END OF CHAPTER MATERIAL
Discussion and Critical Thinking
Discussion Questions
4-1. What is big data, and what opportunities and challenges does it
provide for marketers? (AACSB: Communication; reflective Thinking)
Answer:
With the recent explosion of information technologies, companies can now
generate and )nd marketing information in great quantities. The
marketing world is filled to the brim with information from innumerable
4-2. What is a marketing information system (MIS), and what characteristics
should it possess? (AACSB: Communication)
Answer:
A marketing information system (MIS) consists of people and procedures dedicated to
assessing information needs, developing the needed information, and helping decision
makers use the information to generate and validate actionable customer and market insights.
A good marketing information system balances the information users would like to have
against what they really need and what is feasible to offer. Some managers will ask for
4-3. Name and describe the three types of research objectives and give an
example of a research study for each. (AACSB: Communication; reflective
Thinking)
Answer:
A marketing research project might have one of three types of objectives.
The objective of exploratory research is to gather preliminary information
that will help de)ne the problem and suggest hypotheses. For example,
4-4. What impact has the Internet had on how marketing research is
conducted? What advantages does the Internet provide over traditional
marketing data collection methods? (AACSB: Communication)
Answer:
The Internet has had a dramatic impact on how marketing research is conducted.
Internet-based survey research offers many advantages over traditional phone, mail, and personal
4-5. Why are marketing analytics so important in the age of big data?
(AACSB: Communication)
Answer:
Today’s big data can yield big results. But simply collecting and storing
huge amounts of data has little value. Marketers must sift through the
Critical Thinking Exercises
4-6. In a small group, identify a problem faced by a local business or
charitable organization and propose a research project addressing that
problem. Develop a research proposal that implements each step of the
marketing research process. Discuss how the research results will help the
business or organization. (AACSB: Communication; reflective Thinking)
Answer:
The marketing research process has four steps: (1) defining the problem and research
objectives, (2) developing the research plan, (3) implementing the research plan, and (4)
interpreting and reporting the findings. Defining the problem and research objectives is often
the hardest step in the research process. The manager may know that something is wrong,
4-7. Go to
http://www.bized.co.uk/learn/business/marketing/research/index.htm and
review the various resources available. Select one activity and present what
you learned from that activity. (AACSB: Communication; Use of IT; reflective
Thinking)
Answer:
4-8. Research the marketing research industry and develop a presentation
describing various marketing research jobs and compensation for those jobs.
Create a graphical representation to communicate your finding. (AACSB:
Communication; Use of IT; reflective Thinking)
Answer:
Students’ answers will vary. One source for job titles, descriptions, and
pay data can be found at Quirk’s Marketing Research Media (see
www.quirks.com/jobs/research-salaries/Market-research-salary-by-title.asp
x). This site provides information on several corporate market research
job titles (for example, Customer Insights Manager, Project Managers, or
Minicases and Applications
Online, Mobile, and Social Media Marketing: Social Data
People have been using Twitter’s social media platform to Tweet short bursts
of information in 140 characters or less since 2006 and now average 500
million Tweets a day. The full stream of Tweets is referred to as Twitter’s )re
hose. Various firm analyze data from the )re hose and sell the information
gleaned from that analysis to other companies. Twitter recently purchased
Gnip, the world’s largest social data provider and one of the few companies
that had access to the )re hose. Gnip also mines public data from Facebook,
Google+, Tumblr, and other social media platforms. Analyzing social data has
become a big business because companies such PepsiCo, Warner Brothers,
and General Motors pay to learn about consumers’ sentiments toward them.
According to the CEO of social media analysis company BrandWatch, “We’re
at the bottom of the foothills in terms of the kind of global demand for social
data.” Twitter alone earned more than $70 million last year from licensing its
data. Perhaps Mark Twain’s character, Mulberry Sellers, summed it up nicely
—“There’s gold in them thar hills”—and Twitter and other social media
platforms and data analytic companies are mining that gold.
4-9. Discuss the value of social data for marketers. (AACSB:
Communication; reflective Thinking)
Answer:
One key use of social data is to monitor consumer sentiment toward a
specific company or brand. Monitoring social data such as tweets, posts,
and pins gives companies real-time insights and the opportunity to
Another value of social media data for marketers is to spot trends as they
emerge. For example, the trend called “steampunk” has emerged in
which fashion includes Victorian elements. For an interesting article on
the spotting of this trend from social media, see Trevor Davis, “Trend
4-10. A “dark social channel” refers to a private channel or a channel diMcult
to match with other digital channels. An example of a dark channel is email.
However, Google routinely mines its roughly half-billion Gmail users’ emails.
Research how Google scans email data and the fallout from those actions,
then summarize your finding. (AACSB: Communication; Use of IT; reflective
Thinking)
Answer:
Several lawsuits were brought against Google over its email scanning
activities. All emails sent to and from a Gmail account are scanned. The
suits were grouped into a class action suit, but a judge ruled that the
classes are too dissimilar to pursue as a class, giving a win to Google (see
William Dotinga, “Google Data-Mining Claims Broken into Individual
Marketing Ethics: Metadata
Everyone generates metadata as they use technologies such as computers
and mobile devices to search, post, Tweet, play, text, and talk. What many
people don’t realize, however, is that this treasure trove of date, time, and
location information can be used to identify them without their knowledge.
For example, in analyzing more than a million anonymous credit card
transactions, researchers at the Massachusetts Institute of Technology were
able to link 90 percent of the transactions to specific users with just four
additional bits of metadata, such as user locations based on apps such as
Foursquare, the timing of an activity such as a Tweet on Twitter, or playing a
mobile game. Since there are more mobile devices than there are people in
the United States and 60 percent of purchases are made with a credit card,
marketing research firm are gobbling up all sorts of metadata that will let
them tie a majority of purchase transactions to specific individuals.
4-11. Describe at least four applications you use that provide location, time,
and date information that can be tied to your identity. (AACSB
Communication; reflective Thinking)
Answer:
Students’ responses will vary. Many mobile device apps, such as Google
Maps and The Weather Channel, use location tracking to be able to
provide the information the use is requesting. Twitter tweets provide the
4-12. Debate whether it is ethical for marketers to use metadata to link
individual consumers with specific credit card transactions. (AACSB:
Communication; Ethical Reasoning)
Answer:
Students’ responses will vary. Many consumers are not aware that they
Marketing by the Numbers: The Value of Information
Conducting research is costly, and the costs must be weighed against the
value of the information gathered. Consider a company faced with a
competitor’s price reduction. Should the company also reduce price in order
to maintain market share, or should the company maintain its current price?
The company has conducted some preliminary research showing the
financial outcomes of each decision under two competitor responses: the
competition maintains its price or the competition lowers its price further.
The company feels pretty confident that the competitor cannot lower its
price further and assigns that outcome a probability (p) of 0.7, which means
the other outcome would have only a 30 percent chance of occurring (1 – p =
0.3). These outcomes are shown in the table below:
Competitive Response
Company action
Maintain Price
p = 0.7
Reduce Price
(1 – p) = 0.3
Reduce Price $160,000 $120,000
Maintain Price $180,000 $100,000
For example, if the company reduces its price and the competitor maintains
its price, the company would realize $160,000, and so on. From this
information, the expected monetary value (EMV) of each company action
(reduce price or maintain price) can be determined using the following
equation:
EMV = (p)(financial outomep) + (1 – p)(financial outcome(1 – p))
The company would select the action expected to deliver the greatest EMV.
More information might be desirable, but is it worth the cost of acquiring it?
One way to assess the value of additional information is to determine the
expected value of perfect information (EMVPI), calculated using the following
equation:
EMVPI = EMVcertainty – EMVbest alternative</DM>
where
EMVcertainty = (p)(highest financial outcomep) + (1 – p)(highest financial
outcome(1 – p))
If the value of perfect information is more than the cost of conducting the
research, then the research should be undertaken (that is, EMVPI > cost of
research). However, if the value of the additional information is less than the
cost of obtaining more information, the research should not be conducted.
4-13. Calculate the expected monetary value (EMV) of both company
actions. Which action should the company take? (AACSB: Communication;
Analytical Reasoning)
Answer:
Maintaining price is the best alternative because it has the greatest
4-14. What is the expected value of perfect information (EMVPI)? Should the
research be conducted? (AACSB: Communication; Analytical Reasoning
Answer:
EMVPI = EMVcertainty – EMVbest alternative
where,
EMVcertainty = (p)(highest financial outcomep) + (1-p)(highest financial
outcome(1-p))
So,
