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Chapter 07 - Marketing Research: From Customer Insights to Actions
7-21
* Without being forced to select from among those that a marketing
researcher has predetermined
– Is useful in:
* Understanding consumer behavior.
– Consists of the following types:
* Q5: Semantic differential scale.
◊ Is a five-point scale in which…
◊ The opposite ends have one- or two-word adjectives that have
opposite meanings.
restaurants.
• Q9: Demographic questions.
– Provide details about the respondents’ personal or household
characteristics.
– May be used to segment the market.
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– All respondents interpret the same question similarly.
– Marketing actions developed are consistent with the findings based on
the data.
h. Mall intercept interviews.
• Consists of personal interviews of consumers visiting shopping centers.
• Advantages and disadvantages:
– Reduces the cost of personal visits to consumers in their homes.
i. Electronic technology has revolutionized traditional concepts of interviews
and surveys:
• Kiosks in shopping malls. On a touch screen:
– Respondents read questions.
– Key in their answers.
• Automated telephone interviews.
[ICA 7-3: Designing a Taste Test Survey for Howlin’ Coyote Chili]
F. Primary Data: Other Sources
There are four other methods of collecting primary data exist that overlap somewhat
with observational or questionnaire methods.
1. Social Media.
a. Facebook, Twitter, and other social media:
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• Today, Carma Labs uses social media programs to help promote its
products.
– Can conduct marketing research using social media listening tools
to…
– Understand the nature of online lip balm conversations.
c. Carmex uses these marketing metrics to assess its social media programs for
its line of products:
• Conversation velocity. Total Carmex mentions on the Internet.
• Share of voice. Total Carmex mentions on the Internet as a percentage of
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APPLYING MARKETING METRICS
Are the Carmex Social Media Programs Working Well?
You are a marketing consultant to Carmex, asked to assess its social media activities
for its lip balm product line. Carmex has recently launched new social media programs and
promotions, including:
a. Your Challenge. To assess how the Carmex social media programs are doing, you
use five metrics:
• Carmex conversation velocity—total mentions on the Internet.
• Facebook likers—the number of Facebook users in a time period who have liked
b. Your Findings. Analyzing the marketing dashboards, you reach these conclusions:
• The number of both Facebook likers and Twitter followers is up significantly for
2018 compared to 2017.
• The Carmex share of voice of 35 percent is good compared to the top brand, and
c. Your Actions.
• You conclude that Carmex’s social media initiatives are doing well.
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2. Panels and Experiments.
a. A panel is a sample of consumers or stores from which researchers take a
series of measurements to see if consumers change their behavior over time.
• The NPD Group collects data about consumer purchases such as apparel,
food, and electronics from its online Consumer Panel, which consists of
nearly 2 million individuals globally.
• An advantage of panels is that it measures switching behavior from one
brand to another over time.
• A disadvantage of panels is that:
– The marketing research firm needs to recruit new members continually
b. An experiment involves obtaining data by manipulating factors under tightly
controlled conditions to test cause and effect.
• The interest is in whether changing one of the independent variables
(a cause) will change the behavior of the dependent variable that is studied
(the result).
• In marketing experiments:
– The independent variables are:
* Sometimes called the marketing or sales drivers.
* Often one or more of the marketing mix elements:
– The dependent variable is:
* Usually a change in purchase behavior (incremental increases in
– Test markets:
* Are experiments that…
• A disadvantage of experiments:
– Outside factors (such as actions of competitors)…
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[ICA 7-4: Pepsi vs. Coke Taste Test]
G. Advantages and Disadvantages of Primary Data
• Advantages of primary data:
a. Are more timely.
LEARNING REVIEW
7-6. What is the difference between observational data and questionnaire data?
7-7. Which type of survey provides the greatest flexibility for asking probing
questions: mail, telephone, or personal interview?
7-8. What is the difference between a panel and an experiment?
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V. STEP 4: DEVELOP FINDINGS [LO 7-5]
Mark Twain once observed, “Collecting data is like collecting garbage. You’ve got to
know what you’re going to do with the stuff before you collect it.”
A. Big Data and Data Analytics.
a. Big data is a vague term used to describe large amounts of data collected fro a
b. Information technology includes all the computing resources that collect,
store and analyze data.
c. Challenge is how to transform the huge amount of data into useful information.
d. Data can be obtained from many sources:
• Household product purchases. • TV viewing behavior.
• Barcode scanners at checkout counters.
e. [Figure 7-5] Marketing managers:
• Use information technology, data, models, and queries to obtain results
that lead to marketing actions.
• Organizations that accomplish this are referred to as intelligent
enterprises.
f. Figure 7-5 shows how marketers use information technology to frame
questions that provide answers leading to marketing actions:
• Computers:
• These data sources:
• The marketer queries the databases in the information system with
marketing questions needing answers.
• The questions go through statistical models that organize, manipulate, and
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g. Traditional marketing research involves identifying possible
marketing/sales/brand drivers and then collecting data about them.
• Drivers are the factors that influence the buying decisions of a household
B. Data Mining and Predictive Modeling.
a. Is the extraction of hidden predictive information from large databases to find
statistical links between consumer purchasing patterns and marketing actions.
b. Example: Running a joint promotion between Skippy Peanut Butter and
Welch’s Grape Jelly since both tend to be purchased together for sandwiches.
c. Some unexpected pairings arise from data mining:
d. Predictive modeling uses statistical models that use data mining and
probability analysis to foretell outcomes. Models contain predictors
(variables) that affect the likelihood of future sales.
MAKING RESPONSIBLE DECISIONS
Ethics: No More Personal Secrets—The Downside of Data Mining and Predictive Modeling
Amazon, Google, Yahoo!, eBay, YouTube, reputation.com, Facebook, Twitter, and
others engage in sophisticated data mining of the Internet and social media sites that reveal
an incredible amount of personal information about any American (Social Security Number,
product purchases, interests, websites browsed, etc.).
C. Analyze the Data
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• Marketers are presented with a set of marketing problems to resolve.
a. Analyzing Sales of Tony’s Pizza
• How would a marketing manager for the Tony’s brand address a market
segment question?
a. How are sales doing on a household basis?
D. Present the Findings
• [Figure 7-6] Findings should be clear and understandable from the way the data
are presented. Managers are responsible for actions.
• The results should be delivered in:
a. Clear pictures (i.e., graphically).
b. If possible, on a single page.
a. Figure 7-6A: Annual Sales.
b. Figure 7-6B: Average Annual Sales per Household.
• Be careful to read the numbers on the vertical axis.
• Shows more households are buying pizzas.
• It’s just that each household is buying fewer Tony’s pizzas.
• The number of households buying pizza:
– Is growing, and that’s good news for Tony’s but…
c. Figure 7-6C: Average Annual Sales per Household, by Household Size.
• Shows the source of the problem:
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• Households with 3 or more people usually consist of households with
children.
d. Figure 7-6D: Average Annual Sales per Household, by Age of Children in the
Household.
• The picture now has become clear.
e. Identifying a sales problem in households with children 6 to 12 years old is an
important discovery, as Tony’s sales are declining in a market segment that is
known to be one of the heaviest in buying pizzas.
VI. STEP 5: TAKE MARKETING ACTIONS
• Effective marketing research doesn’t stop with findings and recommendations.
• Marketers must:
a. Identify the marketing actions.
A. Make Action Recommendations
• Marketers must convert market research findings into specific marketing
recommendations.
• Recommendations must focus on clear marketing objectives to be achieved.
• For Tony’s Pizza, the objective is to:
• For Tony’s Pizza, the recommendations are to:
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a. Develop an advertising program that targets children 6 to 12 years old.
B. Implement the Action Recommendations
To implement these action recommendations, Tony’s Pizza should:
• Undertake advertising research to develop ads that appeal to children in the 6-to-
12 age group and their families.
C. Evaluate the Results
There are two aspects of the evaluation process:
• Evaluating the decision itself. This involves monitoring the marketplace to
determine if action is necessary in the future.
a. Are sales increasing from the 6-to-12 age group as a result of the ad
campaign?
b. Should more ads be run to stimulate further sales?
• Evaluating the decision process used.
a. Was the marketing research and analysis used to develop the
recommendations effective?
b. Was it flawed? If so, could it be improved for similar situations in the future?
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LEARNING REVIEW
7-9. In the marketing research for Tony’s Pizza, what is an example of (a) a finding
and (b) a marketing action?
7-10. In evaluating marketing actions, what are the two dimensions on which they
should be evaluated?
Answer: There are two aspects marketers use to evaluate the results of marketing
VII. SALES FORECASTING TECHNIQUES [LO 7-6]
• Forecasting potential sales is often a key goal in a marketing research study.
• Good sales forecasts are important for a firm as it schedules production.
• A sales forecast:
a. Is the total sales of a product that a firm expects to sell during a specified time
• Marketers regularly want an annual sales forecast, such as 4 million cases of cake mix
in 2019.
A. Judgments of the Decision Maker
• Most sales forecasts are judgments of an individual decision maker.
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• A lost-horse forecast involves:
a. Starting with the last known value of the item being forecast, such as actual
sales for 2018.
b. Listing the factors that could affect the forecast.
c. Making the final forecast.
B. Surveys of Knowledgeable Groups
To estimate what a firm’s sales will be next year, ask people who are likely to know
something about future sales. Two common approaches are:
• A survey of buyers’ intentions forecast.
• A salesforce survey forecast.
a. Involves asking the firm’s salespeople to estimate sales during a coming
period.
b. Since salespeople are in contact with customers, they are likely to know what
C. Statistical Methods
• The best-known statistical method of forecasting is trend extrapolation:
a. Involves extending a pattern observed in past data into the future.
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• [Figure 7-7] Linear trend extrapolation.
LEARNING REVIEW
7-11. What are the three kinds of sales forecasting techniques?
7-12. How do you make a lost-horse forecast?
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APPLYING MARKETING KNOWLEDGE
1. Suppose your dean of admissions is considering surveying high school seniors about
their perceptions of your school to design better informational brochures for them.
What are the advantages and disadvantages of doing (a) telephone interviews and
(b) an Internet survey of seniors who have requested information about the school?
Answers: When choosing to use a telephone interview or Internet survey, the marketing
a. Telephone interview.
1. Advantages.
• Virtually everyone in the senior high school class has a land line/mobile
telephone.
• A representative sample of high school seniors may be obtained.
2. Disadvantages.
• The difficulty of getting students to respond to telephone questions and to
respond to scaled questions they can hear but not see in writing.
• Including students in the sample who have no interest in the school.
Chapter 07 - Marketing Research: From Customer Insights to Actions
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
7-36
• Many potential qualified respondents have unlisted telephone numbers and/or
placed themselves on the federal government’s Do Not Call registry. This
eliminates them from the universe of qualified respondents, thereby introducing
bias into the results since the marketing researcher is not able to adequately
reach the desired target market.
• Many potential qualified respondents use their mobile phones as the primary
telephone and therefore may not want to cooperate due to connect charges.
• Many mobile phone users are not in any directory nor online website that may
provide phone numbers such as 411.com.
b. Internet surveys.
1. Advantages.
• The sampled respondents have shown their interest in the university so the
response rate should be high.
2. Disadvantages.
• Getting new ideas from seniors not requesting information.
• Little flexibility to probe responses or ask complex questions since the self-
administered online form must be short and simple to complete.
• Potential qualified respondents need to have a computer, Internet connection,
7-37
2. Wisk detergent decides to run a test market to see the effect of coupons and in-store
advertising on sales. The index of sales is as follows:
What are your conclusions and recommendations?
Answer: Although the coupon without the in-store ads provides a 44% sales increase
during the week of the coupon, it drops off significantly to a modest 8% during the week
3. Nielsen Media Research obtains ratings of local TV stations in small markets by
having households fill out diary questionnaires. These give information on (a) who is
watching TV and (b) the program being watched. What are the limitations of this
questionnaire method?
Answer: Using diaries to record television viewing habits has problems because most
people don’t keep a continuous record of the television programs they have watched but
4. The format in which information is presented is often vital. (a) If you were a harried
marketing manager and queried your information system, would you rather see the
results in tables or charts and graphs? (b) What are one or two strengths and
weaknesses of each format?
a. Tables.
1. Strengths are allowing quantities of data to be summarized succinctly, provided that
2. Weaknesses are overwhelming the reader with large quantities of data, in which key
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b. Charts and graphs.
1. Strengths are allowing high and low points to be seen at a glance. A line or bar
2. Weaknesses are lack of precision and backup detail.
Combining tables, charts, and graphs can overcome the weaknesses and benefit from the
5. (a) Why might a marketing researcher prefer to use secondary data rather than
primary data in a study? (b) Why might the reverse be true?
Answers: Secondary data are facts and figures that have already been recorded before the
8. Which of the following variables would linear trend extrapolation be more accurate
for? (a) Annual population of the United States or (b) annual sales of cars produced in
the United States by Ford. Why?
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BUILDING YOUR MARKETING PLAN
To help you collect the most useful data for your marketing plan, develop a three-
column table:
1. In column 1, list the information you would ideally like to have to fill holes in your
marketing plan.
Answer: Data sources were also touched on briefly in the Chapter 1: Building Your
Marketing Plan when students were selecting a marketing plan topic. Without some
2. In column 2, identify the source for each bit of information in column 1, such as an
Internet search, talking to prospective customers, looking at internal data, and so
forth.
3. In column 3, set a priority on information you will have time to spend collecting by
rating them: 1 = most important; 2 = next most important; and so forth. [Note: This is
a 3-pt. scale.]
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NEEDED INFORMATION
INFORMATION SOURCE
PRIORITY
• Present target market customers
(households and institutions)
• Internal company records
3
• Satisfaction and wants of present
customers
• Simple, 7-question survey
3
• Potential target market customers
(households and institutions)
• Map and observation of potential
customers in local retail trading area
2
• Competitors
• Yellow-pages; map of 15-mile radius
retail trading area
2
• Suppliers of flowers, other supplies
• Yellow-pages; interview with owners
1
• Cost of advertising media
• Pricing of Yellow Pages ad, direct
mail, local newspaper ad
3
• Break-even data (rent, utilities,
average selling price, etc.)
• Interview with owners
3
some understanding of the market and its environment. Also, if students plan on collecting
primary data, they need to allow for sufficient time to design the instrument, collect the
data, analyze the data, and the develop marketing actions.
Helping with Common Student Problems
Students writing marketing plans often have the classic problem of procrastinators—
