It is often helpful the results of this step in the research design to demon-
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THE VALUE OF MARKETING RESEARCH 67
strate to management the kind of project that is going to be undertaken. Agreement by the
management group that the kinds of information anticipated will assist in the solving of a
marketing problem is helpful in obtaining approval for the project and in restraining man-
agement expectations as to the scope and purpose of the project.
CONDUCTINGTHE RESEARCH
The attention devoted in the previous paragraphs to the design of the research plan might
leave the impression that once a marketing research project has bee;! carefully designed,
the job is almost done. Clearly, this is not the case. The implementation of a research plan
is seldom an easy task. Often a research program requires extra effort from already-busy
personnel in the company. In oilier cases, outsiders must be recruited, hired, and trained.
In either situation, carrying out a marketing researcn plan is difficult and requires very close
supervision and control. To the extent that the plan has been well conceived, supervi sion
and control are restricted to making sure that tne research activit:es called for in the plan
are carried out according to schedule and in the manne, prescribed.
PROCESSINGTHE DATA
Processing the data obtained in a market survey involves transforming the information
obtained into a report to be used by management. Four steps are involved: (1) editing the
data; (2) tabulating the data; (3) interpreting tile data; and (4) presenting the report. If, in
the anticipation of the results of the survey, the procedures for handling the data have been
sent forth and the form of the final report conceived. these final four steps in the research
procedure may be quite mechanical. A good plan for the analysis and interpretation of the
data is of immense assistance in bringing a project to a successful conclusion, but it should
never limit the kinds of interpretations that eventually are made or restrict the content of
the final report.
The final report of a marketing research stUdy should ordinarily be written. Since vast
amounts of data often are involved, the written report is the only appropriate method of
presenting these findings. The written repo:t also has the advantage of being permanent,
thus permitting management to study the findings carefully and to refer to them in the future.
Unfortunately, many marketing research projects are never translated into management
action-sometimes because the research conclusions do not directly contribute to the solu-
tion of the problem, sometimes because the report is too technical and difficult to under-
stand, and sometimes because the report writer has not offered specific suggestions as to
how the report should be translated into management strategy.
THE VALUE OF MARKETING RESEARCH
It is important to point out that it:s not always necessary to conduct research before attempt-
ing to solve a problem in marketing management. The manager may feel that he already
knows enough to make a good decision. In a few instances, there may be no choice among
alternatives and hence no decision to make. It is rather pointless to study a problem if there
is only one possible solutions. But in ~ s t business situations, the manager must make a
choice among two or more courses of action. This is where fact-finding enters in to help
make the choice.
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68 CHAPTER 3 MARKETING RESEARCH: AN AID TO DECISION MAKING
But even if a manager would like moreirrformation in order to make a decision, it is
not always wise for her to conduct the research that would be required. One reason is that
the time invol ved may be too great. Another more compelling reason is that the cost of the
r ~ s e r h may exceed its contribution. In principle, it is easy to understand how such a cost
test might be applied. If the cost of conducting the research is less than its contribution to
the improvement of the decision, the research should be carried out. If its cost is greater,
it should not be conducted. The application of this ptinciple in actual practice is somewhat
more complex. Finally, good research should help integrale marketing with the other areas
of the business.
INTEGRATED MARKETING •
RESEARCH BRINGS IT TOGETHER
It's the bane of modern business: too many data, not enough
information. Computers are everywhere, accumulating giga-
bytes galore. Yet it only seems to get harder to find the for-
est for the trees-to extract significance from the blizzard of
numbers, facts, and stats. But help is on the way, in the form
of a new class of software technology known broadly as data-
mining. First developed to help scientists make sense of exper-
imental data, this software has enough smarts to "see"
meaningful patterns and relationships-to see patterns that
might otherwise take tens of man-years to find. That's a huge
leap beyond conventional computer databases, which are pow-
erful but unimaginative. They must be told precisely what to
look for. Data-mining tools can sift through immense col-
lections of customer, marketing, production, and financial data,
and, using statistical and artificial intelligence techniques, iden-
tify what's worth noting and what' s not.
The payoffs can be huge, as MCI Communications is learn-
ing. Like other phone companies, MCI wants to keep its best
customers. One way is to identify early those who might be
considering jumping to a rival. If it can do that, the Cartier
can try to keep the customer with offers of special rates and
services, for example.
How to find the customers you want to keep from among
the millions? MCl's answer has been to comb marketing data
on 140 million households, each evaluated on as many as
10,000 attributes-characteristics such as income, lifestyle,
and details about past calling habits. But which set of those
attributes is the most important to monitor, and within what
range of values? A rapidly declining monthly bill may seem
like a dead give-away, but is there a subtler pattern in inter-
national calling to be looking for, too? Or in the number of
calls made to MCl's customer-service lines?
To find out, MCI regularly fires up its IBM SPI2 super-
computer-its "data warehouse"-which identifies the most
telling variables to keep an eye on. So far, the SPI2 has com-
piled a set of 22 detailed-and highly secret-statistical pro-
files based on repeated crunching of historical facts. None of
them could have been developed without data-mining pro-
grams, says Lance Boxer, MCT's Chief Information Officer.
Data-mining in itself is a relatively tiny market: sales of
such programs will grow to maybe $750 million by 2001. But
the technology is crucial in getting a big payoff from what
information technology executives think will be an immensely
important growth area in coming years: data warehousing.
There are the enormous collections of data-sometimes tril-
lions of bytes-compiled by mass marketers, retailers, or serv-
ice companies as they monitor transactions from millions of
customers. Data warehouses, running on ultrafast computers
with specialized software, are the basis on which companies
hope to operate in real time-instantly adjusting product mix,
inventory levels, cash reserves, marketing programs, or other
factors to changing business conditions.
Source: John W. Verity, "Coaxing Meaning out of Raw Data,"
Business Week, February 3, 1997, pp. 134-138; "Researchers Inte-
grate Internet Tools in Their Work," R&D Magazine, June 2000,
vol. 24, No.6, p. E13; "Smarter Kids. Com Chooses Quadstons-
The Smartest Customer Data Mining Solution," Business Week,
July 31, 2000.
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THE WALL STREET JOURNAL.
IN PRACTICE
Marketing research is a scientific
and controlled process, but ulti-
mately, decisions are based on a
blend of facts and intuition. Under-
standing marketing research allows
managers to intelligently evaluate
findings and recommendations.
Determining the purpose and
scope of the research is the first
critical activity in any marketing
research project. All subsequent
decisions are results of this process.
Creating the research design, con-
ducting the investigation, and pro-
cessing the data are the remaining
critical activities. Both primary and
secondary data are accumulated
when conduction research. Using
this information to produce good
research allows managers to inte-
grate marketing with other areas of
the business.
Secondary sources of data
online include associations and
business information sites. Check
out the American Marketing Asso-
ciation' s website at
www.ama.org/resource for a list of
resources and guides. For links to
business directories, media sites,
and marketing-related resource",
check out A Business Researchers
Interests at www.brint.com.
Your subscription to the Inter-
active Journal allows you to access
articles in various Dow Jones publi-
cations. Under More Dow Jones
Sites in the left menu, click on Dow
Jones & Co. From here you will be
able to access Dow Jones Web Links
which offers you links to dozens of
business and news websites. Click on
several of these links now.
Return to the Interactive jour-
nal's Front Section. Under Tools in
the left menu, select WSJ Yogi. The
WSJ Yogi is a free software applica-
tion that works like a personal
assistant, automatically suggesting
relevant content to you as you
browse the web. The WSJ Yogi will
gather links to related stories as you
read. Download the WSJ Yogi now.
Return again to the Interactive
Journal's Front Section. Under
Resources in the left menu, select
Special Reports. This section offers
links to special reports that have
appeared as supplements to The
Wall Journal print edition.
These reports provide a thorough
analysis and review of various lOP-
ics such as e-commerce, Small Busi-
ness, and World Business. Rev;ew
recent Special Reports now.
DELIVERABLE
With the information provided in
this section about web resources,
use the Interactive journal and rel-
evant web links to conduct market
research on recent trends in
e-commerce. Find at least five
sources of secondary data online
that will help you identify relevant
trends in e-commerce advertising,
marketing, and business strategies.
DISCUSSION QUESTIONS
1. How can mar1
JUiCY Fruit Gum, the oldest brand of the Wm. Wrigley Jr. Company, wasn't chewing up the teen market, gum's top demographic. In 1997, the company found itself under pressure from competitors. Sales and market share were down .
CHAPTER3
MARKETING RESEARCH: ANAID TO
DECISION MAKING
LEARNING OBJ ECT IVES
Having completed this chapte r, you should '
• Understand the role of marketing research .
• Understand the marketing research process and the techniques
employed .
DISCOVERING WHY THEY CHEW
JUiCY Fruit Gum, the oldest brand of the Wm. Wrigley Jr. Company, wasn't chew-
ing up the teen market, gum' s top demographic. In 1997, the company found itself under
pressure from competitors. Sales and market share were down. How could Wrigley make
more kids chomp on Juicy Fruit?
What qualit ies about Juicy Fruit might appeal to teens? Wrigley went to the source
to find out. It found kids who chew five sticks or more of Juicy Fruit each week and
promptly gave them a homework assignment. Find pictures that remind them of the gum
and write a short story about it. From the focus group, Wrigley learned that teens chew
Juicy Fruit because it' s sweet. It refreshes and energizes them.
Their ad agency, BBDO, confirmed what the teens were saying. BBDO asked
more than 400 heavy gum chewers to rate various brands by attributes that best repre-
sented them. For Jui cy Fruit, respondents picked phrases such as "has the right amount
of sweetness" and "is made with natural sweetness."
Another study by BBDO looked into why teens chew gum. Was it because they're
stressed out-or because they forgot to brush their teeth before going to school? Nearly
three out of four kids said they stick a wad into their mouth when they crave something
sweet. And Juicy Fruit was the top brand they chose to fulfill that need (Big Red was a
distant second).
Sources: "How Sweet It Is," American Demographics, March 2000, p, S18; "Flavor du Jour," American Demographics, March
2000, p, SI 0; Erika Rasmusson, "Cool for Sale," Sales & Marketing Management , March 1998, pp. 20-22,
INTRODUCTION
Although the marketing research conducted by the Wrigley Co. was fairly simple, it pro-
vided a new direcLion for their marketing strategy. BBDO developed four TV commercials
53
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54 CHAPTER 3 MARKETING RESEARCH: AN AI DTO DECISION MAKI NG
Marketing
research
FIGURE 3.1 The marketing planning process
with the "Gatta Have Sweet" theme. Rougi1ly 70 percent of respondents voluntarily recalled
the Juicy Fruit name after watching the commercial (the average recaJI for a brand of sugar
gum is 57 percent). Sales of 100-stick boxes of ~ u y Fruit rose 5 percent after the start of
the ad campaign, reversing a 2 percent decline prior to it. Juicy Fruit's market share also
increased from 4.9 percent to 5.3 percent, the biggest gain of any established chewing gum
brand during the year following the campaign.
Marketing research addresses the need for quicker, yet more accurate, decision mak-
ing by the marketer. The impetus for this situation is the complex relationship between the
business firm and the ever-changing external environment. In particular, most marketers are
far removed from their customers; yet must know who their customers are, what they want,
and what c o m p e t i t o r s are doing. Often the marketer relies on salespeople and dealers for
information, but more and more the best source of information is marketing research.
It should be noted that most marketing decisions are still made without the use of
formal marketing research. In many cases, the time required to do marketing research is
not available. In other cases, the cost of obtaining the data is prohibitive or the desired data
cannot be obtained in reliable form. Ultimately, successful marketing executives make deci-
sions on the basis of a bl end of facts and intuition.
In this chapter, we provide an overview of the marketmg research process. We start
the discussion with a look at business information. As noted in Figure 3.1, marketing research
is applicable throughout the marketing planning process.
THE NATURE AND IMPORTANCE
OF MARKETING RESEARCH
Informal and, by today' s standards, crude attempts to analyze the market date back to the
earliest days of the marketing revolution. Only in recent years, however, has the role of
research as it relates to management been clearly recognized.
Reflecting this change in orientation, the foJIowing definition of marketing research
is offered: marketing research is the scientific and controlled gathering of nonroutine mar-
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WHAT NEEDS RESEARCHING IN MARKETING? 55
keting information undertaken to help management solve marketing problems. There is often
hearty disagreement over the answer to the question of whether marketing research is a sci-
ence. One's answer depends on the employed definition of "science." To be specific, a research
activity should use the scientific method. In this method, hypotheses (tentative statements
of relationships or of :;olutions to problems) are drawn from informal observations. These
hypotheses are then tested. Ultimately, the hypothesis is accepted, rejected, or modified
according to the results of the test. In a true science, verified hypotheses are turned into
"jaws." In marketing research, verified hypotheses become the generalizations upon which
management develops its marketing programs. (To simplify our discussion, we will use "ques-
tions" as a synonym of "hypothesis.")
The mechanics of marketing research must be controlled so that the right facts are
obtained in the answer to the correct problem. The control of fact-finding is the responsi-
bility of the research director, who must correctly design the research and carefully super-
vise its execution to ensure ~ h t it goes according to plan. Maintaining control in marketing
research is often difficult because of the distance that separates the researcher and the mar-
ket and because the services of outsiders are often required to complete a research project. I
WHAT NEEDS RESEARCHING IN MARKETING?
An easy, and truthful, answer to this question is "Everything." There is no aspect of mar-
keting to which research cannot be applied. Every concept presented in this marketing text
and every element involved in the marketing management process can be subjected to a
great deal of careful marketing research. One convenient way to focus attention on those
matters that especially need researching is to consider the elements involved in marketing
management. Many important questions relating to the consumer can be raised. Some are:
• Who is/are the customer(s)?
• What does he/she desire in the way of satisfaction?
• Where does he/she choose to purchase?
• Why does he/she buy, or not buy?
• When does he/she purchase?
• How does he/she go about seeking satisfaction in the market?
Another area where research is critical is profits. Two elements are involved. First,
there is the need to forecast sales and related costs- resulting in profits. Second, there is
the necessity to plan a competitive marketing program that will produce the desired level
of ~ l s ~ an appropriate cost. Sales forecasting is the principal tool used in implementing
the profit-direction element in the marketing management concept. Of course, the analy-
sis of past sales and interpretation of cost information are important in evaluation of per-
formance and provide useful facts for future planning.
A great deal of marketing research is directed toward rather specialized areas of man-
agement. These activities are broken down into five major areas of marketing research. Briefly,
these activities are:
1. Research on markets- market trends, market share, market potentials, market char-
acteristics, completion, and other market intelligence.
2. Research on sales-sales analysis, sales forecasting, quota-setting, sales territory
design, sales performance measurement, trade channels, distribution costs, and
inventories.
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56 CHAPTER 3 IViARKETING RESEARCH: AN AIDTO DECISION
3. Research on products-new research, product features, brand image, con-
cept tests, product tests, and market tests. (See the following Newsline. )
4. Research on advertising and promotion-promotion concepts, copy research, media
research, merchandising. packaging, adve;tising effectiveness measurement.
5. Research on corporate growth and development--econorrUc and technological fore-
casting, corporate planning inputs, corporate image, profitability measurement,
merger and acquisition and facilities location.
NEWSLINE: HOWEXECS USE RESEARCH
Creating and introducing new products is the most important
research priority among marketing executives. The Marketing Science
Institu te of Cambridge, Massachusetts, surveyed 160 executives from
its sponsoring organizations. The executives, representing 60 major
consumer and industrial goods and services corporations , were asked
to divide 100 points among several research areas.
After successful new product introductions, the executives said
that market orientation and customer relationships are the next most
important areas . Those issues displaced improving the use of market-
ing information and measuring brand eqUity as the second- and
third-highest concerns, respectively, in the previous survey.
"The new research priorities indicate that a shift is taking place in
marketing practice," notes Donald Lehmann, executive director of the
institute. "Market orientation has taken hold and the increasing
power of the consumer is apparent in the movement away from prod-
uct-driven strategies. Marketers also realize that they need to make
choices about who their customers should be and whose needs they
are best eqUipped to meet ... and most significantly, they are looking
for better ways to anticipate adoption and diffusion of really new
products." Said Marni Clippenger, communications director at MSI,
"Companies seem to be shifting away from usi ng the brand to really
figuring out what customers want."
Source: Rachel Rosenthal. "New Products Reign as Research Priority," Adver-
tising Age, August 8. 1994, p. 26; Robert McMath, 'To Test or Not To Test ,"
American Demographics, June 1998, p. 64; John McManus, "Mission Invisi-
ble," American Demographics, Marcb 1999, p. 6.
MARKETING CAPSULE •
1. Markcting research is the scientific and cont(Qlled gath-
ering of nonroutine marketing informati on undertaken to
help management solve marketing problems.
2. Any business that is consumer-oriented will benefit from
marketing research.
3. Research can be applied to every facet of marketing.
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Sales forecasts
Cost forecasts
Product testing
Consumer needs
Consumer attitudes
Consumer product usage
Market size/trends
Product replacement
PROCEDURES ANDTECHNIOUES IN MARKETING RESEARCH 57
Demographic trends
Legislative impact
Price testing
Marketing communication testing
Channel locations
Competition
Psychographic trends
Environmental trends
FIGURE 3.2 Areas of research application
PROCEDURES ANDTECHNIQUES
IN MARKETING RESEARCH
Considering the relatively short span of time in which marketing research has developed
since the 1930s, it is quite remarkable that so sophisticated and thorough a collection of
procedures and techniques should have been developed. In many respects, marketing research
has advanced faster than any other specialized area in marketing management. In view of
the highly specialized nature of marketing research, it is not possible in this discussion to
present more than an outline of the basic procedures and techniques.
It is important for a marketing manager to be familiar with the basic procedures and
techniques of marketing research. It is true that many businesspeople will never have occa-
sion to engage personally in marketing research. However, it is quite likely that they will
be faced with a need either to supervise an internal marketing research activity or to work
with an outside marketing research firm. The manager who understands the research func-
tion is in a position to judge intelligently the proposals made by research specialists and to
evaluate their findings and recommendations. Occasionally, the manager herself will have
to seek solutions to marketing problems. It may not be possible to obtain the services of
marketing research specialists. The manager familiar with the basic procedures of fact-find-
ing in marketing should be able to supervise a reasonably satisfactory search for the infor-
mation required.
There is no single set of steps in a market research procedure that is accepted by all.
Indeed, each marketing research problem requires, to some degree, its own peculiar pro-
cedure. However, there is general agreement that four major activities should be performed
in a thorough marketing research project. These are: (1) making a preliminary investiga-
tion; (2) creating the research design; (3) conducting the investigation; and (4) processing
the data/reporting results (see Figure 3.3) 2
Making a Preli minary Investigation
There are two phases of activity in the preliminary investigation. The first of these involves
the determination of the purpose and scope of the research. The second involves an inves-
tigation into the marketing environment called the informal assessment.
Determining the Purpose and Scope o f the Research
The basic and critical problem in marketing research is seldom the problem that appears
on the surface. It is therefore necessary to explore beneath the surface to ascertain the nature
and size of the problem. This is the vital first step and must be done correctly, since every
subsequent phase of the project is directed at solving the basic problem. For the research
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58 CHAPTER 3 MARKETING RESEARCH: AN AIDTO DECISION MAKING
Conduct
preliminary
investigation
Purpose/scope
of research
Create the
research design
Conduct
the research
Process
the data
Report
the results
FIGURE 3.3 The marketing research process
to be worthwhile (indeed, for it not to be a waste of resources), the problem must be stated
clearly and correctly. Failure to do so is the most serious of mistakes in this project.
Correctly defining the research problem should lead to the establishment of the research
parameters. A research study could be restricted by (advertising); customer group
(heavy users); market (Far East); and time frame (1999-2001). Because research is so costly,
it is imperative that parameters are establi shed and maintained.
The Informal Assessment
The second important phase of the preliminary investigation is calied the informal assess-
ment. This is an unstructured search of the marketing environment. It enables the researcher
to become familiar with the problem setting. This is particularly important for the outside
consultant who needs to become acquainted with the company, its customers, its products,
and all of the marketing conditions surrounding the problems. But it is also wise for the
company researcher to refresh hislher knowledge of those internal factors bearing on the
problem and also to discover the external elements irvolved.
The informal investigation goes beyond merely "getting acquainted" with the prob-
lem and its marketing setting, however. T h e final result of the preliminary investigation is
the creation of a set of research questions. In marketing research, theses questions can be
stated as a tentative explanation of the problem that the research is designed to solve. For
example, if a marketing manager is trying to solve a problem that involves an important
loss of market share in a particular area of the country, an informal investigation might reveal
three possible reasons for the decline in market position. These until verified b y
thorough study, can best be stated as research statements:
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PROCEDURES ANDTECHNIQUES IN MARKETING RESEARCH 59
1. The decline in market share is the result of increased competitive advertising in
the area.
2. The decline in market share is the result of the te:: t marketing of a new product
by a major competitor.
3. The decline in market share is the result of "stock outs" at the retail level caused
by a trucking strike in the area.
In attempting to verify one or more of these hypothetical statements, the researcher exam-
ines company records to uncover new sources of information or to discover relationships
in old data with bearing on the current problem. Interviews with company executives and
operating personnel are often conducted. Interviews are also conducted with various per-
sons outside the company whose opinions might be expected to have some relevance to the
problem. The preliminary search is always limited to obtaining an insight into the problem
and into possible. solutions for it.
in the final phase of the preliminary investigation, the analyzes the results
he has so far obtained and restates them in the form of research questions to be tested in
the subsequent research steps.
Creating the Research Design
The design of a marketing research project is the plan proposed for the research ques-
tions as wel1 as collecting and processing infoITiation. The administratioD of the project
according to the design insures that the fact-finding process wiIl be adequately control1ed.
"Design" means more than simply using good market research procedures. Every research
project should be individually designed to produce the kinds of information needed to solve
a particular problem. For this reason, nc two market research projects are ever exactly alike.
3
Six steps are involved in creating a research design: choosing the approach, deter-
mining types of data needed, locating data sources, choosing a method of collecting data,
selecting the sample, and anticipating/col1ecting the results.
Choosing the Approach Three alternative approaches are possible in creating a
research design. They are not mutually exclusive, but in most cases, the design of a research
plan is limited to the use of one of the three.
The first approach is the experimental approach. This approaCh requires that certain
procedural rules must be followed. Essentially, the variable of interest---c.g., price, message-
must be manipulated and everyone participating in the experiment must have a known and
equal chance of being selected.
In a market experiment, information relating to the basic problem is obtained through
the use of a small-scale simulated program designed to test a research hypothesis.
Suppose, for example, that we wish to test the question that families of similar size and
economic characteristics living in three different cities purchase different amounts ofa par-
ticular formula of a soft drink, such as Dr. Pepper. The first step would be to establish the
research question: "For a given t;me period, the average fluid ounces of a Formula A, B,
or C purchase in each city were the same." Next, a sample of the families in each city would
be selected and randomly assigned either A, B, or C. Next, a survey would be taken to deter-
mine the number of ounces purchased by each family. Once thi s was done, a statistical test
would be used to test the research question. If statistically significant differences in pur-
chases of Formula A, B, or C of Dr. Pepper were noted, it could be concluded that taste
does influence the amount of this soft drink purchased by families with the same social and
economic characteristics. Of course, other hypotheses about soft drink purchasing could
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60 CHAPTER 3 MARKETING RESEARCH: AN AIDTO DECISION MAKING
also have been tested using a slightly different method. For example, the effect of televi-
sion advertising on the purchase of Dr. Pepper might have been studied by inspecting pur-
chases in two or more cities that are in the same general area of the country (such as the
Southwest) but in which different levels of television advertising had been used.
The second approach is the historical. In this approach, reliance is placed on past expe-
riences in soiutions to marketing problems. Historical marketing facts are relevant
only to the degree that they can be projected into the future. Fortunately, in many areas of
marketing, this can be done with a good deal of confidence. Certain types of changes, such
as populations and income distribution, come about rather slowly. The day-to-day effect of
these changes on marketiJlg is almost imperceptible. Projections of future population, gross
national product, and consumer purchasing power are practically foolproof. Historical analy-
ses of such factors as consumer behavior, competitive selling tactics, and distributors' buy-
ing practices tend also to be fairly reliable indicators of future behavior by these same
marketing components. Often, it is possible to trace the experience of organizations si mi-
lar to yours and assess how they dealt with similar problems. There are literally hundreds
of case studies on companies such as Microsoft that are useful to many business functions.
Learning from the mistakes of others makes good business sense.
The third approach that can be used in designing a marketing research plan is the sur-
vey approach. In the survey approach, marketing infonnation is collected either from obser-
vation or by quest:.onnaire or interview. In contrast to the experimental and historical
in which the data are more or less directly related to the problem, the survey approach nec-
essarily involves far more subjectivity and intuition on the part of the researcher.··.;yalch-
ing a customer make a purchase of a new TV reveals something about his motives:
asking him why he is buying it is much better. Drawing conclusions from either observa-
tions of behavior or from the opinions offered by a respondent create important insig;1ts.
The survey method is flexible. It can be adapted to almost any type of research design. For
thi s reason, and because of the difficulties in creating marketing experiments and in col-
lecting pertinent historical data, the survey approach is the most often used in marketing
research.
Determining the Types of Data Needed Three types of data are used: facts, opin-
ions, and motivational information. The types of data required are partly identified by the
nature of the problem to be solved. For instance, if the problem relates to production and
inventory scheduling, the facts that are needed relate to market and sales potential. On the
other hand, if the problem revolves around the choice between two new products, the opin-
ions of potential customers are important considerations. Finally, if a problem involves the
choice of an appropriate selling appeal, buyers ' motivations are probably be most impor-
tant. Facts are quantitative or infonnation that can be verified. Opinions are ideas
relating to a problem that are expressed by people involved in the solution. Motivat;ons are
basic reasons, recognized or unrecognized, that explain action. They are extremely diffi-
cult to discover.
Locating the Sources of Data There are two general sources of data, secondary
sources and primary sources.
Secondary source information has been previously published and can be either inter-
nal or external. Company recurds and previously prepared marketing research reports are
typical of internal source material. External secondary sources are widely avail-
able and can be found outside the organization. Excellent bibliographies of secondary data
sources are available, especially online. There are eight primary sources of secondary mar-
ket information:
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PROCEDURES AND TECHNIQUES IN MARKETING RESEARCH 61
1. Public libraries.
2. Universities-library facilities and bureaus of business and economic research.
3. Government agencies--especially departments of commerce, agriculture, and labor.
4. Professional and trade associations.
5. Commercial publishers--especially trade publications.
6. Research and nonprofit organizations.
7. Conferences and personal contact.
8. Computer-provided search systems.
There are tremendous advantages in using data from secondary sources. In the first
place, the expense of gathering information from secondary sources is a fraction of the cost
of collecting primary data. The time required to collect data is also less. Frequently, the
information required to solve a management problem must be quickly. Thanks to
computer technology, it is now possible to gather, merge, and reformulate many second-
ary sources of data. This capability has made secondary data even more attractive.
The inherent limitations of using secondary sources data are twofold. First, the infor-
mation is frequently dated. Second, seldom are secondary data collected for precisely the
same reasons that the information is sought to solve current marketing problem. In spite
of these limitations, the advantages of secondary research are so great that it is a common
procedure not to proceed with the collection of primary data until after a thorough search
of secondary information source has been completed.
Primary information is obtained directly from its source. It involves data that are
not available in published form or in company records. It is gathered specifically to answer
your research question. The sources of primary information, however, cannot be as eas-
ily identified as can the sources of secondary market data. Having identified the information
required to help management solve a problem, it is usually possibie to identify the person
or persons possessing the information desired. In some cases, the infor:nation can be obtained
from one of several sources. In other situations, the information can be obtained only by
contacting specific sources. For example, a manufacturer of vitamins for children discovered
that it was necessary to obtain information from the users (children), purchasers (parents),
sellers (for the most part, druggists), and purchase influencers (pediatricians). Similarly,
a manufacturer of feed for dairy cattle found it desirable to seek market information from
farmers, feed dealers, and dairy specialists. Obviously, it is expensive to collect market-
ing information from multiple sources, and often it is ratner time-consuming. These two
disadvantages are offset by the fact that the informati on so obtained is tailored to the spe-
cific problem at hand. Ultimately, the question as to which source of market information
to use depends on the value of the information in relationship to the time and cost required
to gather it.
4
Choosing the Method of Collecting Data There are various methods of collect-
ing data, both secondary and primary. Secondary sources of information, listed earlier, can
be gathered through a number of means. A company may establish a data-gathering/stor-
age system as part of their computer system. Sales, expenses, inventory, returns, and cus-
tomer complaints are then gathered automatically. Or a company can subscribe to one or
more public research companies that gather relevant information. Finally, a company can
obtain information on a problem-by-problem basis.
There are three common methods used to collect primary information: observation,
questionnaire, and self-report. Observational data collection may be the oldest method.
Since the beginning of commerce, merchants have been watching their customers and
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62 CHAPTER 3 MARKETING RESEARCH: AN AI DTO DECISI ON MAKING
Eoncustomers engage in a variety of behaviors. Examples include shopping, purchase, return,
complaint behavior, and so forth. A local fast food manager might simply observe the expres-
sion on customers' as they eat a new sandwich. More formal observation techniques
are also employed. Video cameras or audio systems can be targeted at customers. Researchers
can also be hired to do license plate surveys in parking lots or simply record observations
in a prescribed manner. There are even observational techniques that are quite intrusive.
For instance, in the case of a pantry (cabinet) audit, the researcher comes to the consumer's
home and actually takes an inventory of products found. Ethnography requires that the
researcher practically move in with the and observe various relevant behaviors.
This technique is illustrated in the Newsline box that follows.
NEWSLINE: WHERE'S THE BEEF?
A woman in suburban Baltimore is shopping for her family's meals
for the week. She cruises past the poultry section, stopping only
momentarily to drop a couple of packages of boneless chicken breasts
into her cart. Then, the dreaded sea of red looms before her. Tenta-
tively, she picks up a package of beef. "This cut looks good, not too
fatty," she says, juggling her two-year-old on her hip. "But 1 don't
know what it is. I don't know how to cook it," she confesses, and
trades it for a small package of sirloin and her regular order of
ground beef.
Scenes like these are replayed daily in supermarkets across the
country. But this time, it's being captured on videotape by New York
City-based PortICo Research, part of a recent ethnographic study of
beef consumers for the National Cattleman's Beef Association (NCBA)
and major grocery retailers. And due in part to the trepidation of this
one mother in Baltimore, many grocers' meat cases are now being
rearranged to display beef by cooking method, rather than by cuts of
meat. Simple, three-step cooking instructions will soon be printed on
the packages
Ethnographic research, which combines intense observation with
customer interviews, shows companies how people live with
products-how they purchase and use them in their everyday lives.
Knowing what consumers do with beef is vital to the NCBA. The study
cost th e NCBA approximately $60,000 (studies might range from
$5,000 to $800,000). PortiCo videotaped consumer's purchasing
behavior as well as their preparation habits at home. The researchers
interviewed them each step of the way what they thought about beef,
why they did (or didn't) select particular cuts, and how they prepared
the family meal. The r etailers couldn't believe how little consumers
knew about something that seemed as familiar to them as sliced
bread or soft drinks.
Sources: Kendra Parker, "How Do You Like Your Beef?" American Demograph-
ics, January 2000, pp. 35-38; Jennifer Lach, "Meet You in Aisle Three," Ameri-
can Demograpnics, April 1999, pp. 41-42.
The observation technique can proVIde important research insights, especially if con-
sistent patterns are noted. This method is relatively inexpensive and can be implemented
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PROCEDURES ANDTECHNIQUES IN MARKETING RESEARCH 63
and completed quickly. Unfortunately, interpreting an observation is still very subjective
and mistakes arc made.
Gathering information through a questionnaire format reflects the most popular research
technique. There are two interrelated issues: the design of the questionnaire and the admin-
istration of the questionnaire.
There are several rules of thumb that should be followed when designing a ques-
tionnaire. For example, a good questionnaire should be like a well-written story: it should
be logical, relevant, easy to follow, and interesting to the reader/respondent. There are also
a host of techniques and related guidelines. For example, Figure 3.4 illustrates the forms
questions can take. A yes/no question is considered a closed-ended dichotomous question;
i.e., respondenl must check one of two possible answers. Questions 4 and 5 are two types
of scaled questions. Questions 6-8 are open-ended, in that respondent can provide any answer
desired. Closed-ended questions are best used when the researcher desires a particular set
of answers or feels the respondent is unli kely to come up with an original answer. Open-
ended questions allow the respondent to come up with personal answers. Of course, there
is a risk that the respondent will have no answer.
Other considerations are whether to place the easier questions at the beginning of the
questionnaire, group similar questions, or place demographic questions at the end of the
questionnaire. Again, the goal is to enaole the respondent to answer the questionnaire eas-
ily and accuratejy.
The design of a questionnaire is a function of how the questionnaire is administered,
and vice versa. Four techniques for administering a questionnaire are currently used: mail ,
telephone, personal interview, and online. In the mail technique, the questionnaire is dis-
tributed and returned through the mail. A typical packet might contain a cover letter explain-
ing the purpose of the research, a copy of the questionnaire, a stamped self-addressed return
envelope, and an incentive for compliance (cash, merchandise, contribution to charity, or
copy of report). Mail questionnaires allow the researcher to ask a large number of ques-
tions over a broad range of topics. They also allow the respondent to answer the question-
naire at their leisure. Finally, the standardized format does not allow for subjective bias.
Unfortunately, these advantages can become limitations. The longer the questionnaire, the
less likely the individual will respond. in fact, a response rate of 10-20% is common with-
out an incentive. Control is lost through the mail process. Did the targeted person answer
the questionnaire? Did the respondent understand the questions? Did she/he complete the
questionnaire? Was the questionnaire returned on time? The loss of control also means that
the interviewer cannot probe further into an interesting or controversial answer.
A more convenient and faster way of gathenng marketing information is to conduct
a telephone survey. Names and related telephone numbers can be obtained directly from a
telephone directory or from an intcrnally or externally generated database. Telephone sur-
veys are limited in several important ways, such as the difficulty of reaching the correct
respondent, the problem of completing the interview if the respondent decides to hang up,
and the inability to eliminate the bias introduced by not interviewing those without phones
or individuals WIth unlisted numbers. Also, 10- 15 questions are likely to be the maximum
number to be asked. Therefore, only a limited number of topics can be addressed. In spite
of these the telephone survey method has grown in popularity. The costs are
relatively low, research can provide well-trained and technically supported inter-
viewers, and the technique works if the research questions are limited and require a quick
answer. Still, it would be better if they didn't call while you were eating dinner.
Although often very costly and time-consuming, personal interviews may constitute
the best way of collecting survey information. Once compliance is gained, the well-trained
interviewer can make sure the right person is answering, ask as many questions as necessary,
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64 CHAPTER 3 MARKETING RESEARCH: AN AID TO DECISION MAKING
A. DIRECT QUESTIONS/CLOSED-ENDED
1. HAVE YOU PURCHASED A NEW AUTOMOBILE SINCE JANUARY 1 OF THIS
YEAR:
DYES D NO
2. IF YOU HAVE PURCHASED A NEW AUTOMOBILE, WHAT MAKE AND
MODEL DID YOU BUY?
MAKE: MODEL: _
3. IF YOU HAVE NOT PURCHASED A CAR SINCE JANUARY 1, DO YOU NOW
PLAN TO BUY A NEW AUTOMOBILE BEFORE DECEMBER 31 OF THIS
YEAR?
DYES DNO D NOT DECIDED
4. IF YOU HAVE NOT DECIDED WHETHER OR NOT YOU WILL BUY A NEW
AUTOMOBILE, DO YOU NOW THINK THAT IT IS
_ EXTREMELY LIKELY
_QUITE LIKELY
UNLIKELY
_EXTREMELY UNLIKELY
THAT YOU WILL BUY A NEW AUTOMOBILE BETWEEN NOW AND
DECEMBER 31 ?
5. I TEND TO RELY H V ~ L Y ON THE REPUTATION OF A CAR BRAND
DiSAGREE
2 3 4
AGREE
5
B. DEPTH QUESTIONS/OPEN-ENDED
6. IF YOU HAVE NOT PURCHASED A NEW AUTOMOBILE, WHAT IS THE MOST
IMPORTANT REASON FOR YOUR DECISION NOT TO BUY A NEW CAR?
7. THAT IS VERY INTERESTING. TELL ME MORE ABOUT THAT.
8. ANY OTHER REASONS?
FIGURE 3.4 Examples of questions used in marketing research
make sure questions are understood, probe in order to address new issues, and encourage
the respondent to complete the questionnaire. With freeaom comes bias. It is sometimes
difficult for an interviewer to maintain objectivity. Asking questions with a certain intona-
tion, changing the wording, or changing the ordering of questions can all modify responses.
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PROCEDURES ANDTECHNIQUES IN MARKETING RESEARCH 65
There are several online information-gathering techniques that allow the respondent
more freedom in providing answers. As one would expect, there has been a recent rapid
technological evolution in this area. Online questionnaires can help web site sponsors to
gauge customer satisfaction, profile visitors, and provide a way to measure traffic for adver-
tisers beyond banner c1ick-throughs. By using research tools such as exit surveys, e-tailers
can find out why people are leaving their sites-and why they might not come back.
There are four popular types of online research. Pop-up surveys occur when visitors
are intercepted when they leave certain pages of the web site. A questionnaire then appears
in a box on top of their main browser screens asking for responses. With e-maiUweb sur-
veys, a company sends an e-mail message asking the recipient to complete a survey. Some-
times the survey is embedded in the e-mail itself. Other times the e-mail lists either a
passworded location to visit or a unique location that only the addressee can access to fill
out the survey. Online groups are much like traditional focus groups, but are conducted in
a web-based chat room where select individuals are invited by the company or its research
firm. Finally, in the case of moderated e-mail groups, discussions take place over a period
of time with a group communicating bye-mail. A moderator compiles the answers and sends
the summary back to the group for comments and follow-up.
The third technique used to gather research information is self-reporting. This tech-
nique allows the respondent to deliver the information in a somewhat unstructured format.
One very popular of this technique is focus group. A focus group takes place
in a room where approximately 8-10 individuals and a trained mocerator gather to discuss
a particular business problem or set of problems. Often, the room contains a two-way mir-
ror, which the sponsors of the research sit behind in order to observe the process. The pro-
ceedings are audiotaped and/or videotaped. Focus groups have been an extremely popular
type of data collecting for a long time. A great deal of diverse information can be gathered
quickly (assuming there is a well-trained moderator). However, there are serious limitations.
It's still a subjective process and interpretation is necessary. It is also expensive; often sev-
eral thousand dollars per focus group. Finally, it is difficult to control the behavior of
the participants. Some dominate and some say nothing. And some become the equivalent
of professional focus group me;ubers and no longer are able to provide the hoped-for
spontaneity.
According to a psychologically proven premise, it is possible by impersonalizing ques-
tions to obtain information from a respondent that he would not, or could not, otherwise
provide. This method involves the use of the projective technique, and represents a second
type of self-report technique. The intent of the projective technique is to give respondents
an opportunity to answer questions without the embarrassment or confusion created by direct
involvement. Several projective techniques are employed:
1. Word association tests. In the word association test, the respondent is asked to
say the first word that comes into his mind upon of another word
stimulus. The most obvious applications of this test are in research on brand recog-
nition, company image, and advertising appeals.
2. Sentence completion tests. In a sentence completion test, the respondent is asked
to complete a number of sentences with the first words that come to mind. A series
of sentence completion questions used by a supermarket chain were: (a) I like to
shop in an AG supermarket because . . .; Cb) I think that food prices are .
(c) The thing that bothers me most about food shopping in an AG store is .. . .
The sentence completion test is relatively simple to administer and easy to
interpret. It is usually difficult, however, to reduce the finding from a sentence
completion test to stati stical form.
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66 CHAPTER 3 MARKETING RESEARCH: AN AIDTO DECISION MAKING
3. Fsychodrama. In the psychodramatic type of question, the respondent is asked to
project himself into an artificial marketing situation. The obvious artificiality of
the situation makes the psychodrama a "role-playing" experiment in which the
re:.;pondent provides information based on his personal attitudes through his expla-
nation of the artificial situation.
Perhaps the greatest deficiency of projective techniques is the difficulty of present-
ing the findings. The identification of attitudes, motives, opinions, and :;0 forth is not dif-
ficlllt; however, it is extremely hard to measure the importance of these
Selecting the Sample In most marketing research, it is necessar y to con-
duct a complete census; i .e. , to talk to 100% of the target segment. To do s o time-con-
smning and expensive. For thi s reason most marketing st:rveys make use of smaples. A sample
is a group of elements (persons, stores, financial reports) chosen from among a "total pop-
ulation" or "universe." The value of a research project is directly affected by how well the
sample has been conceived and constructed.
s
The selection of the sample to be investigated requires a master list, or a framework,
from which they may be selected. The sampling frame is the "population" or statistical "uni-
verse" from which the sample units will be selected. The frame for a survey of attitudes of
credit customers of a department store would be the company's list of customers using charge
accounts.
Although there are many kinds of sample designs, all of them can be classified as
either probability samples or nonprobability samples. In a probability sa:nple, each unit has
a known chance of being selected for inclusion in the sample. simplest version is the
simple random sample, in which each unit in the sample frame has exactly ' he same chance
of selection. Examples of this ii1clude flipping a fair coin, whose sides have a 50% chance
of turning up, and throwing an unloaded die, whose sides have a 162/3% chance of turn-
ing up. This same plinciple can be applied to the previous depar:ment ::. lore example. A
sample of names could be selected from the company's list of charge customers according
to a random process, such as that of using a table of random digits.
'While in Cl probability sample the sampling units have a known chance of being selected,
in a nonprobability sampie the sampling units are selected arbitrarily. To return to our depart-
ment store example, instead of using a table of random numbers to select a sample of charge
customers, an arbitrary and more convenient method would oe to take the first fifty or sixty
names on the list.
Anticipating the ResultslMaking the Report The research plan should provide
for: (1) procedures for processing the data; (2) procedures for interpretation and analysis
of the findings; and (3) an outline of the final report. In reaching these decisions, it is usu-
ally helpful to work from the form and content of the final report. The report should pres-
ent a summary of findings and recommendations for management action drawn up in the
light of the reasons for the research. 'The of facts to be presented and the manner of
their presentation dictates the type of analysis to be undertaken. The kinds of analysis will ,
in turn, often suggest the method of data processing. Data processing in general refers to
the procedures for sorting, assembling, and reporting data. It can be done manually by the
use of work sheets or by computer programming. The method of data processing has impor-
tant bearing upon L'1e manner in which data are collected and reported. Thus, the design
of the project is often expedited by a thorough consideration of the kinds of results that are
expected and how they will be handled in the fina: report.
Anticipating the results of the and preparing a "dummy" final report has another
advantage. It is often helpful the results of this step in the research design to demon-
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THE VALUE OF MARKETING RESEARCH 67
strate to management the kind of project that is going to be undertaken. Agreement by the
management group that the kinds of information anticipated will assist in the solving of a
marketing problem is helpful in obtaining approval for the project and in restraining man-
agement expectations as to the scope and purpose of the project.
CONDUCTINGTHE RESEARCH
The attention devoted in the previous paragraphs to the design of the research plan might
leave the impression that once a marketing research project has bee;! carefully designed,
the job is almost done. Clearly, this is not the case. The implementation of a research plan
is seldom an easy task. Often a research program requires extra effort from already-busy
personnel in the company. In oilier cases, outsiders must be recruited, hired, and trained.
In either situation, carrying out a marketing researcn plan is difficult and requires very close
supervision and control. To the extent that the plan has been well conceived, supervi sion
and control are restricted to making sure that tne research activit:es called for in the plan
are carried out according to schedule and in the manne, prescribed.
PROCESSINGTHE DATA
Processing the data obtained in a market survey involves transforming the information
obtained into a report to be used by management. Four steps are involved: (1) editing the
data; (2) tabulating the data; (3) interpreting tile data; and (4) presenting the report. If, in
the anticipation of the results of the survey, the procedures for handling the data have been
sent forth and the form of the final report conceived. these final four steps in the research
procedure may be quite mechanical. A good plan for the analysis and interpretation of the
data is of immense assistance in bringing a project to a successful conclusion, but it should
never limit the kinds of interpretations that eventually are made or restrict the content of
the final report.
The final report of a marketing research stUdy should ordinarily be written. Since vast
amounts of data often are involved, the written report is the only appropriate method of
presenting these findings. The written repo:t also has the advantage of being permanent,
thus permitting management to study the findings carefully and to refer to them in the future.
Unfortunately, many marketing research projects are never translated into management
action-sometimes because the research conclusions do not directly contribute to the solu-
tion of the problem, sometimes because the report is too technical and difficult to under-
stand, and sometimes because the report writer has not offered specific suggestions as to
how the report should be translated into management strategy.
THE VALUE OF MARKETING RESEARCH
It is important to point out that it:s not always necessary to conduct research before attempt-
ing to solve a problem in marketing management. The manager may feel that he already
knows enough to make a good decision. In a few instances, there may be no choice among
alternatives and hence no decision to make. It is rather pointless to study a problem if there
is only one possible solutions. But in ~ s t business situations, the manager must make a
choice among two or more courses of action. This is where fact-finding enters in to help
make the choice.
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68 CHAPTER 3 MARKETING RESEARCH: AN AID TO DECISION MAKING
But even if a manager would like moreirrformation in order to make a decision, it is
not always wise for her to conduct the research that would be required. One reason is that
the time invol ved may be too great. Another more compelling reason is that the cost of the
r ~ s e r h may exceed its contribution. In principle, it is easy to understand how such a cost
test might be applied. If the cost of conducting the research is less than its contribution to
the improvement of the decision, the research should be carried out. If its cost is greater,
it should not be conducted. The application of this ptinciple in actual practice is somewhat
more complex. Finally, good research should help integrale marketing with the other areas
of the business.
INTEGRATED MARKETING •
RESEARCH BRINGS IT TOGETHER
It's the bane of modern business: too many data, not enough
information. Computers are everywhere, accumulating giga-
bytes galore. Yet it only seems to get harder to find the for-
est for the trees-to extract significance from the blizzard of
numbers, facts, and stats. But help is on the way, in the form
of a new class of software technology known broadly as data-
mining. First developed to help scientists make sense of exper-
imental data, this software has enough smarts to "see"
meaningful patterns and relationships-to see patterns that
might otherwise take tens of man-years to find. That's a huge
leap beyond conventional computer databases, which are pow-
erful but unimaginative. They must be told precisely what to
look for. Data-mining tools can sift through immense col-
lections of customer, marketing, production, and financial data,
and, using statistical and artificial intelligence techniques, iden-
tify what's worth noting and what' s not.
The payoffs can be huge, as MCI Communications is learn-
ing. Like other phone companies, MCI wants to keep its best
customers. One way is to identify early those who might be
considering jumping to a rival. If it can do that, the Cartier
can try to keep the customer with offers of special rates and
services, for example.
How to find the customers you want to keep from among
the millions? MCl's answer has been to comb marketing data
on 140 million households, each evaluated on as many as
10,000 attributes-characteristics such as income, lifestyle,
and details about past calling habits. But which set of those
attributes is the most important to monitor, and within what
range of values? A rapidly declining monthly bill may seem
like a dead give-away, but is there a subtler pattern in inter-
national calling to be looking for, too? Or in the number of
calls made to MCl's customer-service lines?
To find out, MCI regularly fires up its IBM SPI2 super-
computer-its "data warehouse"-which identifies the most
telling variables to keep an eye on. So far, the SPI2 has com-
piled a set of 22 detailed-and highly secret-statistical pro-
files based on repeated crunching of historical facts. None of
them could have been developed without data-mining pro-
grams, says Lance Boxer, MCT's Chief Information Officer.
Data-mining in itself is a relatively tiny market: sales of
such programs will grow to maybe $750 million by 2001. But
the technology is crucial in getting a big payoff from what
information technology executives think will be an immensely
important growth area in coming years: data warehousing.
There are the enormous collections of data-sometimes tril-
lions of bytes-compiled by mass marketers, retailers, or serv-
ice companies as they monitor transactions from millions of
customers. Data warehouses, running on ultrafast computers
with specialized software, are the basis on which companies
hope to operate in real time-instantly adjusting product mix,
inventory levels, cash reserves, marketing programs, or other
factors to changing business conditions.
Source: John W. Verity, "Coaxing Meaning out of Raw Data,"
Business Week, February 3, 1997, pp. 134-138; "Researchers Inte-
grate Internet Tools in Their Work," R&D Magazine, June 2000,
vol. 24, No.6, p. E13; "Smarter Kids. Com Chooses Quadstons-
The Smartest Customer Data Mining Solution," Business Week,
July 31, 2000.
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THE WALL STREET JOURNAL.
IN PRACTICE
Marketing research is a scientific
and controlled process, but ulti-
mately, decisions are based on a
blend of facts and intuition. Under-
standing marketing research allows
managers to intelligently evaluate
findings and recommendations.
Determining the purpose and
scope of the research is the first
critical activity in any marketing
research project. All subsequent
decisions are results of this process.
Creating the research design, con-
ducting the investigation, and pro-
cessing the data are the remaining
critical activities. Both primary and
secondary data are accumulated
when conduction research. Using
this information to produce good
research allows managers to inte-
grate marketing with other areas of
the business.
Secondary sources of data
online include associations and
business information sites. Check
out the American Marketing Asso-
ciation' s website at
www.ama.org/resource for a list of
resources and guides. For links to
business directories, media sites,
and marketing-related resource",
check out A Business Researchers
Interests at www.brint.com.
Your subscription to the Inter-
active Journal allows you to access
articles in various Dow Jones publi-
cations. Under More Dow Jones
Sites in the left menu, click on Dow
Jones & Co. From here you will be
able to access Dow Jones Web Links
which offers you links to dozens of
business and news websites. Click on
several of these links now.
Return to the Interactive jour-
nal's Front Section. Under Tools in
the left menu, select WSJ Yogi. The
WSJ Yogi is a free software applica-
tion that works like a personal
assistant, automatically suggesting
relevant content to you as you
browse the web. The WSJ Yogi will
gather links to related stories as you
read. Download the WSJ Yogi now.
Return again to the Interactive
Journal's Front Section. Under
Resources in the left menu, select
Special Reports. This section offers
links to special reports that have
appeared as supplements to The
Wall Journal print edition.
These reports provide a thorough
analysis and review of various lOP-
ics such as e-commerce, Small Busi-
ness, and World Business. Rev;ew
recent Special Reports now.
DELIVERABLE
With the information provided in
this section about web resources,
use the Interactive journal and rel-
evant web links to conduct market
research on recent trends in
e-commerce. Find at least five
sources of secondary data online
that will help you identify relevant
trends in e-commerce advertising,
marketing, and business strategies.
DISCUSSION QUESTIONS
1. How can mar1