978-0136074892 Solution Manual Chapter 03 Part 1

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Chapter 3: Marketing Research

Chapter Objectives

After reading this chapter, students should understand:

·Major functions of marketing research

·The research process

·Primary and secondary data sources

·Qualitative and quantitative research

·Applications of marketing research

·Impact of the Internet on marketing research

Chapter Overview

This chapter provides an introduction to marketing research. It focuses on primary and

secondary research, qualitative and quantitative research and provides examples of

applying marketing research in market potential estimation and forecasting.

Chapter Outline and Key Terms

Key Terms:

·Marketing research

·Research process

·Problem definition

·Information needs

·Type of study or research

·Data collection,

·Data analysis and Conclusions

·Reporting

·Secondary information sources

·Primary information sources

Definition: Market Research: the function that links the consumer, customer, and public

to the marketer through information used to identify marketing opportunities and

problems, generate and evaluate marketing actions, monitor marketing performance, and

improve understanding of marketing as a process.

A. Three Major Functions of Marketing Research (Table 3.1):

·Scanning for opportunities and threats

·Risk assessment of future programs

·Monitoring of current programs.

B. Marketing Research Is Commonly Used to:

·Forecast sales of existing and new products

·Refine new product concepts

·Describe a new strategy for an existing product

·Understand competitors

·Identify market segmentation opportunities

·Understand how customers in different market segments make buying

decisions

·Evaluate how customers in the target audiences react to various advertising

messages and executions

·Determine what price to charge

·Understand how satisfied customers are with the product and the company

C. The Research Process: Six steps of the process are:

·Problem definition: What is the problem to be addressed?

·Information needs: What kinds of information are most appropriate for

solving the problem:

· Type of study or research: What types of studies and date are needed for

solving the problem?

·Data collection: What are the specific data and information sources?

·Data analysis and conclusions

·Reporting: A report on the findings to the appropriate organization and

groups.

(Figure 3.1) Overview of the Marketing Research Process details the 6-step

process into 10 key elements of research.

Data Sources

Key Terms:

·Qualitative research

·Phenomenological

·Exploratory

·Clinical

·Focus group

·Quantitative research

·Surveys

·Virtual shopping

·Panel

·Manipulation

·Control group

·External validity and internal validity

·Laboratory experiment and field experiment

Two Types of Data Sources

·Secondary

·Primary

Secondary Data Sources

·Two types of secondary data sources:

·Internal secondary data

·Secondary data can be located internally, within the organizations.

Examples of secondary data can be internal data sources are

marketing plans and strategic plans.

·External secondary data

·Secondary data can be external. Examples of secondary external data

sources are; the Internet, trade associations, general business

publication, trade publications, academic publications, corporate

reports, government publications.

Table 3.2 Marketing Research Data Sources makes the distinction between the

secondary and primary data, and observations and experiments.

Primary Data Sources

·Two types of primary data sources (Table 3.4):

·Qualitative

·Market research that usually involves samples of customers and

produces information that by itself does not directly lead to

decisions but is valuable as an input for further research.

·Types include:

·Phenomenological (Understanding how the products are

used in everyday life.)

·Exploratory (Generates hypotheses for further research.)

·Clinical (Explores reasoning behind purchasing behavior.)

·Examples include:

·Focus groups: Small groups chosen for their membership

in various target groups of buyers.

·Illustration: Splenda (www.splenda.com, Page

70.)

·Observations and ethnographic research: Observing the

potential buyer in a specified setting

·Illustration: In-store Video Monitoring (Page 70.)

·Illustration: Campbell Soup

(www.campbellsoup.com, Page 71)

·Quantitative

·Market research that typically involves statistical analysis of data,

where the intent is to provide descriptive results or explicitly test a

hypothesis.

·Types include:

·Surveys

·Personal interviews

·Telephone interviews

·Mail surveys

·Illustration: Net Promoter Survey (Page 74.)

·Additional types include:

·Panels

·Experiments

·Models and simulations

·Global Considerations

·Main criteria for evaluating survey alternatives (Table 3.6,

Page 73):

·Cost

·Control

·Response rate

·Potential for interview

·Bias

·Time to obtain data

·Flexibility

Potential and Forecasting

Key Terms:

·Potential

·Forecasts

·Scenario planning

·Naïve extrapolation

·Sales force

·Executive opinion

·Delphi method,

·Market testing

·Market survey

·Moving average

·Exponential smoothing

·Extrapolation

·Correlation

·Regression analysis

·Leading indicators

·Econometric models

·Potential: The maximum sales of a product category reasonably

attainable under a given set of conditions within a specified period of

time.

·Market Forecast: A prediction of a future quantity such as sales

extrapolation. Extending a line based on existing data outside the

range of the date.

·Market Potential: The maximum sales reasonably attainable under a

given set of conditions within a specified period of time.

·Basic Calculations

·Estimating Market Potential

a. Determine the potential of buyers or users of the product

b. Determine how many individual customers are in the

potential groups of buyers defined in step 1.

c. Estimate the potential purchasing or usage rate

d. Illustration: Disposable Diapers (Table 3.7 Market

Potential Illustration Page 79.)

Sales Potential

a. Category Development Index (CDI) =

CDI = % of the category sales in a geographic area x 100

% of the country’s population in the area

b. Brand Development Index (BDI)

Forecasting

a. Forecasting important in strategic planning process in the

situational analysis is to use forecasting. (Table 3.9

Summary of Forecasting Methods, Page 82)

b. Judgment methods—Naïve extrapolation, sales force,

executive opinion, Delphi method

c. Counting methods—market testing, market surveys

d. Time-series methods—(Table 3.8, Page 81.) Moving

average, exponential smoothing, extrapolation

e. Association/causal methods—correction, regression