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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
Copyright© 2011 Pearson Education, Inc., publishing as Prentice Hall
·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.
Copyright© 2011 Pearson Education, Inc., publishing as Prentice Hall
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.
Copyright© 2011 Pearson Education, Inc., publishing as Prentice Hall
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
