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Chapter 01 – Marketing Research for Managerial Decision Making
Chapter 1
Marketing Research for Managerial Decision
Making
Learning Objectives (PPT slides 1-2 and 1-3)
1. Describe the impact marketing research has on marketing decision making.
2. Demonstrate how marketing research fits into the marketing planning process.
3. Provide examples of marketing research studies.
Key Terms and Concepts
1. Behavioral targeting
2. Benefit and lifestyle studies
3. Branded “black–box” methodologies
4. Curbstoning
5. Customized research firms
6. Deanonymizing data
Chapter Summary by Learning Objectives
Describe the impact marketing research has on marketing decision making.
Marketing research is the set of activities central to all marketing-related decisions regardless of
the complexity or focus of the decision. Marketing research is responsible for providing managers
with accurate, relevant, and timely information so that they can make marketing decisions with a
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Chapter 01 – Marketing Research for Managerial Decision Making
high degree of confidence. Within the context of strategic planning, marketing research is
responsible for the tasks, methods, and procedures a firm will use to implement and direct its
strategic plan.
Demonstrate how marketing research fits into the marketing planning process.
The key to successful planning is accurate information—information related to product,
Provide examples of marketing research studies.
Marketing research studies support decision making for all marketing mix variables as well as
providing information about markets and cultures. Examples of research studies include concept
Understand the scope and focus of the marketing research industry.
Generally, marketing research projects can be conducted either internally by an in-house
marketing research staff or externally by independent or facilitating marketing research firms.
External research suppliers are normally classified as custom or standardized, or as brokers or
facilitators.
Recognize ethical issues associated with marketing research.
Ethical decision making is a challenge in all industries, including marketing research. Ethical
issues in marketing research occur for the research information user, the research information
provider, and the selected respondents. Specific unethical practices among research providers
Discuss new skills and emerging trends in marketing research.
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Chapter 01 – Marketing Research for Managerial Decision Making
Just as the dynamic business environment causes firms to modify and change practices, so does
this changing environment dictate change to the marketing research industry. Specifically,
Chapter Outline
Opening Vignette: Geofencing
Over the past 15 years, the internet has sparked a number of significant innovations in marketing
research, from online surveys, to mobile surveys, to social media monitoring. The newest internet
technology to influence both marketing and marketing research may be geofencing. Geofencing is
a virtual fence that is placed around a geographic location in the real world. Location-enabled
smartphone applications can detect entry and exit from these virtual fences. A geofence can be as
I. The Growing Complexity of Marketing Research (PPT slides 1-4 to 1-5)
Technology and the growth of global business are increasing the complexity of marketing
research. Digital technologies bring a great deal of opportunities for marketing research but create
challenges as well. Internet-based tools, including web-based surveys, interactive and social
networking tools like Facebook and Twitter, and mobile phones are radically remolding data
collection. Some new techniques, such as neuromarketing—which involves scanning the brains of
research subjects while showing them ads, for instance—have not yet proven themselves, and may
or may not eventually provide useful insights to marketers. Many new data collection tools,
including Twitter, clickstream tracking, GPS, and geofencing, pose serious questions in regard to
consumer privacy.
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Chapter 01 – Marketing Research for Managerial Decision Making
inherent in single methodologies.
The American Marketing Association defines marketing research as the function that links an
organization to its market through the gathering of information. This information facilitates the
following:
• identification and definition of marketing-driven opportunities and problems
Organizations use marketing research information to identify new product opportunities, develop
advertising strategies, and implement new data-gathering methods to better understand customers.
Marketing research is a systematic process. Tasks in this process include the following:
• designing methods for collecting information
II. The Role and Value of Marketing Research (PPT slide 1-6)
Many managers with experience in their industry can make educated guesses based on their
experience. But markets and consumer tastes change, sometimes rapidly. No matter how much
experience that managers might have with their marketplace, they occasionally find that their
educated guesses miss the mark. And many managerial decisions involve new contexts where
experience may be absent or even misleading.
Marketing research can be applied to a wide variety of problems involving the four Ps as follows.
• Price
• Place
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Chapter 01 – Marketing Research for Managerial Decision Making
Additionally, marketing research is often used to research consumers and potential consumers in
vivid detail, including their attitudes, behaviors, media consumption, and lifestyles. Marketers are
also interested in consumer subcultures, as products are often used to enact and support subculture
participation. Last, marketing academics and consultants often perform theoretical research that
helps marketers understand questions applicable to a broad variety of marketing contexts.
A. Marketing Research and Marketing Mix Variables (PPT slides 1-8 to 1-13)
Product decisions are varied and include the following:
• new product development and introduction
New product development often involves a great deal of research identifying possible new
product opportunities, designing products that evoke favorable consumer response, and then
developing an appropriate marketing mix for new products. Concept and product testing or test
marketing provide information for decisions on product improvements and new-product
introductions. Product testing attempts to answer the following two fundamental questions:
• How does a product perform for the customer?
• How can a product be improved to exceed customer expectations?
Branding is an important strategic issue both for new and existing products. Some marketing
firms such as Namestomers specialize in branding, both identifying possible names and then
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Chapter 01 – Marketing Research for Managerial Decision Making
Distribution decisions in marketing include choosing and evaluating locations, channels, and
distribution partners. Retailers, including online retailers, undertake a wide variety of studies,
but some needs of retailers are unique. Market research studies peculiar to retailers include the
following:
• trade area analysis
Because retailing is a high customer-contact activity, much retailing research focuses on
database development through optical scanning at the point of purchase. Retailers match data
collected at the point of purchase with information on the media customers consume, type of
neighborhoods they live in, and the stories they prefer to patronize. This information helps
retailers select the kind of merchandise to stock and to understand the factors that influence
their customers’ purchase decisions.
Online retailers face some unique challenges and data-gathering opportunities. Following can
be determined by the e-tailers.
• When a website is visited?
• How long the visit lasts?
Online retailers who participate in search engine marketing have access to search analytics that
help them choose keywords to purchase from search engines. In behavioral targeting, e-tailers
work with content sites to display ads based on data collected about user behaviors.
Promotional decisions are important influences on any company’s sales. Billions of dollars are
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Chapter 01 – Marketing Research for Managerial Decision Making
spent yearly on various promotional activities. Given the heavy level of expenditures on
promotional activities, it is essential that companies know how to obtain good returns from their
promotional budgets. In addition to traditional media, digital media, such as Google, YouTube,
The three most common research tasks in integrated marketing communications are as follows.
• Advertising effectiveness studies
• Attitudinal research
• Sales tracking
Marketing research that examines the performance of a promotional program must consider the
total program as each effort often affects others in the promotional mix.
Pricing decisions involve the following:
• pricing new products
Marketing research provides answers to questions.
• How large is the demand potential within the target market at various price levels? What
are the sales forecasts at various price levels?
• How sensitive is demand to changes in price levels?
• Are there identifiable segments that have different price sensitivities?
• Are there opportunities to offer different price lines for different target markets?
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Chapter 01 – Marketing Research for Managerial Decision Making
studies are also useful for determining how to design communications that will resonate with a
target market.
While segmentation studies are useful, more detailed information may sometimes be needed
about cultures or subcultures that businesses seek to serve. Marketers may use ethnographic (or
netnographic) research to study consumer behavior as activities embedded in a cultural context
B. Marketing Theory (PPT slide 1-14)
The purpose of theory is to generalize relationships between concepts in a way that is applicable
to a wide variety of business and often other settings. Thus, marketing theory is important to
many businesses.
Following are some examples of practical theory that are useful in demonstrating how
important theory is to the field of marketing:
• Adoption and diffusion theory (adopted from sociology) has helped marketers understand
how new products are adopted and spread through the market and the characteristics of
products and adopters that aid or inhibit adoption.
III. The Marketing Research Industry
The marketing research industry has experienced unparalleled growth in recent years. The growth
in revenues of international research firms has been even more dramatic. Marketing research firms
have attributed these revenue increases to the following factors.
• Post-sale customer satisfaction studies (one-third of research company revenues)
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Chapter 01 – Marketing Research for Managerial Decision Making
• International research studies
A. Types of Marketing Research Firms (PPT slides 1-15 to 1-16)
Marketing research providers can be classified as either of the following:
• internal or external
• custom or standardized
• brokers/facilitators
Internal research providers are typically organizational units that reside within a company. For
example, IBM, Procter & Gamble, Kraft Foods, and Kodak all have internal marketing research
departments. Benefits of keeping the marketing research function internal include the
following:
• research method consistency
External sources, usually referred to as marketing research suppliers, perform all aspects of the
research, including study design, questionnaire production, interviewing, data analysis, and
report preparation. These firms operate on a fee basis and commonly submit a research proposal
to be used by a client for evaluation and decision purposes.
Customized research firms provide specialized, highly tailored services to the client. Many
customized research firms concentrate their activities in one specific area such as brand-name
testing, test marketing, or new-product development. In contrast, standardized research firms
provide more general services. These firms also follow an established, common approach in
research design so the results of a study conducted for one client can be compared to norms
from studies done for other clients.
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established through retail optical scanner methods. This database, available from AC Nielsen,
tracks the retail sales of thousands of brand-name products. The data can be customized for a
variety of industries to indicate purchase profiles and volume sales in a given industry.
B. Changing Skills for a Changing Industry (PPT slide 1-17)
Marketing research employees represent a vast diversity of cultures, abilities, and personalities.
According to a survey of 100 marketing research executives, the following fundamental
business skills were considered as the leading attributes in job aptitude.
• Communication skills (verbal and written)
More specifically, the top five skills executives hope to find in candidates for marketing
research positions are as follows.
• The ability to understand and interpret secondary data
• Presentation skills
In addition to quantitative, teamwork and communication skills, the Bureau of Labor Statistics
emphasizes the importance of being detail oriented, patient and persistent for market and survey
researchers. In the future, analyzing existing databases, multicultural interaction, and
negotiation are likely to be important characteristics of marketing researchers.
IV. Ethics in Marketing Research Practices
The major sources of ethical issues in marketing research are the interactions among the three key
groups.
• The research information providers
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Chapter 01 – Marketing Research for Managerial Decision Making
Research providers face numerous potential ethical challenges and opportunities to go wrong.
Some of those involve general business practices, while others involve conducting research that is
below professional standards. Clients may behave unethically or deceptively also, as in all
business relationships. Respondents may abuse the research relationship or be abused by it.
Exhibit 1.2 lists typical questionable or unethical practices among the key groups (PPT slide 1-18).
A. Ethical Questions in General Business Practices (PPT slide 1-19)
Methodologies that are potential ethical pitfalls for research providers include the following:
• pricing issues
Research firms may engage in unethical pricing. Following are some examples of such
instances.
• After quoting a fixed overall price for a proposed research project, the researcher may tell
the decision maker that variable-cost items such as travel expenses, monetary response
Research firms are required to maintain client confidentiality. This requirement can be a
challenge for firms that specialize in industries and regularly collect data about various
competitors and the industry in general. Occasionally, a new client may ask for a study very
similar to one recently conducted for another client. It may be tempting to simply share the
previous results, but those results belong to another client.
B. Conducting Research Not Meeting Professional Standards (PPT slide 1-20)