Transcript Module 3 - Understanding Customers

Ashesi University
COURSE TITLE : MARKETING
SEMESTER : FIRST, 2011/2012
MODULE 3: Understanding Customers: Market
Research
Lecturer: Ebow Spio
LEARNING OUTCOMES
• Define the marketing information system and discuss
its parts
• Appreciate the role of information/marketing
research in the overall marketing process
• Outline the steps in the marketing research process
• Know how to define and solve marketing problems
• Appreciate and compare the advantages and
disadvantages of various methods of collecting
information
The management information system
(MIS)
“A system within an organisation that supplies
information and communication services and
resources to meet organisation needs.”
The marketing information system
(MkIS)
“A marketing information system, MIS, consists
of eople, equipment and procedures to gather,
sort, analyse, evaluate and distribute needed,
timely and accurate information to marketing
decision makers” Kotler et al
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Assess the information needs
Develop needed information
Analyze information
Distribute information
The structure of an information system
Technology
infrastructure
• Hardware
• Systems software
• Applications software
• Communications
Data
infrastructure
• Databases
• Database management
• Archiving
Personnel
• Technology developers
• Systems operators
• Systems maintainers
• Users
• User support
The marketing information system (MkIS)
Marketing
environment
• Target
markets
• Marketing
channels
• Competitors
• Publics
• Macroenvironment
forces
Marketing information system
Developing information
Marketing
intelligence
Internal
records
Assessing
information
needs
Marketing
research
Information
analysis
Distributing
information
Marketing
managers
• Analysis
• Planning
• Implementation
• Organisation
• Control
Marketing decisions and communications
Source: Kotler et al
The marketing information system
Information Needs Probes
• What decisions do you regularly make?
• What information do you need to make these
decisions?
• What information do you regularly get?
• What special studies do you periodically request?
• What information would you want that you are
not getting now?
• What are the four most helpful improvements
that could be made in the present marketing
information system?
Benefits of Marketing Information System
• Help in selecting and developing plans
• Monitor the implementation of current plans
• Monitor Competitor performance
Developing Marketing Information
Marketers can obtain information from:
• Internal data
• Marketing intelligence
• Marketing research
Developing Marketing Information
Internal Data
Internal databases are electronic collections of
consumer and market information obtained from
data sources within the company network,
including accounting, marketing, customer service,
and sales departments
Developing Marketing Information
Advantages and Disadvantage of Internal Databases
Advantages:
• Can be accessed more
quickly
• Less expensive
Disadvantages:
• Incomplete information
• Wrong form for decision
making
• Timeliness of information
• Amount of information
• Need for sophisticated
equipment and
techniques
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Developing Marketing Information
Marketing Intelligence
Marketing intelligence is the systematic collection and analysis
of publicly available information about competitors and
developments in the marketplace
The goal of marketing intelligence is to improve strategic
decision making, assess and track competitors’ actions, and
provide early warning of opportunities and threats
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Developing Marketing Information
Steps to Improve Marketing Intelligence
• Train sales force to spot and report new
developments
• Motivate distributors, retailers, and other
intermediaries (mystery shoppers) to share
intelligence
• Network externally
• Utilize a customer advisory panel
• Utilize government data sources e.g. statistical
service
• Collect customer feedback online
• Purchase information from outside suppliers e.g AC
Nielsen
MARKETING RESEARCH
The collection, analysis and communication of information
undertaken to assist decision making in marketing
(Wilson, A - 2003)
Marketing Research consists of the procedures to develop
and analyze new information to help marketing managers
make decisions. (William D. Perreault, Jr. and E. Jerome
McCarthy – 2006)
Marketing research is the systematic design, collection,
analysis, and reporting of data relevant to a specific
marketing situation facing an organization
(Kotler, P and Armstrong G-2008)
Marketing research gets the "facts" not already available in
the marketing information system.
Marketing Information
Answers the questions –
• What, where and when …. Are customers buying, etc
• How …. Do we compare with our competitors, etc
• Why …. Do customers respond to this form of sales
promotion, etc
• What would happen if …. The government
introduced new legislation in this area, etc
Typical applications for marketing
research
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Market analysis
New product/service development
Selection of brand names and packaging
Pricing decisions
Advertising and promotion decisions
Sales decisions
Service support and complaint handling decisions
Typical data requirements:
1. Market analysis
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Market size
Market profitability
Market growth trends
Main products in the market
Customer attitudes and buying behaviours
Major competitors and market shares
Distribution patterns
Marketing strategies used in the market
Typical data requirements:
2. Product research
Long range economic
studies
Satisfaction levels
and trends with
current products
Gap between current
products & perception
New products
Consumer
research
Competitor research
Research from
international markets
Source: Hines
Typical data requirements:
3. Pricing decisions
• Competitor product prices
• Consumer attitudes to price
– what would they expect to pay?
– what would they be prepared to pay
• Cost/price/volume - what quantities are likely to
sell at different price levels?
Typical data requirements:
4. Advertising and promotion
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Size of potential market
Demographic characteristics of users
Demographic profiles of segments
Behaviours and attitudes of different segments
Language used by customers in talking about product
Share of mind compared with competitors
Typical data requirements:
5. Sales decisions
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Sales territories
Sales personnel efficiency
Sales statistics
Sales forecasts
Sales incentives
Characteristics of a Good Marketing
Research
1. Systemic - Well Planned
2. Objective – relatively unbiased
3. Managerial Oriented – meets specific needs
of decision makers
The marketing
research process
Define the problem and
the research objectives
Develop the
research plan
Collect and analyse
the data
Source: Kotler et al
Interpret and report
the findings
The marketing research process
1. Identification of problems
and opportunities
2. Formulation of research
needs/ brief
3a. Selection of research
agency/provider
3b. Creation of research
design/choice of method
4. Collection of secondary
data
5. Collection of primary data
6. Analysis of data
7. Preparation and
presentation of research
findings and
recommendations
Source: Wilson, A - 2003
The marketing research process
1. Identification of problems and
opportunities
• What do we need to know?
• What pieces of information will give
us the answer?
Problem/Opportunity -information
requirements
• Should be precisely defined
• Assess the ‘symptoms’ of the issue
• Consider –
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Market conditions
Competitor activity
Objectives, plans and capabilities
Previous marketing initiatives – lessons from success or failure
Nature of proposed products or services (if applicable)
Awareness, attitude and behaviour of customers
• Consult all interested parties internally
• Identify what current information is held
The marketing research process
2. Formulation of research needs/ brief
Research Brief
• Background –
• the organisation, its products and its markets
• Rationale –
• Origin and development of research needed
• Decision areas to be addressed by research
• Objectives –
• Definition of areas of problem/opportunity to be explored
• Outline of possible method
• Reporting and presentational requirements
• Timescales
The research Brief
Business problem
Objective of research
Specific questions to be addressed
Test method
Target Group
Action standard
Stimulus material
Carte D’or example
Business Problem
Carte D’Or is currently available in 2 chocolate flavours –
milk and dark. However, very few retailers stock both.
Maintaining the supply of both flavours is reducing the
overall profitability of the brand.
Research Objective
Establish which of the 2 should be withdrawn.
Specific questions to be addressed
Which flavour is most appealing to consumers in terms of
product acceptability?
Which flavour best delivers against the brand promise of
‘authentic chocolate taste’?
Do not confuse:Marketing & Business Objectives
What am I trying to achieve?
(share, penetration, profit, )
Market Place outcome
VS
Research Objectives
What do I need to know?
Information, understanding and insight
oriented
Marketing Research
Defining the Problem and Research Objectives
Types of objectives
• Exploratory research
• Descriptive research
• Causal research
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Marketing Research
Defining the Problem and Research Objectives
Exploratory research is the gathering of preliminary information
that will help to define the problem and suggest hypotheses
Descriptive research is to describe things such as market
potential for a product or the demographics and attitudes
of consumers who buy the product
Causal research is to test hypotheses about cause-and-effect
relationships
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The marketing research process
3a. Selection of research
agency/provider
Information providers
Internal
External
List brokers/
profilers
Full
Service
Specialist
Service
Field
agency
Data
analysis
services
Independent
Consultants
Market
Technique
Reporting
Source: Wilson, A - 2003
Why an external supplier?
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Skills and experience
May be cheaper in the long term
Special facilities/competencies
Internal company policy
Anonymity/objectivity
Selecting a supplier
Shortlist 3 or 4 agencies based on –
• Previous experience in market sector
• Previous experience in geographic region
• Technical capabilities
• Research facilities and resources
• Reputation – quality and timescales
• Communication skills
• Financial stability/length of time established
Selecting Supplier : Research
Proposal/Plan
Research Proposal: Plan that specifies what
information will be obtained and how it will
be done
• Based on research brief
• Final choice of provider based on research
proposal/plan
• Most important part of project
• Provides a template for subsequent research
• Provides a contract between parties involved
Selecting Supplier : Research Proposal/Plan
Research plan outlines sources of existing data and
spells out the specific research approaches, contact
methods, sampling plans, and instruments that
researchers will use to gather data
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Selecting Supplier : Research Proposal/Plan
Developing the Research Plan
Research plan is a written proposal that includes:
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Management problem
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Research objectives
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Information needed
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How the results will help management decisions
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Budget
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Selecting Supplier : Research
Proposal/Plan - content
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Background
Management Problem
Research Objectives
Information Needed
Approach and method
Reporting/presentation procedures
Timing
Budget & Fees
CVs
Related experience and references
Contact details
Contract details
Selecting Supplier : Final selection
criteria
• Ability to comprehend brief and convert it into
proposal
• Compatibility of staff – client and agency
• Evidence of innovative thinking
• Evidence of understanding of market and problem
• Appropriate methodology
• Meets requirements in terms of budget and
timescales
• Past experience/references
Ethical issues
• Industry dependent on –
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Goodwill
Trust
Professionalism
Confidentiality
• Challenges
• Withhold certain information about research
• Poor research results based on poor interpretation of
questions
• Sell under the pretence of doing research
The marketing research process
3b. Creation of research design/choice
of method
The marketing research process
4. Collection of secondary data
Secondary Data
Secondary data is information
that has been previously gathered
for some purpose other than the
current research project
MARKETING RESEARCH
(Dibb, Simkin, Pride & Ferrell 2000)
Internal
sources
Collection of
secondary
data
•Accounting
records
•Marketing
databank
•Periodicals
•Census reports
External
sources
•Government
publications
•WWW
•Other
Internal Secondary Research Sources
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Sales figures
Operational data – stock levels, etc
Customer satisfaction results
Advertising spend
Customer complaints records
Effectiveness data from promotional campaigns
Marketing research reports from past studies
External Secondary Research Sources
• Internet – single search engines, and multiple
search engines
• Directories
• Country information
• Published marketing research reports
• News sources
• Newsgroups and discussion lists
Uses of secondary data
• Helps to clarify research requirements and
define problem better
• Answers some of the research needs and
eliminate need for research.
• Enables more insightful interpretation of
primary data
• Provides comparative data
• Provides information that cannot be obtained
through primary research
Benefits of secondary data
• Faster
• Less expensive to collect
• Internet can be used, increasing speed further
Limitations of secondary data
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Availability
Applicability
Accuracy
Comparability
Evaluation of secondary data
• Is relevant data available?
• Is the cost of data acquisition acceptable?
• Is the data in an appropriate format?
• Does the data apply to the time period of interest?
If ‘Yes’, go to original source if possible –
• Is the data likely to be unbiased?
• Can the accuracy of the data be verified?
• Can it be obtained within the timescale of the project?
If ‘Yes’, then use the data
If ‘No’, then undertake primary research
The marketing research process
5. Collection
of Primary of data
MARKETING RESEARCH
(Dibb, Simkin, Pride & Ferrell 2000)
OBSERVATION
Collection
of primary
data
•Personal
•Mechanical
•Mail
SURVEYS
•E-mail
/Internet
•Telephone
•Personal
Primary research methods
Primary data : Information specifically
collected to solve a current problem
• Observation
• Survey methods
• Mail Questionnaires
• In-depth interviews
• Group discussions
• E-mail/Internet surveys
• Projective techniques
Primary research methods
Observational research involves gathering primary data
by observing relevant people, actions, and
situations
Ethnographic research involves sending trained
observers to watch and interact with consumers in
their natural environment
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Primary research methods
Survey research is the most widely used method and is
best for descriptive information—knowledge,
attitudes, preferences, and buying behavior
• Flexible
• People can be unable or unwilling to answer
• Gives misleading or pleasing answers
• Privacy concerns
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Primary research methods
Experimental research is best for gathering causal
information—cause-and-effect relationships
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Primary research methods
Mail questionnaires
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Collect large amounts of information
Low cost
Less bias with no interviewer present
Lack of flexibility
Low response rate
Lack of control of sample
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Primary research methods
Telephone interviewing
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Collects information quickly
More flexible than mail questionnaires
Interviewers can explain difficult questions
Higher response rates than mail questionnaires
Interviewers communicate directly with respondents
Higher cost than mail questionnaires
Potential interviewer bias
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Primary research methods
Mail, telephone, and personal interviewing
• Personal interviewing
• Individual interviewing
• Group interviewing
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Primary research methods
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Personal interviewing
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Individual interviewing
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Involves talking with people at home or the office, on the street, or in
shopping malls
Flexible
More expensive than telephone interviews
Group interviewing or focus group interviewing
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Involves inviting six to 10 people to talk with a trained moderator
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Primary research methods
Online marketing research
• Internet surveys
• Online panels
• Online experiments
• Online focus groups
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Primary research methods
Online marketing research
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Low cost
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Speed to administer
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Fast results
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Good for hard-to-reach groups
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Hard to control who’s in the sample
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Lack of interaction
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Privacy concerns
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Quantitative research
• Research aimed at producing data that can be
statistically analysed and whose results can be
expressed numerically
• For example: market share, spend per
customer, market size
• Easier to analyse than qualitative data
Quantitative methods
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Face to face surveys
Telephone surveys
Self-administered surveys
Omnibus surveys
Hall tests
Placement tests
Simulated test markets
Panels
What is Qualitative Research?
Qualitative Research:
is the practise of consumer psychology
is concerned with understanding things rather than
with measuring them.
It is used to extract beliefs, attitudes, values,
assumptions that are not easily obtained by
quantitative measures or could be open to
misinterpretation.
What is Qualitative Research cont?
At a simplistic level, it answers the questions of:
‘What’, ‘Why’ or ‘How’
But: it cannot answer the question: ‘How Many’.
It generally:
• Involves small samples of consumers (not representative of whole population)
• employs a wide variety of techniques
• relies on interpretation of findings
• allows access to the ways in which consumers express themselves
• is used to retrieve underlying motivations
What is Qualitative Research?
also used to complement quantitative research
either PRE :
elicit consumer vocabulary
describe people, typologies etc.
or POST :
explain quantitative data
It is NOT a cheap substitute for quantitative research
Role and Value of Qualitative Research
Interprets and
presents at the
individual level
Creative
Developmental
Very direct
relevance
STRENGTHS
Actionable
Explanation
Understanding
Insight into
consumer motives,
beliefs, value
systems
How Qualitative research works
• Techniques are borrowed from social science/ psychology
• Face to face research exploring conscious and semi – conscious beliefs,
attitudes and opinions
• Interviews or group discussions use verbal elicitation, non verbal
interpretation, enabling techniques and stimulus material
 Followed by analysis and interpretation
• Findings are not statistically valid but can be indicative if target audience is
correctly sampled.
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It is moderated or facilitated by moderator with social science background
• The moderator uses a guide: questions to solicit relevant response
When to use Qualitative
Research Methodology
• Guidance to marketing decision making
• Stimulation for strategic direction
• To ask ‘why’, not ‘how many’
• To understand motivation behind behaviour
• To identify distinct behavioural groups
• For attitudes and brand relationship studies
• To generate lateral, abstract, creative output
• To explore market parameters for subsequent quantitative
studies.
When not to use Qualitative Research
Methodology
• For market volume assessments
• For answers which need statistical validity
• For pricing and propensity to purchase
• When the sample needs to be represent the whole
population
• Because its ‘cheap’!
Focus Groups
• Group Discussions : Interviewing people in an informal group setting. Uses open-ended
questions under the direction of a moderator
 Main trade of qualitative research with 6-10 respondents
 Comfortable duration
 Productive information
 Permission for projective/associated techniques
• Mini Groups
 Identical to standard groups but with 4 - 5 respondents
 Useful when interaction of group needed but greater individual response required
 Can overcome problems of embarrassment, expertise differences & recruitment difficulties
• Extended Groups
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Gruelling, but involving (sessions last 3 - 4 hours)
Useful where there is much to cover with same people
Or immersion is required to stimulate creativity
Require highly proficient moderators.
• Individual
In-depth Interviews
– for sensitive topics
– difficult to recruit or highly dispersed respondents
– where individual profile will be significant to analysis
• Pairs and triads
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can set up opposition dynamic (role playing)
or parent-child interaction (joint decision-making)
or ‘moral support’ (for teens, kids)
not so great for projective or ‘play’ related tasks
• Laddering
– benefit networking
– from category features
– basic to essential need satisfaction
Skills and Role of the Moderator
personal presentation
- dress
- demeanour
facilitator
- interaction between respondents
- 2 way communication with the group
listening
- learning
- homing in
- following up
bonding
- trust
- sensitivity
- confidence builder
but minimal self
disclosure
MODERATOR
social chameleon
- age
- class
- background
- personality
genuinely
like people
ability to
- focus
- guide
- balance
- suspend judgement
AND STILL BE YOURSELF!!!
Observing Behaviour
• Important form of primary research
• No questions are asked of participants
• Measures behaviour – not reasons for
behaviour
• Normally only public behaviour – not possible
to observe private behaviour in people’s
homes or workplaces
Personal methods of observation
• Observation in natural setting – e.g. stores
• One-way mirror observation
• Mystery shopping
Mystery shopping
• Researchers act as customers
• Act to a specified brief
• Measures process of service delivery stage by
stage
• Aims to collect facts not perceptions
• Training necessary
• More than one visit may be required
Mechanical observation
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Scanners
Electronic TV viewing meters
Internet cookies
Security cameras
Questionnaire Construction
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Develop question topics
Select question and response formats
Select wording
Determine sequence
Design layout and appearance
Pilot test
Undertake survey
TYPES OF QUESTION
• Behavioural - market size, market share, usage
rate, awareness
• Attitudinal - image and attitude surveys,
brand mapping, help build market share
• Classification - all surveys
Behavioural questions
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Have you ever ……?
Who do you know …………?
How many ………….?
When did you last ………?
Do you have ………?
Who does …………?
Attitudinal Questions
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What do you think of ……?
Why do you …………?
Do you agree or disagree ………?
How do you rate ………?
Which is best (or worst) for ………?
Classification questions
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Sex
Household Status
Social Class
Industrial occupation
Number of employees
Location
Neighbourhood
Questions
• Open-ended
• Closed
• Scalar
Questions
Closed-end questions include all possible answers, and subjects
make choices among them
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Provide answers that are easier to interpret and tabulate
Open-end questions allow respondents to answer in their own
words
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Useful in exploratory research
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Layout and appearance
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Spacing
Quality of production
Variety
Coding/analysis requirements
QUIZ
• Distinguish between qualitative and
quantitative approaches to research- and give
some key advantages and limitations of each
approach
The marketing research process
6. Analysis
of data
Analysing qualitative data
• Organising data manually –
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The tabular method
The cut and paste method
Spider-type diagrams
Annotation method
• Organising data via computer –
• Content analysis
• Text analysis
• Need to consider –
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Data entry
Data storage
Coding
Search and retrieval
Steps in analysing quantitative data
• Coding
• Data entry
• Tabulation and statistical analysis
Analysing quantitative data
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Descriptive methods
Statistical significance and hypothesis testing
Measuring relationships
Multivariate data analysis
The research report
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Title page
Table of contents
Executive summary and recommendations
Problem definition
Research method (and limitations)
Research findings
Conclusions
Appendices
The marketing research process
7. Preparation and presentation of
research findings and
recommendations
Understanding your audience
• Respect them as your client – be professional,
focused and structure for them (not you!)
• Demonstrate your understanding of their situation
• Explain how the information will help them
• Explain details, charts, etc
• Summarise the key points
• Make clear recommendations
Structuring your presentation
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Introduction
Methodology
Key findings
Conclusions and recommendations
Questions
Marketing Research & Decision Making
• If research doesn’t have action implications, it
has little value. It should guide marketing
decisions
Apply Findings in marketing strategy planning –
e.g. choice of a target market or crafting of the
marketing mix
Analyzing Marketing Information
Customer Relationship Management
(CRM)
CRM consists of sophisticated software and
analytical tools that integrate customer
information from all sources, analyze it in
depth, and apply the results to build stronger
customer relationships
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Analyzing Marketing Information
Customer Relationship Management
(CRM)
Data warehouses are comprehensive companywide electronic
databases of finely tuned detailed customer information
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Uses
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To understand customers better
To provide higher levels of customer service
To develop deeper customer relationships
To identify high-value customers
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Analyzing Marketing Information
Customer Relationship Management
Touch points: Every contact between the customer and company
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Customer purchases
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Sales force contacts
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Service and support calls
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Web site visits
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Satisfaction surveys
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Credit and payment interactions
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Research studies
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Distributing and Using
Marketing
Information
Information distribution involves entering
information into databases and making it
available in a time- useable manner
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Intranet provides information to employees and
other stakeholders
Extranet provides information to key customers
and suppliers
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Other Marketing Information Considerations
Marketing Research in Small Businesses and
Nonprofit Organizations
Need information about their industry, competitors,
potential customers, and reactions to new offers
Must track changes in customer needs and wants,
reactions to new products, and changes in the
competitive environment
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Other Marketing Information Considerations
Marketing Research in Small Businesses and
Nonprofit Organizations
Sources of marketing information:
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Observing their environment
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Monitoring competitor advertising
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Evaluating customer mix
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Visiting competitors
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Conducting informal surveys
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Conducting simple experiments
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Other Marketing Information Considerations
Marketing Research in Small Businesses and
Nonprofit Organizations
Sources of marketing information:
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Secondary data
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Trade associations
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Chambers of Commerce
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Government agencies
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Media
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