Chapter 7 Marketing Research, Decisions Support Systems, and Sales Forecasting---Review Marketing Terms you need to Know Marketing

Research- Process of collecting and using information for marketing decision making. Exploratory Research- Process of discussing a marketing problem with informed sources both within and outside the firm and examining information from secondary sources. Secondary Data- Previously published information Primary Data- Information collected specifically for the investigation at hand Sampling- Process of selecting survey respondents or research participants Probability Sample- Sample that gives every member of the population a chance of being selected Nonprobability Sample- Sample that involves personal judgement somewhere in the selection process Interpretative Research- Observational research method developed by social anthropologists in which customers are observed in their natural setting and their behaviour is interpreted based on an understanding of social and cultural characteristics, also known as ethnography, or going native. Focus Group- Simultaneous personal interview of a small group of individuals, which relies on group discussion about a certain topic. Marketing Decision Support System (MDSS) - Marketing information system component that links a decision maker with relevant databases and analysis tools Sales Forecast- Estimate of firm s revenue for a specified furfure period

Chapter 7- Overview Material Who Conducts Marketing Research The size and organizational form of the marketing research function is typically tied to a given company s structure Many firms outsource research needs Syndicated services Organizations that regularly provide a standardized set of data to all customers Full-service research suppliers Organizations that conduct complete marketing research projects

Limited-service research suppliers Firm that specializes in selected activities, such as conducting field interviews or performing data processing

The Marketing Research Process A 6 step process for marketing research to provide knowledge and data to business executives. 1. Define the Problem- First you must look for the underlying causes of the market share loss, the reason why there is a problem how, where, and why it started. A logical start point in identifying the problem would be evaluating the firms target market and marketing mix elements. 2. Conduct Exploratory Research- Seeks to discover the cause of a specific problem by discussing the problem with informed sources both within and outside the firm and by examining data from other information sources. This is all from a secondary data source, or could be from input of retailers, customers, or wholesalers. 3. Formulate a Hypothesis- After defining a problem and conducting an exploratory investigation, the marketer needs to formulate a hypothesis, a tentative explanation for some specific event. A hypothesis is a statement about the relationship among variables that carries clear implications for testing this relationship. Sets the stage for more in-depth research. 4. Creating a Research Design- A master plan or model for conducting marketing research to find solutions for the problem. The study must measure what they intend to measure 5. Collect Data- Marketing researchers gather two kinds of data, secondary and primary(see above for definition). Secondary data offers two major advantages, 1) it is almost always less expensive to gather secondary rather than primary data, 2) researchers usually spend less time to locate and use secondary data. Secondary data also has its downfalls to primary data, is quickly becomes obsolete, not always necessary relevant. The debate between primary and secondary data is tied to cost, applicability and effectiveness. 6. Interpret and Present Research Information- The final step in the marketing research process is to interpret the findings and present them to decision makers in a format that allows manager to make effective judgements. Possible differences in interpretations of research results may occur between marketing researchers and their audience s due to differing backgrounds, levels of knowledge and experience. Both oral and written reports should be presented in a manner to minimize misinterpretations. Using Internal Data- Marketers can find valuable data in their firms own internal records. Sales analysis can be easily acquired through sales forecasts, invoices, or computer database. Accounting data, as summarized in the firm s financial statements, can be another good tool for identifying financial issues that influence marketing. Market cost analysis, evaluation of expenses for tasks as selling, warehousing, advertising, and delivery to determine the profitability of particular customers, territories, or product lines.

Marketing Research Methods Secondary Data Collection- Consists of two types, 1) internal data, personal records and files within the company, 2) external data, comes from a variety of sources to be mentioned below Government Data- All levels of government provide information, much of it free. Stats Canada is a great source for secondary data for all types of information. Private Data- Private Organizations provide data, trade associations can be great sources of data which can be found in libraries or online. Online Sources of Data- Databases and other sources of information are available online. Internet-based marketing research project can cost less yet yield faster results than offline research. Sampling Techniques Population/Universe- The total group of people that the researcher wants to study Simple Random Sample- Every member of the relevant universe has an equal opportunity of selection. Stratified Sample- Randomly selected subsamples of different groups that are represented in the total sample Cluster Sample- Researchers select a sample of subgroups from which they draw respondents Convenience Sample- A nonprobability sample selected from among readily available respondents Quota Sample- A nonprobability sample that is divided to maintain the proportion of certain population as a whole Primary Research Methods- Marketers use a variety of methods for conducting primary research 1. Observation Method- Marketers trying to understand how consumers behave in certain situations find observation to be a useful technique. Technological advantages provide increasingly sophisticated ways for observing consumer behaviour. Interpretative Research-(See above for definition) 2. Survey and Interview Methods Telephone Interviews- Quick and inexpensive method for obtaining a small quantity of relatively impersonal information Personal Interviews- This is the best way for obtaining detailed information, the interviewer can establish rapport with the respondents and explain confusing or vague questions. Focus Groups- Brings together 8-12 people in one location to discuss a subject of interest. Provide quick and relatively inexpensive insight into consumer attitudes and motivations.

Mail Surveys-Cost effective alternate method to personal interviews. Provide anonymity that may encourage respondents to give candid answers. The downfall is that the time for the data to come is longer than other research methods. Fax Surveys- In response to long follow-up times and low response rates to mail surveys, but most households do not have fax machines. Thus this is mainly used for business to business research studies. Online Surveys and Other Internet-based Methods- Using the Web, they are able to speed the survey process, increase sample sizes, ignore geographic boundaries, and dramatically reduce costs. As the internet grows marketing research follows finding new ways in attracting people to complete the online surveys, etc. incentives 3. Experimental Method Controlled Method- A marketing research experiment is scientific investigations in which a researcher controls or manipulates a test group and compares the results with those of a control group that did not receive the experimental controls or manipulations. Test Marketing- This is the most common method used by marketers. Introducing a new product in a specific area and then observing its degree of success. The drawbacks are very expensive, other competitors learn quickly about the product, and some products are not well suited to test marketing e.g. cars. Conducting International Marketing Research As corporations expand globally they need to gather correspondingly more knowledge about consumers in other countries. Secondary data can be useful as almost all governments hold major information in all sorts of markets. While conducting research in foreign countries companies need to be aware of the language and cultural differences not to offend the local citizens. Some countries have high illiterate rates in which mail surveys and questionnaires would not be applicable. Interpretative Research A method for explaining behaviour that operates below the level of the conscious thought, interpretative research can provide insights into consumer behaviour and the ways in which consumers interact with brands. The word ethnographic means that a researcher takes a cultural perspective of the population being studied. Used to find consumer behaviour amongst different groups of people. Computer Technology in Marketing Research The ability to quickly gather and analyze business intelligence can create a substantial strategic advantage, computer databases provide a wealth of data for marketing research, whether they are maintained outside the company or designed specifically to gather important facts about its customers.

Marketing Information Systems (MISs) A planned, computer based system designed to provide decisions makers with a continuous flow of information relevant to their areas of responsibility. A well-constructed MIS serves as a company s nerve center, continually monitoring the market environment, both inside and outside the organization, and providing instantaneous information. Marketers can store data for later use, classify, and analyze the data and retrieve it easily when needed. Marketing Decisions Support Systems (MDSSs) - Definition Above While MIS provides raw data, MDSS develops this data into information useful for decision making. Data Mining- The process of searching through computerized data files to detect patterns. It focuses on identifying relationships that are not obvious to marketers in a sense answering questions that marketing researchers may not even have thought to ask. The data is stored in a huge data bade called a data warehouse. Once marketers identify patterns and connections, they use this intelligence to check the effectiveness of different strategy options. Business Intelligence- The process of gathering information and analyzing it to improve business strategy, tactics, and daily operations. Using advanced software tools, marketers gather information from both within and outside the organization. Business intelligence can thus tell the firm how its own sales operation is doing or what its top competitors are up to. Competitive Intelligence- A form of business intelligence that focuses on finding information about competitors using published sources, interviews, observations by salespeople and suppliers in the industry, government agencies, public filings such as patent applications, and other secondary sources, including the internet. Its aim is to uncover the advantages the competition might have. Sales Forecasting Sales forecasts play major roles in new-product decisions, production scheduling, finical planning, inventory planning and procurement, distribution, and human-resource planning. An inaccurate forecast may lead to incorrect decisions in each of these areas. Qualitative Forecasting Techniques Qualitative Forecasting- Techniques rely on subjective data that report opinions rather than exact historical data. Jury of Executive Opinion- Opinions come from executives in many different departments, quick and inexpensive. Managers may lack background knowledge and experience to make meaningful predictions Delphi Technique- Group of experts can accurately predict long-term events such as technological breakthroughs. It is time consuming and expensive.

Sales Force Composite- Salespeople have expert customer, product, and competitor knowledge, quick and inexpensive. Inaccurate forecasts may result from low estimates of salespeople concerned about their influence on quotas. Survey of Buyer Intention- Useful in predicting short-term and intermediate sales for firms that serve only selected customers. Intentions to buy may not result in actual purchases, this is time consuming and expensive. Quantitative Forecasting Techniques Quantitative Forecasting- Use statistical computations such as trend extensions based on past data, computer simulations, and econometric models. Market Test- Provides realistic information on actual purchases rather than intent to buy. Alerts competition to new-product plans, which means it is time-consuming and expensive. Trend Analysis- Quick, inexpensive, effective with stable customer demand and environment. Assumes the future will continue the past, ignores environmental change. Exponentials Smoothing- Same benefits as trend analysis, but emphasizes more recent data. Same limitations as trend analysis, but not as sever to emphasis on recent data.