©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 4
Marketing Research and Information Systems
TEACHING RESOURCES QUICK REFERENCE GUIDE
Resource
Location
Purpose and Perspective
IRM, p. 1
Lecture Outline
IRM, p. 2
Discussion Starters
IRM, p. 13
Class Exercises
IRM, p. 14
Chapter Quiz
IRM, p. 17
Answers to Issues for Discussion and Review
IRM, p. 18
Answers to Developing Your Marketing Plan
IRM, p. 21
Comments on Video Case 4
IRM, p. 22
PowerPoint Slides
Instructor’s website
Note: Additional resources may be found on the accompanying student and instructor websites at
www.cengagebrain.com.
PURPOSE AND PERSPECTIVE
This chapter focuses on the information-gathering methods needed to make sound marketing decisions.
First, it discusses the role of marketing research in decision making and problem solving. The differences
between exploratory research and conclusive research are explored. It then identifies a set of basic steps
to follow when conducting a marketing research project: 1) locating and defining problems or research
issues, 2) designing the research project, 3) collecting data, 4) interpreting research findings, and 5)
reporting research findings. Then it turns to the methods of gathering marketing research data. It describes
various sources of secondary data and explores primary data collection methods in detail, focusing on
sampling, survey methods, observation methods, and experimentation. It then discusses the nature and
role that databases, big data, marketing analytics, and decision support systems play in marketing decision
making. Finally, it considers ethical and international issues in marketing research.
2
Chapter 4: Marketing Research and Information Systems
LECTURE OUTLINE
I. The Importance of Marketing Research
A. Marketing research is the systematic design, collection, interpretation, and reporting of
information to help marketers solve specific marketing problems or take advantage of marketing
opportunities.
1. As the word research implies, it is a process for gathering the information needed that is not
already available to decision makers.
2. The purpose of marketing research is to inform an organization about customers’ needs and
desires, marketing opportunities for particular goods and services, and changing attitudes and
purchase patterns of customers.
B. Marketing research can help a firm better understand market opportunities, ascertain the potential
for success of new products, and determine the feasibility of a marketing strategy.
C. Changes in the economy have changed marketers’ decision-making strategies to focus more on
small-scale surveys and short-range forecasting. Businesses need speed and agility to survive and
to react quickly to changing consumer behavior.
D. The real value of marketing research is measured by improvements in a marketer’s ability to make
decisions.
1. Marketing research is used by all sorts of organizations to help develop marketing mixes to
match the needs of customers.
2. Marketers should treat information in the same manner as other resources utilized by the
organization, and must weigh the costs of obtaining information against the benefits derived.
3. Information should be considered worthwhile if it results in marketing activities that better
satisfy the firm’s target customers, leads to increased sales and profits, or helps the
organization achieve some other goal.
II. Types of Research
A. The nature and type of research a firm conducts vary based on the research design and the
hypotheses under investigation.
B. Marketing research involves two types of data.
1. Qualitative data yields descriptive non-numerical information.
2. Quantitative data yields information that can be communicated through numbers.
C. To collect data, marketers conduct either exploratory research or conclusive research.
D. Exploratory Research
1. When marketers need more information about a problem or want to make a tentative
hypothesis more specific, they conduct exploratory research.
a. The main purpose of exploratory research is to better understand a problem or
situation and/or to help identify additional data needs or decision alternatives.
b. Exploratory research can help marketers better understand how consumers view a
topic or a product, which can assist a firm as it develops better products and more
targeted marketing mixes.
2. Some organizations utilize customer advisory boards, which are small groups of actual
3
Chapter 4: Marketing Research and Information Systems
customers who serve as sounding boards for new product ideas and offer researchers insights
into their feelings and attitudes toward a firm’s marketing strategy, including products,
pricing, distribution, and promotion.
3. A focus group brings together multiple people to discuss a certain topic in a group setting
led by a moderator.
a. It is a common method of conducting exploratory research.
b. Focus groups are often conducted informally, without a structured questionnaire.
c. Focus groups allow customer attitudes, behaviors, lifestyles, needs, and desires to be
explored in a flexible and creative manner.
d. Questions are open-ended and stimulate respondents to answer in their own words.
e. Focus groups can provide companies with ideas for new products or can be a forum to
test different marketing strategies for existing products.
f. In-person focus groups have some disadvantages:
(1) Sometimes the focus group’s discussion can be hindered by overly talkative,
confrontational, or shy individuals.
(2) Some participants might be less than honest in an effort to be sociable or to
receive money and/or food in exchange for their participation.
(3) Focus groups do not provide quantitative data, and are thus best used to uncover
issues that can be explored using quantifiable marketing research techniques.
g. A current trend is online focus groups in which participants sign in to a website and
type their comments and responses, or log into a video chat.
(1) Online focus groups can be a cost-effective way to gather data from large and
geographically-diverse groups.
(2) Online focus groups are much more convenient for the participants than
traditional focus groups because they can participate in their own homes, no
matter where they are located.
(3) This method is not well-adapted to ask participants about a product’s smell or
taste, so it is not suitable for all goods.
(4) Researchers also cannot observe the participants’ nonverbal cues and body
language, which can often reveal “gut” reactions to questions discussed.
E. Conclusive Research
1. Conclusive research verifies insights through an objective procedure to help marketers
make decisions; it is used in the final stages of decision making, when the marketer has
narrowed his or her decision down to a few alternatives.
a. It is helpful when a marketer requires a well-defined and structured research project to
help decide which of a set of approaches is best for a specific product and target
consumers.
2. If marketers need to understand the characteristics of certain phenomena to solve a particular
problem, descriptive research is a good aid.
a. Descriptive research may range from general surveys of customers’ educations,
occupations, or ages to seeking out specific information on how they use products or
how often they purchase them.
b. Descriptive studies generally demand significant prior knowledge and assume the
problem or issue is clearly defined.
4
Chapter 4: Marketing Research and Information Systems
(1) Some descriptive studies require statistical analysis and predictive tools.
c. Descriptive research does not provide sufficient information to allow researchers to
make causal inferences (i.e., that variable X causes a variable Y).
(1) Experimental research allows marketers to make these causal deductions
about relationships between variables.
(a) Experiments involve manipulating an independent variable (Variable X,
one that is not influenced by or acted on by other variables) and
measuring the resulting changes in a dependent variable (Variable Y, one
that is influenced by the dependent variable).
(b) Manipulation of the dependent variable while controlling for other
variables is what makes experimental research different from descriptive
research.
(c) Through experimental research, researchers can determine causality,
which is highly important when developing marketing strategy.
III. The Marketing Research Process
A. To maintain the control needed to obtain accurate information, marketing research should be
approached as a process with logical steps. These steps should be viewed as adaptable and as an
overall approach to conducting research rather than as a rigid set of rules.
B. Locating and Defining Problems or Research Issues
1. The first step in launching a research study is defining the problem, or issue.
a. This will encourage researchers to focus on the true nature and boundaries of a
situation as it relates to marketing strategy or implementation.
b. The first sign of a problem is typically a departure from some normal functioning,
such as failures to meet an objective that was previously attainable.
2. Marketing research often focuses on identifying and defining market opportunities or
changes in the environment.
a. When a firm discovers a market opportunity, it should conduct research to more
precisely understand the situation so it can craft an appropriate marketing strategy.
3. In order to identify and define an issue correctly, marketers must be careful not to be
distracted by superficial symptoms.
4. Researchers and decision makers should remain in the problem or issue definition stage as
long as needed until they are certain they have designed a research plan that addresses the
issue.
a. Taking the necessary steps to allow researchers to refine a broad, indefinite problem or
issue into a precise and testable research statement is a prerequisite for the next step in
the research process.
C. Designing the Research Project
1. Once the problem or issue has been defined, the next step is to create a research design, an
overall plan for obtaining the information needed to address the issue.
a. This step requires formulating a hypothesis and determining what type of research is
most appropriate for testing the hypothesis.
D. Developing an Hypothesis
5
Chapter 4: Marketing Research and Information Systems
1. A hypothesis is an informed guess or assumption about a certain problem or set of
circumstances.
2. A hypothesis is what a researcher seeks to prove or disprove and is based on all the insight
and knowledge available about the problem or circumstances from previous research studies
and other sources.
a. Sometimes several hypotheses are developed during a research project; the accepted or
rejected hypotheses become the study’s conclusions.
E. Research Reliability and Validity
1. In designing research projects, marketing researchers must ensure that research techniques
are both reliable and valid.
2. A research technique has reliability if it produces almost identical results in repeated trials.
3. To have validity, the research method must measure what it is supposed to measure, not
something else.
a. This means than not all reliable research findings are valid.
4. Research projects should be replicable as well; otherwise it is impossible to establish
reliability.
F. Collecting Data
1. The next step in the marketing research process is collecting data to help prove or disprove
the research hypothesis. The research design must specify the types of data to collect and
how the data is collected.
2. Types of Data
a. Primary data are observed and recorded or directly collected from respondents. This
type of data must be gathered through observation of phenomena or by surveying
people of interest.
b. Secondary data are compiled inside and outside the organization for some purpose
other than the current investigation.
(1) Secondary data include general reports compiled by other organizations and
internal and online databases.
(a) Reports might address a variety of topics, including market share, retail
inventory levels, and customers’ buying behavior.
(b) They are useful for research if the information contained is pertinent to
the hypothesis marketers are testing.
3. Sources of Secondary Data
a. Marketers often begin the data collection phase of the marketing research process by
gathering secondary data.
b. Internal sources of secondary data, such as databases, sales records, and research
reports, can be helpful because they provide information on the firm’s own marketing
activities.
c. External sources of data include trade associations, periodicals, government
publications, unpublished sources, and online databases.
d. The Internet is a very useful research tool.
(1) Search engines help marketers to locate quickly many types of secondary data
or news and scholarly information research topics of interest.
4. Methods of Collecting Primary Data
6
Chapter 4: Marketing Research and Information Systems
a. The collection of primary data is a more lengthy, expensive, and complex process than
the collection of secondary data.
b. Sampling
(1) Because the time and resources available for research are limited, it is almost
impossible to investigate all the members of a target market or other population.
(a) A population, or “universe,” includes all the elements, units, or
individuals of interest to researchers for a specific study.
(b) Researchers can predict the behaviors of a total market or market segment
by systematically selecting a limited number of units—a sample—to
represent the characteristics of a total population.
(2) Sampling in marketing research is the process of selecting representative units
from a population. Most types of marketing research employ sampling
techniques. There are two basic types of sampling: probability sampling and
nonprobability sampling.
(3) With probability sampling, every element in the population being studied has a
known chance of being selected for study.
(a) When marketers employ random sampling, all the units in a population
have an equal chance of appearing in the sample.
(b) Stratified sampling divides the population of interest into groups
according to a common attribute, and a random sample is then chosen
within each sub-group.
(4) Nonprobability sampling is more subjective than probability sampling because
there is no way to calculate the probability that a specific element of the
population being studied will be chosen.
(a) One type of nonprobability sampling is quota sampling, in which
researchers divide the population into groups and then arbitrarily choose
participants from each segment.
c. Survey Methods
(1) Marketing researchers often employ sampling to collect primary data through
mail, telephone, personal interview, online, or social network surveys.
(a) Selection of a survey method depends on the nature of the problem or
issue, the data needed to test the hypothesis, and the resources (such as
funding and personnel) available to the researcher.
(b) Gathering information through surveys can be difficult because many
people believe responding to surveys requires too much scarce personal
time and may have concerns about invasions of privacy and how personal
information will be used.
(2) In a mail survey, questionnaires are sent to respondents, who are encouraged to
complete and return them.
(a) Mail surveys are used most often when the individuals in the sample are
spread over a wide area and funds for the survey are limited.
(b) A mail survey is less expensive than a telephone or personal interview
survey, as long as the response rate is high enough to produce reliable
results.
7
Chapter 4: Marketing Research and Information Systems
(c) Premiums, or incentives, that encourage respondents to return
questionnaires can be effective in encouraging mail survey response rates
and developing panels of respondents who are interviewed regularly.
(3) In a telephone survey, an interviewer records respondents’ answers to a
questionnaire over the phone.
(a) A telephone survey has some advantages over a mail survey. The rate of
response is higher because it takes less effort to answer the telephone and
talk than to fill out and return a questionnaire.
(b) In addition, a telephone survey permits interviewers to gain rapport with
respondents and ask probing questions.
(c) Automated telephone surveys, also known as interactive voice response
or “robosurveys,” rely on a recorded voice to ask the questions while a
computer program records respondents’ answers. The primary benefit of
automated surveys is the elimination of any bias that might be introduced
by a live researcher.
(4) A telephone depth interview combines the traditional focus group’s ability to
probe with the confidentiality provided by a telephone survey.
(a) This type of interview is most appropriate for qualitative research projects
among a small targeted group.
(b) This method can be appealing to busy respondents because they can
choose the time and day for the interview.
(c) Although this method is difficult to implement, it can yield revealing
information from respondents who otherwise would be unwilling to
participate in marketing research.
(5) Telephone surveys and interviews have several disadvantages.
(a) Few people like to participate in telephone surveys, which limit
participation and distort representation.
(b) Telephone surveys are limited to oral communication; visual aids or
observation cannot be included.
(c) Interpreters of results must make adjustments for subjects who are not at
home, do not have telephones, have unlisted numbers, or screen or block
calls.
(6) In a personal interview survey, participants respond to questions face-to-face.
(a) One such research technique is the in-home (door-to-door) interview,
which takes place in the respondent’s home and offers a clear advantage
when thoroughness of self-disclosure and elimination of group influence
are important.
(b) Shopping mall intercept interviews involve interviewing a percentage
of individuals passing by certain “intercept” points in a mall.
(c) An on-site computer interview is a variation of the mall intercept
interview, in which respondents complete a self-administered
questionnaire displayed on a computer monitor.
d. Online and Social Media Surveys
(1) In an online survey, questionnaires can be transmitted to respondents either
8
Chapter 4: Marketing Research and Information Systems
through e-mail or through a website.
(a) Because e-mail is semi-interactive, recipients can ask for clarification of
specific questions or pose questions of their own.
(b) The potential advantages of online surveys are quick response time and
lower cost than traditional mail, telephone, and personal interview
surveys if the response rate is adequate.
(c) Online technology providers offer software such as Qualtrics to help
marketers develop their own surveys.
(2) Marketers can also use social networking sites such as chat rooms, blogs,
newsgroups, and research communities and other digital media forums to
identify trends in consumer interests and consumption patterns.
(a) Often consumers must choose to go to a particular social media site or
blog and then take the survey, which eliminates sample randomness.
(b) It may be difficult to obtain a representative sample size if site traffic or
participation rates are low.
(c) By merely monitoring ongoing online conversations, marketers may be
able to identify new-product opportunities and consumer needs.
(d) A major advantage of online data is that it can be gathered at little
incremental cost compared to alternative data sources.
(3) Crowdsourcing combines the words crowd and outsourcing and calls for
taking tasks usually performed by a marketer or researcher and outsources them
to a crowd, or potential market, through an open call.
(a) In the case of digital marketing, crowdsourcing is often used to obtain the
opinions or needs of the crowd (or potential markets).
(b) It is a way for marketers to gather input straight from willing consumers
and to actively listen to people’s ideas and evaluations on products.
(4) Marketing research is likely to rely heavily on online surveys in the future.
(a) Internet surveys have especially strong potential within organizations
whose employees are networked and for associations that publish
members’ e-mail addresses.
(5) There are some ethical issues to consider when using digital marketing research,
such as unsolicited e-mail, and privacy concerns
(6) A serious challenge for firms conducting online surveys is obtaining a sample
that is representative of the desired population.
e. Questionnaire Construction
(1) Questions must be clear, easy to understand, and directed toward a specific
objective.
(2) Defining the objective of a questionnaire before construction will provide a
guide to the substance of the questions and ensure that they yield useful
information that contributes to the research project.
(3) Questions are usually of three kinds: open-ended, dichotomous, and multiple-
choice.
(4) Researchers must be careful not to ask questions that may be considered too
personal or require an admission of activities that other people are likely to
9
Chapter 4: Marketing Research and Information Systems
condemn.
f. Observation Methods
(1) In using observation methods, researchers record individuals’ overt behaviors,
taking note of physical conditions and events. Direct contact with subjects is
avoided.
(2) Observation may include the use of ethnographic techniques, such as watching
customers interact with a product in a real-world environment.
(3) Observation may also be combined with interviews.
(4) Data gathered through observation can sometimes be biased if the subject is
aware of the observation process and adapts his or her behavior accordingly.
(a) An observer can be placed in a natural market environment, such as a
grocery store, without biasing or influencing shoppers’ actions.
(b) If the presence of a human observer is likely to bias the outcome or if
human sensory abilities are inadequate, mechanical means may be used to
record behavior. Mechanical observation devices include cameras,
recorders, counting machines, scanners, and equipment that records
physiological changes.
(c) Observation is straightforward and avoids a central problem of survey
methods: motivating respondents to state their true feelings or opinions.
However, observation tends to be descriptive and may not provide
insights into causal relationships.
G. Interpreting Research Findings
1. After collecting data to test hypotheses, marketers need to interpret the research findings.
2. In most cases, the first step researchers will take is to assemble the data into a table format.
3. Next, the data must be analyzed: statistical interpretation focuses on what is typical and
what deviates from the average.
4. Data require careful interpretation, and a firm may choose to enlist an expert consultant or
computer software to ensure accuracy.
5. Managers must understand the research results and relate them to a context that permits
effective decision making.
H. Reporting Research Findings
1. The final step in marketing research is to report the research findings. The marketer must
objectively analyze the findings to see how well the gathered facts answer the research
question or support or negate the initial hypothesis.
2. The report of the research results is usually a formal, written document.
3. Report writers should keep in mind that corporate executives prefer reports that are short,
clear, and simply expressed. To address this desire, researchers often give their
recommendations first, in an executive summary, followed by details on how the results
were obtained.
a. Researchers must recognize the needs and expectations of the report user and adapt to
them.
IV. Using Technology to Improve Marketing Information Gathering and Analysis
10
Chapter 4: Marketing Research and Information Systems
A. Technology and the Internet have made the information required for marketing decisions more
accessible than ever.
B. Information technology permits for easy internal research and quick information gathering to help
marketers better understand and satisfy customers.
C. Consumer feedback is an important aspect of marketing research, and new technology such as
digital media is enhancing this process.
D. Companies of all sizes have unprecedented access to industry forecasts, business trends, and
customer buying behavior—which improves communication, understanding of the marketing
environment, and marketing research capabilities.
E. Many firms use marketing information systems, CRM technologies, and cloud computing to
network technologies and organize the marketing data available to them.
F. Marketing Information Systems
1. A marketing information system (MIS) is a framework for the day–to-day management
and structuring of information gathered regularly from sources both inside and outside the
organization.
a. It provides a continuous flow of information about prices, advertising, expenditures,
sales, competition, and distribution expenses and can be an important asset for
developing effective marketing strategies.
2. The main focuses of an MIS are on data storage and retrieval, as well as computer
capabilities and management’s information requirements.
3. An effective MIS starts by determining the objective of the information by identifying
decision needs which require certain information. The firm then specifies an information
system for continuous monitoring to provide regular, pertinent information on both the
external and internal environment.
G. Databases
1. A database is a collection of information arranged for easy access and retrieval.
2. Databases are often accessed through a computer system and allow marketers to tap into an
abundance of information useful in making marketing decisions: internal sales reports,
newspaper articles, company news releases, government economic reports, bibliographies,
and more.
3. Customer relationship management (CRM) employs database marketing techniques to
identify different types of customers and develop specific strategies for interacting with each
customer. It incorporates these three elements:
a. Identifying and building a database of current and potential customers.
b. Delivering differential messages according to each consumer’s preference and
characteristics through established and new media channels.
c. Tracking consumer relationships to monitor the costs of retaining individual customers
and the lifetime value of their purchases.
4. Single-source data is information provided by a single firm about household demographics,
purchases, television viewing behavior, and responses to promotions, such as coupons and
free samples.
H. Big Data
1. Big data involves massive data files that can be obtained from both structured and
unstructured databases. Big data often consists of high volume data that marketers can use to
11
Chapter 4: Marketing Research and Information Systems
discover unique insights and make more knowledgeable marketing decisions. Big data can
include data collected from social networks, RFID, retail scanning, purchases, logistics, and
production.
2. Big data is important because marketers can look at patterns of consumption behavior and
discover trends that predict future buying behaviors.
3. Despite the benefits of big data to marketing research, the challenge for marketers is to
figure out how to use pieces of data to develop more targeted marketing strategies.
4. Many consumers do not like to have their purchases or behaviors tracked, and sometimes
using big data for marketing purposes creates conflict.
5. Big data is necessary to uncover valuable insights about customers, and marketing research
firms are offering services to help organizations generate this complex information.
Avoiding big data could cause a business to sacrifice a competitive advantage.
I. Marketing Analytics
1. Marketing analytics uses tools and methods to measure and interpret the effectiveness of a
firm’s marketing activities.
a. The purpose of marketing analytics is to evaluate the company’s return on investment
on their marketing strategies and make adjustments when necessary.
b. Investing in marketing analytics involves the following four steps:
(1) Defining what to measure and which tools to use
(2) Collecting data
(3) Developing reporting capabilities
(4) Implementing the campaign and analyzing the results
2. Marketing analytics is becoming an increasingly important part in companies’ marketing
activities.
3. The highest goal marketers have with marketing analytics is identifying how to develop
better-targeted marketing campaigns.
a. Research shows that a one-unit increase in marketing analytics deployment results in
an 8 percent increase in a company’s return on assets.
J. Marketing Decision Support Systems
1. A marketing decision support system (MDSS) is customized computer software that aids
marketing managers in decision making by helping them anticipate the effects of certain
decisions.
2. An MDSS has a broader range and offers greater computational and modeling capabilities
than spreadsheets and lets managers explore a broad range of alternatives.
a. For this reason, MDSS software is often a major component of a company’s MIS.
b. Some decision support systems incorporate artificial intelligence and other advanced
computer technologies.
V. Issues in Marketing Research
A. The Importance of Ethical Marketing Research
1. Marketing managers and other professionals increasingly rely on marketing research,
marketing information systems, and new technologies to make better decisions.
2. Organizations like the Marketing Research Association have developed codes of conduct and
guidelines to promote ethical marketing research.
3. Consumer privacy has also become a significant issue as firms now have the ability to
purchase and collect data on customer demographics, interests, and more personal matters
such as bankruptcy filings and past marriages.