The Essentials of Marketing Research

Lawrence Silver, Robert E. Stevens, Bruce Wrenn, David L. Loudon

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136593239
• Edition: 3
• Topic: Betriebswirtschaft
• Subtopic: Marketingforschung

Identifying and assessing the ways in which changes in the marketing mix affect consumer behavior is key to a successful marketing strategy.

The Essentials of Marketing Research guides the student in designing, conducting and interpreting marketing research. This comprehensive textbook covers the full range of topics, including:

• Secondary research and data mining
• Internet marketing research
• Qualitative and exploratory research
• Statistical analysis
• Marketing research ethics

With learning objectives at the beginning of each chapter, a host of cases and a comprehensive companion website, this book offers a range of tools to help students develop and test their research and analytical skills.

Part I The Marketing Research Process and Decision Making

1 Introduction to Marketing Research

DOI: 10.4324/9780203182598-1

Learning Objectives

Upon completing this chapter, you should understand:

1. what is involved in the decision making process;
2. how research contributes to the decision making process;
3. the differences between the following: management problems and opportunities, decisional alternatives, and decisional criteria;
4. the nature of the marketing research process;
5. how the research questions lead to formulating research hypotheses.

The Marketing-Decision Environment

Marketing decisions in contemporary organizations are some of the most important decisions made by managers. The decisions of what consumer segments to serve with what products/services, at what prices, through which channels, and with what type and amounts of promotion not only determine the marketing posture of a firm, but also affect decisions in other areas as well. The decision to emphasize quality products, for example, affects decisions on procurement, production personnel, quality control, etc.

Many companies are discovering that the decisions involved in creating and distributing goods and services for selected consumer segments have such long-run implications for the organization that they are now being viewed as strategic decisions necessitating input by top management. Some marketing decisions, such as those relating to strategy, may involve commitments and directions that continue to guide efforts as long as they prove successful. A belief that future success requires the organization to become “market oriented”¹ or “market sensitive” has increased the importance of the intelligence function within organizations as they seek to make the right responses to a marketplace. Right responses become increasingly important as competition heats up in markets. Firms are discovering that they must be market driven in order to make decisions that meet with market approval.

Developing an understanding of consumer needs, wants, perceptions, etc., is a prerequisite to effective decision making. Consider the different results of marketing Pepsi AM in the United States and Chee-tos in China. Pepsi AM was introduced without research, which would have revealed that the name suggested it to be drunk only in the morning, thereby restricting market size to specific-occasion usage. Frito-Lay did extensive research on the market for snack foods in China before introducing Chee-tos there. They learned that cheese was not a common item in the diet of Chinese, that traditional Chee-tos flavors did not appeal to consumers there, but that some flavors were appealing (savory American cream and zesty Japanese steak). They also researched Chinese reaction to Chester Cheetah, the cartoon character on the bag, and the Chinese translation of “Chee-tos” (luckily corresponding to Chinese characters qu duo or “new surprise”). Pepsi AM was a flop; Chee-tos were such a success that Frito-Lay could not keep store shelves stocked.²

Marketing research is the specific marketing function relied upon to provide information for marketing decisions. However, it should be stressed at the outset that merely doing marketing research does not guarantee that better decisions will be made. The quality of each stage of a marketing research project will either contribute to better decision making or will make it an ever elusive goal. If research results are correctly analyzed and imaginatively applied, studies have shown that increased profitability is often the outcome.³

Marketing Research

The American Marketing Association defines marketing research as follows:

Marketing research is the function which 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 improve understanding of marketing as a process.

Marketing research specifies the information required to address these issues; designs the method for collecting information; manages and implements the data collection process; analyzes the results; and communicates the findings and their implications.⁴

This rather lengthy definition suggests the connection between research and decision making in business organizations.

Research, in a business context, is defined as an organized, formal inquiry into an area to obtain information for use in decision making. When the adjective marketing is added to research, the context of the area of inquiry is defined. Marketing research, then, refers to procedures and techniques involved in the design, data collection, analysis, and presentation of information used in making marketing decisions. More succinctly, marketing research produces the information managers need to make marketing decisions.⁵

Although many of the procedures used to conduct marketing research can also be used to conduct other types of research, marketing decisions require approaches that fit the decision-making environment to which they are being applied. Marketing research can make its greatest contribution to management when the researcher understands the environment, industry, company, management goals and styles, and decision processes that give rise to the need for information.

Marketing Research and Decision Making

Although conducting the activities of marketing research requires using a variety of research techniques, the focus of the research should notbe on the techniques. Marketing research should focus on decisions to be made rather than the collection techniques used to gather information to facilitate decision making. This focus is central to understanding the marketing research function in terms of what it should be and to the effective and efficient use of research as an aid to decision making. Any user or provider of marketing research who loses sight of this central focus is likely to end up in one of two awkward and costly positions: (1) failing to collect the information actually needed to make a decision or (2) collecting information that is not needed in a given decision-making context.⁶ The result of the first is ineffectiveness—not reaching a desired objective, and the result of the second is inefficiency—failing to reach an objective in the least costly manner. The chances of either of these occurring are greatly reduced when the decision to be made is the focus of the research effort.

Figure 1.1 Steps in Decision Making

To maintain this focal point, an understanding of the purpose and role of marketing research in decision making is necessary. The basic purpose of marketing research is to reduce uncertainty or error in decision making. It is the uncertainty of the outcome surrounding a decision that makes decision making difficult. If the outcome of choosing one alternative over another is known, then choosing the right alternative would be simple, given the decision-making criteria. If it were certain that alternative A would result in $100,000 in profit and that alternative B would result in $50,000 in profit, and the decision criterion was to maximize profits, then the choice of alternative A would be obvious. However, business decisions must be made under conditions of uncertainty—it is unknown if alternative A will produce $50,000 more than B. In fact, either or both alternatives may result in losses. It is the ability to reduce uncertainty that gives information its value.

Analyzing what is involved in making a decision will help in understanding how information aids decision making. Decision making is defined as a choice among alternative courses of action. For purposes of analysis, a decision can be broken down into four distinct steps (see Figure 1.1): (1) identify a problem or opportunity, (2) analyze the problem or opportunity, (3) identify alternative courses of action, and (4) select a specific course of action.

Identify a Problem or Opportunity

A problem or opportunity is the focus of management efforts to maintain or restore performance. A problem is anything that stands in the way of achieving an objective, whereas an opportunity is a chance to improve overall performance.

Managers need information to aid in recognizing problems and opportunities because before a problem can be defined and alternatives developed, it must be recognized. An example of this type of information is attitudinal data that compares attitudes toward competing brands. Since attitudes usually are predictive of sales behavior, if attitudes toward a company's product were less favorable than before, the attitudinal information would make the managers aware of the existence of a problem or potential problem. Opportunities may depend upon the existence of pertinent information, such as knowing that distributors are displeased with a competitor's new policy of quantity discounts and as a result may be willing to place increased orders for your product.

Analyze the Problem or Opportunity

Once a problem or opportunity has been recognized, it must be analyzed. Until the nature and sources of the problem have been analyzed, no alternative courses of action can be considered. Sometimes the symptoms of the problem are recognized first and there may be several problems that produce the same set of symptoms. An analogy using the human body may help in understanding this point. A person experiencing a headache (symptom) may be suffering from a sinus infection, stress, the flu, or a host of other illnesses (potential problems). Treating the headache may provide temporary relief, but not dealing with the root problem will ensure its return, perhaps worsening physical conditions.

The same type of phenomenon occurs in marketing. A firm, experiencing a decline in sales (symptom), may find it to be the result of a decline in total industry sales, lower prices by competitors, low product quality, or a myriad of other potential problems. No alternative courses of action should be considered until the actual problem has been analyzed. Thus, information aids the manager at this stage in the decision-making process by analyzing the problem.

In some cases an entire research project must be devoted to defining the problem or identifying an opportunity because of a lack of prior knowledge of a particular area. This type of study is usually called an exploratory study and will be discussed more fully in Chapter 4.

Identify Alternatives

The third stage in the decision-making process involves identifying viable alternatives. For some problems, developing alternatives is a natural outcome of analyzing the problem, especially if that particular problem or opportunity has occurred before. A manager's past knowledge and experiences are used to develop the alternatives in these situations. However, in other situations a real contribution of research is to inform the decision maker of the options available to him or her. A company considering introduction of a new product may use consumer information to determine the position of current offerings to evaluate different ways its new product could be positioned in the market. Information on the significant product attributes and how consumers position existing products on these attributes would be an evaluation of possible “openings” (options) available at a given time.

Select an Alternative

The final stage in the decision-making process is the choice among the alternative courses of action available to the decision maker. Information provided by research can aid a manager at this stage by estimating the effects of the various alternatives on the decision criteria. For example, a firm considering introduction of a new product may test market two versions of that product. The two versions of the product are two alternatives to be considered and the sales and profits resulting from test marketing these two versions become the information needed to choose one alternative over another. Another example is the pre-test of television commercials using different themes, characters, scripts, etc., to provide information on consumer reactions to alternative commercials. This information also aids the decision maker in selecting the best advertising approaches to use.

Information collected through research must be directly related to the decision to be made in order to accomplish its purpose of risk reduction. Thus, the focus of research should be the decision-making processes in general and, specifically, the decision to be made in a given situation, rather than the data or the techniques used to collect the data. There is always the danger of a person involved in marketing research viewing himself or herself as a research technician rather than as someone who provides information to help managers make decisions to solve problems and take advantage of opportunities. In fact, it is safe to say that the best researchers think like decision makers in search of information to make decisions rather than as researchers in search of answers to research questions.

Strategic Versus tactical Information Needs

Managers are called upon to make two broad categories of decisions—strategic and tactical. The strategic decisions are those that have long-run implications and effects. These decisions are critical to a firm's success and may not be altered if successful. Tactical decisions are short-run in scope and effect and are usually altered on a regular ...