268 Part 3 Target Market Selection
CHAPTER 10
MARKETING RESEARCH IN THE ERA OF BIG DATA
CHAPTER OVERVIEW
Collecting and managing information about what customers need and want is a challenging task for any
marketer. This chapter focuses on marketing research—the process of collecting and using information
for marketing decision making. It explains that data comes from a variety of sources—from well–planned
studies, sales force reports, accounting records, or published reports; from controlled experiments and
computer simulations; and from big data—information that originates in unprecedented volume and at
unprecedented speed from the world around us.
The chapter also focuses on the impact of technology and the use of big data in the marketing research
process—right from data mining, data collection, analysis of the gathered information to market research,
decision making, and planning—which is aimed at gathering business and competitive intelligence.
Changes in the 17th Edition
The chapter has been updated and revised in several ways.
• The Opening Vignette and Evolution of a Brand profiles Netflix, the online entertainment
company that has been at the forefront of using big data as part of its decision-making process
when it comes to streaming entertainment and developing original content for its subscribers.
With a $3 billion budget for content, 10 percent of which is reserved for original programming,
Netflix has the potential to transform the way consumers view entertainment. The company has
made expert use of its huge and complex database, which steadily captures the likes, dislikes,
• Marketing Success explains how Procter & Gamble (P&G) used consumer behavior
observations to save its product Febreze from failure. When Febreze was launched, P&G
assumed that people would change their cleaning routines to incorporate the use of Febreze.
Chapter 10 Marketing Research in the Era of Big Data 269
after completing their cleaning routine. As a result of this strategy, the sales volume of Frebreze
doubled within two months.
• Career Readiness provides some tips on designing surveys for mobile devices. These tips
include: designing the survey with the mobile environment in mind; limiting the usage of images;
keeping the survey short and simple; offering an incentive; ensuring that the navigation is made
easy for the respondent; and trying to offer the choice to complete the survey on a computer.
• Chapter Case 10.1 describes how Samsung has adopted gamification to build customer
relationships, reward loyalty, and gather market research data. Samsung Nation rewards users
who post comments on the company’s website, answer other users’ questions, and link their
Twitter accounts to Samsung.com. Players in the Samsung Nation network spend more time on
the company’s site, share more product information, and let Samsung track their online behavior.
Gamification is considered to be a win-win strategy for marketers aiming to increase their
customer database. For more details read “Gamification: Game Changer for Marketing
Research?”
• Collaborative Learning Exercises are provided in several areas related to marketing research
and sales forecasting—The Marketing Research Process, Ethics in Marketing Research, Primary
Research Methods, and Garbology.
• Video Case 10.2 describes how GaGa SherBetter benefited from marketing research even after
the product was introduced in the market.
LECTURE OUTLINE
Opening Vignette and Evolution of a Brand—“Netflix Uses Big Data to Develop Content.” How would the
information collected by retailers help them serve customers more effectively? How does Netlfix gather
and sift the information about its customers?
Chapter Objective 1: Describe the development of the marketing research function and its major
activities.
Key Terms: marketing research, big data, marketing intelligence, marketing information system (MIS),
marketing decision support system (MDSS), syndicated services, full-service research suppliers, limited–
service research suppliers, metrics, data mining, predictive analytics, key performance indicator,
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1. What is marketing research and big data?
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Note: How many
research organizations
can you name? Do
they offer standard
services, or
specialized services?
many other sources
d. Marketing research helps marketers in understanding
customers, targeting customer segments, and developing long-
f. Marketing intelligence refers to the sum total of information
related to a firm’s markets, which a firm gathers in order to
better understand its customers, target market segments, and
develop long-term customer relationships
2. The marketing research function
a. The underlying purpose of marketing research is to find out
more about consumers
i. Research is an essential component to effective
customer satisfaction and customer relationship
programs
ii. Emerging computer technologies significantly changed
the complexion of marketing research
b. Development of the marketing research function
i. The first organized marketing research project took
place in 1879; in the early part of the 20th century, the
first commercial research department was established
c. Who conducts marketing research?
i. The size and organizational form of the marketing
research function are usually tied to the firm’s structure
ii. Firms organize research units by product lines, brands,
geographic areas, or the type of research needed
d. Many organizations depend on independent marketing research
firms due to several factors:
i. Cost is often the reason for using an external firm
ii. Information collected is often more reliable and accurate
than what could be gathered in-house
iii. Outside firms provide technical assistance and expertise
not available within the company
iv. Interaction with outside suppliers also helps ensure that
a researcher does not conduct a study only to validate a
favorite viewpoint or preferred option
Solving an Ethical
Controversy—Who
Profits from Your
3. Marketing and Competitive Intelligence
a. Marketing intelligence is the process of gathering information
and analyzing it to improve business strategy, tactics, and daily
4. Data Mining, Predictive Analytics, and Key Performance Indicators
a. Data mining employs special software to search through
computerized data files to detect patterns
1.1. Identify the different classifications of marketing research suppliers, and
explain how they differ from one another. Marketing research suppliers can be
1.2. Distinguish between data mining and predictive analytics. Data mining is a
technique in which a user employs special software to search through
272 Part 3 Target Market Selection
computerized data files to detect patterns. It focuses on identifying relationships
not obvious to marketers. Predictive analytics is the use of business intelligence
data to model scenarios and create forecasts. Using data captured through data
mining, predictive analytics allows marketers to focus their efforts on customer
targets that maximize the company’s profitability.
1.3 Describe the process of collecting marketing and competitive intelligence.
Marketing intelligence is the process of gathering information and analyzing it to
1.4 What is a key performance indicator? A key performance indicator is a
quantifiable measurement, articulated in advance, that reflects an organization’s
goals and is critical to its success.
Chapter Objective 2: Explain the six steps in the marketing research process.
Key Terms: exploratory research, sales analysis, accounting data, marketing cost analysis, hypothesis,
research design
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Figure 10.1 The
Marketing Research
Process. Which steps,
if any, might be
conducted in house?
Which might be better
left to an outside
marketing firm?
1. The marketing research process
a. The chances of making good decisions improve when the right
information is provided at the right time during decision making
b. To meet this goal, researchers often follow six steps in the
marketing research process:
i. Define the problem
ii. Conduct exploratory research
iii. Formulate a hypothesis
iv. Create a research design
2. Define the problem
a. A well-defined problem is half solved, because it permits the
researcher to focus on securing the exact information needed
3. Conduct exploratory research
a. Exploratory research looks for causes of a specific problem by
discussing it with informed sources (both within and outside the
firm) and by examining data from other sources
i. This includes speaking with employees as well as
internal records such as sales records, financial
statements, and marketing cost analyses
ii. Sales analysis is an in-depth evaluation of a firm’s sales;
it compares actual and expected sales based on a
detailed sales forecast by territory, product, customer,
previous years against industry benchmarks (ratio
analysis)
vii. Marketing cost analysis is the evaluation of expenses for
tasks such as selling, warehousing, advertising, and
delivery to determine profitability
4. Formulate a hypothesis
a. A hypothesis is a tentative explanation for some specific event
b. It is a statement about the relationship among variables that
5. Create a research design
a. A research design is a master plan or model for conducting
marketing research
b. It allows for the selection of the respondents, or sample, to be
studied
Assessment check questions
2.1. What are the six steps in the marketing research process? The marketing
problem, (2) conducting exploratory research, (3) formulating hypotheses, (4)
2.2. What is the goal of exploratory research? Exploratory research seeks to
discover the cause of a specific problem by discussing the problem with
informed sources within and outside the firm and examining data from other
information sources.
Chapter Objective 3: Distinguish between primary and secondary data sources.
Key Terms: secondary data, primary data
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1. Collect data
a. Marketing research gathers two kinds of data—secondary and
primary
b. Secondary data is information from previously published or
compiled sources (such as U.S. Census data)
2. Interpret and present research data
a. The final step is to interpret the findings and present them to
decision makers in a format that allows management to make
effective judgments
b. Differences in interpretation can arise due to differing
Note: If you were
asked to research on
the trends in U.S.
population in the past
five decades, which
sources would you
use?
3. Secondary data collection
a. Most secondary data is available at little or no cost
b. The challenge is selecting from a wealth of sources only that
4. Government data
a. The federal government is the nation’s most important source of
5. The U.S. Census of Population
a. U.S. Census of Population offers vast information broken down
by small geographic areas or census tracts
b. Another resource is the Topographically Integrated Geographic
Encoding and Referencing (TIGER) system, a government
mapping database, which overlays topographic features
(railroads, highways, rivers) with census data such as income
level
6. Private data
a. Many organizations offer data through their own channels
i. Business and trade associations often offer data through
their publications
ii. Encyclopedia of Associations, available in many
7. Online sources of secondary data
a. Hundreds of databases and other sources of information are
available online
i. A well-designed, Internet-based marketing research
project can cost less yet yield faster results than offline
research
ii. The Internet has led to a growth in research
aggregators—companies that acquire, catalog, reformat,
segment, and then resell already-published premium
research reports
iii. Social networking sites yield valuable marketing
Assessment check questions
3.2. What are the major methods of collecting secondary data? Sources of
internal data include sales records, product evaluation, sales force reports, and
records of marketing costs.
Chapter Objective 4: Explain probability and nonprobability sampling techniques.
Key Terms: sampling, population (universe), probability sample, simple random sample, stratified sample,
cluster sample, nonprobability sample, convenience sample, accidental sample, quota sample
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1. Sampling techniques
a. Sampling is the process of selecting survey respondents or
Chapter 10 Marketing Research in the Era of Big Data 277
research participants
2. Probability sample
a. A probability sample gives every member of the population a
chance of being selected
3. Nonprobability sample
a. A nonprobability sample relies on personal judgment in the
selection process as researchers decide what groups to study
b. Types of nonprobability samples:
i. Convenience sample—a group selected from readily
available respondents, also called an “accidental
sample” because those include just happened to be in
Assessment check questions
4.1. What is sampling? Sampling is the process of selecting representative
4.2. Explain the different types of probability samples. Types of probability
4.3. Identify the types of nonprobability samples. Nonprobability samples are
convenience samples and quota samples.
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Chapter Objective 5: Describe the three principal methods marketing researchers use to collect
primary data.
Key Terms: interpretative research, focus groups, controlled experiment, test marketing
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1. Primary research methods
a. Marketers use a variety of methods for conducting primary
2. Observation method
a. In observational studies, researchers view the overt actions of
the subjects studied, trying to understand how consumers
behave in certain situations
d. Communications technology also changes the way consumers
respond to advertising; Internet users are more willing to use
real money for purchases that arise during their social gaming
and social networking sessions
e. Other observational techniques include videotaping consumers
in action, conducting focus groups, and asking consumer panels
to respond to certain queries in person or online
f. To understand what makes younger consumers tick, a trend-
forecasting firm called TRU (for Teenage Research Unlimited)
3. Survey method
a. Observation alone cannot supply all of the desired information,
so researchers must ask questions to get information on
attitudes, motives, and opinions
b. Observation does not obtain exact demographic information
(such as income levels)—to get that, researchers use interviews
or questionnaires
c. Telephone interviews
i. Telephone interviews are a quick and inexpensive
method for obtaining a small quantity of relatively
impersonal information
Chapter 10 Marketing Research in the Era of Big Data 279
affect the accuracy
and validity of the
results?
ii. Simple, clearly worded questions are easy for
interviewers to pose over the phone and are effective at
drawing appropriate responses
iii. Telephone surveys have relatively high response rates,
particularly with repeated calling, and some firms use
computerized dialing and digitally synthesized voices
that interview respondents
d. Personal interviews
i. Personal interviews are the best method for obtaining
detailed information about consumers, as the
interviewer can establish rapport and explain confusing
or vague questions
e. Focus groups
i. A focus group brings together eight to twelve individuals
in one location to discuss a subject of interest for an
hour or two
ii. Focus groups encourage discussion rather than using a
question-and-answer format
iii. They are a quick and inexpensive method of gaining
insight into consumer attitudes and motivations
iv. In a focus group, the leader, or moderator, typically
suggests an opening topic. The moderator’s purpose is
to stimulate interaction among group members. It is a
difficult job that require preparation and group facilitation
skills
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Creating Surveys for
Mobile Devices.
Think of a time you
came across a survey
on your mobile phone.
Was the survey design
appropriate for the
mobile environment?
than traditional formats, have better attendance, and are
less affected by peer pressure
ix. Drawbacks of online focus groups: Lack of access to
body language or nonverbal cues, difficulty in testing
products in relevance with taste or smell, tendency
toward nonrepresentative samples
f. Surveys
i. Mail surveys are a cost-effective alternative, providing
anonymity that may encourage respondents to give
candid answers
g. Online surveys and other Internet-based methods
i. Using the Web allows researchers to speed the survey
process, increase sample sizes, ignore geographic
boundaries, and dramatically reduce costs
ii. A proliferation of Web-based survey tools streamlines
the survey tasks: Survey Monkey, SurveyGizmo, or
Zoomerang, for example, can even help a novice build,
deliver, tabulate, and analyze a survey.
iii. Online surveys are less intrusive than phone surveys,
allowing respondents to take part at their leisure
iv. The novelty and ease of answering online may even
vii. There is no industrywide standard to measure Web use,
marketers try counting “hits,” tracking with cookies (now
unpopular), or asking visitors to register
viii. Some marketers look into new measures like user time
spent interacting with others, degree of user
involvement, and level of user attention
ix. Observing consumers online offers marketers the
4. Experimental method
Chapter 10 Marketing Research in the Era of Big Data 281
a. The least-used method for collecting primary data is the
controlled experiment
i. Controlled experiment is a scientific investigation in
which a researcher manipulates a test group and
compares the results with those of a control group that
did not receive the experimental manipulation
b. The most common use of this method by marketers is test
marketing, or introducing a new product and then observing its
degree of success
i. Test marketing may follow periods of information
gathering from focus groups or evaluation of competing
iii. Drawbacks of test marketing:
1. It is an expensive operation
3. Some products are not well suited to test
1. Firms that skip test marketing can simulate a
campaign through computer-modeling software
2. They might offer an item in just one region or
3. They might limit a product’s introduction to only
one retail chain, then monitor the results closely
Assessment check questions
5.1. What are the principal methods for collecting primary data? The principal
5.2. Identify the different types of survey methods. Different survey methods may
include telephone interviews, personal interviews, focus groups, mail and online
surveys, online polling, and other Internet-based methods.
Chapter Objective 6: Explain the challenges of conducting marketing research in global markets.
Key Terms: ethnographic studies
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1. Conducting international marketing research
a. Though the steps are similar to domestic market studies, new