Marketing Research and Information System

Lecture # 2 January 19, 2012 Text Reference: Principles of Marketing

Phillip Kotler & Gary Armstrong

14th Edition Pearson Prentice Halll

Unit 2

Marketing Research & Information Systems

 Learning Objectives
 Explain the concept of the marketing information system  Identify the ways of assessing information needs  Describe the sources used for developing information  Outline the Marketing Research Process  Compare and contrast the main ways of measuring

current demand
 Explain how future demand can be forecasted

For Discussion
 Marketers are always keen on acquiring useful data

and information on their target market by way of market research. Assume the role of a Consultant Marketer explore the ,marketing research process and its value for your client.

WHY THE NEED FOR A M.I.S?

Identification of significant marketplace changes, hence.
 Provision of useful

 A marketing information

system (MIS)
consists of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers.
Kotler,P. & Keller, K.(2006)

information to impact the planning process as it relates to buyer wants, preferences, and behaviour.

Components of a MIS
(A) Internal Records system
 this supplies results data
Sources include:

B) Market Intelligence system  this supplies happening data. Defined as: procedures and sources
managers use to obtain everyday information about the marketing environment

Sales information, payment to order cycle, inventory levels, receivables, payables, monthly reports, etc.

Components of a MIS
 Marketing Intelligence  Systematic collection and analysis of publicly available information about competitors and developers in the marketing environment  Mini quizzes  Bench marking competing products (Spies)

Sources of Marketing Intelligence

1. Trained and motivated
salesforce spotting and reporting developments
2.

4. Consumer Advisory Panel 5. Motivating intermediaries to pass along important information. 6. Government data resources

Purchasing of information from suppliers A company networking regionally and internationally

3.

Components of a MIS
C) MARKET RESEARCH
Market intelligence system and internal record system supplies happening and results data respectively

Marketing Research
 Acquisition and analysis of

information required for the making of marketing decisions. (Cole, 2006).

 Increasing needed for

Marketing Research :
markets

 Shift from local to wider internal

 He highlights 2 basic areas :  Markets (existing & potential)

the changing emphasis from buyer needs to wants (buyer behaviour) based on non price

 External markets
 Marketing tactics & method


 The trend towards competition

Internal - response to customers, present & future

 Name some non-price methods

used by marketers

MARKET RESEARCH
 Systematically
 Some companies

gathering, analyzing, interpreting and transforming data, structures and results into decision making information.
Bush, R.P. et. al. (2000)

Research Team This info will help companies to:  Assess market potential  Understand customer satisfaction & purchase behaviour  Measure the effectiveness of pricing product, distribution & promotion activities

MARKET RESEARCH
Decision situations marketing are created by the awareness of :
1. Decision Problems 2. Decision Opportunities 3. Market performance

 MARKET RESEARCH CAN

PROVIDE INFORMATION NECESSARY TO ALLOW FOR THESE DECISIONS

symptoms.

Marketing Information System

 Begins with assessing

information needs for users

 Internal Database  Electronic collection of info

obtained from data source within the company

 Develops from internal

database, marketing intelligence activities, & research

 External source

 Analyses of data received for

decision making to manage customer relations.

Marketing Research Process

Define the problem & research objectives

Develop the research Plan For collecting information

Implement the Research Plan Collect & analyze data

Interpreting & Reporting findings

Step 1- Defining the Problem & Research Objectives

 (usually considered the

most difficult step

E.g.. Would a 10% decrease at

UCC increase enrollment enough to offset/ reduced tuition?

 Exploratory research  Gathers preliminary info

that will help to define the problem (s) and suggest an hypothesis

Casual Research  This tests hypotheses about cause & effect relationships The statement of the problem and research objectives guides the entire research process.

 Descriptive Research  Describes marketing

problems, situations or markets- demo, cust attitude

 In determining the research problem:  a. Determine and clarify information needs  B. Re define the decision problem as a

research problem
 C. Establish research objectives

Step 2 Developing the Research Plan

 An efficient plan is
 How customers are

developed for collecting information  Plan outlines sources of existing information  Specific approach, contact, methods instruments  Information is usually gathered from primary & secondary data source.

responding to the seasoned fish & chicken on the market.

 The product may cost

more, but think about convenience

 What specific information

would be needed?  Consumers, Retailers  Demographics  Economics

Step 2 Developing the Research Plan

 Secondary data  Information already exists for  Primary Data  Care must be taken

another purpose  Comps Internal database  Commercial database STATIN - Online database  Usually less expensive  Sometimes required info. may not exist (reactions to new product)

when collecting primary data to ensure relevance to the research being conducted.  Accuracy (reliably collected & reported  Currency (up-to-date)  Impartiality (obj. coll. & reported)

Approaches to Research
 a. Observation,  Observing relevant people,  b. Survey Research  Gathering of data by asking

actions & situations  E.g. How much of a particular product consumers purchase, traffic patterns
 Mechanical Observation

questions  Knowledge, attitudes, preferences, buying patterns  Descriptive research  Most widely used approach

 TVJ Rising Stars, Kings &

Queens, Dancing Dynamites

 Scanners at Supermarkets.
 Do you know of any other type

 Flexibility  Advantages  used to collect different type of

data

being used?

Approaches to Research

 Disadvantage  Some persons inability to

 Single Source data

system
 Electronic monitoring

answer survey question- - -never thought about what they do or why or cannot remember
 Persons may be unwilling to

systems - link consumers expend. to television advertising & promotion

respond to unknown interviewers & what they consider private information -Resent intrusion  May give answers they think interviewers want.

 (using TV meters with

what they buy in stores (store check out scanners

Approaches to Research
 Experimental Research  The gathering of primary data by
 Advantages  Contact Methods -includes mail,

selecting matched groups of subjects, giving them different treatments, controlling unrelated factors and for checking for differences in group responses. product they may use different prices in different parts of the country to test consumers response. different prices in Kingston & Ocho Rios

telephone personal interviews  Mail large qty, low cost per respondent no interviewer bias
 Disadvantage  Low return rate  All respondents respond in the

 Eg. A comp introduces a new

same order]  Takes longer, no control over sample

 E.g. Burger King May have

Approaches to Research
 Telephone  Advantages  Best for gathering information quickly & greater flexibility  Respondents can ask for explanation to questions or not answer  Reponses are usually higher more controlled because the interviewer can seek persons with specific characteristics.  Disadvantages
 Higher cost than mail  Respondents may or may not

want to answer personal question.  There may be interviewer bias (can skew the questions to obtain particular response  Interviewer may even cheat on questionnaires  Interviewer may not interpret and record respondents response objectively

Personal Interviews
2 forms Individual in homes, offices, street, mallsoffers flexib.


 The interviewer focuses the group

discussion on important issues.  Very popular nowadays

Interviewers probe respondents to elicit more meaningful information explore issues. Respondents may be able to view actual products, advt pkg & observer reactions  Group Interviews


 Focus can make use of :  Video conferencing links, remote

control TV Camera computer assisted interviewing

 Online Marketing Research  Collecting primary data thru

Focus group personal interviewing involves inviting 6-10 people to gather with a trained interviewer to talk about a product, service organ.

internet surveys & online focus groups. (Digiport Montego Bay)

Approaches to Research

 

Sampling A segment of the population selected for marketing research to represent her population as a whole

 Types of sample  Research Instruments  2 methods for primary data      

3 decisions are required for sampling: i. Who is to be surveyed (sampling unit) ii. How many people should be surveyed (sample size -the larger the sample the more reliable the results iii. (How you choose the people for sampling (procedure)
Method chosen depends on the need of the research project.

collection Questionnaire Commonly used Flexible Open-ended question- all possible answers Multiple choice scaled

 E.g. the most importance

consideration in choosing a tertiary is

 Open ended questions are  useful in exploratory research (what

 First question should create

people think but not necessarily how many people.

interest

 Difficult & personal

 Closed ended  Provide answers that are easier to

interpret and tabulate.

questions should be asked last.

 Care should be taken with the

 Researchers use

wording of the question and ordering of the question. unbiased, and arranged in a logical manner

mechanical instrument to monitor consumer behaviour (supermarket)

 Questions should be simple, direct,

Implementing the Research Plan

 Involves collecting,  Interpreting &

processing and analyzing information

 Check for accuracy &

Reporting the Findings

 Application of the finding in the

decision-making process
 Computer aided techniques

completeness and code analysis

 Results tabulated &

may be used for more detailed findings.

computed

Measuring Current Demand

One very important reason For conducting market research

Companies can lose profits by overestimating or underestimating the market: overly optimistic estimates of current or future demand can result in costly overcapacity or excess inventories. Underestimating demand can mean missed sales and profit opportunities.

to identify potential marketing opportunities.



When a company finds an attractive market it must carefully estimate that markets:Current size Future potential

1. 2.

A. CURRENT SIZE
Measurement of Current Market Demand For this demand marketers need three (3) important pieces of information:
I. II. III.

Total market demand Area market demand Actual sales and market shares

Measurement of Current Market Demand

I.

Total market demand

Definitions: i) Total market demandThe volume of a product or service that would be bought by a defined customer group in a defined geographic area in a defined time period in defined marketing environment under defined level and mix of industry marketing effort. (Kotler & Armstrong,2008)

Measurement of Current Market Demand

Definitions: ii) Primary Demand Total demand for product/service class or form iii) Selective Demand Demand for a given brand of product or service

Total market demand (contd)

According to Fig.1.1 Market minimum (Q1) this would take place without stimulated marketing activities. As expenditure increase then demand will be positively impacted.

Measurement of Current Market Demand

Total market demand (contd) However, expenditure beyond a certain point would not stimulate further demand hence: Market Potential: This relates to the upper limit of market demand.

Estimating total market demand

Common way to do this is as follows: Q=n*q*p Where : Q = total market demand N = number of buyers in the market q = quantity purchased by average buyer per year p = price of an average unit
Thus:

If 20 million buyers of bottled water each year, with an average buyer buying 60 bottles per year @$50, then the total market demand for bottled is :

20,000,000*60*$50  = $60billion

II. Estimating Area Market Demand



In selecting the best sales territories, companies need to estimate the market potential (upper limit for market demand) for different cities, states and countries.

i)

Market Build up or Index Method (consumer markets

Two commonly used methods are: i) Market build up method (for business goods)
ii)

Procedure:  Identify all the potential buyers in each business market  Then estimate their potential purchases.

Market factor Index

method (consumer markets)

Estimating Area Market Demand

ii) Market Index factor Procedure:
 

Identify all the potential buyers in each consumer market estimate their potential purchases.

Estimating Area Market Demand

ii) Market index factor A common example used by Sales & Marketing Management Survey of Buying Power, is the Buying Power Index (BPI). This estimates the buying power (ability to buy) for a region.

Estimating Area Market Demand

Market index factor

This is based on three (3) factors : - areas share of the total population
- Effective buying

income
- Retail sales

Thus: BPI= .2* % of Nat. pop. + .5*% of buy. Income +.3% of Nat. ret. sales

Estimating Area Market Demand Market index factor

E.g: If a soft drinks manufacturer looks at St. Ann area and finds that .5596% of Nat. pop. is within this region &
 .5984% of nations  Then

BPI= (.2*.5596)+(.5*.5984) +(.3*.6594) =.6089

Therefore St. Ann would account for .6089% of the total potential demand for soft drinks in the Island

effective buying power is also from this region along with .6594% of the nations retail sales.

III. Estimating Actual Sales & Market Shares

A company must identify its competitors and estimate their sales This will provide a greater understanding of the position of the firm in the industry as it relates to market share. Total sales information can be acquired from: a) Document and reports published by trade associations. b) Marketing research firms that audit total sales and brand sales

B. FUTURE POTENTIAL
 Forecasting future Demand

Definition: This relates to the art of estimating future demand by anticipating what buyers are likely to do under given conditions.

Forecasting future Demand

Companies commonly use a three step approach to forecast sales:

i)

Macroeconomic Forecast (environmental forecast) Industry forecast (Trade Ass. & Mktg firms) Company Sales forecast (past sales info.)

ii) iii)

Forecasting Future Demand

All forecasts are built on:


what people have done.

what people say,  Involves the use of surveys of buyers opinion what people do,  Involves the use of test markets for product/services and measure buyer response

b. Involves analysis of past

buying activities and behaviour and/or using various statistical tools to forecast sales from past records


SUMMARY

Current and future demand measures are important in providing information to the marketer about the opportunities that exist in the marketplace. Market potential estimates and industry and company sales forecasts are important for the development of corporate marketing strategies and products objectives. Middle management decisions regarding size and allocation of marketing expenditures depend heavily on sales forecasts.

Review and Discussion

 Explain the importance of information to the company and its

understanding of the marketplace

 Explain the steps in the Marketing research process  Marketing information has no value unless it is used to make better

decision, explain how companies can analyze and distribute marketing information.
 What are some of the unique issue facing marketers in terms of

public policy, ethics

 How can marketers use technology to improve marketing. Identify

some weaknesses of this method.

Consumer Markets and Consumer Buyer behaviour

Lecture # 3 January 2012

Class Objectives

Identify the Major Models of Consumer Behaviour Outline the Major Characteristics Affecting Consumer Behaviour Distinguish the Major Consumer Buying Roles Explain the Buyer Decision Process

Model of Consumer Behaviour

Marketing Stimuli Products & services Price, Distributio n Communica tions
Consumer Psychology Motivation Perception Learning Memory Other Stimuli Economic Technological Political Cultural Consumer Characteristics Cultural Social Personal Buying Decision Process Problem recognition Information search Evaluation of Alternatives Decision Post-purchase behavior

Purchase Decision Product choice Brand Choice Dealer Choice Purchase Amount Purchase timing Payment Method.

CONSUMER BUYING BEHAVIOUR

 Marketers are forced to understand and be cognizant of

the buying behavior of the consumer, especially with todays technologically savvy and well informed consumers.
 Consumer buyer behaviour refers to:  the buying behaviour of final consumers individuals and

households who buy goods and services for personal consumption. All of these final consumers combine to make up the consumer market.

CONSUMER BUYING BEHAVIOUR

Consumer market refers to all

the individuals and households who buy or acquire goods and services for personal consumption.


Consumers buying behavior is impacted by: 1. Consumer characteristics 2. Consumer Psychology

Consumers may make many buying decisions every day and hence consumer buyer behaviour and the consumer market are very dynamic. Marketers can study actual consumer purchases to find out what they buy, where and how much.

Consumer purchases are influenced strongly by cultural, social, personal and psychological characteristics.

CONSUMER BUYING BEHAVIOUR



1.Consumer characteristics

2. Consumer psychology

I.) Cultural II). Social III). Personal

I). Motivation II). Learning III). Perception IV). Memory

1. Consumer Characteristics
Cultural Factors
These refer to beliefs, perceptions, values, wants and normative patterns of behavior that is transmitted to the individual by society from family and other important institutions. Culture is the most basic cause of a persons wants and behaviour. Human behaviour is largely learned.

Culture is transmitted from generation to generation via: i) Family ii) Church iii) School iv) Groups v) Media vi) Peers

Consumer Characteristics Culture

 Impact on marketing:


Impact on marketing:

Both culture and subculture will impact the buying behaviour of consumers. Consumer products/services choice, use and buying patterns are are overwhelming impacted by the cultural exposure of the consumer.

Companies that are able to absorb multicultural activities and strategies in their overall marketing programs are at an advantage in capitalizing on the great potential of this factor

Consumer Characteristics Social

 Social factors  These include:  Reference groups  Social roles  Status  family

Social forces represents all the forces that will allow for the social development and maturity of the individual. They are closely intertwined in the cultural background of the individual.

1. Consumer Characteristics Social

 Reference groups
 Groups with direct influence

are membership groups and are two types:

All the groups that have direct or indirect impact on an individuals attitudes and behavior

i) Primary
-family, friends, neighbours, co-workers, etc.

ii) Secondary
- religious, professional groups, etc.

1.

Consumer Characteristics Social

Reference groups will influence consumers in three (3) ways:

Impact on marketing:

i)

Exposing individuals to new lifestyles, behaviors and experiences that will impact attitude towards brands, products, etc. Creating pressure for conformity which may impact product choice, brand and usage rate. Exposing individuals to groups that they are hoping to belong or whose values they reject.

ii) ii)

1.

Consumer Characteristics Social

 Social roles and status

An individual membership in a group will assign him roles (activities) and each role carries a status.

1.

Consumer Characteristics -Social

Impact on marketing:
 Consumers will select products that symbolizes and

will communicate their roles and ultimately their status in society.

 Marketers can maximize on this in branding and

positioning of products/services to the consumer.

1. Consumer Characteristics Social

 Family
This can be categorized as the most powerful institution of consumer buying in any society. Family structure and organization are implications of socio cultural orientations.

1.

Consumer Characteristics Social

 The consumer behaviour is determined by the families

that they were exposed to (family orientation) and this behavior is transferred to the family they create (family procreation)

 Impact on marketing:

Changes in family size and structure will result in changes in the buying behavior of the consumer.

1. Consumer Characteristics  Personal factors

These include:
1. 2. 3. 4.

Age, stage, and life cycle (baby Boomers) Occupation and economic circumstances Personality and self concept Lifestyles and value.

1. Consumer Characteristics Personal



Impact on marketing:

A. Peoples purchasing pattern and choice as it relates

to products/services will reflect changes as they move from age to age and as they move through life events situations like marriage, childbirth, retirement, etc.
B. Economic situations can impact product choice and

ultimately demand. Ones occupation may be a strong indicator of product consumption pattern.

1. Consumer Characteristics Personal


C.

Impact on marketing:
Each person possesses personality characteristics and self concept that will impact his/her buying behavior. Brands are chosen base on how well the brand personality is in sync with the consumers personality. Brand Personality- this refers to the mix of human traits that can be attributed to a particular brand.

1. Consumer Characteristics Personal

Consumers will more than often select brands that will have brand personality that are consistent with their own: - Actual self - Ideal self concept - Others self concept

1. Consumer Characteristics Personal


D.

Impact on marketing:
Lifestyles and values also help to shape consumers taste and buying patterns. Lifestyle relates to an individuals pattern of living in the world as expressed in activities, interests and opinions. Marketers can aim the brand more closely to reflect the consumers lifestyle or changes within the lifestyle.

2. Consumer Psychology
Consumer psychology can be divided into the following factors impacting consumer behavior:
a. b. c. d.

Motivation Perception Learning Memory

2. Consumer Psychology Motivation

 Motivation A motive is a need that is sufficient to cause to cause a person to act
Kotler,P. (2006)

Numerous theories have been tabled to explain this concept in general which can generally be applied to consumer behaviour. They include:

 Motivation  Maslows Theory A motive is a need that is of needs sufficient to cause to cause a person to act  Hertzbergs TwoKotler,P. (2006)

factor Theory
Numerous theories have been tabled to explain this concept in general which can generally be applied to consumer behaviour. They include:

 Freuds Theory

2. Consumer Psychology Motivation

 Maslows Theory of needs
Products/services ultimately fit into the overall plan, goals and lives of the consumer base on their situation in the hierarchy of needs.

 Hertzbergs Two-factor Theory

In selling products, marketers should increase satisfiers and decrease dissatisfiers in order to attract customers.

2.Consumer Psychology Motivation

 Freuds Theory
Product can meet deeper innate needs of consumer based on motives.
 Products/services also represent different things to

consumer based on the projected needs by the marketer.

2.Consumer Psychology Perception

 Perception
Process by which an individual selects, organizes, and interprets input information to give meaning and greater understanding of the world. It is perception and not reality that consumers respond to which will impact their behavior in the marketplace or marketspace.

2.Consumer Psychology Perception

 As it relates to perception there is : - Selective attention - Selective distortion - Selective retention - Subliminal perception

2.

Consumer Psychology

 Learning
Learning relates to permanent change in behavior.

 Memory
Information and experiences that individuals encounter throughout their lives.

Model of Consumer Behaviour

Marketing Stimuli Products & services Price, Distributio n Communica tions
Consumer Psychology Motivation Perception Learning Memory Buying Decision Process Problem recognition Information search Evaluation of Alternatives Decision Post-purchase behavior Purchase Decision Product choice Brand Choice Dealer Choice Purchase Amount Purchase timing Payment Method.

Other Stimuli Economic Technologica l Political Cultural

Consumer Characteristics Cultural Social Personal