McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual
CHAPTER 1
The Role of Marketing Research in Management Decision Making
LEARNING OBJECTIVES
1. To review the marketing concept and the marketing mix.
3. To define marketing research.
5. To learn when marketing research should and should not be conducted.
7. To understand the history of marketing research.
KEY TERMS
Marketing Marketing concept
Consumer orientation Goal orientation
Systems orientation Marketing research
Descriptive function Diagnostic function
CHAPTER SCAN
Chapter one begins with a review of the nature of marketing. The market concept is reintroduced
with its three components, the customer orientation, the systems orientation, and the goal
orientation. The elements of the marketing mix are also discussed. Marketing Research is
defined and its importance to management is discussed. Marketing research plays a proactive
role in business, seeking to understand and help development opportunities, as well as finding
McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual
CHAPTER OUTLINE
1. Nature of Marketing
I. Marketing
A. Definition
2. Marketing Research and Decision Making
I. Marketing Research Defined
A. AMA Definition
B. Author’s Preferred Definition
II. Importance of Marketing Research to Management
3. Development of Marketing Research
I. The Development of Marketing Research
4. Summary
CHAPTER SUMMARY
1. NATURE OF MARKETING
I. Marketing
1. ‘Right’ Principles–right goods or services to the right people at the right place at the right
time at the right price, using the right promotion techniques, these are provided by management
making the ‘right’ decisions by having timely decision-making
Information provided by marketing research
II. The Marketing Concept
McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual
A. Consumer Orientation–firms strive to identify the group of people (or firms) most likely to
buy their product and to produce a good or offer a service that will meet the needs of the target
customers most effectively
B. Goal Orientation–a company can be consumer oriented only to the extent that it is also
accomplishing corporate goals, such as financial goals
C. Systems Orientation–managers should look at the effects of management actions upon the
entire organization, not just upon one unit
III. Opportunistic Nature of Marketing Research
IV. External Marketing Environment
A. Elements in the External Environment–changes over time
Managers must stay alert to these changes and alter the marketing mix accordingly
B. Marketing Research–key means for understanding the environment.
2. MARKETING RESEARCH AND DECISION MAKING
I. Marketing Research Defined
A. AMA Definition
Marketing research is the function that links the consumer, customer, and public to the marketer
through information–information used to identify and define marketing opportunities and
problems; generate, refine and evaluate marketing actions; monitor marketing performance; and
B. Authors Preferred Definition
Marketing research is the planning, collection, and analysis of data relevant to market decision
making and the communication of the results of this analysis to management.
II. Importance of Marketing Research in Management
A. Functions of Market Research
2. Diagnostic function–data and/or actions are explained
3. Predictive function–take advantage of opportunities as they arise in the ever-changing
marketplace
B. The Unrelenting Drive for Quality and Customer satisfaction
2. Product quality–not to be achieved at the expense of customer service and satisfaction
3. Return on Quality
1. Customer retention–increasing revenues and market share, decreasing costs and demands on
2. Marketing research–to understand customers’ needs and to satisfy those needs, which leads
to customer satisfaction? British Airways used marketing research to find that first class
passengers want to sleep.
III. Understanding the Ever-Changing Marketplace.
2. Marketing research has been practiced as far back as marketing exited
IV Social Media and User-Generated Content
V. Proactive Role of Marketing Research
Proactive Management–alters the marketing mix to fit the newly emerging patterns in
economic, social, and competitive environments, whereas reactive management waits for change
to have a major impact on the firm before deciding to take actions
1. Proactive position–to become cutting-edge in the industry
McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual
C. Proactive Marketing Strategic Plan–guides the long-run use of the firm’s resources based
on the firm’s existing and projected internal capabilities and on projected changes in the external
environment
VI. Applied Research versus Basic Research
A. Applied Research–conducted to determine changes in the market, to better understand results
of a decision, or to reduce uncertainty in management decision making.
B. Basic or Pure Research–expands the frontiers of knowledge.
VII. Nature of Applied Research
A. Programmatic Research–helps develop marketing options through market segmentation,
market opportunity analysis, or consumer attitude and product usage studies
1. Arises from management’s need to obtain a market overview.
Some questions that programmatic researchers ask
a. Has its target market changed? How?
b. Does the market exhibit any new segmentation opportunities?
c. Do some segments appear to be more likely candidates than others for the firm’s marketing
efforts?
d. What new product opportunities lie in the various segments?
B. Selective Research–used to test decision alternatives
2. Can be required at any stage of the marketing process
C. Evaluative Research–used to assess program performance
1. Need arises when the effectiveness and efficiency of marketing programs must be evaluated
VIII. Decision to Conduct Marketing Research
A. Reasons not to conduct marketing research
1. Resources are lacking–organization does not have the funds to conduct research properly, it
should not be undertaken
2. Research results would not be useful–information obtained from the research could not be
3. Opportunity has passed–if the opportunity for successful entry into a market has already
passed
4. The decision has already been made–management is just conducting research to try to
5. Managers cannot agree on what they need to know to make a decision–if the problem or
6. Decision-making information already exists– Organizations gather much data and
7. The costs of conducting research outweigh the benefits–when the expected value of the
information is greater than the cost of obtaining the data
a. See Exhibit 1.1 Deciding Whether to Conduct Marketing Research (p 11)
3. DEVELOPMENT OF MARKETING RESEARCH
I. The Development of Market Research
A. The Inception–Pre-1900
1. Election poll performed by Harrisburg Pennsylvanian in July 1824; John Jacob Astor
2. First documented use of research to make informed marketing decisions was by advertising
agency N.W. Ayer in 1879 to determine expected levels of grain production.
3. Academics enter field in 1895.
B. Early growth–1900-1920–in response to the need to understand consumer’s buying habits
C. The Adolescent Years–1920-1950
2. A. C. Nielsen entered the research business in 1922 expanding on White’s earlier work by
3. 1930s formal courses in marketing research were offered on college campuses
4. Two events that helped the discipline to become a well-defined profession–the spread of
broadcast media and World War II
D. The Mature Years–1950 to present
2. The concepts of segmentation and motivation analysis were combined with psychographics
and benefit segmentation
4. The development of the computer during the early 1960s enhanced the researcher’s ability to
13)
5. Marketing research is undertaken to reduce the risks when opening new markets through
6. Voice of the customer–businesses and other institutions are measuring and monitoring
7. Management metrics–provide the key metrics to senior management–they are beginning to
8. New Products–failure rate of new products has been laid at the doorstep of marketing
research; however, investigation into these failures tends to exonerate some of the research. The
failures occur because
a. There were inadequate investments in research
9. Branding–companies are again recognizing that brands represent a component of value that
can’t be replicated by a competitor–offers a unique, defensible asset for the owner and a launch
pad for new product development and deployment. In the past, branding has been hard to
E. The Connected World: 2000-Present
4. SUMMARY
QUESTIONS FOR REVIEW AND CRITICAL THINKING
1. The role of marketing is to create exchanges. What role might marketing research play
in facilitating the exchange process?
Exchange can take place when two or more parties have something of potential value to each
other and can communicate and deliver these desired goods or services. Marketing research helps
2. Marketing research has traditionally been associated with manufacturers of consumer
goods. Today an increasing number of organizations, both profit and nonprofit, are using
marketing research. Why do you think this trend exists? Give some examples.
Marketing research helps all organizations follow the principle of the “marketing concept.”
Profit-making organizations face increasing amounts of competition from U.S. companies, as
3. Explain the relationship between marketing research and the marketing concept.
The marketing concept requires (1) a consumer orientation, (2) a goal orientation, and (3) a
systems orientation. The consumer orientation means that firms strive to identify the group of
4. Comment on the following statement by the owner of a restaurant in a downtown area:
“I see customers every day whom I know on a first-name basis. I understand their likes and
dislikes. If I put something on the menu and it doesn’t sell, I know that they didn’t like it. I
also read the magazine Modern Restaurants, to keep up with industry trends. This is all of
the marketing research that I need to do.”
This restaurant owner may know customers by name, but the assertion about understanding their
tastes may be over-confident. An item on the menu may not sell because the customers are not
familiar with it. Or, it may be perceived as too expensive. There could be many reasons why a
5. Why is marketing research important to marketing executives? Give several reasons.
Marketing research is important to marketing executives because it gives them additional
information on which to make decisions. Some of that information includes:
6. What differences might you note among marketing research conducted for (a) a retailer,
(b) a consumer goods manufacturer, (c) an industrial goods manufacturer, and (d) a
charitable organization?
Each of these organizations would use marketing research to help accomplish the strategic
mission of their organization or the goals that were determined to be most important. For
example:
A retailer might use marketing research to track trends in demographics, to determine effective
advertising strategies, and to find products or services desired by the customer.
7. Comment on the following: Ralph Moran is planning to invest $1.5 million in a new
restaurant in Saint Louis. When he applied for a construction financing loan, the bank
officers asked whether he had conducted any research. Ralph replied, “I checked on
research and a marketing research company wanted $20,000 to do the work. I decided that
with all the other expenses of opening a new business, research was a luxury that I could do
without.”
If Mr. Moran is willing to spend $1.5 million on a new restaurant without conducting marketing
research, he should be prepared to lose that money. Without marketing research, he may not
McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual
predominantly Jewish? Given all of this, $20,000 seems a small price to pay to increase the
8. What is meant by “return on quality”? Why do you think that the concept evolved? Give
an example.
Return on Quality means two things. First, that the quality being delivered is the quality desired
by the target market. Second, that added quality must have a positive impact on profitability. The
9. Describe three situations in which marketing research should not be undertaken.
Explain why this is true.
A Lack of Resources – If an organization does not have the funds to conduct the research
properly, it should not be undertaken. If a firm has the money to perform the research, but it
10. Given an example of (a) the descriptive role of marketing research, (b) the diagnostic
role of marketing research, and (c) the predictive function of marketing research.
An example of the descriptive role of marketing research is a bank or other financial institution
11. Using the Internet and a Web browser, visit a search engine such as Google or Yahoo!,
and type, “marketing research.” From the thousands of options you are offered, pick a
Web site that you find interesting and report on its content to the class.
12. Divide the class into groups of four. Each team should visit a large organization (profit
or nonprofit) and conduct an interview with the top marketing executive to discover how
this firm is using marketing research. Each team then should report its findings in class.
13. How is the Internet changing the field of marketing research?
The reach, economy, and speed of the Internet have had significant effects in the recent past, and
promise to have even more profound impact in the future. Secondary information for exploratory
research can be obtained from literature reviews and Web pages. The capacity for capture and
REAL LIFE RESEARCH
Case 1.1 – Give Me a Coupon That I Can Use Online! (p 18)
Key Points
• Coupons have a significant impact on retailers’ bottom lines in addition to the obvious
consumer benefit as couponers are likely to spend more, have higher satisfaction, and
return to the retailer where the coupon was used, according to Online Shopper
1. How might a firm like Home Depot use this information? Would Amazon.com use the
same couponing strategy as Home Depot?
Home depot could use an in store application for smart phones. The smart phone would display
2. Do you think that Home Depot might need more research before it develops a couponing
strategy? If so, what does it need to know?
3. Do you think it is necessary for online retailers to conduct marketing research?
Why?
Case 1.2 – Young Consumers Searching for a Bank Still Want the Personal Touch (p 19)
Key Points
– A recent survey by Mintel finds that young consumers are both similar to and different from
their parents when it comes to banking and debt.
– Only 33% of young consumers (18-34) use online banking services; 37% say they would
switch banks for better customer service; 40% of those not using online banking say it is because
Questions
1. How might a bank use this information?
A bank may use this research as a starting point for thinking about the attitudes, beliefs, and
motivations of their current and prospective young customers. Additional, customized research
may prove useful in understanding why consumers do not make use of online banking services
2. Could this research have been conducted over the Internet? What other means might
have been used to gather the data?
This research could have been conducted (solely) over the Internet, but doing so would seem to
potentially problematic give the topic of the survey. Specifically, young consumers who are
3. Is this basic or applied research? Why?
4. What other type of marketing research information might a bank need to effectively
market to young consumers?
A bank would need information on young consumers’ other non-age demographic characteristics,