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Chapter 4 Managing Marketing Information to Gain Customer Insights

CHAPTER 4

MANAGING MARKETING INFORMATION TO GAIN CUSTOMER INSIGHTS

PREVIEWING THE CONCEPTS – CHAPTER OBJECTIVES

1 Explain the importance of information in gaining insights about the marketplace and

customers.

2 Define the marketing information system and discuss its parts.

3 Outline the steps in the marketing research process.

4 Explain how companies analyze and use marketing information.

5 Discuss the special issues some marketing researchers face, including public policy and

ethics issues.

JUST THE BASICS

CHAPTER OVERVIEW

This chapter looks at how companies develop and manage information about important

marketplace elements.

This chapter is an examination of marketing information systems designed to assess the firm’s

marketing information needs, develop the needed information, and help managers to use the

information to gain actionable customer and market insights.

ANNOTATED CHAPTER NOTES/OUTLINE

FIRST STOP

The LEGO Group: Digging Out Fresh Customer Insights

Classic LEGO plastic bricks have been xtures in homes around the world for

more than 65 years. Last year, The LEGO Group (TLG) produced a record 55

billion LEGO bricks, enough to construct a continuous line stretching around

the world more than 20 times.

But only a decade ago, TLG was near bankruptcy, spiraling downward and

losing money at a rate of $1 million a day. The problem: The classic toy

company had fallen out of touch with its customers.

The LEGO makeover, however, didn’t start with engineers working in design

labs. First, TLG had to reconnect with customers. So it started with marketing

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Chapter 4 Managing Marketing Information to Gain Customer Insights

research. Beyond traditional research methods and data analytics, TLG used

innovative immersive research approaches to understand the deeper

motivations underlying LEGO purchases and play.

This immersive research produced a lot of “Aha! Moments,” customer insights that shattered

many of the brand’s decades-old traditions.

Thus, over the past decade, thanks to customer insight-driven marketing

research, The LEGO Group has reconnected with both its customers and the

times.

MARKETING INFORMATION AND CUSTOMER INSIGHTS

Companies use such customer insights to develop competitive advantage.

To gain good customer insights, marketers must effectively manage marketing information from

a wide range of sources.

Marketing Information and Today’s “Big Data”

With the recent explosion of information technologies, companies can now

generate and nd marketing information in great quantities.

Far from lacking information, most marketing managers are overloaded with

data and often overwhelmed by it. This problem is summed up in the

concept of big data.

Big data refers to the huge and complex data sets generated by today’s

sophisticated information generation, collection, storage, and analysis

technologies.

Managing Marketing Information

The real value of marketing research and marketing information lies in how it is used—in the

customer insights that it provides.

A marketing information system (MIS) consists of people and procedures for assessing

information needs, developing the needed information, and helping decision makers to use the

information to generate and validate actionable customer and market insights. (Figure 4.1)

Use Key Terms Big Data, Customer Insights and Marketing Information

System here.

Use Chapter Objectives 1 and 2 here.

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Use Discussion Question 4-1 here.

Use Figure 4.1 here.

ASSESSING MARKETING INFORMATION NEEDS

A good marketing information system balances the information users would like to have against

what they really need and what is feasible to offer.

Sometimes the company cannot provide the needed information, either because it is not available

or because of MIS limitations.

By itself, information has no worth; its value comes from its use.

Use Marketing by the Numbers here.

DEVELOPING MARKETING INFORMATION

Marketers can obtain the needed information from internal data, marketing intelligence, and

marketing research.

Internal Data

Use Key Term Internal Databases here.

Internal databases are electronic collections of consumer and market information obtained

from data sources within the company network.

Information in the database can come from many sources.

Problems with internal data:

It may be incomplete or in the wrong form for making marketing decisions.

Keeping the database current requires a major effort because data ages quickly.

All the data must be well integrated and readily accessible.

Use Key Term Competitive Marketing Intelligence here.

Competitive Marketing Intelligence

Competitive marketing intelligence is the systematic collection and analysis of publicly

available information about consumers, competitors, and developments in the marketplace.

Marketing intelligence gathering has grown dramatically.

Firms use competitive intelligence to gain early warnings of competitor moves and strategies.

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Much competitor intelligence can be collected from people inside the company.

Competitors often reveal intelligence information through their annual reports, business

publications, trade show exhibits, press releases, advertisements, and Web pages.

Most companies are now taking steps to protect their own information.

The growing use of marketing intelligence raises a number of ethical issues.

Use Key Term Marketing Research here.

Use Chapter Objective 3 here.

Use Marketing Ethics here.

MARKETING RESEARCH

Marketing research is the systematic design, collection, analysis, and reporting of data

relevant to a specific marketing situation facing an organization.

Use Figure 4.2 here.

Use Critical Thinking Exercise 4-6 here.

The marketing research process has four steps (see Figure 4.2):

1. Defining the Problem and Research Objectives

Defining the problem and research objectives is often the hardest step in the research process.

A marketing research project might have one of three types of objectives.

Use Key Terms Exploratory Research, Descriptive Research, and Causal

Research here.

Use Discussion Question 4-3 here.

1. Exploratory research: to gather preliminary information that will help define the

problem and suggest hypotheses.

2. Descriptive research: to describe things, such as the market potential for a product.

3. Causal research: to test hypotheses about cause-and-effect relationships.

Start with exploratory research and later follow with descriptive or causal research.

2. Developing the Research Plan

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The research plan outlines sources of existing data and spells out the specific research

approaches, contact methods, sampling plans, and instruments that researchers will use to gather

new data.

Research objectives must be translated into specific information needs.

The research plan should be presented in a written proposal.

Secondary data consist of information that already exists somewhere, having been collected

for another purpose.

Primary data consist of information collected for the specific purpose at hand.

Gathering Secondary Data

Researchers usually start by gathering secondary data.

Using commercial online databases, marketing researchers can conduct their own searches of

secondary data sources.

Internet search engines can also be a big help in locating relevant secondary information sources.

Secondary data can usually be obtained more quickly and at a lower cost than primary data.

Secondary sources can sometimes provide data an individual company cannot collect on its own.

Use Key Term Secondary Data here.

Secondary data can present problems.

The needed information may not exist.

The data might not be very usable unless it is:

orelevant (fits research project needs),

oaccurate (reliably collected and reported),

ocurrent (up-to-date enough for current decisions), and

oimpartial (objectively collected and reported).

Primary Data Collection

In most cases, a company must also collect primary data. Care must be given to making certain

the primary data is relevant, accurate, current, and unbiased.

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Use Key Term Primary Data here.

Use Table 4.1 here.

Research Approaches

Observational Research involves gathering primary data by observing relevant people, actions,

and situations.

Use Key Term Observational Research here.

Observational research can obtain information that people are unwilling or unable to provide.

Disadvantages:

Some things cannot be observed.

Long-term or infrequent behavior is also difficult to observe.

Observations can be very difficult to interpret.

Ethnographic research involves sending trained observers to watch and interact with

consumers in their “natural habitat.”

Use Key Term Ethnographic Research here.

Ethnographic research often yields the kinds of details that just don’t emerge from traditional

research questionnaires or focus groups.

Survey research, the most widely used method for primary data collection, is the approach best

suited for gathering descriptive information.

Use Key Term Survey Research here.

The major advantage of survey research is its flexibility.

Disadvantages:

Sometimes people are unable to answer survey questions.

People may be unwilling to respond to unknown interviewers or about things they

consider private.

Respondents may answer survey questions even when they do not know the answer.

People may not take the time, or they might resent the intrusion into their privacy.

Experimental Research is best suited for gathering causal information.

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Use Key Term Experimental Research here.

Contact Methods

Mail, Telephone, and Personal Interviewing

Mail questionnaires can be used to collect large amounts of information at a low cost per

respondent.

Respondents give more honest answers to more personal questions.

No interviewer is involved to bias the respondent’s answers.

Disadvantages:

Not very flexible

Take longer to complete

The response rate is very low.

The researcher often has little control over the mail questionnaire sample.

Telephone interviewing is one of the best methods for gathering information quickly, and it

provides greater flexibility than mail questionnaires.

Interviewers can explain difficult questions.

Response rates are higher than with mail questionnaires.

Disadvantages:

Cost per respondent is higher than with mail questionnaires.

People may not want to discuss personal questions with an interviewer.

Introduces interviewer bias

Different interviewers may interpret and record responses differently.

Increasingly high rates of hang-ups

Personal interviewing takes two forms—individual and group interviewing.

Individual interviewing involves talking with people one-on-one.

Group interviewing (focus group interviewing) consists of inviting six to ten people to

meet with a trained moderator to talk about a product, service, or organization.

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Use Key Term Focus Group Interviewing here.

Use Table 4.2 here.

Use Critical Thinking Exercise 4-7 here

Online Marketing Research

Increasingly, researchers are collecting primary data through online marketing research.

Use Key Term Online Marketing Research here.

The Internet is especially well suited for quantitative research.

More than 87 percent of Americans now use the Internet.

Web-based research offers many advantages over more traditional approaches:

Speed

Low costs

More interactive and engaging

Easier to complete

Less intrusive

Sample size has little impact on costs.

Use Discussion Question 4-4 here.

Use Key Terms Online Focus Group and Behavioral Targeting here.

The primary qualitative Web-based research approach is online focus groups.

Disadvantages:

Restricted Internet access can make it difficult to get a broad cross section of respondents.

Controlling who’s in the online sample is difficult.

Consumer privacy is a major issue.

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