MBA Semester 3

MK0013 Market Research (4 credits)

(Book ID: B1221)
ASSIGNMENT- Set 1
Marks 60
Note: Each Question carries 10 marks. Answer all the questions.

1. List the problems associated with marketing research.

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
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."[1] Marketing research is the systematic gathering, recording, and analysis of
data about issues relating to marketing products and services. The goal of marketing research is
to identify and assess how changing elements of the marketing mix impacts customer behavior.
The term is commonly interchanged with market research; however, expert practitioners may
wish to draw a distinction, in that market research is concerned specifically with markets,
while marketing research is concerned specifically about marketing processes.[2]
Marketing research is often partitioned into two sets of categorical pairs, either by target market:

Consumer marketing research, and

Business-to-business (B2B) marketing research

Or, alternatively, by methodological approach:

Qualitative marketing research, and

Quantitative marketing research

Consumer marketing research is a form of applied sociology that concentrates on understanding

the preferences, attitudes, and behaviors of consumers in a market-based economy, and it aims to
understand the effects and comparative success of marketing campaigns. The field of consumer
marketing research as a statistical science was pioneered by Arthur Nielsen with the founding of
the ACNielsen Company in 1923.[3]
Thus, marketing research may also be described as the systematic and objective identification,
collection, analysis, and dissemination of information for the purpose of assisting management in
decision making related to the identification and solution of problems and opportunities
in marketing
Well, smack me on the wrist and call me shorty, they are. You would think that's a good thing and
it is except... That's the operative word, 'except.' The little critters are still multiplying around the
web like rabbits in heat, but there is a little problem. Actually, the problem isn't so little.
This darn problem haunts me. At least a couple of times a week it drives me insane. Whenever I
run across it I feel like the dullest axe in the shed.
If I were double jointed, I'd kick myself in the 'hello there.'
So what is this dumb mistake that:

Has me pulling my hair out by the roots

Has me kicking myself over and over

Haunts me like that house in Amityville

Outdated resource boxes with links leading to that dreaded 404 error.
I'm afraid to guess how much money and traffic I'm losing. It's a nightmare. Those babies are
doing their part, but crazy John has made the ultimate dumb mistake.
How did this happen? How could I end up looking like the 'village idiot?'
The only answer I can give is, 'I didn't realize.'

I never realized how viral articles were. I had no idea that little articles could circle the globe for
years.
I didn't see the big picture. I wrote those resource boxes with no regard for the future.
How can you avoid making the same mistake?
1. If you're going to promote an affiliate program, don't link directly.
Sometimes programs just disappear. Other times, you may find the program hasn't lived up to
your expectations.
Set up a redirect page on your website. If the program disappears, or you no longer wish to
promote it, you can reset the page to lead wherever you choose.
2. Don't lead directly to your opt in list.
You never know when a list may change their pricing or services. For one reason or another you
may change listservs.
A better option is to set up a page on your site to capture addresses. If you leave your present
service, you can edit the page to lead to your new list.
If I had set up my links according to option number one for affiliate programs, or two for list
building, I'd have kept the leads flowing and the orders coming for years.
Creating killer articles can drive traffic and pull in profits for years. So avoid the mistakes of this
'dumb monkey' and reap the full rewards of your efforts.

2. Explain the role of Marketing research in decision-making process

The role and limitations of marketing research

"Marketing research does not make decisions and it does not guarantee success". Marketing
managers may seek advice from marketing research specialists, and indeed it is important that
research reports should specify alternative courses of action and the probability of success, where
possible, of these alternatives. However, it is marketing managers who make the final marketing
decision and not the researcher. The second observation, that marketing research does not
guarantee success, is simply a recognition of the environment within which marketing takes
place. In the fields of science and engineering researchers are often working with deterministic
models of the world where y = f(x). That is, x is a necessary and sufficient condition for y to
occur. For instance, an increase in pressure is usually necessary and sufficient to bring about a
rise in air temperature. In the social sciences, and this includes marketing and marketing
research, the phenomenon under investigation rarely, if ever, lends itself to deterministic
modelling. Consider the marketing problem of determining how much to spend on promotion in
order to achieve a given market share. The link between promotional expenditure and sales is not
so direct as that between pressure and temperature. There are a great many more intervening
variables, including: the media used, the effectiveness of the promotional message, the length
and frequency of the campaign, not to mention the many dimensions of the product, price and
distribution. Marketing researchers work with probabilistic models of the form:
y = f(x1)..(fx2)...f(xn)...
This reflects the fact that in order for a target market share to be reached some promotion
(amount unknown) is necessary but will not be sufficient, on its own, to achieve the target. Y is a
function of a number of variables and the interactions between them. The model is further
complicated by the fact that these interactions are themselves often not understood. It is for these
reasons that marketing researchers cannot guarantee that decisions based on their information
will always prove 'successful'. Rather the best that a competent researcher and a well designed
study will be able to offer is a reduction in the amount of uncertainty surrounding the decision.
A definition of marketing research
Green and Tull1 have defined marketing research as follows:

"Marketing research is the systematic and objective search for, and analysis of, information
relevant to the identification and solution of any problem in the field of marketing."
The key words in this definition are; systematic, objective and analysis. Marketing research
seeks to set about its task in a systematic and objective fashion. This means that a detailed and
carefully designed research plan is developed in which each stage of the research is specified.
Such a research plan is only considered adequate if it specifies: the research problem in concise
and precise terms, the information necessary to address the problem, the methods to be employed
in gathering the information and the analytical techniques to be used to interpret it.
Maintaining objectivity in marketing research is essential if marketing management is to have
sufficient confidence in its results to be prepared to take risky decisions based upon those results.
To this end, as far as possible, marketing researchers employ the scientific method. The
characteristics of the scientific method are that it translates personal prejudices, notions and
opinions into explicit propositions (or hypotheses). These are tested empirically. At the same
time alternative explanations of the event or phenomena of interest are given equal consideration.
Not many years ago an agricultural engineering company developed an improved rice milling
machine. The machine was introduced into Thailand where existing rice milling machines were
of a design which resulted in a high percentage of brokens (broken kernels). The new rice mill
produced a negligible percentage of brokens. Intuitively a successful product would be predicted,
launched with hardly any need for marketing research when the new mill had such obvious
advantages over existing products. The agricultural engineering company went through the
expensive and time-consuming process of importing the machine into Thailand. They set up
extensive distribution and servicing facilities only to be surprised when the mill failed to gain
acceptance. In Thailand, smallholders take their rice to a miller.
Since they do not have sufficient cash to pay for milling their rice they get paid in 'brokens'. The
miller then sells the 'brokens' for animal feed. The more effective milling machine simply did not
fit into the Thai rice processing system. The company's assessment of the market was hardly
objective. They saw the 'brokens' as a problem which their product solved. The prospective
customer did not see it as a problem at all.

The third of the key terms in the definition given a little earlier was analytical. The marketing
researcher's task goes beyond the collecting of data. He/she must also interpret the data in terms
of what the it means to the organisation which commissioned the research. Knowing that 60% of
those interviewed thought that product A was superior to product B is, in itself, of little value.
The organisation needs to know the alternative ways it can respond to this data. Data is
equivalent to the raw materials of manufacturing; it has to be converted into information before it
becomes useful in decision making. The process of convening data into information is achieved
through analysis.
Although the need for precision and thoroughness in marketing research has been stressed here,
it is to be remembered that, in practice, there is a perpetual conflict between the demands of
expediency and the search for truth. The reality is that management is frequently under pressure
to make timely decisions. Therefore management often seeks answers through marketing
research in the shortest time possible and, moreover, at minimum cost. On such occasions its
methods tend to be less theoretically rigorous and its analysis more superficial.
The market research brief
Marketing research can be concerned with any of a variety of aspects of the market: the product,
sales, buyer behaviour, promotion, distribution, pricing, packaging, etc. Since the researcher
cannot investigate everything about a market, he/she must be selective. The question remains as
to how the researcher decides where to focus the study, and to what depth each issue should be
investigated. The answer should lie in a document called the research brief. The research design
is a set of guidelines given to the researcher by the person(s) who have commissioned the
research and/or the individual(s) who are to make use of the results in their decision making. The
brief must inform the researcher which aspects of the market are particularly important. In
particular, the research brief should include:
the

purpose

of

the

research

the objectives stated in a clear, concise, attainable, measurable and quantifiable way
a

time

horizon

resource

allocation,

including

the

budget

and

facilities

a reporting period.
Each of these components of the brief is explained in a little more detail in the section that
follows.
The purpose of the research
It is not at all unusual for marketing managers to neglect to tell the researcher the precise purpose
of the research. They often do not appreciate the need to do so. Instead, they simply state what
they think they need to know. This is not quite the same thing. To appreciate the difference
consider the case of the marketing research agency which was contacted by the International
Coffee Organisation (ICO) and asked to carry out a survey of young people in the age group 1524. They wanted information on the coffee drinking habits of these young people: how much
coffee they drank, at what times of day, with meals or between meals, instant or ground coffee,
which other beverages they preferred and so on. In response, the research organisation developed
a set of wide-ranging proposals which included taking a large random sample of young people.
In fact much of the information was interesting rather than important. Important information is
that information which directly assists in making decisions and the ICO had not told the research
company the purpose of the research. The initial reason for the study had been a suspicion, on the
part of the ICO, that an increasing percentage of young people were consuming beverages other
than coffee, particularly soft drinks, and simply never developed the coffee drinking habit. Had
this been explained to the research company then it is likely that their proposals would have been
radically different. To begin with, the sample would have been composed of 15-24 year old noncoffee drinkers rather than a random sample of all 15-24 year olds. Second, the focus would have
been non-coffee drinking habits rather than coffee drinking habits.
Unless the purpose of the research is stated in unambiguous terms it is difficult for the marketing
researcher to translate the decision-maker's problem into a research problem and study design.
Clear, concise, attainable, measurable and quantifiable objectives

Suppose that the marketing manager states that he needs to know the potential market for a new
product his/her organisation has been developing. At first glance this might appear to meet all of
the requirements of being clear, concise, attainable, measurable and quantifiable. In practice it
would possibly meet only one of these criteria, i.e. it is concise!
Here is another case to be considered. A small engineering firm had purchased a prototype treelifter from a private research company. This machine was suitable for lifting semi-mature trees,
complete with root-ball intact, and transplanting such trees in another location. It was thought to
have potential in certain types of tree nurseries and plantations.
The problem with the objective is that the marketing manager needs to know the potential market
for the new tree-lifter is that it is not attainable. One could find out how many tree-lifters were
currently being sold but this is not the same as the objective set by the marketing manager. The
market potential for any new brand is a function of at least 4 things, as shown in Figure 1.1.
Figure 1.1 The components of market potential

It was possible to test customer reaction to the concept of the new tree-lifter by showing pictures,
line drawings and by supplying product specifications to prospective buyers. However, since the
company had not decided their pricing policy an important element could not be tested. In large
measure, it was also possible to gauge the likely reaction from competitors. The researchers
began by looking at the basis of competition to determine whether it was on price, product
quality or unique product features. The researchers were able to look at precedents. They
examined the pattern of response on past occasions when one or other of those companies
already in the market had launched a new product. An audit of the environment was undertaken
too, but the missing component was the company's' own plans for exploiting the market. Since
the company had no involvement in the agricultural engineering sector, prior to acquiring the
rights to the tree-lifter, they had no agreements with distributors, no idea of which, if any, of the

distributors would be prepared to stock their product; they had no salesmen trained in selling into
this industry and so on. The product's potential depended very much on such initiatives.
The solution would have been to undertake a study which would have described the market in
detail in terms of customers, competitors and the environment. The company could then have put
a marketing plan together and conducted a follow-up study to test their propositions out on the
marketplace.
The need to set a time horizon for marketing research
Inevitably there are deadlines which the marketing research activity must fit and these must be
stated clearly at the outset of the research. As was said earlier, because of time pressures,
management is often seeking quick answers from marketing research. If the researcher is aware
of the time constraints then this will become an overriding factor when he/she plans the research
design. He or she is likely to put forward a design which is less elegant, and gives rise to less
precise information but delivers the results on schedule.
A resource allocation, including the budget and facilities
There are essentially two approaches to establishing the resource allocation to a particular
marketing research exercise. Management can start with the problem and work out how much it
will cost to solve it. Alternatively, they can decide how much the management can afford to
spend, at the time, and seek the best answer they can for the time, money and manpower
allocated. In practice the decision-makers prefer the latter approach and the researchers the
former. In the end, some kind of compromise develops. The researcher rarely gets all of what
he/she judges is required to reach a satisfactory conclusion but if the research proposal is well
thought out and persuasively presented some concessions can be obtained.
Whichever the approach to resource allocation adopted, it is imperative that the researcher is
aware of the financial and other constraints within which he/she must complete the work.

3. Describe consumer research process in detail.

The discipline of consumer research has its roots in marketing research. There are two paradigms
of consumer research qualitative and quantitative. While qualitative deals with consumer
insights in a visual form or in words, quantitative is primarily number driven. Some researchers
now use both these techniques together to get more accurate insights. The consumer research
process focuses on defining the research problem, conducting exploratory and evaluation,
conclusive research design and qualitative and data collection, analysis, and report.
Exploratory research involves collecting secondary data, i.e., already published data. If the
research problem is solved by the secondary data, no conclusive research is needed. Conclusive
research involves collecting primary data, directly from consumers, retailers, etc. The conclusive
research project has to be designed before data collection can be done.
The researcher has to select the methods of data collection, which can be quantitative and
qualitative. Quantitative data collection methods include: observation (researcher observes the
activities of the consumer), experimentation (the consumer reactions to change in product
feature, price etc. are studied in the laboratory, under controlled conditions, or in the field), and
survey (consumer is directly approached for information). There are many quantitative
techniques or tools which are used for primary data collection questionnaire (consumer is
directly asked questions through mail, over telephone, online, or through personal interview) and
attitude scales (attitude measurements techniques like graphic rating, semantic differential,
ranking,

and

Likert

scale).

The qualitative methods of data collection are depth interviews like in-depth interviews
(personal interview with unstructured questionnaire) and focus groups (group interaction to study
the consumer); projective techniques like completion technique (sentence and story completion),
association technique (single word, phrase, or sentence), and construction technique; and
metaphor analysis (collage making, ZMET, and means-end chain model). Sampling is an
important part of the research design and involves the selection of sampling unit, sampling
method, and sample size depending on the time and cost factors. Sampling is followed by data
collection, analysis, and report.
4. What is the importance of customer research?

Research, as a general concept, is the process of gathering information to learn about something
that is not fully known. Nearly everyone engages in some form of research. From the highly
trained geologist investigating newly discovered earthquake faults, to the author of best selling
spy novels gaining insight into new surveillance techniques, to the model train hobbyist spending
hours hunting down the manufacturer of an old electric engine, each is driven by the quest for
information.

The rules are being remade. Customers are in charge, completely!Old ways are being jettisoned;
new ways are all the rage.
In the new marketing world is the importance of customer segmentation irrelevant?
Is market segmentation just one more old rule that needs to go?
Okay,

Out

here's

With

The

Old;

In

With

hedge.

The

New

(market

Maybe.

segmentation)

Old school customer segmentation probably does need to go. A lengthy process, averaging a year
or more to complete, with a static model that was meant to have a working life of five or more
years. Clearly, no longer viable.
However, the concept of customer segmentation, altered by the new marketing environment, is
more of a necessity than ever.
The key here is that customers are in charge.

In the new marketing world, where the web is rewriting the rules, customers make the decisions.
They need to be attracted, listened to, cajoled, and informed. They are never more than a click of
the back button away from disappearing, potentially forever.
Now certainly the impact of the new marketing world can be overstated. Traditional marketing
channels still work and still, in some ways, dominate. But the trend is relentless and the lessons
of the web are coming to traditional marketing, not vice-versa.
In this new world, knowing your customers, and talking with them almost personally is an
imperative. In the old school, marketers often behaved as if their main role was to tell customers
what to do, and how and when to do it.
No longer.
The old school is out forever.
In the new marketing world, marketers and companies must know and understand their
customers..............or

The

New

perish.

Rules

of

Customer

Market

Segmentation

Customer Market segmentation gives marketers the information to speak more and more directly
to the needs of specific groups of customers, with similar behaviors, tastes, styles, and opinions.
Moreover, the sheer quantity of information available about customers, their preferences, habits,
and yes, demographics, allows segmentation to be even more potent.
So what, exactly, does customer market segmentation bring to the new marketing toolbox?
With the explosion of data available on customers (and potential customers), customer market
segmentation allows marketers to identify discrete groups of customers with a high degree of

accuracy based on demographic, behavioral, and geographic data. Market research adds
psychographic

(attitudinal)

and

enriched

behavioral

and

demographic

data.

Customer Market Segmentation Is Now Primarily An Analysis Of Internal Customer Data

In the old school, market research drove the segmentation effort. Data on customers was
relatively scarce, so market segmentation required market researchers to analyze survey data for
attitudinal and behavioral characteristics and then map the resulting segments of customers
primarily on the scanty demographic data available in internal company databases.
Now, market researchers can begin with robust internal databases brimming with behavioral and
demographic data, using surveying to add psychographic and attitudinal variables, can classify
segments

The

with

Criticality

much

of

greater

Market

precision.

Segmentation

Marketers can develop, hone and deliver products that fit these groups and niches with a much
higher degree of accuracy than ever before. They can easily test market. And they can
communicate directly with segments, using the self-selection capabilities of the Web.
Market segmentation leads to more precisely designed products and services for customers,
communications that speak directly to these customers, and from both these outcomes, increased
sales and revenue.

For marketers, research is not only used for the purpose of learning, it is also a critical
component needed to make good decisions. Market research does this by giving marketers a
picture of what is occurring (or likely to occur) and, when done well, offers alternative choices

that can be made. For instance, good research may suggest multiple options for introducing new
products or entering new markets. In most cases marketing decisions prove less risky (though
they are never risk free) when the marketer can select from more than one option.
Using an analogy of a house foundation, marketing research can be viewed as the foundation of
marketing. Just as a well-built house requires a strong foundation to remain sturdy, marketing
decisions need the support of research in order to be viewed favorably by customers and to stand
up to competition and other external pressures. Consequently, all areas of marketing and all
marketing decisions should be supported with some level of research.
While research is key to marketing decision making, it does not always need to be elaborate to be
effective. Sometimes small efforts, such as doing a quick search on the Internet, will provide the
needed information. However, for most marketers there are times when more elaborate research
work is needed and understanding the right way to conduct research, whether performing the
work themselves or hiring someone else to handle it, can increase the effectiveness of these
projects.

1. Describe data-driven MDSS in detail.

A decision support system (DSS) is a computer-based information system that supports business
or organizational decision-making activities. DSSs serve the management, operations, and
planning levels of an organization and help to make decisions, which may be rapidly changing
and not easily specified in advance.
DSSs include knowledge-based systems. A properly designed DSS is an interactive softwarebased system intended to help decision makers compile useful information from a combination
of raw data, documents, personal knowledge, or business models to identify and solve problems
and make decisions.
Typical information that a decision support application might gather and present are:

inventories of information assets (including legacy and relational data sources,

cubes, data warehouses, and data marts),

comparative sales figures between one period and the next,

projected revenue figures based on product sales assumptions.

The concept of an interactive computer-based system that helps companies make better
business decisions has been around since computers came into widespread use.

The vision is deceptively simple. Companies take advantage of in-depth reporting tools
and predictive models to analyze data and learn what happened in their business, why it
happened and, eventually, what will happen. This yields a deep, fact-based understanding
that complements experience and intuition and leads to exemplary decision-making and
dramatic competitive advantage.

While this sounds simple, in reality there are a number of pitfalls that can complicate the
implementation of a decision support system (DSS). Nevertheless, a number of
innovative companies have avoided the pitfalls by understanding that creation of a
successful data-driven DSS requires three essential elements: first, a process that
carefully gauges the short- and long-term decision support needs of the business and what
is required to meet those needs; second, a flexible, step-by-step plan for growth; and,
third, a centralized data warehouse that can deliver a single, comprehensive, and up-todate picture of the enterprise that all levels of the organization can access as needed.

Defining the Business Needs

The process begins with an analysis aimed at precisely defining the business challenge(s)
that your DSS will address, both in the short- and long-term.

After identifying all the areas that might benefit from improved decision support, you
must then prioritize. For example, you may recognize that your marketing department has
delivered solid results for its direct marketing programs. How can you maintain or boost
the direct marketing program's success while lowering the cost? The data-driven DSS
enables you to cost effectively target customers that are most likely to respond. It helps
you more clearly understand the customers you have been targeting, the customers you
need to target (perhaps broken down by geography and demographics), and what you can
change to improve the targeted mailings.

In another part of the company your customer service department has been struggling to
get accurate, up-to-date information on computer screens at the call-in center. Here, you
are hoping the data-driven DSS can help improve customer service and create
opportunities for your agents to offer additional products and services.

Both situations present legitimate cases for implementing a DSS, but to decide how to
proceed you need to consider such things as: Which business unit can deliver the most
return on investment (ROI)? Which project can deliver the most substantial ROI? How
quickly can that ROI be delivered?

The bottom line here is that companies that successfully implement a DSS clearly define
and prioritize the problems they are trying to solve, understand what they expect the DSS
to achieve, and establish a way to measure its success. Once you have prioritized and
implemented - your measurable results can justify extending the data-driven DSS to other
business areas and applications.

Defining User Needs

Once you've defined the business goal, it is time to define the targeted user group and its
particular needs. Two of the most important questions to explore are: How current does
the information need to be? And in what form do the users need it?

Consider three potential user groups. Executives tend to need a global, high-level look
with much of the analysis done behind the scenes. Rarely do they need information in
real-time. In contrast, the front-line employee does need up-to-date information in realtime, but does not typically need global or in-depth types of analysis. And your power
users - mid-tier decision-makers such as buyers in retail stores or operations managers
who do scheduling for airlines - need both real time and historical detail.

It is helpful to create a matrix or table that details the system's users by job positions or
by department and document how many individuals comprise each category. From there,
you can define the general data requirements of each audience. Include such things as
output formats, the type of data, the audience's need to analyze the data, the required
frequency of the reports, and how the data will be used.

It is also crucial at this point to consider what the needs of each user group imply for
privacy and security concerns. For example, at a health insurer, some people may need to
see only the number of emergency room admissions over the last six months, while others
may need to see individual diagnoses and treatments. The system must be designed in
such a way that it clearly identifies and provides access to those who need the selected
information and those who should be denied access. This too should become part of your
matrix

A Decision Support System (DSS) is a way to model data and make quality decisions
based on it. Making the right decision in business is usually based on data quality and
ones ability to sift through and analyze the data to find trends that solutions and
strategies can be created from/for. Decision Support Systems are usually computer
applications with a human component. They can sift through large amounts of data and
pick between the many choices.

What are Decision Support Systems?

While many people think of a DSS as a specialized part of a business, most companies
have actually integrated them into their day to day operating activities. For instance,
many companies constantly download and analyze sales data, budget sheets, and
forecasts. They update their strategy once they analyze and evaluate the current results.
Decision Support Systems have a definite structure in businesses. In reality, however, the
data and decisions that are based on them are fluid and constantly changing.

2. List the functions of marketing information system.

a programmed system that is intended to give an organized flow of information to

maintain the marketing activities of an organization.

serves collaborative, analytical and operational needs. In the collaborative mode, the
MkIS enables managers to share information and work together virtually.

can enable marketers to collaborate with customers on product designs and customer
requirements. The analytical function is addressed by decision support applications that enable
marketers to analyze market data on customers, competitors, technology and general market
conditions.

These insights are becoming the foundation for the development of marketing strategies
and plans.

addresses operational needs through customer management systems that focus on

the day-to-day processing of customer transactions from the initial sale through customer
service.

are designed to be comprehensive and flexible in nature and to integrate with each other
functionally.

Advance looking and vital to the organizations capacity to generate competitive

advantage.

The

Strategic

Role

of

the Marketing

Information

Systems

Historically, the role of the marketing function has been to support make and sell business
strategies that emphasized increases in market share over the creation of long-term customer
value. This view started to change after World War II with the recognition that satisfying
the customers needs and wants should be the focus of a firms business activities. The emphasis
on the customer elevated the importance of marketing as a core business function on a par with
research and development and production. The marketing function has become the firms
window to the world in the sense that it must monitor the marketing environment for changes in
buyer behavior, competition, technology, economic conditions, and government policies.

Marketing is a strategic function in that marketing activities enable organizations to identify

and adapt to changes in the market environment. The strategic function of marketing is further
emphasized as Internet-based technologies have enabled radically new approaches to selling
where information technology for the first time touches customers and provides new means for
collecting marketing information. In a knowledge-intensive economy, the ability to collect,
analyze and act upon marketing information more rapidly than the competition is the core
competency from which competitive advantage flows. Marketing information systems provide
the information technology backbone for the marketing organizations strategic operations. In a
broader sense, the MkIS creates an organized and timely flow of information required by
marketing decision makers. It involves the equipment, software, databases, and also the
procedures, methodologies and people necessary for the system to meet its organizational
objectives. MkIS encompasses a broad spectrum of activities from simple transaction processing
complex marketing strategy decision making. C. The Role of the Internet Information technology
has transformed how firms conduct business. For example, financial service providers such as
banks, stockbrokers and insurance companies could not do business today without their clientserver-based information technology. This technology has long supported marketing activities.
However, it is the recent advent of the Internet, and especially the browserbased World Wide
Web, which has ignited a revolution in MkISs. The term cybermarketing is often used to
describe the Internets convergence of computers, information systems, telecommunications and
the customer with the marketing process. Internet marketing is characterized by interactivity,
graphical user interfaces, multimedia content, and one-to-one connectivity. Internet technologies
are not only providing new ways to reach the customer, but also to enable the reengineering of
the entire marketing process and, indeed, the entire enterprise. It is no longer acceptable to view
marketing as a standalone activity with lengthy time lapses between product concept, marketing
strategy and commercialization. Marketing has become interactive and real time. The rapidly
growing field of marketing automation encompasses customer management functions to support
e-commerce. As depicted in Figure 2, customer management applications include marketing
decision support systems, customer relationship management, sales force automation, customer
service and e-commerce activities. These activities are often described as front office
customer-oriented activities. Back office enterprise resource planning (ERP) activities include
manufacturing, finance and human resources. Supply chain management (SCM) activities

encompass electronic procurement, inventory management, quality management and logistics

systems to link an organization with its suppliers. These three elements comprise the enterprise
information system. Large integrated enterprise software companies such as Oracle, SAP,
PeopleSoft, and IBM address all three major applications and they are beginning to use Webbased technologies to redesign business processes throughout the organization. The result is
leaner organizations, faster response times, and lower costs. Decisionmakers are able to integrate
information from customers, suppliers, and the internal organization to obtain an enterprise-wide
view of their ability to develop and execute marketing strategy. Until truly integrated browserbased systems are widely in use, the principal challenge for marketers is to tie e-commerce
generated data with legacy information systems in order to create a unified view of each
customer. Marketers will need to understand all the various ways that customers are touching the
business through existing interfaces and e-commerce. Many of the older interfaces, such as
telemarketing centers, point of sale (POS) systems, and the sales force are likely to be supported
by legacy client-server technology. Marketers need to consolidate data from those systems with
that from the Web-based ecommerce sources into a holistic view of the customer and make it
available
decisionmakers.

to

D.
Benefits of the Marketing Information System The MkIS increases the number of options
available to decision-makers and supports every element of marketing strategy. MkIS affects
marketings interfaces with customers, suppliers and other partners. The primary benefits of the
MkIS impact in the areas of functional integration, market monitoring, strategy development,
and strategy implementation. 1. Market Monitoring. Through the use of market research and
marketing intelligence activities the MkIS can enable the identification of emerging market
segments, and the monitoring of the market environment for changes in consumer behavior,
competitor activities, new technologies, economic conditions and governmental policies. Market
research is situational in nature and focuses on specific strategic or tactical marketing initiatives.
Marketing intelligence is continuous in nature and involves monitoring and analyzing a broad
range of market-based activities and information sources. There are three major sources of
market information. The first is syndicated data published by market research companies and
industry associations. Company-sponsored primary research is another option. It is much more
focused since you ask specific questions of respondents within your markets. But, it is
considerably more expensive and time consuming. Perhaps the best data available are your own
customers behavior captured from web site viewing, point of sale (POS) transactions, and
systematic feed back from the sales force. 2. Strategy Development. The MkIS provides the
information necessary to develop marketing strategy. It supports strategy development for new
products, product positioning, marketingcommunications (advertising, public relations, and sales
promotion), pricing, personal selling, distribution, customer service and partnerships and

alliances. The MkIS provides the foundation for the development information system-dependent
e-commerce strategies. 3. Strategy Implementation. The MkIS provides support for product
launches, enables the coordination of marketing strategies, and is an integral part of sales force
automation (SFA), customer relationship management (CRM), and customer service systems
implementations. The MkIS enables decisionmakers to more effectively manage the sales force
as well as customer relationships. Some customer management software companies are
extending their CRM applications to include partner relationship management (PRM)
capabilities. This has become increasingly important as many marketers are choosing to
outsource important marketing functions and form strategic alliances to address new
markets. 4. Functional integration. The MkIS enables the coordination of activities within the
marketing department and between marketing and other organizational functions such as
engineering, production, product management, finance, manufacturing, logistics, and customer

service.

E.

Marketing Information System Functional Components As shown in Figure 3, a MkIS consists

of four major components: (1) user interfaces, (2) applications software, (3) databases, and (4)

systems support. 1. User Interfaces. The essential element of the MkIS is the managers who will
use the system and the interfaces they need to effectively analyze and use marketing information.
The design of the system will depend on what type of decisions managers need to make. The
interface includes the type of hardware that will be used, the way information is analyzed,
formatted and displayed, and how reports are to be compiled and distributed. Issues to resolve
are ease of use, security, cost, and access. 2. Applications Software. These are the programs that
marketing decision makers use to collect, analyze, and manage data for the purpose of
developing the information necessary for marketing decisions. Examples include the marketing
decisions support software (MDSS) and customer management software for on-line sales and
customer service. 3. Marketing Databases. A marketing database is a system in which marketing
data files are organized d stored. Data may be collected from internal and external sources.
Internal sources largely result from transactions. They provide data from e-commerce sites, sales
results, shipping data, inventories, and product profitability. External sources include market
research, competitor intelligence, credit bureaus, and financial institutions. Data can be organized
in a flat file (Text file with one data record per line) or a relationaldatabase (Data is stored in
tabular form where each row represents one entity and each column represents one characteristic
of that entity). For instance, each row could represent a customer with the columns providing
name, identification number, and purchase information. 4. System Support. This component
consists of system managers who manage and maintain the systems assets including software
and hardware network, monitor its activities and ensure compliance with organizational policies.
This function may also include a help desk for system users.

MBA Semester 3
MK0013 Market Research (4 credits)
(Book ID: B1221)
ASSIGNMENT- Set 2
Marks 60
Note: Each Question carries 10 marks. Answer all the questions.

1. Describe the relation between research design and marketing decision process
Decision Making
Decision making is often seen as the centre of what managers do, something that engages most
of a managers time. It is one of the areas that information systems have sought most of all to
affect (with mixed success). Decision making can be divided into 3 types: strategic, management
control and operations control.
Strategic decision making: This level of decision making is concerned with deciding on the
objectives, resources and policies of the organisation. A major problem at this level of decision
making is predicting the future of the organisation and its environment, and matching the
characteristics of the organisation to the environment. This process generally involves a small
group of high-level managers who deal with very complex, non-routine problems.
For example, some years ago, a medium-sized food manufacturer in an East African country
faced strategic decisions concerning its range of pasta products. These products constituted a
sizeable proportion of the company's sales turnover. However, the company was suffering
recurrent problems with the poor quality of durum wheat it was able to obtain resulting in a
finished product that was too brittle. Moreover, unit costs were shooting up due to increasingly
frequent breakdowns in the ageing equipment used in pasta production. The company faced the
decision whether to make a very large investment in new machinery or to accept the offer of

another manufacturer of pasta products, in a neighbouring country, that it should supply the
various pasta products and the local company put its own brand name on the packs. The decision
is strategic since the decision has implications for the resource base of the enterprise, i.e. its
capital equipment, its work force, its technological base etc. The implications of strategic
decisions extend over many years, often as much as ten to fifteen years.
Management control decisions: Such decisions are concerned with how efficiently and
effectively resources are utilised and how well operational units are performing. Management
control involves close interaction with those who are carrying out the tasks of the organisation; it
takes place within the context of broad policies and objectives set out by strategic planners.
An example might be where a transporter of agricultural products observes that his/her profits
are declining due to a decline in the capacity utilisation of his/her two trucks. The manager (in
this case the owner) has to decide between several alternative courses of action, including:
selling of trucks, increasing promotional activity in an attempt to sell the spare carrying capacity,
increasing unit carrying charges to cover the deficit, or seeking to switch to carrying products or
produce with a higher unit value where the returns to transport costs may be correspondingly
higher. Management control decisions are more tactical than strategic.
Operational control decisions: These involve making decisions about carrying out the " specific
tasks set forth by strategic planners and management. Determining which units or individuals in
the organisation will carry out the task, establishing criteria of completion and resource
utilisation, evaluating outputs - all of these tasks involve decisions about operational control.
The focus here is on how the enterprises should respond to day-to-day changes in the business
environment. In particular, this type of decision making focuses on adaptation of the marketing
mix, e.g. how should the firm respond to an increase in the size of a competitor's sales force?
should the product line be extended? should distributors who sell below a given sales volume be
serviced through wholesalers rather than directly, and so on.
Within each of these levels, decision making can be classified as either structured or
unstructured. Unstructured decisions are those in which the decision maker must provide insights
into the problem definition. They are novel, important, and non-routine, and there is no well-

understood procedure for making them. In contrast, structured decisions are repetitive, routine,
and involve a definite procedure for handling them so that they do not have to be treated each
time as if they were new.
Structured and unstructured problem solving occurs at all levels of management. In the past,
most of the success in most information systems came in dealing with structured, operational,
and management control decisions. However, in more recent times, exciting applications are
occurring in the management and strategic planning areas, where problems are either semistructured or are totally unstructured.
Making decisions is not a single event but a series of activities taking place over time. Suppose,
for example, that the Operations Manager for the National Milling Corporation is faced with a
decision as to whether to establish buying points in rural locations for the grain crop. It soon
becomes apparent that the decisions are likely to be made over a period of time, have several
influences, use many sources of information and have to go through several stages. It is worth
considering the question of how, if at all, information systems could assist in making such a
decision. To arrive at some answer, it is helpful to break down decision making into its
component parts.
The literature has described 4 stages in decision making: intelligence, design, choice and
implementation. That is, problems have to be perceived and understood; once perceived solutions
must be designed; once solutions are designed, choices have to be made about a particular
solution; finally, the solution has to be implemented.
Intelligence involves identifying the problems in the organisation: why and where they occur
with what effects. This broad set of information gathering activities is required to inform
managers how well the organisation is performing and where problems exist. Management
information systems that deliver a wide variety of detailed information can be useful, especially
if they are designed to report exceptions. For instance, consider a commercial organisation
marketing a large number of different products and product variations. Management will want to
know, at frequent intervals, whether sales targets are being achieved. Ideally, the information

system will report only those products/product variations which are performing substantially
above or below target.
Designing many possible solutions to the problems is the second phase of decision making. This
phase may require more intelligence to decide if a particular solution is appropriate. Here, more
carefully specified and directed information activities and capabilities focused on specific
designs are required.
Choosing among alternative solutions is the third step in the decision making process. Here a
manager needs an information system which can estimate the costs, opportunities and
consequences of each alternative problem solution. The information system required at this stage
is likely to be fairly complex, possibly also fairly large, because of the detailed analytic models
required to calculate the outcomes of the various alternatives. Of course, human beings are used
to making such calculations for themselves, but without the aid of a formal information system,
we rely upon generalisation and/or intuition.
Implementing is the final stage in the decision making process. Here, managers can install a
reporting system that delivers routine reports on the progress of a specific solution, some of the
difficulties that arise, resource constraints, and possible remedial actions. Table 9.1 illustrates the
stages in decision making and the general type of information required at each stage.
Table 9.1 Stages in the decision making process
Stage of Decision Making
1 Intelligence
2 Design
3 Choice
4 Implementation

Information Requirement
Exception reporting
Simulation prototype
"What-if simulation
Graphics, charts

In practice, the stages of decision making do not necessarily follow a linear path from
intelligence to design, choice and implementation. Consider again the problem of balancing the
costs and benefits of establishing local buying points for the National Milling Corporation. At
any point in the decision making process it may be necessary to loop back to a previous stage.
For example, one may have reached stage 3 and all but decided that having considered the

alternatives of setting up no local buying points, local buying points in all regions, districts or
villages, the government decides to increase the amounts held in the strategic grain reserve. This
could cause the parastatal to return to stage 2 and reassess the alternatives. Another scenario
would be that having implemented a decision one quickly receives feedback indicating that it is
not proving effective. Again, the decision maker may have to repeat the design and/or choice
stage(s).
Thus, it can be seen that information system designers have to take into account the needs of
managers at each stage of the decision making process. Each stage has its own requirements.
Components of a marketing information system
A marketing information system (MIS) is intended to bring together disparate items of data into a
coherent body of information. An MIS is, as will shortly be seen, more than raw data or
information suitable for the purposes of decision making. An MIS also provides methods for
interpreting the information the MIS provides. Moreover, as Kotler's 1 definition says, an MIS is
more than a system of data collection or a set of information technologies:
"A marketing information system is a continuing and interacting structure of people, equipment
and procedures to gather, sort, analyse, evaluate, and distribute pertinent, timely and accurate
information for use by marketing decision makers to improve their marketing planning,
implementation, and control".
Figure 9.1 illustrates the major components of an MIS, the environmental factors monitored by
the system and the types of marketing decision which the MIS seeks to underpin.
Figure 9.1 The marketing information systems and its subsystems

The explanation of this model of an MIS begins with a description of each of its four main
constituent parts: the internal reporting systems, marketing research system, marketing
intelligence system and marketing models. It is suggested that whilst the MIS varies in its degree
of sophistication - with many in the industrialised countries being computerised and few in the
developing countries being so - a fully fledged MIS should have these components, the methods
(and technologies) of collection, storing, retrieving and processing data notwithstanding.
Internal reporting systems: All enterprises which have been in operation for any period of time
nave a wealth of information. However, this information often remains under-utilised because it
is compartmentalised, either in the form of an individual entrepreneur or in the functional
departments of larger businesses. That is, information is usually categorised according to its
nature so that there are, for example, financial, production, manpower, marketing, stockholding
and logistical data. Often the entrepreneur, or various personnel working in the functional
departments holding these pieces of data, do not see how it could help decision makers in other
functional areas. Similarly, decision makers can fail to appreciate how information from other
functional areas might help them and therefore do not request it.
The internal records that are of immediate value to marketing decisions are: orders received,
stockholdings and sales invoices. These are but a few of the internal records that can be used by
marketing managers, but even this small set of records is capable of generating a great deal of
information. Below, is a list of some of the information that can be derived from sales invoices.

 Product
Product

type,
type,

size
size

and
and

pack

pack

type

type

by

type

Product

type,

size

and

pack

type

Product

type,

size

and

pack

type

Average

value

and/or

Average

value

Average

value

and/or
and/or

volume
volume

of

of

sale

volume

of

by
of
by

sale

customer

by
type

territory
of

by

account
industry

by

sale
by

territory

account
industry

Average value and/or volume of sale by sales person

By comparing orders received with invoices an enterprise can establish the extent to which it is
providing an acceptable level of customer service. In the same way, comparing stockholding
records with orders received helps an enterprise ascertain whether its stocks are in line with
current demand patterns.
Marketing research systems: The general topic of marketing research has been the prime ' subject
of the textbook and only a little more needs to be added here. Marketing research is a proactive
search for information. That is, the enterprise which commissions these studies does so to solve a
perceived marketing problem. In many cases, data is collected in a purposeful way to address a
well-defined problem (or a problem which can be defined and solved within the course of the
study). The other form of marketing research centres not around a specific marketing problem
but is an attempt to continuously monitor the marketing environment. These monitoring or
tracking exercises are continuous marketing research studies, often involving panels of farmers,
consumers or distributors from which the same data is collected at regular intervals. Whilst
the ad hoc study and continuous marketing research differs in the orientation, yet they are both
proactive.

2 . What are the factors affecting cost of a warehouse? What are the various types of warehouses
and their uses?

WAREHOUSING
DEFINITION
A warehouse is a commercial building for storage of goods. Warehouses are used by
manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are
usually large plain buildings in industrial parts of towns. They come equipped with loading
docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or
seaports. They also often have cranes and forklifts for moving goods, which are usually placed
on

ISO

standard

pallets

INTRODUCTION
Warehouse can play a key role in the integrated logistics strategy and its building and
maintaining good relationships between supply chain partners. Warehousing affects customer
service stock-out rates and firms sales and marketing success. A warehouse smoothens out
market supply and demand fluctuations. When supply exceeds demand, a demand warehouse
stores products in anticipation of customers requirements when Demand exceeds supply the
warehouse can speed product movement to the customer by performing additional services like
marking

prices,

packaging

products

or

final

assembling

etc.

Warehousing can be defined as a location with adequate facilities where volume shipments are
received from production center, which are then broken down into particular order and shipped
onwards

to

the

customer.

Warehousing is an integral part of any logistics system. The warehouse is a link between
producer

and

customer.

Out-bound warehouse help consumers buy on demand without a near4by production plant
warehousing cost are about 10% of total integrated logistics costs for most companies.

A Basic Conceptual Rationale

The warehouse is where the supply chain holds or stores goods.

Functions of warehousing include:

Transportation consolidation

Product mixing

Cross-docking

Service

Protection against contingencies

Smoothing
Warehouse Value-Adding Roles
Value-Adding Roles

Trade-Off Areas

Consolidation

Transportation

Product mixing

Order filling

Service

Lead

Contingency
protection
Smooth Operation
Transportation Consolidation

stockouts
Stockouts
Production

times,

Supply and Product Mixing

Basic Warehouse Decisions

A Cost Trade-off Framework

Ownership
Public versus contract versus private
Centralized or Decentralized Warehousing

How many

Location

Size

Layout

What products where

The Ownership Decision

TYPES

OF

WAREHOUSES

1.

Private

Warehousing

2.

Public

Warehousing

3.

Contract

Warehousing

Private

Warehousing

A firm producing or owning the goods owns private warehouses. The goods are stored until they
are delivered to a retail outlet or sold. Potential advantage of using a private warehouse is the
ability to maintain physical control over the facility, which allows mangers to address loss,
damage,

and

theft.

When

not

in

use

they

can

rent

it

out.

The construction and maintenance of private warehousing can be extremely costly. All the
expenses

have

i.

expenses

Fixed

to

be
and

carefully
building

and

analyzed
land

and

acquisition

evaluated.
costs

These

which

are

are:
high;

ii. Expenses incurred on ensuring that warehouses are properly equipped with material-handling
equipment like conveyors, fork lifts, hand trucks, racks and bins, and dock levelers;
iii. The costs of salaries of staff required for peak activity periods which can be very high since

retrenchment

during

slack

periods

may

not

be

possible;

iv. Extra payment to be made for work on Saturday and Sundays and holidays;
v. Generator and other services charges are required to be taken into account.
vi. The office and record-keeping equipment necessary for successful warehousing operations
has

to

be

budgeted

for;

vii. To this must be added the cost of such item as fuel, air-conditioning, power and light.
viii. The cost of maintaining insurance records and of the premiums paid for fire, theft, and also
for

workmens

compensation.

Advantages
The advantages and disadvantages of private warehousing as against those of public warehousing
are:
a. Private warehousing offers better control over the movement and storage of products as
required

by

the

management

from

time

to

time.

b. There is less likelihood of error in the case of private warehousing since the companys
products are handled by its own employees who are able to identify the products of their own
company

better.

c. If there is sufficient volume of goods to be warehoused, the costs of private warehousing

compares favourably with that of public warehousing. But private warehouse may not be
expected to be packed upto the brim all the while. Therefore the costs of private warehousing per
unit

may

actually

Public

be

higher.
Warehousing

A public warehouse rents space to individuals or firm needing storage, some provide wide array
of services including packaging, labeling, testing, inventory, maintenance, local delivery, data
processing

and

pricing.

All the foregoing cost factors operate in public warehousing as well. But in public warehousing,
the expenses are distributed over several other consignments of other clients. In most instances
therefore can render better service with greater flexibility for the user. A company running a

private warehouse will have to compare costs incurred with the total figure for the complete
service

through

public

warehousing.

Advantages
a.

It

is

generally

less

expensive

and

more

efficient.

b. Public warehouses are usually strategically located and immediately available.

c. Public warehousing is sufficiently flexible to meet most space requirements, for several plans
are

available

for

the

requirement

of

different

users.

d. Fixed costs of a warehouse are distributed among many users. Therefore the overall cost of
warehousing

per

unit

works

out

to

lower

figure.

e. Public warehousing facilities can be given up as soon as necessary without any additional
liability

on

the

part

of

the

user.

f. The costs of public warehousing can be easily and exactly ascertained, and the user pays only
for

the

space

and

Contract

services

he

use.
Warehousing

Contract warehousing is a specialized form of public warehousing. In addition to warehousing

activities such warehousing provides a combination of integrated logistics services. Thus
allowing the leasing firm to concentrate on its specialty. They provide customized services, eg.
Value
FUNCTIONS

Added
OF

Services.
WAREHOUSES

Warehouses are basically intermediate storage points in the logistics system where raw material,
work in process, finished goods and good in transit are held for varying duration of times for a
variety of purposes. The warehousing functionality today is much more than the traditional
function of storage. The following are main function that warehousing serves today:
1.

Consolidation

This helps to provide for the customer requirement of a combination of products from different

supply or manufacturing sources. Instead of transporting the products as small shipments from
different sources, it would be more economical to have a consolidation warehouse. This
warehouse will receive these products from various sources and consolidate these into
shipments, which are economical for transportation or as required by the customers.
2.

Break

Bulk

As the name suggests, the warehouse in this case serves the purpose of receiving bulk shipments
through economical long distance transportation and breaking of these into small shipments for
local delivery. This enables small shipments in place of long distance small shipments.
3.

Cross

Docking

This type of facility enables receipt of full shipments from a number of suppliers, generally
manufacturers, and direct distribution to different customers without storage. As soon as the
shipments are received, these are allocated to the respective customers and are moved across to
the vehicle for the onwards shipments to the respective customers at these facilities. Smaller
shipments accompanying these full shipments are moved to the temporary storage in these
facilities awaiting shipments to the respective customers along with other full shipments.

4.

Product

Mixing

Products of different types are received from different manufacturing plant or sources in full
shipment sizes. These products are mixed at these warehouses into right combination for the
relevant customers as per their warehouses and continuously provided for the product mixture
shipments
5.

requiring
Stock

these.
Piling

This function of warehousing is related to seasonal manufacturing or demand. In the case of

seasonal manufacturing, certain raw materials are available during short periods of the year.
Hence, manufacturing is possible only during these periods of availability, while the demand is
full year around. This requires stockpiling of the products manufactured from these raw
materials. An example is mango pulp processing. On the other hand, certain products like

woolens are required seasonally, but are produced throughout the year, and thus need to be
stockpiled

as

such.

6.

Postponement

This Functionality of warehousing enables postponement of commitment of products to

customer until orders are received from them. This is utilized by manufacturers or distributors for
storing products ready up to packaging stage. These products are packaged and labeled for the
particular

only

on

receipt

of

the

7.

order.
Positioning

This permits positioning products or materials at strategic warehouses near to the customers.
These items are stored at the warehouse until ordered by the customers when these can be
provided to the customers in the shortest lead-time. This function of warehousing is utilized for
higher service levels to customers for critical items and during increased marketing activists and
promotions.
8.

Assortment

Assortment warehouse store a variety of products for satisfying the variety requirements of
customers. For example, retailers may demand different brands of the same product in small
quantities

rather

than

larger

quantities

9.

of

the

single

brand.
Decoupling

During manufacturing, operation lead-times may differ in order to enable production economies.
Thus, the batch size and the lead-time of production may differ in consecutive operations. This
decoupling of operations requires intermediate storage of materials required for the subsequent
operation.
10.

Safety

Stocking

In order to cater to contingencies like stock outs, transportation delays, receipt of defective or
damaged goods, and strikes, safety stocks have to be maintained. This ensures that, on the
inbound site production stoppages do not occur, and, on the outbound side customers are fulfilled

on

time.

Advantages

of

Warehousing

Warehousing offers many advantages to the business community. Whether it is industry or trade,
it

provides

number

of

benefits

which

are

listed

below.

i. Protection and Preservation of goods - Warehouse provides necessary facilities to the

businessmen for storing their goods when they are not required for sale. It provides protection to
the stocks, ensures their safety and prevents wastage. It minimises losses from breakage,
deterioration in quality, spoilage etc. Warehouses usually adopt latest technologies to avoid
losses,

as

far

as

possible.

ii. Regular flow of goods- Many commodities like rice, wheat etc. are produced during a
particular season but are consumed throughout the year. Warehousing ensures regular supply of
such

seasonal

commodities

throughout

the

year.

iii. Continuity in production- Warehouse enables the manufacturers to carry on production

continuously without bothering about the storage of raw materials. It helps to provide seasonal
raw

material

without

any

break,

for

production

of

finished

goods.

iv. Convenient location- Warehouses are generally located at convenient places near road, rail or
waterways to facilitate movement of goods. Convenient location reduces the cost of
transportation.
v. Easy handling- Modern warehouses are generally fitted with mechanical appliances to handle
the goods. Heavy and bulky goods can be loaded and unloaded by using modern machines,
which reduces cost of handling such goods. Mechanical handling also minimizes wastage during
loading

and

unloading.

vi. Useful for small businessmen- Construction of own warehouse requires heavy capital

investment, which small businessmen cannot afford. In this situation, by paying a nominal
amount as rent, they can preserve their raw materials as well as finished products in public
warehouses.
vii. Creation of employment - Warehouses create employment opportunities both for skilled and
unskilled workers in every part of the country. It is a source of income for the people, to improve
their

standards

of

living.

viii. Facilitates sale of goods- Various steps necessary for sale of goods such as inspection of
goods by the prospective buyers, grading, branding, packaging and labelling can be carried on by
the warehouses. Ownership of goods can be easily transferred to the buyer by transferring the
warehouse

keepers

warrant.

ix. Availability of finance- Loans can be easily raised from banks and other financial institutions
against the security of the warehouse-keepers warrant. In some cases warehouses also provide
advance

to

the

depositors

of

goods

on

keeping

the

goods

as

security.

x. Reduces risk of loss - Goods in warehouses are well guarded and preserved. The warehouses
can economically employ security staff to avoid theft, use insecticides for preservation and
provide cold storage facility for perishable items. They can install fire-fighting equipment to
avoid fire. The goods stored can also be insured for compensation in case of loss.

3. Explain research process Differentiate between Causal and Experimental design.

Experimental Design
Experimental designs are often touted as the most "rigorous" of all research designs or, as the
"gold standard" against which all other designs are judged. In one sense, they probably are. If
you can implement an experimental design well (and that is a big "if" indeed), then the
experiment is probably the strongest design with respect to internal validity. Why? Recall that
internal validity is at the center of all causal or cause-effect inferences. When you want to

determine whether some program or treatment causes some outcome or outcomes to occur, then
you are interested in having strong internal validity. Essentially, you want to assess the
proposition:
If X, then Y
or, in more colloquial terms:
If the program is given, then the outcome occurs
Unfortunately, it's not enough just to show that when the program or treatment occurs the
expected outcome also happens. That's because there may be lots of reasons, other than the
program, for why you observed the outcome. To really show that there is a causal relationship,
you have to simultaneously address the two propositions:
If X, then Y
and
If not X, then not Y
Or, once again more colloquially:
If the program is given, then the outcome occurs
and
If the program is not given, then the outcome does not occur
If you are able to provide evidence for both of these propositions, then you've in effect isolated
the program from all of the other potential causes of the outcome. You've shown that when the
program is present the outcome occurs and when it's not present, the outcome doesn't occur. That
points to the causal effectiveness of the program.

Think of all this like a fork in the road. Down one path, you implement the program and observe
the outcome. Down the other path, you don't implement the program and the outcome doesn't
occur. But, how do we takeboth paths in the road in the same study? How can we be in two
places at once? Ideally, what we want is to have the same conditions -- the same people, context,
time, and so on -- and see whether when the program is given we get the outcome and when the
program is not given we don't. Obviously, we can never achieve this hypothetical situation. If we
give the program to a group of people, we can't simultaneously not give it! So, how do we get
out of this apparent dilemma?
Perhaps we just need to think about the problem a little differently. What if we could create two
groups or contexts that are as similar as we can possibly make them? If we could be confident
that the two situations are comparable, then we could administer our program in one (and see if
the outcome occurs) and not give the program in the other (and see if the outcome doesn't occur).
And, if the two contexts are comparable, then this is like taking both forks in the road
simultaneously! We can have our cake and eat it too, so to speak.
That's exactly what an experimental design tries to achieve. In the simplest type of experiment,
we create two groups that are "equivalent" to each other. One group (the program or treatment
group) gets the program and the other group (the comparison or control group) does not. In all
other respects, the groups are treated the same. They have similar people, live in similar contexts,
have similar backgrounds, and so on. Now, if we observe differences in outcomes between these
two groups, then the differences must be due to the only thing that differs between them -- that
one got the program and the other didn't.
OK, so how do we create two groups that are "equivalent"? The approach used in experimental
design is to assign people randomly from a common pool of people into the two groups. The
experiment relies on this idea of random assignment to groups as the basis for obtaining two
groups that are similar. Then, we give one the program or treatment and we don't give it to the
other. We observe the same outcomes in both groups.
The key to the success of the experiment is in the random assignment. In fact, even with random
assignment we never expect that the groups we create will be exactly the same. How could they

be, when they are made up of different people? We rely on the idea of probability and assume
that the two groups are "probabilistically equivalent" or equivalent within known probabilistic
ranges.
So, if we randomly assign people to two groups, and we have enough people in our study to
achieve the desired probabilistic equivalence, then we may consider the experiment to be strong
in internal validity and we probably have a good shot at assessing whether the program causes
the outcome(s).
But there are lots of things that can go wrong. We may not have a large enough sample. Or, we
may have people who refuse to participate in our study or who drop out part way through. Or, we
may be challenged successfully on ethical grounds (after all, in order to use this approach we
have to deny the program to some people who might be equally deserving of it as others). Or, we
may get resistance from the staff in our study who would like some of their "favorite" people to
get the program. Or, they mayor might insist that her daughter be put into the new program in an
educational study because it may mean she'll get better grades.
The bottom line here is that experimental design is intrusive and difficult to carry out in most real
world contexts. And, because an experiment is often an intrusion, you are to some extent setting
up an artificial situation so that you can assess your causal relationship with high internal
validity. If so, then you are limiting the degree to which you can generalize your results to real
contexts where you haven't set up an experiment. That is, you have reduced your external
validity in order to achieve greater internal validity.
In the end, there is just no simple answer (no matter what anyone tells you!). If the situation is
right, an experiment can be a very strong design to use. But it isn't automatically so. My own
personal guess is that randomized experiments are probably appropriate in no more than 10% of
the social research studies that attempt to assess causal relationships.
Experimental design is a fairly complex subject in its own right. I've been discussing the simplest
of experimental designs -- a two-group program versus comparison group design. But there are
lots of experimental design variations that attempt to accomplish different things or solve

different problems. In this section you'll explore the basic design and then learn some of the
principles behind the major variations.

4. List the benefits and limitations of focus group interviews

Focus groups are a great way to collect information from several people very quickly and cost
effectively. They are mainly used to gauge peoples reactions and feelings to items, however
when used appropriately they can also be used as part of user requirements gathering.
The Advantages of Focus Groups
Focus groups are often of use when deciding on the look and feel of a website or product. They
gather good data on emotive issues as people are quite willing to give their opinions and
impressions of items. They will allow you to develop an appropriate presentation through
pointing out what things work or dont work for users. It can also be helpful to show groups
several different designs in order to facilitate conversation on what it is they are looking for in a
design.
Used early in the design process focus groups are also useful at gathering user requirements.
People can talk about their expectations for a website/product, such as what functions they
expect the website/product to have. They also discuss similar systems which have worked for
them in the past and those which have not, allowing you to see which designs and functions are
the most effective. This valuable information is then fed into the design process to ensure the
production of an end product which people will want to use.
The Limitations of Focus Groups
There are however limitations to using focus groups. The main issue being that in focus groups
you learn what people say they do or think, not what they actually do or think. Focus groups will
not show any usability problems that exist on a site as the users will not be actually interacting or
completing tasks on the website/service.
A major issue with focus groups is that there is the possibility of group think i.e. people
expressing an opinion which is in line with the rest of the group even if that opinion is at odds

with their own personal one. Another possibility is that one or two individuals will come to
dominate the group, creating an inaccurate view of what users overall opinions are. Because of
these issues it is essential to have a skilled moderator carry out all focus groups.
Running a Focus Group
Ideally a focus group should contain between six and eight people, anymore and you will not get
enough detailed information from each person. It is generally a good idea to run two focus
groups for each item. This is to protect against such issues as group think, where the results from
a group might not be fully accurate.
A skilled moderator is crucial. The moderator needs to make sure that the conversation in a group
is free flowing and has a natural tone while at the same time keeping the discussion on track and
on issue. The moderator must also prevent individuals from dominating a group and ensure that
all participants are involved and contribute equally
The advantages of focus groups

The Authority Role Of The Moderator

The face-to-face involvement of a qualified moderator can ensure that the conversation is always
on track, and encourage participants engagement without one individual dominating the
meeting.

The Ability Of Group Participants To Interact With Each Other

When participate are stimulated to discuss, the group dynamics can generate new thinking about
a topic which will result in a much more in-depth discussion.

The Dynamic Nature Of The Methodology

Due to the dynamic environment the moderator can modify the topics, which are prepared before
the session to make the topic more suitable for the purpose.

The Ability To Involve The Client Personnel In The Research Process

In traditional focus groups it is possible for the client personnel to watch the whole discussion
behind a one-way mirror. The client personnel can provide their thinking to the moderator, which

may help the moderator better handle the direction of discussion, and improve the quality of
output.

The Capability To Utilise Non-Verbal Behavior As A Research Input

The expression, attitude of individual, the intensity of the conversation etc. can be perceived by
the researcher, which can modify the moderators decision and also can be counted in the
research result.

The Level Of Participant Involvement In The Research

Because every participant is under observation by the moderator and everybody know the
process has been videotaped, it is easy to make participants fully engage even during nondiscussion time.

The Greater Security Associated With Traditional Focus Group Research

The possibility to screen each participant, lets the researcher know who have been involved. This
ensures that for example your competition is not involved.
Top

The disadvantages of focus groups

Focus groups are not the optimal technique for all research situations, the criticisms below have
been mentioned by people who promote some other qualitative research methods.

Focus Groups Tend To Become Influenced By One or Two Dominant People In The
Session Thus Making the Output Very Biased

The moderator plays an essential role in handling the situation, but if the moderator is not
experienced enough, it is very easy for the whole discussion to be dominated by a few people.

Focus Groups Are Not As Effective As IDIs In Dealing With Sensitive Topics

It is difficult to have the participants share their real feelings towards some sensitive topics
publicly. This can in turn influence the output data.

Focus Group Output Is Not Projectable

If a great deal of consistency in the results from a series of focus groups have been identified and
it is very likely that the results from these sessions probably can represent a larger number of
people. We cant expect focus groups to be projectable in the same way as quantitative study
findings can be.
Furthermore, traditional focus groups can only be held in a few cities, unlike some internet and
telephone focus groups which could be organized in various situations without limitation of time
and location. This also makes data from focus groups less representative of the total universe.

Focus Groups Are A Very Artificial Environment Which Can Influence The Responses
That Are Generated

This is frequently the argument that ethnographers will use when recommending their
methodology versus focus groups. Because researchers using the ethnographic technique will
situate themselves in the real environment, that is unreachable for focus groups. In focus groups
people are collected in a meeting room thus they might behave differently from how they behave
when they are not watched and it will effect the quality of research results.

5. Explain latest techniques of qualitative research..

Qualitative research is a method of inquiry employed in many different academic disciplines,
traditionally in the social sciences, but also in market researchand further contexts.[1] Qualitative
researchers aim to gather an in-depth understanding of human behavior and the reasons that
govern such behavior. The qualitative method investigates the why and how of decision making,
not just what, where, when. Hence, smaller but focused samples are more often needed than
large samples.
In the conventional view, qualitative methods produce information only on the particular cases
studied,

and

any

more

general

conclusions

are

only

propositions

(informed

assertions). Quantitative methods can then be used to seek empirical support for such research
hypotheses. This view has been disputed by Oxford University professor Bent Flyvbjerg, who

argues that qualitative methods and case study research may be used both for hypotheses-testing
and for generalizing beyond the particular cases studied
Data collection
Qualitative researchers may use different approaches in collecting data, such as the grounded
theory practice, narratology, storytelling,

classical ethnography,

orshadowing.

Qualitative

methods are also loosely present in other methodological approaches, such as action
research or actor-network theory. Forms of the data collected can include interviews and group
discussions, observation and reflection field notes, various texts, pictures, and other materials.
Qualitative research often categorizes data into patterns as the primary basis for organizing and
reporting results.[citation needed] Qualitative researchers typically rely on the following methods for
gathering information: Participant Observation, Non-participant Observation, Field Notes,
Reflexive Journals, Structured Interview, Semi-structured Interview, Unstructured Interview, and
Analysis of documents and materials.[3]
The ways of participating and observing can vary widely from setting to setting. Participant
observation is a strategy of reflexive learning, not a single method of observing. [4] In participant
observation[5]researchers typically become members of a culture, group, or setting, and adopt
roles to conform to that setting. In doing so, the aim is for the researcher to gain a closer insight
into the culture's practices, motivations and emotions. It is argued that the researchers' ability to
understand the experiences of the culture may be inhibited if they observe without
participating[citation needed].
Some distinctive qualitative methods are the use of focus groups and key informant interviews.
The focus group technique involves a moderator facilitating a small group discussion between
selected individuals on a particular topic. This is a particularly popular method in market
research and testing new initiatives with users/workers.
One traditional and specialized form of qualitative research is called cognitive testing or pilot
testing which is used in the development of quantitative survey items. Survey items are piloted
on study participants to test the reliability and validity of the items.
In the academic social sciences the most frequently used qualitative research approaches include
the following:

1. Ethnographic Research, used for investigating cultures by collecting and describing data
that is intended to help in the development of a theory. This method is also called
ethnomethodology or "methodology of the people". An example of applied
ethnographic research, is the study of a particular culture and their understanding of the
role of a particular disease in their cultural framework.
2. Critical Social Research, used by a researcher to understand how people communicate
and develop symbolic meanings.
3. Ethical Inquiry, an intellectual analysis of ethical problems. It includes the study of ethics
as related to obligation, rights, duty, right and wrong, choice etc.
4. Foundational Research, examines the foundations for a science, analyses the beliefs and
develops ways to specify how a knowledge base should change in light of new
information.
5. Historical Research, allows one to discuss past and present events in the context of the
present condition, and allows one to reflect and provide possible answers to current
issues and problems. Historical research helps us in answering questions such as: Where
have we come from, where are we, who are we now and where are we going?
6. Grounded Theory, is an inductive type of research, based or grounded in the
observations or data from which it was developed; it uses a variety of data sources,
including quantitative data, review of records, interviews, observation and surveys.
7. Phenomenology, describes the subjective reality of an event, as perceived by the study
population; it is the study of a phenomenon.
8. Philosophical Research, is conducted by field experts within the boundaries of a specific
field of study or profession, the best qualified individual in any field of study to use an
intellectual analyses, in order to clarify definitions, identify ethics, or make a value
judgment concerning an issue in their field of study.

Recursive abstraction
Some qualitative datasets are analyzed without coding. A common method here is recursive
abstraction, where datasets are summarized, those summaries are then further summarized, and
so on. The end result is a more compact summary that would have been difficult to accurately
discern without the preceding steps of distillation.
A frequent criticism of recursive abstraction is that the final conclusions are several times
removed from the underlying data. While it is true that poor initial summaries will certainly yield
an inaccurate final report, qualitative analysts can respond to this criticism. They do so, like
those using coding method, by documenting the reasoning behind each summary step, citing
examples from the data where statements were included and where statements were excluded
from the intermediate summary
Mechanical techniques
Some techniques rely on leveraging computers to scan and sort large sets of qualitative data. At
their most basic level, mechanical techniques rely on counting words, phrases, or coincidences of
tokens within the data. Often referred to as content analysis, the output from these techniques is
amenable to many advanced statistical analyses.
Mechanical techniques are particularly well-suited for a few scenarios. One such scenario is for
datasets that are simply too large for a human to effectively analyze, or where analysis of them
would be cost prohibitive relative to the value of information they contain. Another scenario is
when the chief value of a dataset is the extent to which it contains red flags (e.g., searching for
reports of certain adverse events within a lengthy journal dataset from patients in a clinical trial)
or green flags (e.g., searching for mentions of your brand in positive reviews of marketplace
products).
A frequent criticism of mechanical techniques is the absence of a human interpreter. And while
masters of these methods are able to write sophisticated software to mimic some human
decisions, the bulk of the analysis is nonhuman. Analysts respond by proving the value of their
methods relative to either a) hiring and training a human team to analyze the data or b) letting the
data go untouched, leaving any actionable nuggets undiscovered.

6. Explain multidimensional scaling

Multidimensional scaling (MDS) is a set of related statistical techniques often used

in information visualization for exploring similarities or dissimilarities in data. MDS is a special
case of ordination. An MDS algorithm starts with a matrix of itemitem similarities, then assigns
a location to each item in N-dimensional space, where N is specified a priori. For sufficiently
small N, the resulting locations may be displayed in a graph or 3D visualisation.

General Purpose
Multidimensional scaling (MDS) can be considered to be an alternative to factor analysis
(see Factor Analysis). In general, the goal of the analysis is to detect meaningful underlying
dimensions that allow the researcher to explain observed similarities or dissimilarities (distances)
between the investigated objects. In factor analysis, the similarities between objects (e.g.,
variables) are expressed in the correlation matrix. With MDS, you can analyze any kind of
similarity or dissimilarity matrix, in addition to correlation matrices.
Logic of MDS
The following simple example may demonstrate the logic of an MDS analysis. Suppose we take
a matrix of distances between major US cities from a map. We then analyze this matrix,
specifying that we want to reproduce the distances based on two dimensions. As a result of the
MDS analysis, we would most likely obtain a two-dimensional representation of the locations of
the cities, that is, we would basically obtain a two-dimensional map.
In general then, MDS attempts to arrange "objects" (major cities in this example) in a space with
a particular number of dimensions (two-dimensional in this example) so as to reproduce the
observed distances. As a result, we can "explain" the distances in terms of underlying
dimensions; in our example, we could explain the distances in terms of the two geographical
dimensions: north/south and east/west.

Orientation of axes. As in factor analysis, the actual orientation of axes in the final solution is
arbitrary. To return to our example, we could rotate the map in any way we want, the distances
between cities remain the same. Thus, the final orientation of axes in the plane or space is mostly
the result of a subjective decision by the researcher, who will choose an orientation that can be
most easily explained. To return to our example, we could have chosen an orientation of axes
other than north/south and east/west; however, that orientation is most convenient because it
"makes the most sense" (i.e., it is easily interpretable).

To index

Computational Approach
MDS is not so much an exact procedure as rather a way to "rearrange" objects in an efficient
manner, so as to arrive at a configuration that best approximates the observed distances. It
actually moves objects around in the space defined by the requested number of dimensions, and
checks how well the distances between objects can be reproduced by the new configuration. In
more technical terms, it uses a function minimization algorithm that evaluates different
configurations with the goal of maximizing the goodness-of-fit (or minimizing "lack of fit").
Measures of goodness-of-fit: Stress. The most common measure that is used to evaluate how
well (or poorly) a particular configuration reproduces the observed distance matrix is the stress
measure. The raw stress value Phi of a configuration is defined by:
Phi =

[dij - f (

ij

)]2

In this formula, dij stands for the reproduced distances, given the respective number of
dimensions, and
ij

ij

(deltaij) stands for the input data (i.e., observed distances). The expression f (

) indicates a nonmetric, monotone transformation of the observed input data (distances). Thus,

it will attempt to reproduce the general rank-ordering of distances between the objects in the
analysis.

There are several similar related measures that are commonly used; however, most of them
amount to the computation of the sum of squared deviations of observed distances (or some
monotone transformation of those distances) from the reproduced distances. Thus, the smaller
the stress value, the better is the fit of the reproduced distance matrix to the observed distance
matrix.
Shepard diagram. You can plot the reproduced distances for a particular number of dimensions
against the observed input data (distances). This scatterplot is referred to as a Shepard diagram.
This plot shows the reproduced distances plotted on the vertical (Y) axis versus the original
similarities plotted on the horizontal (X) axis (hence, the generally negative slope). This plot also
shows a step-function. This line represents the so- called D-hat values, that is, the result of the
monotone transformation f(

) of the input data. If all reproduced distances fall onto the step-

line, then the rank-ordering of distances (or similarities) would be perfectly reproduced by the
respective solution (dimensional model). Deviations from the step-line indicate lack of fit.

To index

How Many Dimensions to Specify?

If you are familiar with factor analysis, you will be quite aware of this issue. If you are not
familiar with factor analysis, you may want to read the Factor Analysis section in the manual;
however, this is not necessary in order to understand the following discussion. In general, the
more dimensions we use in order to reproduce the distance matrix, the better is the fit of the
reproduced matrix to the observed matrix (i.e., the smaller is the stress). In fact, if we use as
many dimensions as there are variables, then we can perfectly reproduce the observed distance
matrix. Of course, our goal is to reduce the observed complexity of nature, that is, to explain the
distance matrix in terms of fewer underlying dimensions. To return to the example of distances
between cities, once we have a two-dimensional map it is much easier to visualize the location of
and navigate between cities, as compared to relying on the distance matrix only.

Sources of misfit. Let's consider for a moment why fewer factors may produce a worse
representation of a distance matrix than would more factors. Imagine the three cities A, B, and C,
and the three cities D, E, and F; shown below are their distances from each other.
A B C
A 0

D
D0

E F

B 90 0

E 90 0

C 90 90 0
F 180 90 0
In the first matrix, all cities are exactly 90 miles apart from each other; in the second matrix,
cities D and F are 180 miles apart. Now, can we arrange the three cities (objects) on one
dimension (line)? Indeed, we can arrange cities D, E, and F on one dimension:
D---90 miles---E---90 miles---F
D is 90 miles away from E, and E is 90 miles away from F; thus, D is 90+90=180 miles away
from F. If you try to do the same thing with cities A, B, and C you will see that there is no way to
arrange the three cities on one line so that the distances can be reproduced. However, we can
arrange those cities in two dimensions, in the shape of a triangle:
A
90 miles
90 miles
B
90 miles C
Arranging the three cities in this manner, we can perfectly reproduce the distances between them.
Without going into much detail, this small example illustrates how a particular distance matrix
implies a particular number of dimensions. Of course, "real" data are never this "clean," and
contain a lot of noise, that is, random variability that contributes to the differences between the
reproduced and observed matrix.
Scree test. A common way to decide how many dimensions to use is to plot the stress value
against different numbers of dimensions. This test was first proposed by Cattell (1966) in the
context of the number-of-factors problem in factor analysis (see Factor Analysis); Kruskal and
Wish (1978; pp. 53-60) discuss the application of this plot to MDS.

Cattell suggests to find the place where the smooth decrease of stress values (eigenvalues in
factor analysis) appears to level off to the right of the plot. To the right of this point, you find,
presumably, only "factorial scree" - "scree" is the geological term referring to the debris which
collects on the lower part of a rocky slope.
Interpretability of configuration. A second criterion for deciding how many dimensions to
interpret is the clarity of the final configuration. Sometimes, as in our example of distances
between cities, the resultant dimensions are easily interpreted. At other times, the points in the
plot form a sort of "random cloud," and there is no straightforward and easy way to interpret the
dimensions. In the latter case, you should try to include more or fewer dimensions and examine
the resultant final configurations. Often, more interpretable solutions emerge. However, if the
data points in the plot do not follow any pattern, and if the stress plot does not show any clear
"elbow," then the data are most likely random "noise."

To index

Interpreting the Dimensions

The interpretation of dimensions usually represents the final step of the analysis. As mentioned
earlier, the actual orientations of the axes from the MDS analysis are arbitrary, and can be rotated
in any direction. A first step is to produce scatterplots of the objects in the different twodimensional planes.

Three-dimensional solutions can also be illustrated graphically, however, their interpretation is

somewhat more complex.

In addition to "meaningful dimensions," you should also look for clusters of points or particular
patterns and configurations (such as circles, manifolds, etc.). For a detailed discussion of how to
interpret final configurations, see Borg and Lingoes (1987), Borg and Shye (in press), or
Guttman (1968).
Use of multiple regression techniques. An analytical way of interpreting dimensions (described
in Kruskal & Wish, 1978) is to use multiple regression techniques to regress some meaningful
variables on the coordinates for the different dimensions. Note that this can easily be done
via Multiple Regression.

To index

Applications
The "beauty" of MDS is that we can analyze any kind of distance or similarity matrix. These
similarities can represent people's ratings of similarities between objects, the percent agreement
between judges, the number of times a subjects fails to discriminate between stimuli, etc. For
example, MDS methods used to be very popular in psychological research on person perception
where similarities between trait descriptors were analyzed to uncover the underlying
dimensionality of people's perceptions of traits (see, for example Rosenberg, 1977). They are

also very popular in marketing research, in order to detect the number and nature of dimensions
underlying the perceptions of different brands or products & Carmone, 1970).
In general, MDS methods allow the researcher to ask relatively unobtrusive questions ("how
similar is brand A to brand B") and to derive from those questions underlying dimensions
without the respondents ever knowing what is the researcher's real interest.

To index

MDS and Factor Analysis

Even though there are similarities in the type of research questions to which these two
procedures can be applied, MDS and factor analysis are fundamentally different methods. Factor
analysis requires that the underlying data are distributed as multivariate normal, and that the
relationships are linear. MDS imposes no such restrictions. As long as the rank-ordering of
distances (or similarities) in the matrix is meaningful, MDS can be used. In terms of resultant
differences, factor analysis tends to extract more factors (dimensions) than MDS; as a result,
MDS often yields more readily, interpretable solutions. Most importantly, however, MDS can be
applied to any kind of distances or similarities, while factor analysis requires us to first compute
a correlation matrix. MDS can be based on subjects' direct assessment of similarities between
stimuli, while factor analysis requires subjects to rate those stimuli on some list of attributes (for
which the factor analysis is performed).
In summary, MDS methods are applicable to a wide variety of research designs because distance
measures can be obtained in any number of ways (for different examples, refer to the references
provided at the beginning of this section).
To index