SIMC Market Research Final

Marketing Research
Chapter One
A Decision Making
Perspective on
Marketing Intelligence
Business Intelligence
BI is the ability to access data from multiple sources
within an organization for the purpose of analysis.
It links the disparate operation systems to the end
users of the data, thus creating an environment with
free flow of information.
It offers a reliable barometer of the business
performance.
The applications of BI tools are immense and can be
profitable across different functions of an
organization.

Business Intelligence
Finance & Accounting
Intelligence
Marketing Intelligence HR Intelligence Operations Intelligence
Marketing Research
Define problem & info. needs
Look for existing data
Design study
Collect & Analyze data
Use & Report data for decision making
Back-End Analysis
Need for Marketing Intelligence
MI focuses on the use of information as a
source of strategic advantage.
Need to have a thorough knowledge of
customers, their attitudes, tastes and
preferences.
Need to analyze competition for
benchmarking and making price, product,
market and segment decisions.
Marketing Research
Marketing Research, a critical part of Marketing
Intelligence helps by providing accurate, relevant and
timely (ART) information.
Function of Marketing Research is to link an
organization to its market through information
Identify and define marketing opportunity and
problems
Generate, redefine and evaluate marketing actions
Monitor marketing performance
Improve understanding of marketing as a process

Role of Market Research
Specifies information required
Designs method for collecting information
Manages and implements data collection
process
Interprets results & communicates
findings

Marketing Information System
A continuing and interacting structure of people,
equipment and procedures designed to gather,
sort, analyze, evaluate, and distribute pertinent,
timely and accurate information to marketing
decision making
MIS Uses 3 Types of Information

Recurring market and accounting data from market
analysis and accounting activities
Intelligence relevant to future strategy of business
Marketing research studies not of a recurring nature
Role of Marketing Research in
Managerial Decision Making
Four Stages of Market Planning Process
Situation analysis
Strategy development
Marketing program development
Implementation

Situation Analysis
Analysis of
Market environment
Market characteristics
Consumer behavior
Research Approaches
Organize information obtained from prior
studies (secondary)
Focus groups
Strategy Development
Market Research Provides Information to
Assist Management With Three Critical
Decisions
What business should we be in?
How will we compete?
What are the objectives for the business?

Marketing Program Development

Programs embrace specific tasks
Action program usually focuses on a
single objective in support of one element
of overall business strategy

Implementation
Starts with decision to proceed to a new
program or strategy
Commitment to objectives, budgets and
timetables
Specific measurable objectives must be set for
all elements of marketing program
"Did the elements achieve their objectives?"
Should the marketing program be continued,
discontinued, revised or expanded?"

Factors Influencing Marketing
Research Decisions

Relevance
Type and Nature of Information Sought
Timing
Availability of Resources
Cost-benefit Analysis

Ethics in Marketing Research
Ethics of the Sponsor
Overt and covert purposes
Dishonesty in dealing with suppliers
Misuse of research information
Ethics of the Supplier
Violating client confidentiality
Improper execution of research
Respondents Abuse
Falsifying answers

Conquering Latino Homes
Hispanics account for nearly 13% of the U.S.
population.
Research shows that Latino households spend
$600 billion of $1.3 trillion purchasing power of
multicultural population.
In 1998 only 2.5% of total advertising dollars in
the United States was focused on Latinos.
By 2050, Hispanic population would represent
25% of US population.
Who can tell me what the problem is?

P & G Luring Women with their
Feminine Toothpaste
P & G has came out with Rejuvenating Effects a
gender specific toothpaste targeting the female
customers, who do 82% of the grocery shopping.
The flavor and package of the product was
decided on the basis of the results from a
customer survey filled out by women.
Though, the product is priced slightly higher
than the other brands P & G hopes to make
women think about the toothpaste in the same
light as skin care lotions and shampoo.
Who thinks they were right to try.

Daimler Chrysler Exploring New
Markets
Daimler Chrysler entered the small car segment with
Java in response to the increased demand for small
fuel efficient cars.
They envision a three car plan with an ultra small car
at the bottom end, Java in the middle range and
Mercedes A- class at the very top.
The companys marketing research indicated that
Java would be a success due to high demand and as
the resultant pollution from small cars is low.
Who thinks they were right to try
Situation
Analysis
Strategy
Development
Marketing
Program
Development
Implementation
Understand the environment and the market
Identify threats and opportunities
Assess the competitive position
Define the business scope and served market
segments
Establish competitive advantages
Set performance objectives.
Product and channel decision
Communication decisions
Pricing
Personal selling decisions
Performance monitoring
Refining strategies and program

Marketing Research
Aaker, Kumar, Day
Eighth Edition
Instructors Presentation Slides

Chapter Two
Marketing Research in
Practice
Marketing Research in Practice
Programmatic Research
Develops market options through market segmentation,
market opportunity analysis, or consumer attitude and
product usage studies
Selective Research
Tests different decision alternatives such as new product
testing, advertising copy testing, pre-test marketing, and test
marketing
Evaluative Research
Evaluation of performance of programs

Information System
A continuing and interacting structure of
people, equipment, and procedures,
designed to gather, sort, analyze, evaluate,
and distribute pertinent, timely, and
accurate information to decision makers.

Databases
Contain 3 types of information:
1
st
type: Recurring day-to-day
information
2
nd
type: Intelligence relevant to the
future strategy of the
business
3
rd
type: Research studies that are
not of a recurring nature

Decision Support Systems (DSS)
DSS models are developed and adapted to
support each firms own decision problems
Used to retrieve data, transform it into usable
information, and disseminate it to users
Allow managers to interact directly with
database
To retrieve information
Provides a modeling function to help interpret
information retrieved

Use of Information Systems (IS)
in Marketing Research
IS emphasizes that market research should
part of systematic and continuous effort to
improve decision-making process
Marketing research used to close gaps in
data bank revealed by use of models and
IS

Marketing Decision Support
System
Combines marketing data from diverse
sources into a single database, enabling
product managers, sales planners, market
researchers, financial analysts, and
production schedulers to share
information.

Systems Cont..
Managers needs for decision relevant
information:
Routine comparisons of current performance
against past trends on each of the key measures
of effectiveness
Periodic exception reports to assess which sales
territories or accounts have not matched
previous years purchases
Special analyses to evaluate the sales impact of
particular marketing programs, and to predict
what would happen if changes were made

Systems Cont..
Characteristics of MDSS:
Interactive
Flexible
Discovery oriented
User friendly

Systems Cont..
Four components of MDSS:
Database
Reports and Displays
Analysis capabilities
Models

Gaining Insight from a MDSS
Manager
Modeling
Analysis
Display
Database
Environment
Suppliers of Information
Corporate or in-house marketing research
department

External suppliers

Participants in Marketing Research
Activities
Information Users
Information Suppliers:
Inside Company
Information Suppliers:
Outside Company
General management
Planning
Marketing and sales managers
Product managers
Lawyers
Marketing research department
Sales analysis group
Accounting department
Corporate strategic planning
Research consultants
Marketing research suppliers
Advertising agencies

Information suppliers and services
Information
Supplier
Corporate In-
house Supplier
Structured
(Independent
Department
Syndicated
Services
Customized
Services
Standardized
Services
External
Supplier
Unstructured
(one or more
MR employees)
Field
Services
Branded
Product/Services
Selective
Services
Factors Influencing Choice of
Information Supplier
Internal personnel may not have skills or
experience
Outside help may be called to boost
internal capacity in response to
urgent deadline
Often it is cheaper to go outside

Factors Influencing Choice of
Information Supplier (Contd.)
Outside suppliers may have special
facilities or competencies which would be
costly to duplicate for a single study
Political considerations
Increased credibility of research used in
litigation or in proceedings before
regulatory or legislative bodies
Type and Nature of Services
Customized
Work with individual clients
Syndicated
Routinely collect information on several different
issues and provide it to firms that subscribe to their
services (e.g.,Nielsen television index)
Standardized
Projects conducted in standard, prespecified manner
and supplied to several different clients. (e.g., Starch
readership surveys)

Type and Nature of Services
(Contd.)
Field
Suppliers concentrate only on collecting data for
research projects
Selective
Specialize in just one or two aspects of marketing
research, mainly concerning data coding data,
editing or data analysis
Branded products / services
Develop specialized data collection and analyses
procedures to address specific of research problems
that they market as branded products

Criteria For Selecting External Suppliers

Steps in deciding if supplier can deliver promised data,
advice, or conclusions:

1. A thorough search for companies with an expertise in the
area of study
2. Selection of a small number of bidders on basis of
recommendations of colleagues or others with similar needs
3. Personal interviews with potential project leaders, asking for
examples of previous work, their procedures for working
with clients, and they should provide references
4. Check of references on each potential supplier, with special
attention on expertise, creativity, and quality and adequacy
of resources available
International Marketing
Research
Definition
International Marketing Research can be
defined as marketing research conducted to
aid in making decisions in more than one
country
Function
Provides a systematic, planned approach to
the research process
Ensures all aspects of the research project are
consistent with each other
International Market
Research Industry
Percentage of Worldwide Market
Research Expenditure Per Country
United States 39%
Japan 10%
Western Europe 40%
Rest of World 11%
Career Opportunities in Marketing Research
Marketing Research Analyst
Marketing Information manager
Project manager
Director of Market Research
Research Account manager
Research Analyst
Methodologist
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Three
The Marketing Research
Process
Overview of Marketing Research
Process
MR Process Evolves From Answers to Five
Key Questions
Why should we do research?
What research should be done?
Is it worth doing the research?
How should the research be designed to achieve the
research objectives?
What will we do with the research?
Marketing Research Process
MARKETING PLANNING AND INFORMATION SYSTEM
Planning system
Strategic plans
Tactical plans
Information system
Databases
DSS
1. AGREE ON RESEARCH PROCESS
Problems or opportunities
Decision alternatives
Research users
2. ESTABLISH RESEARCH OBJECTIVES
Research users
Estimate
the value of
information
Is benefit >
cost
Do not conduct
marketing research
NO
2. ESTABLISH RESEARCH OBJECTIVES
Research users
YES
5. COLLECT THE DATA
7. REPORT THE RESEARCH RESULTS AND PROVIDE
STRATEGIC RECOMMENDATIONS
6. PREPARE AND ANALYZE THE DATA
The International Marketing Research
Process
Marketing research process is consistent for
both domestic and international markets
Variety of market environments affect
international marketing research process
Major Environmental Forces
Influencing International Marketing
Research Process
Economic Environment
Social-cultural Environment
Political and Legal Environment
Technological, Multimedia and Infrastructural
Facilities
The Marketing Research Process
Step 1
Research Purpose
Problem or opportunity analysis
Which problems or opportunities are anticipated
What is the scope of the problems and the possible reasons?
Evaluation of decision alternatives
What are the alternatives being studied?
What are the criteria for choosing among the alternatives?
Research users
Who are the decision makers?
Are there any covert purposes?
Kroger Opens Signature Store
Kroger Co. is adding five new Signature stores in
Houston. More than 1,000 questionnaires were
sent to targeted area residents asking what kind of
features the respondents (or future customers)
would like to see included in a new supermarket
in their neighborhood. Based on the surveys,
Kroger added several variations:

A larger selection of wines
A sit-down coffee bar
The largest all-natural food section
U-Scan Express aisles
(Contd.)
Step 2
Research Objective
A statement, in as precise terminology as possible, of
what information is needed
Should be framed to ensure information obtained will
satisfy research purpose
Research Question
Hypothesis Development
Research Boundaries
(Contd.)
Research Question
Asks what specific information is required to
achieve the research purpose
Sample questions to determine if a specific
advertisement should be run:
Will the advertisement be noticed?
Will it be interpreted accurately?
Will it influence attitudes?
(Contd.)
Hypothesis Development
A possible answer to a research question.
Generating a hypothesis
Draw on previous research efforts
Borrow from other disciplines such as:
Psychology
Sociology
Marketing
Economics
Managers experience with related problems, coupled with
knowledge and the use of judgment
Source
Theory
Management experience
Exploratory research
Research
Question
Hypothesis
Research
Purpose
Research
Design
Research
Objective
(Contd.)
Step 3
Estimating the Value of Information
Value depends on:
Importance of decision
Uncertainty that surrounds it
Influence of research information on the decision
Case B
Case A
$ 4 million
$ 1 million
$ 4 million
-$ 2.5 million
Success
Success
Failure
Failure
Introduce
Introduce
Introduce
Introduce
Do not
Do not
Illustrative Decision Models
What is an HMO?
A health maintenance organization that involves fixed
monthly payments directly to a group of doctors or a clinic
that is then responsible for all the health needs covered by
the plan.

Advantages
Total annual cost of an HMO to the consumer is lower than for
group insurance plans
Flat-fee formula discourages doctors from hospitalizing patients
for longer than necessary
Emphasis on preventative care produces fewer seriously ill
patients.

Disadvantages
Restriction of the choice of physicians and hospitals to those
affiliated with the HMO
The International Marketing Research
Process
Avoid mistakes:
Profile you target customers and clients
Interview target segments to assess how well they match your
preconceived ideas
Hire local researchers
Use a variety of methods to get a well-rounded picture
Qualitative methods
Quantitative methods
Look at the findings and analyze what must be done
differently, abroad or internationally, in comparison with
current domestic marketing activities
Framing Research Questions in an
International Environment
Possible questions:
Do opportunities exist for entry into foreign markets?
Which foreign markets warrant detailed investigation?
What are the major economic, political, legal, and other
environmental facts in each potential country?
What mode of entry does the company plan to adopt?
What is the market potential in these countries?
Who are the firms present and potential customers?
What is the nature of competition in the foreign market?
What kind of strategy should the firm adopt?
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Four
Research Design and
Implementation
Research Design and
Implementation
Research Design
The detailed blueprint to guide the
implementation of a research study toward the
realization of its objectives
Categories of Research
Exploratory Research
Used when seeking insights into the general nature of a
problem, the possible decision alternatives, and the relevant
variables that need to be considered
Categories of Research (Cont.)
Descriptive Research
Provides an accurate snapshot of some aspect of the
market environment, such as:
The proportion of the adult population that supports the
United Fund
Consumer evaluation of the attributes of our product
versus competing products.
The socioeconomic and demographic characteristics of
the readership of a magazine
The proportion of all possible outlets that are carrying,
displaying, or merchandising our products
Categories of Research (Cont.)
Causal Research
Used when it is necessary to show that one variable causes or
determines the values of other variables, a causal research
approach must be used

Detective Funnel
Uses Combination of All Three Research
Techniques
Exploratory techniques generate all
possible reasons for a problem
Descriptive and Causal approaches
narrow the possible causes
Problem
Exploratory
Research
Probable
Causes
Causal
Research
Descriptive
Research
Possible
causes of the
problem
Detective Funnel
Data Collection Methods
Relationship between Data Collection Method and
Category of Research
Category of Research
Data Collection Method Exploratory Descriptive Causal
Secondary Sources
Information System a b
Databanks of other a b
organizations
Syndicated Services a b b

Primary Sources
Qualitative Research a b
Surveys b a b
Experiments b a
Research Tactics and Implementation
Once the research approach has been chosen:
Develop:
The specifics of measurements
Plan for choosing the sample
Methods of analysis
Analysis of value versus cost and time involved
Issues in International Research
Design
Determining Information Requirements
Consider level and type of decision for which
research is conducted
Two types of decisions
Strategic
Tactical
Design (Contd.)
Global Strategic Decision
Mostly made at corporate headquarters
Information required is governed by overall
company objectives
Implies long term survival of company
Deal with macro environment
Design (Contd.)
Tactical Decisions
Concerned with micro-level implementation
issues
Information obtained from primary data
Concerned with marketing mix strategy for
country/product markets
Made at functional or subsidiary level
Design (Contd.)
Unit of Analysis
Researcher must decide at what level the analysis is
done
Global level
All countries taken simultaneously
Regional level
Groups of countries considered homogeneous for macro
environmental factors
Country level
Each country taken as separate unit
Construct, Measurement and Sample
Equivalence
Construct Equivalence
Deals with how both the researcher and the
subjects see, understand, and code a particular
phenomenon
"Are we studying the same phenomenon in
countries X and Y?"
Equivalence (Contd.)
Measurement Equivalence
Deals with the methods and procedures used
by the researcher to collect and categorize
essential data and information
Are the phenomenon in countries X and Y
measured the same way?"
Equivalence (Contd.)
Sampling Equivalence
"Are the samples used in countries X and Y
equivalent?"
Key Pitfalls in Conducting and
International Research
Selecting a domestic research company to do
your international research
Rigidly standardizing methodologies across
countries
Interviewing in English around the world
Setting inappropriate sampling requirements
Key Pitfalls in Conducting and
International Research (Contd.)
Lack of systematic international
communication procedures
Misinterpreting multi-country data across
countries
Not understanding international differences
in conducting qualitative research
Error in Research Design
Two Components of Errors
Sampling error
Non-sampling error
Sampling Error
Difference between a measure obtained from a
sample of population and the true measure that can
be obtained only from the entire population
Nonsampling Error
All other errors associated with a research project
Sources of Nonsampling Error
Design Errors
Flaws in research design
Selection Error
Population Specification Error
Sampling Frame Error
Surrogate Information Error
Measurement Error
Experimental Error
Data Analysis Error
(Contd.)
Administering Errors
Occur during the administration of a survey
instrument to the respondents
Questioning Error
Recording Error
Interference Error
(Contd.)
Response Error
Occur when respondent provides inaccurate
answers to survey questions
Non-response Error
Occur if
Some members of sample not contacted
Some members provide incomplete or no
response to survey instrument
Budgeting the Research Project
Two approaches to budgeting
Estimate the dollar costs associated with each research
activity
Used for unusual or expensive projects
Determining the activities to be performed in hours
and apply standard cost estimates to these hours
Used for routine projects or when researcher has knowledge
of costs
Scheduling the Research Project
Identifies personnel accountable for each task within a
given time period
Scheduling techniques:
Critical path method (CPM)
Program evaluation & review techniques (PERT)
GANTT charts
Graphical evaluation & review techniques (GERT)
Research Proposal
Describes a plan for conducting and controlling a
research project
Basis for a written contract between manager and
researcher
Basis for a vehicle for reviewing important
decisions
Used to choose among competing supplies and
influence decision to fund study
Basic Contents of a Research Proposal
Executive Summary
Purpose and Scope
Objectives
Research Approach
Time and Cost Estimates
Appendices
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Five
Secondary Sources of
Marketing Data
Data Sources
Secondary Data
Primary Data
DATA
SOURCES
SECONDARY
DATA
SOURCES
PRIMARY
DATA
SOURCES INTERNAL
RECORDS
EXTERNAL
SOURCES
PUBLISHED
DATA
STANDARDIZED
SOURCES OF
MARKETING
DATA
INTERNET
ELECTRONIC
PRINTED
STORE AUDITS
WAREHOUSE WITHDRAWAL SERVICES
CONSUMER PURCHASE PANELS
SINGLE SOURCE DATA
NIELSENS TELEVISION INDEX
STARCH SCORES
ARBITRON PANEL
MULTIMEDIA SERVICES
SALES/PATRONAGE RESULTS ( OUTCOMES )
MARKETING ACTIVITY ( INPUTS )
COST INFORMATION
DISTRIBUTOR REPORTS AND FEEDBACK
CUSTOMER FEEDBACK
GOVERNMENT
TRADE ASSOCIATIONS
PERIODICALS
NEWSPAPERS
BOOKS
ANNUAL REPORTS
PRIVATE STUDIES
Sources of
Secondary Data
Uses of Secondary Data
Can solve the problem on hand all by its own
Can lead to new ideas and other sources
Helps to define the problem more clearly
Can help in designing the primary data
collections process
Helps in defining the population / sample
Can serve as a reference base
Benefits and Limitations of Secondary
Data
Low cost
Less effort
Less time
At times, more accurate
At times, only way to obtain
data
Collected for some other purpose
No control over data collection
May not be accurate
May not be in correct form
May be outdated
May not meet data requirements
Assumptions have to be made
Benefits
Limitations
Internal Sources of Secondary Data
Internal Records
Accounting Data
Sales Reports
Inventory Management
Customer Database
External Sources of Secondary
Data
Published data sources (e.G., Census,
publications of various trade associations)
Trade directories
Computer retrievable databases ("online"
databases)
Computer Retrievable Database
Based on the Method of
Storage and Retrieval of
Information
Based on the Type of
Information
Source Reference On-line
Databases
CD-ROM
Databases
Floppy Disc
Databases
Indirect
through
Networks
Direct from
Producer
Direct from
Vendors
Internet
Computer-Retrievable Methods
Scope of information
available
Speed of information access
and retrieval
Commercially available
search procedures provide
considerable flexibility and
efficiency
Rely solely on the accuracy of
the abstract author
Depend on the journal and
article selection policy of the
database producer
Might miss important
information, or retrieve a lot of
irrelevant data if searching by
keyword

Limitations Advantages
Sources of Secondary Data for
International Marketing Research
Economic Data
United Nations
World Bank
Business International Publications
Euromonitor
World Casts

Sources of Secondary Data for
International Marketing Research
(Contd.)
Industry Data
United Nations yearbooks
U.S. Department of commerce
The Economist (publication)
World Casts
Background Data
Dun and Bradstreet publications (e.G. Exporter's guide)
Price Waterhouse publications
SIC / NAIC Code
Standard I ndustrial Classification System /
North American I ndustrial Classification
Uniform numbering systems for classifying firms
Up to 7 digits
Total economy is divided into 11 divisions
Classification SIC # Description
Major group 57 Home furniture and equipment stores
Subgroup 571 Home furniture and furnishings
Detailed industry 5712 Furniture stores
5713 Floor covering stores
Appraising Secondary Sources
Factors to Be Considered:
Who has collected the data (did they have adequate resources)?
Why was the data collected (how the interests of agency match
with ours)?
How the data was collected (to determine the quality of data on-
hand)?
What data was collected (geographic and demographic
limitations)?
When the data was collected (how old/obsolete is the data)?
Applications of Secondary Data
Monitoring the Environment
Demand Estimation

Applications of Secondary Data
(Contd.)
Census data
Standard Industrial
Classification (SIC)
Trade association data
Experts and authorities
Press releases
Legislation and laws
Industry news
Business and practitioner
literature, such as
magazines
Demand Estimation Monitoring the Environment
Applications of Secondary Data (Contd.)
PRIZM
CLUSTER PLUS
ACORN
DMI
SIC
TIGER
Competitors annual
reports
Press releases
Segmentation and Targeting Developing a Business
Intelligence System
Problems Associated with Secondary
Data in International Research
Data Accuracy
Comparability of Data
Applications of Secondary Data in
International Research
There Are Four Types of Data Analysis Useful
in Demand Estimation in International
Markets
Lead-lag Analysis
Surrogate Indicators
Cross-sectional Data / Barometric Procedures
Econometric Forecasting Model
Growth of Standardized Sources
Factors
Multitude of information users having
common information needs
When cost of satisfying individual user's need
is prohibitive
The increasing use of scanner systems at the
check out points
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Six
Standardized Sources of
Marketing Data
Growth of Standardized Sources
Factors
Multitude of information users having common
information needs
When cost of satisfying individual user's need is
prohibitive
The increasing use of scanner systems at the check
out points
Audits and Surveys:
National Market Audit
Bi-monthly audit focused on products
irrespective of the outlet carrying the product
Retail Store Audits
Every two months a team of auditors from a
research firm visits a sample of stores to count
the inventory on hand and record deliveries to
the store since the last visit

Beginning inventory + deliveries ending inventory = sales
Nielsen Retail Index
Biggest research company in the world
Their auditing services cover four groups
Grocery products
Drugs
Mass merchandisers
Alcoholic beverages
Consumer Purchase Panels
To Cover the Gap Between Warehouse Withdrawal
Audits and Actual Purchases Following Methods Can
Be Used
Home Audit Approach
Panel member agrees to permit an auditor to check
the household stocks of certain product categories at
regular intervals
Mail Diary Method
Panel member records the details of each purchase
and returns the diary by mail at regular intervals
Advantages of Consumer Panels
Can Provide Information On:
Aggregate Sales Activity
Brand Shares
Shifts in Buyer Characteristics
Shifts in Retail Outlets
Limitations of Consumer Panels
Possibility of Selection Bias
Mortality Effect
Testing Effects
Scanner Services
Scanner-Based Audit Services
Benefits:
High degree of accuracy
Time saving
Ability to study very short time periods of
sales activity
RFID
A new technology that may replace the bar
codes. Utilizing a tiny silicon chip to store
information; a small transmitter would then send
this information to a scanner. RFID offers more
benefits than a UPC, such as:
The ability to store more information
The ability to change the information on the tag
The ability to transmit all the information on the
chip to a scanner without clear line of sight
Single-source Systems
Usually set up in self-contained communities
with their own newspapers and cable TV and
are roughly representative of the demographics
of the country
A test panel of community households is
recruited and monitored
Advantages of Single Source Systems
Availability of exclusive pre-test records
Immediate availability of test results
Ability to compare households prior to and
after exposure to the message
Ability to control settings
Expert Systems Based on Single-
source Services
Since users of scanner data are flooded with massive
amounts of data, expert systems are used to help the
users understand the data quickly
Examples of Expert Systems Are:
Apollo Space Management Software
Cover Story
Sales Partner
Promotion Stimulator
Spotlight
Media Related Standardized Sources
Nielsen Television Index (NTI)
A system for estimating national T.V. audiences
Arbitron Diary Panel
Both regional and national radio and TV panels
Starch Scores
Print media
Multi Media Services
Measurement Systems
Mechanics No wire connections Wired directly to TV and
VCR tuners

Research Methods Data retrieved by
reading UTCP codes
Telephone connections
used to return data
Method of Data
Collection
User logs in/out before
and after watching TV
User punches numerical
code into data-entry
device
Reputation as: Media measurement
business serving the
ratio industry
Foremost in TV ratings
SMART PEOPLE METER
Marketing Decision Support Systems
A typical marketing manager receives some or all of following
data:
Factory shipments or order
Syndicated aggregate (industry) data services
Sales reports from sales personnel
Consumer panel data
Scanner data
Demographic data
Internal cost and budget data
Purpose of MDSS is to combine marketing data from diverse
sources into single database
Applications of Standardized Sources
of Data
Scanner data Starch scores
Diary panels NTI
Arbitron
Multimedia services
Measuring Promotion
Effectiveness
Measuring Ad Exposure
and Effectiveness
Applications of Standardized Sources
of Data (Cont.)
Diary panels Scanner data
Retail audits Starch scores
Scanner data Diary panels
Internal records Internal records
SIC
Measuring Product
Sales and Market Share
Estimation and
Evaluation of Models
Applications of Standardized
Sources of Data (Contd.)
Measuring product sales and market share
Measuring advertisement exposure and
effectiveness
Measuring promotion effectiveness
Estimation And evaluation of models
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Eight
Information Collection:
Qualitative and Observational
Methods
Information Collection :
Qualitative and Observational
Methods
Qualitative Methods
Recommended to capture the basic feel of a
problem prior to conducting more analytical
study
Observational Methods
These methods are limited to providing
information on current behavior
Qualitative Research Methods
Exploratory
Conducted primarily to explicitly define the problem
and formulate hypotheses
Orientation
To learn more about target consumer (e.G. Culture,
language)
Clinical
To gain insights into topics that are difficult in a
structured research
Qualitative Research Methods
Four major constraints:
Volume of data
Complexity of analysis
Detail of clarification record
Time-consuming nature of the clerical efforts
required

Computer technology helps alleviate these
problems and increase the use of qualitative
research
Use of Computers in Qualitative
Research
Transmitting
Storing
Coding
Searching and Retrieving
Building Relationships
Matrix Building
Individual In-depth Interviews
Nondirective interviews (respondent enjoys
maximum freedom)
Semi-structured or focused individual interviews
Covers a specific list of topics or sub-areas
Individual in-depth interviews (3 techniques):
Laddering
Hidden-issue
Symbolic Analysis
Focus Group Discussions
Offers participants more stimulation than an
interview; makes new ideas and meaningful
comments more likely
Issues to be addressed:
Outlining the intended direction of the group
Explaining how participants were recruited
Reeducating observers on the concepts of random
selection, statistical reliability, and projectability of
research results
Types of Focus Groups
Exploratory Focus Groups
Used in the exploratory phase of the market research process
Used for generating the hypotheses
Clinical Focus Groups
Based on the premise that an individual's true feelings and
motivations are subconscious in nature
Experiencing Focus Groups
Allows the researcher to experience the emotional framework
in which the product is being used
Key Factors for Focus Group Success
Planning the Agenda
Recruitment
Moderation
Analysis and Interpretation of the Results
Ten Tips for Running a Successful Focus Group
1. You can never do too much planning for a focus group.
2. Manage the recruitment process actively to be sure to get the right people in the
groups.
3. Dont prejudge the participants based on physical appearance.
4. The best focus group moderators bring objectivity and expertise in the process to a
project.
5. Achieving research objectives does not guarantee a successful group project.
6. The moderator and the client should coordinate their efforts at all stages of the
process for the research to achieve its objectives.
7. Most client organizations conduct more focus groups than are necessary to achieve
the research objective
8. One of the most important services a moderator can provide is a fast report
turnaround.
9. Client observers should be thoroughly briefed about the research objectives before
the sessions start.
10. The most valuable service a moderator can provide is objective conclusions based
on the interpretations of the research, without regard for what the client wants to
hear.

Trends in Focus Groups
Telephone Focus Groups
Video Conference
Two-way focus groups
Projective Techniques
Respondent is asked to comment upon rather
unstructured or ambiguous object, activity
The Various Categories of Projective
Techniques Are
Word Association
Completion Test
Picture Interpretation
Third Person Techniques
Role Playing
Limitations of Qualitative Methods
Potential susceptibility of the results to get
misused or misinterpreted
Results not necessarily representative of the
whole population
Moderator or interviewer's role is extremely
critical can lead to ambiguous or at times
misleading results
Observational Methods
Casual Observation
Systematic Observation
Direct Observation
Contrived Observation
Content Analysis
Physical Trace Measures
Humanistic Inquiry
Behavior Recording Devices
Limitations of Observational Methods
Cannot be used to observe motives, attitudes or
intentions
More costly and time consuming
Recent Applications of Qualitative
and Observational Methods
Get inside minds of shoppers by providing tape
recorders and having them record their thoughts
while shopping
Virtual Customers system for evaluating service
quality
On-site observation
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Nine
Information from Respondents:
Issues in Data Collection
Information From Surveys
Used to Capture a Wide Variety of Information:
Attitude
Decisions
Focus on process and not the results
Measuring the relationship between actions &
needs, desires, preferences, motives and goals
Sources of Survey Error
The Results Will Be Meaningful If:
Population has been defined correctly
Sample is representative of the population
Respondents selected are able and willing to cooperate
Questions are understood by the respondents
Respondents have the knowledge, opinions, attitudes, or
facts required
Interviewer correctly understands and records the
response
POPULATION RESPONDENT INTERVIEWER
Sample
Question
Answer
Sampling error
Nonresponse
due to refusals
or not-at-home
Ambiguity
of question
Interviewer
error
Ambiguity
of answer
Inaccuracy in
response
Inability to
formulate a
response
Unwillingness
to respond
Sources of Survey Error
Non-response Errors Due to Refusals
Refusals Could Occur Due to:
Nature of questions and place
Subject of no interest to the respondent
Fear
Invasion of privacy
Hostility towards sponsor
Personal bias
Characteristics of the data collection procedure (e.G.,
Presidential polls)
Non-response Errors Due to Refusals
(Cont.)
Phenotypic Source
Characteristics of the data collection procedure
Question asked
How question is asked
Length of interview
Genotypic Source
Indigenous characteristics of the respondents
Age
Sex
Occupation
Inaccuracy in Response
Inability to respond
Telescoping
Averaging
Omission
Cannot formulate an adequate answer
Some of these problems can be solved by:
Aided-recall techniques
Unwillingness to Respond Accurately
This Could Arise Due to the Following
Reasons:
Concern about invasion of privacy
Time pressure and fatigue
Prestige seeking and social desirability response bias
Courtesy bias
Uninformed response bias
Response style
Interviewer Error
This Depends On:
Respondents Impression of the Interviewer
Questioning, Probing, and Recording
Fraud and Deceit
Improving Interviewer Quality
Methods of Data Collection
Personal Interview
Telephone Interview
Mail Survey
Fax Survey
E-mail Survey
Web-based Survey
Factors Affecting the Choice of a
Survey Method
Sampling
Type of Population
Question Form
Question Content
Response Rate
Costs
Available Facilities
Length of Data Collection
Ethical Issues in Data Collection
Misrepresentation of Data Collection Process Stems
From:
Representation of a marketing activity other than
research as research
Abuse of respondents rights during the data collection
process, under the rationale of providing better quality
research. E.G.,
Use of survey for selling purposes
Use of survey to obtain names and addresses of
prospects for direct marketing
(Contd.)
The Rights of the Respondents Can Be Violated By:
Disguising the purpose of a particular measurement
Deceiving the prospective respondent as to the true
duration of the interview
Misrepresenting the compensation in order to gain
cooperation
(Contd.)
The Rights of the Respondents Can Be Violated By:
Not mentioning to the respondent that a follow up interview will
be made
Using projective tests and unobtrusive measures to circumvent the
need for a respondents consent
Using hidden tape recorders
Not debriefing the respondent
Conducting simulated product tests in which identical product is
tried by respondent except for variations in color
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Ten
Information from Respondents:
Survey Methods
Collecting Data
Guidelines:
Reviewing data
Getting started
Setting the feedback objective
Customer presentation
Sharing responsibility
Handling issues you cannot fix
Working the issue resolution with your
account
Basic Survey Methods
Personal Interview
Telephone Interview
Mail Survey
Personal Interviews
There Are Four Entities Involved:
Researcher
Interviewer
Interviewee
The Interview Environment
Personal Interviews (Contd.)
Methods:
Door to Door Interviewing
Executive Interviewing
Mall Intercept Surveys
Self Administered Interviews
Purchase Intercept Technique (PIT)
Omnibus Surveys
Advantages:
Can arouse and keep interest
Can build rapport
Ask complex questions with the help of visual and other aids
Clarify misunderstandings
High degree of flexibility
Probe for more complete answers
Accurate for neutral questions
Do not need an explicit or current list of households or
individuals
Disadvantages:
Bias of Interviewer
Response Bias
Embarrassing/personal questions
Time Requirements
Cost Per Completed Interview Is High
Telephone Interviewing
The Important Aspects of Telephone Interviewing:
Selecting telephone numbers
Pre-specified list
A directory
Random dialing procedure
Random digit dialing
Systematic random digit dialing (SRDD)
Call outcomes
The introduction
When to call
Call reports
Telephone Interviewing (Contd.)
Advantages:
Central location, under supervision, at own hours
More interviews can be conducted in a given time
Travelling time is saved
More hours of the day are productive
Repeated call backs at lower cost
Absence of administrative costs
Lower cost per completed interview
Intrusiveness of the phone and ease of call backs
Less sample bias
Telephone Interviewing (Contd.)
Limitations:
Inability to employ visual aids or complex tasks
Can't be longer than 5-10 min. or they get boring
Amount of data that can be collected is relatively
less
A capable interviewer essential
Sample bias
As all people do not have phones, or are not listed
Mail Surveys
Requires a broad identification of the individuals to be
sampled before data collection begins
Some Decisions That Need to Be Taken Are:
Type of Return Envelope
Postage
Method of Addressing
Cover Letter
The Questionnaire Length, Layout, Color, Format Etc
Method of Notification
Incentive to Be Given
Mail Surveys (Contd.)
Advantages:
Lower cost
Better results, including a shorter response time
Reliable answers as no inhibiting intermediary
Survey answered at respondents discretion
Disadvantages:
The identity of the respondent is inadequately
controlled
No control over whom the respondent consults
before answering the questions
The speed of the response can't be monitored
No control on the order in which the questions
are exposed or answered
Disadvantages (Contd.):
The respondent may not clearly understand the
question and no opportunity to clarify
No long questionnaires
Subject to availability of a mailing list
Response rate is generally poor
Number of problems such as obsolescence,
omissions, duplications, etc
Factors Affecting the Response Rate
Perceived amount of work required, and the
length of the questionnaire
Intrinsic interest in the topic
Characteristics of the sample
Credibility of the sponsoring organization
Level of induced motivation
Factors Affecting the Response Rate
(Cont.)
Coping with non-response:
Include monetary incentive
Send a follow-up letter
Include return envelope
Alternatives:
Mail Panels
Fax Surveys
Combination of Survey Methods
The Telephone Pre-notification Approach
The Lockbox Approach
The Drop-off Approach
Comprehensive Advantages of
Various Methods
Survey Method: Personal Interviewing

The best way to implement some sample
designs
Most effective way of enlisting cooperation.
Advantages of interview questions-probing for
adequate answers, accurately following
complex instructions or sequences are
realized.
Comprehensive Advantages of Various
Methods (Cont.)
Multi-method data collection are feasible
Rapport and confidence building are
possible.
Probably longer interviews can be done in
person.
Comprehensive Disadvantages of
Various Methods
Survey Method: Personal Interviewing

It is likely to be more costly than alternatives.
A trained staff of interviewers that is
geographically near the sample is needed.
The total data collection period is likely to be
longer than for most procedures.
Some samples may be more accessible by some
other mode.

Survey Method: Telephone Interviewing

Lower costs than personal interviews.
Random Digit-Dialing (RDD) sampling of
general population.
Better access to certain populations
Shorter data collection periods.

Various Methods
Comprehensive Advantages of Various
Methods (Cont.)
The advantages of interviewer administration (In
contrast to mail surveys).
Interviewer staffing and management easier than
personal interviews-smaller staff needed, not
necessary to be near sample, supervision and
quality control potentially better.
Likely better response rate from a list sample
than from mail
Various Methods
Survey Method: Telephone Interviewing

Sampling limitations, especially as a result of omitting
those without telephone
Nonresponse associated with RDD sampling is higher
than with interviews
Questionnaires or measurement constraints
Possibly less appropriate for personal or sensitive
questions if no prior contact
Various Methods
Survey Method: Self-Administration

Ease of presenting questions requiring visual
aids.
Asking questions with long or complex
response categories is facilitated.
Asking batteries of similar questions is
possible.
Various Methods
Especially careful questionnaire design is
needed.
Open questions usually are not useful.
Good reading and writing skills are needed by
respondents.
The interviewer is not present to exercise quality
control with respect to answering all questions,
meeting questions objectives, or the quality of
answers provided.
Various Methods
Survey Method: Mail Procedures

Relatively low cost
Can be accomplished with minimal staff and
facilities.
Provides access to widely dispersed samples.
Respondents have time to give thoughtful
answers, look up records, or consult others.
Various Methods
Ineffective as a way of enlisting cooperation.
Various disadvantages of not having
interviewer involved in data collection.
Need for good mailing addresses for sample.
Various Methods
Survey Method: Drop-off questionnaire

The interviewer can explain the study, answer
questions, and designate a respondent.
Response rates tend to be like those of personal
interview studies.
There is more opportunity to give thoughtful
answers and consult records.
Various Methods
Costs about as much as personal interviews.
A field staff is required.

Various Methods
Survey Method: Fax Surveys

Relatively low cost
Can be accomplished with minimal staff and facilities
Provides access to widely dispersed samples.
Respondents have time to give thoughtful answers.
Telephone charges are decreasing.
Various Methods (Cont.)
Local faxes are free.
Administrative costs are fixed.
It is fast.
Technology is improving.
List management is easy.
Can send and receive by computer.
More reliable than mail in some countries.
Various Methods
Survey Method: Fax Surveys

Higher fixed costs for computer/fax equipment,
multiple phone lines.
Costs increase with minutes.
Cost varies by time on line, time of day, distance, and
telephone carrier.
Currently limited to organizational populations.
Loss of anonymity.
Trends in Survey Methods
Computer Interactive Interviewing
Fax Surveys
Electronic Mail Surveys
Surveys in the International Context
Personal
Dominant mode of data collection outside the US
Telephone
Low levels of telephone ownership in some countries
Poor communication network in some countries
Mail
Absence of mailing lists
Poor mail services in some countries
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Eleven
Attitude Measurement
Attitude Measurement
Majority of questions in marketing research are
designed to measure attitudes
Attitudes include
Information possessed
Feelings of like and/or dislike
Intentions to behave
Management wants to understand and influence
behavior
Reasons for Measuring Attitudes
Attitudes lead to behavior
More feasible to ask questions on attitudes than to
observe and interpret behavior
Large capacity for diagnosis and explanation
Learn which features of a new product concept are
acceptable or unacceptable
Measure the perceived strengths and weaknesses of
competitive alternatives
What Are Attitudes?
Mental states used by individuals to structure
the way they perceive their environment and
guide the way they respond to it
Components of Attitude
Cognitive or Knowledge Component
Represents a persons information about an object
Awareness of existence on the object
Beliefs about the characteristics or attributes
of the object
Judgments about the relative importance of
each of the attributes
Components of Attitude (Cont.)
Affective or Liking Component
Summarizes a persons overall feelings toward an
object, situation, or person
On a scale of like-dislike or favorable-unfavorable
When there are several alternatives, liking is
expressed in terms of preference
Measured by asking which alternative is most
preferred or first choice, which is the second
choice, and so on
Components of Attitude (Cont.)
Intention or Action Component
Refers to a persons expectations of future behavior
toward an object
Intentions are usually limited to a distinct time
period that depends on buying habits and planning
horizons
Advantage
Incorporates information about a respondents
ability or willingness to pay for the object, or other
taken action
Measurement and Scaling
Measurement
Standardized process of assigning numbers or other
symbols to certain characteristics of objects of interests
according to pre-specified rules
Characteristics for Standardization
One-to-one correspondence between the symbol and the
characteristic in the object that is being measured
Rules for assignment should be invariant over time and
the objects being measured
Measurement and Scaling (Contd.)
Scaling
Process of creating a continuum on which
objects are located according to the amount of
the measured characteristic that the object
possesses
Measurement Scales
Nominal Scale
Objects are assigned to mutually exclusive, labeled
categories
No necessary relationships among categories
No ordering or spacing are implied
Only possible arithmetic operation is a count of each
category
Measurement Scales (Contd.)
Ordinal Scale
Rank objects or arrange them in order by some common
variable
Does each object have more or less of a variable than
some other object?
Does not provide information on how much difference
between objects
Arithmetic operations are limited to statistics such as
median or mode
Interval Scale
Numbers are assigned to objects that represent
categories, rank orders, as well as how much the object
is preferred on the attribute being measured
Differences can be compared
Entire range of statistical operations can be employed
Ratio Scale
Type of interval scale with meaningful zero point
Possible to say how many times greater or smaller one
object is than another
Magnitude scaling of attitudes has been calibrated
through numeric estimation
Attitude Rating Scales
Present a respondent with a continuum of
numbered categories that represent the range
of possible attitude adjustments
Single item or multiple item scales
Attitude Scales
Single-Item
Scales
Continuous
Scales
Multi-Item
Scales
Stapel
Scales
Thurstone
Scales
Likert
Scales
Associative
Scales
Semantic
Differential
Scale
Paired
Comparison
Scales
Q-sort
Scales
Comparative
Scales
Itemized
Category
Scales
Pictorial
Scales
Constant
Sum Scales
Rank Order
Scales
Classification of Attitude
Scales
Single Item Scales
Only have one item to measure a construct
Itemized-category scale most widely used by
marketing researchers
Other single item scales
Comparative
Rank-order
Q-sort
Pictorial
Constant sum
Single Item Scales (Contd.)
Itemized-category Scales
Scales in which the respondent selects from a
limited number of categories
Comparative Scale
A judgment comparing one object, concept, or
person against one another

Rank-order Scales
Scale in which the respondent compares one item
with another or a group of items against each
other and ranks them
Q-sort Scaling
Respondents sort comparative characteristics into
normally distributed groups
Ten or more groups increases accuracy of results

Constant-sum scale
Respondents allocate a fixed number of rating points
among serial objects to reflect relative preference
Pictorial scales
Various categories of the scale are depicted pictorially
Thermometer Scale
Funny faces scale
Format must be comprehensible to respond and allow
accurate response
Paired-Comparison Scales
The brands to be rated are presented two at a time, so each
brand in the category was compared once to every other brand
Brands are rated on a given 10 pts. that are then divided
between the two brands
Advantages
Performs well on the criteria
Limitations
Cumbersome to administer
Frame of reference is always the other brand being tested; these
brands may change over time
Designing Single Item Scales
Number of Scale Categories
Types of Poles Used in the Scale
Strength of the Anchors
Labeling of the Categories
Balance of a Scale
Multiple-item Scales
Developed to measure a sample of beliefs
toward the attitude objects and combine the set
of answers into an average score
Multiple-item Scales (Contd.)
Likert Scale
Requires respondent to indicate degree of
agreement or disagreement with a variety of
statements related to the attitude object
Summated Scale
Scores on individual items are summed to give total
score for respondents
Likert Scale Is Uni-dimensional
Thurstone Scales
Also known as the method of equal-appearing intervals;
objective is to obtain a unidimensional scale with
interval properties
Step 1:
Generate a large number of statements or adjectives reflecting
all degrees of favorableness toward the attitude of objects
Step 2:
A group of judges is given this set of items and asked to
classify them according to their degree of favorableness or
unfavorableness
Thurstone Scales (Cont.)
Advantages
Easy to administer
Requires minimum instructions
Limitations
Time consuming
Expensive to construct
Not as much diagnostic value as a Likert scale
Values depend on the attitudes of the original judges
Semantic-differential Scale
Respondents rate each attribute object on a
number of five or seven-point rating scales
bounded by polar adjectives or phrases
With bipolar scale, the midpoint is a neutral
point
Characteristics of Semantic
Differential
Scales in Semantic Marketing Applications:
Pairs of objects or phrases must be meaningful in market
being studied and often correspond to product/service
attributes
Avoid "halo" effect by placing negative pole on either side
Category increments are treated as interval scales so group
mean values can be computed for each object on each scale
May also be analyzed as a summated rating scale
Characteristics of Semantic
Differential (Contd.)
Profile Analysis
Application of semantic differential scale
Plot mean ratings of each object on each scale
for visual comparison
Overall comparison of brands hard to grasp with
many brands and attributes
Not all attributes are independent
Stapel Scales
Uses one pole rather than two opposite poles
Respondents select a numerical response
category
High positive score reflects good fit between
adjective and object
Easy to administer and construct
No need to assure bipolarity
Associative Scaling
Most effective for markets where respondent is
knowledgeable only about a small subset of a
large number of choices
Appropriate to choice situations that involve a
sequential decision process
Best suited to market tracking where the
emphasis is on understanding shifts in relative
competitive positions
Continuous Rating Scales
Respondents rate objects by placing a mark at
appropriate position on a line running from one
extreme of the criterion variable to the other
Values can be interpreted as interval or ratio
scaled data
It is easy to construct
Scoring is cumbersome and unreliable
General Guidelines For Developing A
Multiple-Item Scale
Determine clearly what you are going to
measure
Generate as many items as possible
Ask experts in the field to evaluate the
initial pool of items
Determine the type of attitudinal scale
to be used
Include some items that will help in the
validation of the scale
Evaluate and refine the items
Administer the items to an initial
sample
Finally, optimize the scale length
Choosing An Attitudinal Scale
Problems in choosing
There are many different techniques, each with its own
strengths and weaknesses
Virtually any technique can be adapted to the
measurement of any one of the attitude components
Researchers choice shaped by:
The specific information required
Adabtability of the scale to the data collection method
and budget constraints
Compatibility of the scale with the structure of the
respondents attitude
Accuracy of Attitude Measurements
Validity
An attitude measure has validity if it measures what it is
supposed to measure
Face Validity
The extent to which the content of a measurement scale
appears to tap all relevant facets of the construct
Criterion Validity
Based on empirical evidence that the attitude measure
correlates with other criterion variables
(Cont.)
Concurrent validity
Two variables are measured at the same time
Predictive validity
The attitude measure can predict some future event
Convergent validity
A form of construct validity that represents the
association between the measured construct and
measures of other constructs with which the
construct is related on theoretical grounds
Discriminant validity
A form of construct validity that represents the extent
to which the measured construct is not associated
with which the construct is related on theoretical
grounds
Construct Validity
A scale evaluation criterion that relates to the
underlying question "what is the nature of the
underlying variable or construct measured by the
scale?"
Accuracy of Attitude
Measurements (Cont.)
(Contd.)
Reliability
The consistency with which the measure produces the
same results with the same or comparable population
Sensitivity
Extent to which ratings provided by a scale are able
to discriminate between the respondents who differ
with respect to the construct being measured
Accuracy of Attitude
Measurements (Contd.)
Generalizability
Refers to the ease of scale administration and
interpretation in different research settings and
situations
Relevancy
Relevance = reliability * validity
Scales in Cross-national Research
Responses Can Be Affected by:
Low literacy and educational levels
Culture in a country
Semantic differential scale is closest to pan
cultural scale
Adapting response formats, particularly their
calibration, for specific countries and cultures
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Twelve
Designing the Questionnaire
Questionnaire building
is an art!
A questionnaire
is always custom-built!
The process of questionnaire design
PLANNING WHAT TO MEASURE
Revisit the research objectives
Decide on the research issue of your questionnaire
Get additional information on the research issue from secondary
data sources and exploratory research
Decide on what is to be asked under the research issue
FORMATTING THE QUESTIONNAIRE
In each issue, determine the content of each question.
Decide on the format of each question
QUESTION WORDING
Determine how the question is worded
Evaluate each research question on the basis of comprehensibility,
knowledge and ability, willingness/inclination of a typical respondent to
answer the question
FORMATTING THE QUESTIONNAIRE
In each issue, determine the content of each question.
Decide on the format of each question
The process of questionnaire design
SEQUENCING AND LAYOUT DECISIONS
Lay out the questions in a proper sequence
Group all the questions in each subtopic to get a single questionnaire
PRETESTING AND CORRECTING PROBLEMS
Read through the whole questionnaire to check whether it
makes sense and it measures what it is supposed to measure
Check the questionnaire for error
Pretest the questionnaire
Correct the problems
Logical Steps to Develop a Good Questionnaire
Plan what to measure
Formulate questions to obtain the needed information
Decide on the order and wording of questions and the
layout of the questionnaire
Using a sample, test the questionnaire for omissions and
ambiguity
Correct the problems (pretest again, if necessary)
Designing the Questionnaire (Contd.)
Planning What to Measure
Specify research objectives and information to
be collected
Relevance of the study
Translating Research Objectives Into
Information Requirements
Designing the Questionnaire (Contd.)
Formatting the Question
Decision to be made regarding the degree of freedom to be
given to the respondents in answering the questions
Alternatives
Open ended with no classification
Open ended where the interviewer uses precoded
classifications to record the response
Close ended or structured format in which a
question or a supplementary card presents the
responses to be considered
Open Ended Questions
Open Ended Questions Are Good for the Following
Circumstances
Introduction to a survey or to a topic
When it is important to measure the saliency of an issue to
a respondent
When there are too many responses to be listed, or they
can't be foreseen
When verbatim responses are desired to give the flavor of
people's answers or to cite examples
When the behavior to be measured is sensitive or
disapproved
Open Ended Questions (Contd.)
Advantages
Wide range of responses
Responses obtained without any influence
Free choices
Disadvantages
Variability in the clarity and depth of the responses
Articulateness of the respondent in personal
interview
Willingness to compose a written answer for a mail
survey
Interviewer's ability to record the verbatim answers
quickly
Disadvantages (Cont.)
These type of questions are also time consuming
Involves subjective judgements during summarization
and are prone to error
Expensive
The answer to this type of question expands or contracts
depending on the space or time available for it
Respondents may not use the same frame of reference,
when the options are not available
Closed-response Questions
There Are Two Basic Formats for Closed Ended
or Structured Questions
Choice from a list of responses
Appropriate single-choice rating on a scale
Closed-response Questions (Contd.)
Advantages
Easier to answer
Require less effort by the interviewer
Tabulation and analysis is easier
Less potential error in the way the question is
asked and the way it is recorded
The responses are directly comparable from
respondent to respondent
Limitations
Disagreement among researchers on the type of
responses that should be listed
The answer to a closed response question will be
received no matter how relevant or irrelevant the
question is in that context
May not produce meaningful results
Dichotomous questions are prone to a large amount of
measurement error because the alternatives are polarized
Limitations (Contd.)
Good questions are hard to develop
Provides fewer opportunities of self expression
The list of alternative responses provides
answers that might have not been considered by
the respondent who are reluctant to admit
ignorance, and thereby selecting a "reasonable"
response
Number of Response Categories
Generally five to seven categories
Ideally the multiple choices should be
mutually exclusive
Order of Response Categories
Responses are likely to be affected by the
order in which they are presented.
What factor influences your fast-food restaurant
choice most ?
Convenient location
Quality of food
Menu selection
Fast service
Reasonable prices
Brand name
Cleanliness
Order of Response Categories
To prevent order bias, place the average or
expected response at various positions in the
sequence of categories
Range of Response Categories
Respondents who do not know the answer
might take categories as cues.

How many long-distance calls do make in a week?
less than 5 less than 10
5-10 or 10-20
More than 10. More than 20.
Handling Uncertainty and Ignorance
Concerns the handling of dont know and
neutral responses
May be advisable to provide the interviewer with
an additional no answer category to identify
these people correctly
Using Both Open-Response And Closed-
Response Questions
Probe:
Using an open-response question to follow up a
closed-response question
Two general purposes for the use of probes:
Pinpoint questions that were particularly difficult
for respondents
Aid researcher interpretation of respondent
answers
Question Wording
Care Has to Be Taken That
Is the vocabulary simple, direct, and familiar to all
respondents?
Do any words have vague or ambiguous meanings?
Are any questions " double-barreled?
Are any questions leading or loaded?
Are the instructions potentially confusing?
Is the question applicable to all respondents?
Are the questions of appropriate length?
Question Wording
Avoid ambiguous words

How many times per month do you visit a
fast-food restaurant?
Never
Occasionally
Sometimes
Often
Question Wording
Are any questions loaded?

1) Dont you think, because its so greasy,
fast-food is one of the worst types of food?

2) Do you prefer a hamburger that is grilled
on a hot stainless-steel grill or cooked by
passing the raw meat through an open gas
flame?
Question Wording
Are any questions "double-barreled?

Are you satisfied with the price and the service of
Taco Bell?
Question Wording
Is the question applicable to all respondents?

Why do you like fast-food?

Assumes that respondent likes fast-food.
Asking Sensitive Questions
Consumption of Kelloggs Frosted Flakes
The casual approach
Have you eaten Frosted Flakes within the last week?
The numbered card
Would you please read off the number on this card that
corresponds to what you had eaten for breakfast in the last
week?
(Hand card to respondent)
1. Pancakes
2. Frosted Flakes
3. Other (what)?
Asking Sensitive Questions (Cont.)
The everybody approach
As you know, many people have been eating
Frosted Flakes for breakfast. Do you eat Frosted
Flakes?
The other people approach
Do you know of any adult who eats Frosted
Flakes?
How about yourself?
The sealed ballot technique
In this version you explain that the survey respects peoples
right to anonymity with respect to their eating habits, and that
they themselves are to fill out the answer to the question, seal
it in an envelope, and drop it in a box conspicuously labeled
sealed ballet box that is carried by the interviewer
The Kinsey approach
Stare firmly into respondents eyes and ask in simple clear-cut
language as that to which the respondent is accustomed, and
with an air of assuming that everyone had done everything,
Do you eat Frosted Flakes for breakfast?
Randomized Response Technique
The respondent is asked to answer one or two randomly
selected questions without revealing which question has been
answered
Questions:
Sensitive
Innocuous
Since the interviewer records a yes or no answer
without knowing which question has been answered,
the respondent feels free to answer honestly
Randomized Response Technique
P[Yes] = P[Yes|
S.Q
] * P[S.Q] + P[Yes|
I.Q
] *
P[I.Q]

where
S.Q = Sensitive Question
I.Q = Innocent Question
Sequence And Layout Decisions
Open with an easy and non threatening
question
The questionnaire should flow smoothly and
logically from one topic to the next
Proceed from broad general questions to the
more specific

Organization of a Typical Questionnaire
Location Type Function Example
Starting questions Broad, general
questions
To break the ice and
establish a report with
the respondent
Do you own a
personal computer?
Next few questions Simple and direct
questions
To reassure the
respondent that the
survey is simple and
easy to answer
What brands of
personal computers
did you consider
when you bought it?
Questions up to a
third of the
questionnaire
Focused questions Relate more to the
research objectives
and convey to the
respondent the area of
research
What attributes did
you consider when
you purchased you
personal computer?
Major portion of the
questionnaire
Focused questions;
some may be difficult
and complicated
To obtain most of the
information required
for the research
Rank the following
attributes of a
personal computer
based on their
importance to you
Last few questions Personal questions
that may be perceived
by the respondent as
sensitive
To get classification
and demographic
information about the
respondent
What is the highest
level of education
you have attained?
Sequence And Layout Decisions
(Contd.)
Sensitive questions should not be placed in the
beginning of the questionnaire
Use good quality of paper
Physical layout should be appealing and
interesting
Order bias
Order Bias: Does The Question Create
The Answer?
1. No question asked 2.8
2. Asked only about advantages 16.7
3. Asked only about disadvantages 0.0
4. Asked about both advantages and
disadvantages
5.7
Percentage of Respondents
Very Much Interested in
Buying New Product Questions Preceding Buying Interest Question
Pretesting and Correcting Problems
Pretest Design
Pretesting Specific Questions For
Variation
Meaning
Task difficulty
Respondent interest and attention
Pretesting the Questionnaire
Flow of the questionnaire
Skip patterns
Length
Respondent Interest and Attention
Exercises
Why did you purchase a Sony brand Walkman?

Price was lower than other alternatives
Feel it represents the highest quality
Availability of local service
Sound is better
Warranty is better
Looks good
Exercises
Have you ever listened to a Long John Silvers
radio commercial?

Which of the following restaurants do you visit
frequently?
Burger King
Pizza Hut
James Coney Island
Exercises
Do you agree that, since fast-food restaurants
produce a disproportionate amount of waste,
they should be subject to an additional
environmental tax?

Yes
No
Exercises
How often do you eat fast food?

Daily
Every second day
Once a week
Every two weeks

Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Thirteen
Experimentation
Experiments
Studies in which conditions are controlled so
that one or more independent variable(s) can
be manipulated to test a hypothesis about a
dependent variable
Experimental Research
Manipulation of A treatment variable (x),
followed by observation of response variable
(y)
Experiment must be designed to control for
other variables to establish causal relationship
Descriptive Research
Limitations
Descriptive provides a snapshot of some
aspect of market environment at a specific
point in time
No hint of a causal insight to be obtained from
descriptive data
What Constitutes Causality?
A change in one variable will produce a change
in another
Concept of a precondition influencing a variable
of interest
Time Sequence
No other possible explanation
Attitude Behavior
Direction of Causation Issue
Determining the direction of causation
Draw on logic and previous theory
Whether one of the variables is relatively fixed and
unalterable
If a time lag exists between cause and effect then
the causal variable should have a positive
association with the effect variable lagged in
time
Conditions for valid Causal Inference
Types of evidence relevant to evaluating causal
relationships:
Condition of concomitant variation
Evidence that a strong association exists between an action and
an observed outcome
Condition of time order of occurrence
Evidence that the action preceded the outcome
Absence of competing causal explanations
Evidence that there is no strong competing explanation for the
relationship that a high level of internal validity exists
Issues In Experimental Research
What type of experimental design should be
used?
Should the experiment be performed in a
laboratory setting or in the field?
What are the internal and external threats to the
validity of the experiment, and how can we
control for the various threats to the experiments
internal and external validity?
Basic Symbols and Notations
O denotes a formal observation or measurement
X denotes exposure of test units participating in the
study to the experimental manipulation of treatment
EG denotes an experimental group of test units that are
exposed to the experimental treatment.
CG denotes a control group of test units participating in the
experiment but not exposed to the experimental treatment
R denotes random assignment of test units and
experimental treatments to groups. Increases reliability
M denotes that both the experimental group and the control
group are matched on the basis of some relevant
characteristics
Types of Experimental Designs
Classical
Considers only one treatment level of an
independent variable at a time
Statistical
Allows for examining the impact of different
treatment levels of an independent variable and
the impact of two or more independent
variables
Classical
Designs
Factorial Design
Latin Square Design
Completely Randomized
Design
Randomized-Block Design
Quasi-Experimental Designs
Time Series Design
Continuous Panel Design
Preexperimental Designs
One-group, After-Only Design
One group, Before-After Design
Nonmatched Control Group Design
Matched Control Group Design
True Experimental Designs
Two-group, Before-After Design
Two group, After-Only Design
Solomon Four Group Design
Experimental
Designs
Statistical
Designs
Classical Designs - Pre-experimental
Designs
One Group, After-only Design
Apply the experimental treatment to a subject
or group and measure the results
EG X O
Leaves open the possibility that the results
could be explained by events external to the
design
Designs (Contd.)
Nonmatched Control Group
Introduce a control group to control for history
and maturation
EG X O
1

- - - - - - - - -
CG O
2

Designs (Contd.)
Matched Control Group Design
Matches experimental and control groups to
reduce selection bias
EG M X O
1

- - - - - - - - - - -
CG M O
2

Designs (Contd.)
One-group, Before - After Design
Improve control by adding before measure
EG O
1
X O
2

Before measure adds sensitivity by adding
another method to control for confounding
variables
Designs (Contd.)
Threats to Experiment Validity
Before Measure Effect
May alert respondents to the fact that they are being studied
Results in more socially desirable behavior
Mortality Effect
Some subjects may stop participating in the experiment
Instrumentation Effect
Results from a change in the measuring instrument
Classical Designs - True-experimental
Designs
True experimental designs adopt random
assignment procedure and use one or more
control groups
Random Assignment
For any given assignment to a treatment, every
member of the universe has an equal probability
of being chosen for that assignment
Designs (Contd.)
Two-group, Before-after Design
Adds a control group to one-group, before - after design
Helps control for history and maturation
Controls for reactive effect of O
1
and O
2

EG R O
1
X O
2

- - - - - - - - - - - - - -
CG R O
3
O
4
Designs (Contd.)
Two Group, After-only Design
Randomization can match test and control groups on all
dimensions simultaneously, given a sufficient sample
size

EG R X O
1

- - - - - - - - - - - - - -
CG R O
2

There is no interaction effect of testing as there are no
pretest requirements
Designs (Contd.)
Solomon Four - Group Design

EG R O
1
X O
2

- - - - - - - - - - - - - - - - -
CG R O
3
O
4

EG R X O
5

- - - - - - - - - - - - - - - - -
CG R O
6

This design is often prohibitively expensive
Provides power to control for before measure effect of O
1
on both X and O
2

Classical Designs - Quasi-experimental
Designs
Offer some degree of control but there is no
random assignment of variables
Provide more measurements and more
information than pre-experimental design
Time Series Designs
Series of measurements are employed during
which an experimental treatment occurs
EG O
1
O
2
O
3
O
4
X O
5
O
6
O
7
O
8
Classical Designs - Quasi-
experimental Designs (Contd.)
Trend Studies
Measures over time come from succession of
separate random samples from the same
population
Continuous Panel Studies
Collect a series of measurements on the same
sample of test units over an extended period of
time
Statistical Designs
Completely Randomized Design
Any number of treatments can be assigned to test
units on a random basis
EG
1
R X
1
O
1

- - - - - - - - - - - - - - - -
EG
2
R X
2
O
2

- - - - - - - - - - - - - - - -
EG
3
R X
3
O
3

Statistical Designs (Contd.)
Randomized Block Design
Employs the randomization process for all variables
Matching ensures that there are no differences between test samples on
matched variables
Matching and randomization are combined in randomized block design
EG
1
R X O
1

- - - - - - - - - - - - - - - -
CG
1
R O
2

-------------------------------
EG
2
R X O
3

- - - - - - - - - - - - - - - -
CG
2
R O
4
Latin Square Design
Reduces number of groups involved when
interaction between the treatment levels and
control variables are unimportant
Requires same number of rows, columns, and
treatment levels
Cannot be used to determine interaction effects
1 2 3 4
Private Brand A
21 cents
III IV I II
Private Brand B
22 cents
II III IV I
Major Brand A 25
cents
I II III IV
Major Brand B 26
cents
IV I II III
Stores
Factorial Designs
Two or more experimental variables are considered
simultaneously
Each combination of the experimental treatment levels applies
to randomly selected groups
EG
1
X
1
O
1

EG
2
X
2
O
2

.
EG
n
X
n
O
n

Provides the ability to determine interactive effects of pairs of
experimental variables and the main effect
Issues in Experimental Research
What type of experimental design should be
used?
Should the experiment be performed in a
"laboratory" setting or in the "field"?
What are the internal and external threats to
the validity of the experiment?
Laboratory Experiments
Experiments in which the experimental treatment is
introduced in an artificial or laboratory setting
Laboratory experiments tend to be artificial
Testing effect exists as respondents are aware of being in
a test and may not respond naturally
Results may not have external validity
Least costly and allow experimenter greater control over
the experiment
Alternative explanations of results are reduced,
increasing internal validity
Field Experiments
Research study in which one or more independent
variables are manipulated by the experimenter under
carefully controlled conditions as the situation will
permit
Experimental treatment or intervention introduced in a
completely natural setting
Response tends to be natural
Tend to have much greater external validity
Difficult to control
Competing explanations for results exist
Threats to Experimental Validity
Threats to Internal Validity
History
Maturation
Testing
Instrumentation
Statistical Regression
Selection Bias
Mortality
Selection - Maturation Interaction
Threats to Experimental Validity
(Contd.)
Threats to External Validity
Reactive or interaction effect of testing
Interaction effect of selection bias and
experimental variable
Reactive effects of experimental arrangements
Multiple treatment interference
Guidelines for Conducting
Experimental Research
Recognition of and statement of the problem
Choice of factors and levels
Selection of the response variable
Must provide useful information about process
under study

Guidelines for Conducting
Experimental Research (Contd.)
Choice of Experimental Design
Selection of suitable order for experimentation trials
Determination of whether blocking or other randomization
restrictions are involved
Performing the Experiment
Data Analysis
Conclusion and Recommendations
Limitations of Experiments
Cost Involved
Time Considerations
Security
Field experiment exposes marketing program in
the marketplace
Difficult to hide from competitors

Limitations of Experiments (Contd.)
Implementation Problems
Difficult to gain cooperation within the organization
Contamination may occur in experiments involving
market areas due to inability to confine the treatment
to designated experimental area
Variability in behavior across test units can be so
large that it is difficult to detect experimental effects
Uncertain Persistency of Results
Two factors:
High rates of technological, economic, or social
change in the market environment
Aggressive competitive behavior
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Fourteen
Sampling Fundamentals
Sampling Fundamentals
When Is Census Appropriate?
Population size itself is quite small
Information is needed from every individual in the
population
Cost of making an incorrect decision is high
Sampling errors are high
Sampling Fundamentals (Contd.)
When Is Sample Appropriate?
Sample size is large
Both cost and time associated with obtaining
information from the population is high
Quick decision is needed
In a given time period, more time can be spent
on each interview, thereby increasing response
quality
Sampling Fundamentals (Contd.)
When Is Sample Appropriate? (Cont.)
Easier to manage surveys of smaller samples
and also exercise quality control in the
interview process
Population being dealt with is homogeneous
Used if census is impossible
Error in Sampling
Total Error
Difference between the true value and the observed value of a
variable
Sampling Error
Error is due to sampling
Non-sampling Error
Error is observed in both census and sample
Measurement Error
Data Recording Error
Data Analysis Error
Non-response Error
Sampling Process
Determining Target Population
Well thought out research objectives
Consider all alternatives
Know your market
Consider the appropriate sampling unit
Specify clearly what is excluded
Should be reproducible
Convenience
Sampling Process (Contd.)
Determining Sampling Frame
Creating lists
Selection A Sampling Procedure
Choose between Bayesian and traditional
sampling procedure
Decide whether to sample with or without
replacement
Identifying the Target Population
Determining the Sampling Frame
Selecting a Sampling Frame
Probability
Sampling
Non-Probability
Sampling
Determining the Relevant Sample Size
Execute Sampling
Data Collection From Respondents
Information for Decision-Making
Reconciling the
Population, Sampling
Frame Differences
Handling the Non-
Response Problem
The Sampling
Process
Sampling Techniques
Probability Sampling
All population members have a known probability of
being in the sample
Simple Random Sampling
Each population member, and each possible sample, has
equal probability of being selected
Stratified Sampling
The chosen sample is forced to contain units from each
of the segments or strata of the population
Sampling Techniques (Contd.)
Types of Stratified Sampling
Proportionate Stratified Sampling
Number of objects/sampling units chosen from each group is
proportional to number in population
Can be classified as directly proportional or indirectly
proportional stratified sampling
Disproportionate Stratified Sampling
Sample size in each group is not proportional to the respective
group sizes
Used when multiple groups are compared and respective group
sizes are small
Consumer type Group size 10 Percent
directly
proportional
stratified sample
size
Brand-loyal 400 40
Variety-seeking 200 20
Total 600 60
Directly Proportionate Stratified Sampling
Inversely Proportional Stratified Sampling. Assume now, that among the 600
consumers in the population, 200 are heavy drinkers and 400 are light drinkers. If a
research values the opinion of the heavy drinkers more than that of the light drinkers,
more people will have to be sampled from the heavy drinkers group. In such instances,
one can use an inversely proportional stratified sampling. If a sample size of 60 is
desired, a 10 percent inversely proportional stratified sampling is employed.
In inversely proportional stratified sampling, the selection probabilities are computed as
follows:
Denominator
Heavy Drinkers
proportional and
sample size
Light drinkers
proportional and
sample size
600/200 + 600/400 = 3 + 1.5 = 4.5
3/ 4.5 = 0.667; 0.667 * 60 = 40
1.5 / 4.5 = 0.333; 0.333 * 60 = 20
Inversely Proportional Stratified Sampling
Cluster Sampling
Involves dividing population into subgroups
Random sample of subgroups/clusters is
selected and all members of subgroups are
interviewed
Very cost effective
Useful when subgroups can be identified that
are representative of entire population
A Comparison of Stratified and Cluster
Sampling Processes
Stratified sampling
Homogeneity within group
Heterogeneity between groups
All groups are included
Sampling efficiency improved by
increasing accuracy at a faster rate
than cost
Cluster sampling
Homogeneity between groups
Heterogeneity within groups
Random selection of groups
Sampling efficiency improved by
decreasing cost at a faster rate than
accuracy.
Systematic Sampling
Involves systematically spreading the sample through
the list of population members
Commonly used in telephone surveys
Non Probability Sampling
Costs and trouble of developing sampling frame are
eliminated
Results can contain hidden biases and uncertainties
Sampling Methods
Types of Non Probability Sampling
Judgmental
"Expert" uses judgement to identify representative samples
Snowball
Form of judgmental sampling
Appropriate when reaching small, specialized populations
Each respondent, after being interviewed, is asked to
identify one or more others in the appropriate group

Convenience
Used to obtain information quickly and inexpensively
Quota
Minimum number from each specified subgroup in
the population
Often based on demographic data
Non Response Problems
Respondents may:
Refuse to respond
Lack the ability to respond
Be inaccessible
Non Response Problems (Contd.)
Sample size has to be large enough to allow for
non response
Those who respond may differ from non
respondents in a meaningful way, creating
biases
Seriousness of nonresponse bias depends on
extent of non response
Solutions to Nonresponse Problem
Improve research design to reduce the number
of nonresponses
Repeat the contact one or more times (call
back) to try to reduce nonresponses
Attempt to estimate the nonresponse bias
Shopping Center Sampling
20% of all questionnaires completed or
interviews granted are store-intercept
interviews
Bias is introduced by methods used to select
(Contd.)
Source of Bias:
Selection of shopping center
Point of shipping center from which
respondents are drawn
Time of day
More frequent shoppers will be more likely to
be selected
(Contd.)
Solutions to Bias:
Shopping Center Bias
Use several shopping centers in different neighborhoods
Use several diverse cities
Sample Locations Within a Center
Stratify by entrance location
Take separate sample from each entrance
To obtain overall average, strata averages should be combined by
weighing them to reflect traffic that is associated with each entrance
Time Sampling
Stratify by time segments
Interview during each segment
Final counts should be weighed according to
traffic counts
Sample Size and Statistical
Theory
Determining the Sample Size
Use of statistical techniques or ad hoc methods
Ad Hoc Methods
Used when a person knows from experience
what sample size to adopt
Used when budgetary constraints dictate the
size of the sample
Rule of Thumb (Contd.)
Budget Constraints
Researcher must decide whether sample size
dictated by budget constraints allows a
worthwhile study to be conducted
Comparative Studies
Find similar studies and use their sample sizes
as a guide
Factors Determining Sample Size
Number of groups and subgroups within the
sample
Value of information in the study
Accuracy level required in results
Cost of sample
Variability of the population
Basic Statistics
Population Sample
Mean X
Variance o
2
s
2

Standard Deviation o s
Sample Size N n

24 . 0
1
1
= X E = X
=
i
n
i
n
067 . 1 ) (
1
1
2
1
2
= X X E
=
=
i
n
i
n
s
Size of Interval Estimate
Confidence level
Population standard deviation
Sample size
Confidence Interval
X sampling error = interval estimate of

95% confidence interval:
X 2o
X
= 95% interval estimate of

-0.24 2(0.103) = (-0.446 , -0.034)

Confidence interval
Confidence Interval Exercises
Problem 1:
X = 56
s = 4
n = 49
Observe effect of sample size!
Problem 2:
X = 56
s = 4
n = 100

Calculate 90% and 95% confidence intervals!
Sample - Size Question
Size of the sampling error that is desired
Confidence level
Sample size n = Z
2
o
2
/(sampling error)
2

Example
Suppose a researcher is interested in estimating the
proportion of families in the United States owning birds as
pets. Although the researcher has learned from industry
sources that one out of every five families owns a bird, the
researcher believes it is necessary to sample families. As
part of the sampling process, an appropriate sample size
must be determined. If the researcher wants to employ a
confidence coefficient of 0.90 and be certain the sample
estimate will lie within 4 percent of the population
proportion, given the study procedures to be employed,
then the sample size required (assuming a simple random
sample) can be approximated in the following manner.
If

0016 . 0
) 16 . 0 )( 72 . 2 (
0016 . 0
16 . 0
72 . 2
2
2
2
2
2 2
=
=
=
=
= =
n
d
t
d
t
n
o
o approximate sample size
(since 1- = 0.90, = 0.10 and /2 = 0.05, so that t =
1.65 from Statistical Appendix Table 4)
(Since p = 0.20 and 0.20 (0.80) is an estimate of variance)
(0.04
2
)

or 272
then
Thus, the researcher uses a sample size of 272
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Fifteen
Sample Size and Statistical
Theory
Sample Size and Statistical Theory
Determining the Sample Size
Use of statistical techniques or ad hoc methods
Ad Hoc Methods
Used when a person knows from experience
what sample size to adopt
Used when budgetary constraints dictate the
size of the sample
Rule of Thumb
Sample should be large enough, so that when it
is divided into groups, each group will have a
minimum sample size of 100 or more
If analysis involves comparison between
subgroups, sample size in each subgroup
should be 20 to 50
Use disproportionate sampling if one of groups
of population is relatively small
Rule of Thumb (Contd.)
Budget Constraints
Researcher must decide whether sample size
dictated by budget constraints allows a
worthwhile study to be conducted
Comparative Studies
Find similar studies and use their sample sizes
as a guide
Factors Determining Sample Size
Number of groups and subgroups within the
sample
Value of information in the study
Accuracy level required in results
Cost of sample
Variability of the population
Population Characteristics/parameters
Population Mean
Normally unknown
Determine its value as closely as possible by taking a sample
from population
Population Variance
Measure of population dispersion
Based on degree to which a response differs from population
average response
The difference of each value from its mean is squared and
averaged across all responses
Population
Characteristics/parameters (Contd.)
Sample Characteristics/Statistics
Population mean is not known and must be estimated from a
sample
Sample mean (X) is used to estimate the unknown
population mean
Sample Reliability
X will vary from sample to sample
As sample size (n) increases, variation in X will decrease
Population
Characteristics/parameters (Contd.)
Variation of X
Standard error depends on sample size
Assume that variation of X follows normal
distribution
Sampling distribution
Indicates probability of getting a particular sample
mean
Interval Estimation
X varies from sample to sample
The difference between the sample mean (X) and the
population mean is the sampling error
X + sampling error = interval estimate of sample mean
Interval size depends on the confidence level the
researcher wants for the interval to contain the true
population mean
If the population standard deviation is not known, it is
necessary to estimate it with the sample standard
deviation
Interval Estimate of the
Population Mean
X + sampling error
o
x
- population standard deviation
Or
x + z o
x
/ \n
N - sample size
Size of Interval Estimate
Confidence level
Population standard deviation
Sample size
Sample - Size Question
Size of the sampling error that is desired
Confidence level
Sample size n = Z
2
o
2
/(sampling error)
2

Determining the Population Standard
Deviation
Use a sample standard deviation obtained from
a previous comparable survey or from a pilot
survey
Estimate the sample standard deviation (s)
subjectively
Sample Size When Proportions
Are Used
n = z
2
t(1 - t)/(sampling error)
2

Researcher may require the sample estimate be
within plus or minus G percentage points of
the population value
D = G
Sample Size Formula
N = o
2
Z
2
/(sampling error)
2

N = o
2
Z
2
/ D
2

= C
2
Z
2
/ g
2

Coefficient of variation: C=(o/)
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Sixteen
Fundamentals of Data
Analysis
Data Analysis
A set of methods and techniques used to obtain
information and insights from data
Helps avoid erroneous judgements and
conclusions
Can constructively influence the research
objectives and the research design
Preparing the Data for Analysis
Data editing
Coding
Statistically adjusting the data
(Contd.)
Data Editing
Identifies omissions, ambiguities, and errors in
responses
Conducted in the field by interviewer and field
supervisor and by the analyst prior to data analysis
(Contd.)
Problems Identified With Data Editing
Interviewer Error
Omissions
Ambiguity
Inconsistencies
Lack of Cooperation
Ineligible Respondent
(Contd.)
Coding
Coding closed-ended questions involves
specifying how the responses are to be entered
Open-ended questions are difficult to code
Lengthy list of possible responses is generated
(Contd.)
Statistically Adjusting the Data + Weighting
Each response is assigned a number according to a pre-
specified rule
Makes sample data more representative of target
population on specific characteristics
Modifies number of cases in the sample that possess
certain characteristics
Adjusts the sample so that greater importance is
attached to respondents with certain characteristics
(Contd.)
Statistically Adjusting the Data + Variable Re-
specification
Existing data is modified to create new variables
Large number of variables collapsed into fewer variables
Creates variables that are consistent with study objectives
Dummy variables are used (binary, dichotomous, instrumental,
quantitative variables)
Use (d-1) dummy variables to specify (d) levels of qualitative
variable
(Contd.)
Statistically Adjusting the Data + Scale
Transformation
Scale values are manipulated to ensure comparability
with other scales
Standardization allows the researcher to compare
variables that have been measured using different types
of scales
Variables are forced to have a mean of zero and a
standard deviation of one
Can be done only on interval or ratio scaled data
Simple Tabulation
Consists of counting the number of cases that
fall into various categories
Use of Simple Tabulation
Determine empirical distribution (frequency
distribution) of the variable in question
Calculate summary statistics, particularly the
mean or percentages
Aid in "data cleaning" aspects
Frequency Distribution
Reports the number of responses that each question
received
Organizes data into classes or groups of values
Shows number of observations that fall into each class
Can be illustrated simply as a number or as a percentage
or histogram
Response categories may be combined for many
questions
Should result in categories with worthwhile number of
respondents
Descriptive Statistics
Statistics normally associated with a frequency
distribution to help summarize information in the
frequency table
Measures of central tendency mean, median and
mode
Measures of dispersion (range, standard deviation,
and coefficient of variation)
Measures of shape (skewness and kurtosis)
Analysis for Various Population
Subgroups
Differences between means or percentages of
two subgroup responses can provide insights
Difference between means is concerned with
the association between two questions
Question upon which means are based are
intervally scaled
Cross Tabulations
Statistical analysis technique to study the
relationships among and between variables
Sample is divided to learn how the dependent
variable varies from subgroup to subgroup
Frequency distribution for each subgroup is
compared to the frequency distribution for the
total sample
The two variables that are analyzed must be
nominally scaled
Factors Influencing the Choice of
Statistical Technique
Type of Data
Classification of data involves nominal, ordinal, interval and
ratio scales of measurement
Nominal scaling is restricted to the mode as the only measure
of central tendency
Both median and mode can be used for ordinal scale
Non-parametric tests can only be run on ordinal data
Mean, median and mode can all be used to measure central
tendency for interval and ratio scaled data
Factors Influencing the Choice of
Statistical Technique (Contd.)
Research Design
Dependency of observations
Number of observations per object
Number of groups being analyzed
Control exercised over variable of interest
Assumptions Underlying the Test Statistic
If assumptions on which a statistical test is based are
violated, the test will provide meaningless results
Overview of Statistical Techniques
Univariate Techniques
Appropriate when there is a single measurement of each of
the 'n' sample objects or there are several measurements of
each of the `n' observations but each variable is analyzed in
isolation
Nonmetric - measured on nominal or ordinal scale
Metric-measured on interval or ratio scale
Determine whether single or multiple samples are involved
For multiple samples, choice of statistical test depends on
whether the samples are independent or dependent
(Contd.)
Multivariate Techniques
A collection of procedures for analyzing
association between two or more sets of
measurements that have been made on each
object in one or more samples of objects
Dependence or interdependence techniques
(Contd.)
Multivariate Techniques (Contd.)
Dependence Techniques
One or more variables can be identified as
dependent variables and the remaining as
independent variables
Choice of dependence technique depends on
the number of dependent variables involved in
analysis
(Contd.)
Multivariate Techniques (Contd.)
Interdependence Techniques
Whole set of interdependent relationships is
examined
Further classified as having focus on variable
or objects
(Contd.)
Why Use Multivariate Analysis?
To group variables or people or objects
To improve the ability to predict variables
(such as usage)
To understand relationships between variables
(such as advertising and sales)
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Seventeen
Hypothesis Testing:
Basic Concepts and Tests of
Association
Hypothesis Testing:
Basic Concepts
Assumption (hypothesis) made about a
population parameter (not sample parameter)
Purpose of Hypothesis Testing
To make a judgement about the difference between
two sample statistics or the sample statistic and a
hypothesized population parameter
Evidence has to be evaluated statistically
before arriving at a conclusion regarding the
hypothesis.
Hypothesis Testing
The null hypothesis (H
o
) is tested against the
alternative hypothesis (H
a
).
At least the null hypothesis is stated.
Decide upon the criteria to be used in making
the decision whether to reject or "not reject"
the null hypothesis.
The Logic of Hypothesis Testing
Evidence has to be evaluated statistically
before arriving at a conclusion regarding the
hypothesis
Depends on whether information generated
from the sample is with fewer or larger
observations
Problem Definition
Clearly state the null and
alternative hypotheses.
Choose the relevant test and
the appropriate probability
distribution
Choose the critical value
Compare test statistic and
critical value
Reject null
Does the test statistic fall in
the critical region?
Determine the
significance level
Compute relevant
test statistic
Determine the
degrees of
freedom
Decide if one-or
two-tailed test
Do not reject null
Basic Concepts of Hypothesis
Testing (Contd.)
The Three Criteria Used Are
Significance Level
Degrees of Freedom
One or Two Tailed Test
Significance Level
Indicates the percentage of sample means that
is outside the cut-off limits (critical value)
The higher the significance level (o) used for
testing a hypothesis, the higher the probability
of rejecting a null hypothesis when it is true
(Type I error)
Accepting a null hypothesis when it is false is
called a Type II error and its probability is (|)

Significance Level (Contd.)
When choosing a level of significance, there is
an inherent tradeoff between these two types
of errors
Power of hypothesis test (1 - |)
A good test of hypothesis ought to reject a null
hypothesis when it is false
1 - | should be as high a value as possible
Degree of Freedom
The number or bits of "free" or unconstrained
data used in calculating a sample statistic or
test statistic
A sample mean (X) has `n' degree of freedom
A sample variance (s
2
) has (n-1) degrees of
freedom
One or Two-tail Test
One-tailed Hypothesis Test
Determines whether a particular population parameter is
larger or smaller than some predefined value
Uses one critical value of test statistic
Two-tailed Hypothesis Test
Determines the likelihood that a population parameter is
within certain upper and lower bounds
May use one or two critical values
Basic Concepts of Hypothesis
Testing (Contd.)
Select the appropriate probability distribution
based on two criteria
Size of the sample
Whether the population standard deviation is
known or not
Hypothesis Testing

DATA ANALYSIS
OUTCOME
In Population Accept Null
Hypothesis
Reject Null
Hypothesis
Null Hypothesis
True
Correct Decision Type I Error
Null Hypothesis
False
Type II Error Correct
Decision
Hypothesis Testing
Tests in this class
Statistical Test
Frequency Distributions _
2

Means (one) z (if o is known)
t (if o is unknown)
Means (two) t
Means (more than two) ANOVA

Cross-tabulation and Chi Square
In Marketing Applications, Chi-square Statistic Is Used As
Test of Independence
Are there associations between two or more variables in a study?
Test of Goodness of Fit
Is there a significant difference between an observed frequency
distribution and a theoretical frequency distribution?
Statistical Independence
Two variables are statistically independent if a knowledge of one would
offer no information as to the identity of the other
Chi-Square As a Test of
Independence
Null Hypothesis H
o

Two (nominally scaled) variables are statistically
independent

Alternative Hypothesis H
a

The two variables are not independent

Use Chi-square distribution to test.
Chi-square As a Test of
Independence (Contd.)
Chi-square Distribution
A probability distribution
Total area under the curve is 1.0
A different chi-square distribution is
associated with different degrees of freedom
Independence (Contd.)
Degree of Freedom
v = (r - 1) * (c - 1)
r = number of rows in contingency table
c = number of columns
Mean of chi-squared distribution
= Degree of freedom (v)
Variance = 2v
Chi-square Statistic (
2
)
Measures of the difference between the actual numbers
observed in cell i (O
i
), and number expected (E
i
) under
independence if the null hypothesis were true

With (r-1)*(c-1) degrees of freedom
r = number of rows c = number of columns

Expected frequency in each cell: E
i
= p
c
* p
r
* n
Where p
c
and p
r
are proportions for independent variables
and n is the total number of observations
i
i i
n
i
E
E O
2
1
2
) (
E =
=
_
Chi-square Step-by-Step
1) Formulate Hypotheses
2) Calculate row and column totals
3) Calculate row and column proportions
4) Calculate expected frequencies (E
i
)
5) Calculate _
2
statistic
6) Calculate degrees of freedom
7) Obtain Critical Value from table
8) Make decision regarding the Null-hypothesis
Example of Chi-square as a Test of
Independence
Class
1 2
A 10 8
Grade B 20 16
C 45 18
D 16 6
E 9 2
This is a Cell
Independence - Exercise
Own Income
Expensive Low Middle High
Automobile
Yes 45 34 55
No 52 53 27

Task: Make a decision whether the two variables are
independent!
The chi-square distribution
Probability distributions that are continuous, have one mode, and are skewed to the
right.
Exact shape varies according to the number of degrees of freedom.
The critical value of a test statistic in a chi-square distribution is determined by
specifying a significance level and the degrees of freedom.
Ex: Significance level = .05
Degrees of freedom = 4
CV
x
2
= 9.49
The decision rule when testing hypotheses by means of chi-square distribution is:
If x
2
is <= CV
x
2
, accept H
0
Thus, for 4 df and o = .05
If x
2
is > CV
x
2
, reject H
0
If If x
2
is <= 9.49, accept H
0
df = 4
x
2

F(x
2
) Critical value = 9.49
5% of area under curve
o = .05
Cross Tabulation Example
In a nationwide study of 1,402 adults a question was asked about institutions:
I am going to name some institutions in this country. As far as the people running
these institutions are concerned, would you say have a great deal of confidence,
only some confidence, or hardly any confidence at all in them?
One of the institutions was television.
Answers to the question about television are cross-tabulated with three levels of
income below.
Annual Family Income

Under
$10,000
$10,000
20,000
Over
$20,000
95 57 39 191
272 274 214 760
140 163 148 451
507 494 401 1,402
A great deal
Only some
Hardly any
Amount of confidence
in television
Calculations for income-confidence data
Cell Observed Expected Contribution
(O
u
E
u
)
2
/ E
u
Cell
11
95 69.1 9.71
Cell
12
57 67.3 1.58
Cell
13
39 54.6 4.46
Cell
21
272 274.8 .03
Cell
22
274 267.8 .14
Cell
23
214 217.4 .05
Cell
31
140 163.1 3.27
Cell
32
163 158.9 .11
Cell
33
148 129.0 2.80
X
2
ts
= 22.15
o = .05
df = 4 [(r-1) (c-1)]
n = 1402
X
2
cv
= 9.5
X
2
ts
= 22.15

df = 4
F(x
2
) X
2
cv
= 9.5
5% of area under curve
o = .05
22.15
Strength of Association
Measured by contingency coefficient
C = x
2
o< c < 1
\ x
2
+ n
0 - no association (i.E. Variables are
statistically independent)
Maximum value depends on the size of
table-compare only tables of same size
Limitations As an Association
Measure
It Is Basically Proportional to Sample Size
Difficult to interpret in absolute sense and compare
cross-tabs of unequal size
It Has No Upper Bound
Difficult to obtain a feel for its value
Does not indicate how two variables are related
Chi-square Goodness of Fit
Used to investigate how well the observed
pattern fits the expected pattern
Researcher may determine whether population
distribution corresponds to either a normal,
poisson or binomial distribution
Chi-square Degrees of Freedom
Employ (k-1) rule
Subtract an additional degree of freedom for
each population parameter that has to be
estimated from the sample data
Goodness-of-Fit Test
Suppose a researcher is investigating preferences for four possible names of a
new lightweight brand of sandals: Camfo, Kenilay, Nemlads, and Dics. Since
the names are generated from random combinations of syllables, thre researcher
expects preferences will be equally distributed across the four names (that is,
each name will receive 25 percent of the available preferences). After sampling
300 people at reandom and asking them which one of the four names was most
preferred, the following distribution resulted (each expected value is 300 * .25 =
75).

Possible Name Observed
Preferences
Expected
Preferences
Camfo 30 75
Kenilay 80 75
Nemlads 120 75
Dics 70 75
Goodness-of-Fit Test cont.
There are (d 1) or three degrees of freedom in this
instance. If o is specified as 0.01, the critical value is
11.325 from Statistical Appendix Table 3.
18
Given this
information, the hypothesis to be tested can be stated as:
H
0
: preferences are equal for the names
H
a
: preferences are not equal for the names
And the decision rule is

If x
2
is <= 11.325, accept H
0
.
If x
2
is > 11.325, reject H
0
.
The test statistic is calculated as
x
2
= (30-75)
2
/ 75 + (80-75)
2
/ 75 + (120-75)
2
/ 75 + (70-75)
2

/ 75
= 27.00 + .33 + 27.00 + .33
= 54.66

Marketing Research
Kumar, Aaker Day
Eighth Edition
Chapter Eighteen
Hypothesis Testing:
Means and Proportions
Hypothesis Testing For Differences
Between Means
Commonly used in experimental research
Statistical technique used is analysis Of variance
(ANOVA)
Hypothesis Testing Criteria Depends on
Whether the samples are obtained from different or related
populations
Whether the population is known on not known
If the population standard deviation is not known, whether
they can be assumed to be equal or not
The Probability Values (P-value)
Approach to Hypothesis Testing
P-value provides researcher with alternative
method of testing hypothesis without pre-
specifying o
Largest level of significance at which we would
not reject h
o

Difference Between Using o and p-value
Hypothesis testing with a pre-specified o
Researcher is trying to determine, "is the probability
of what has been observed less than o?"
Reject or fail to reject h
o
accordingly
The Probability Values (P-value)
Approach to Hypothesis Testing
(Contd.)
Using the p-Value
Researcher can determine "how unlikely is the
result that has been observed?"
Decide whether to reject or fail to reject h
o
without
being bound by a pre-specified significance level
In general, the smaller the p-value, the greater is
the researcher's confidence in sample findings
P-value is generally sensitive to sample size
A large sample should yield a low p-value
P-value can report the impact of the sample size
on the reliability of the results
Hypothesis Testing About
a Single Mean - Step-by-Step
1) Formulate Hypotheses
2) Select appropriate formula
3) Select significance level
4) Calculate z or t statistic
5) Calculate degrees of freedom (for t-test)
6) Obtain critical value from table
7) Make decision regarding the Null-hypothesis
a Single Mean - Example 1

H
o
: = 5000 (hypothesized value of population)
H
a
: = 5000 (alternative hypothesis)
n = 100
X = 4960
o = 250
o = 0.05

Rejection rule: if |z
calc
| > z
o/2
then reject H
o
.
H
o
: = 1000 (hypothesized value of population)
H
a
: = 1000 (alternative hypothesis)
n = 12
X = 1087.1
s = 191.6
o = 0.01

Rejection rule: if |t
calc
| > t
df, o/2
then reject H
o
.
H
o
: s 1000 (hypothesized value of population)
H
a
: > 1000 (alternative hypothesis)
n = 12
X = 1087.1
s = 191.6
o = 0.05

Rejection rule: if t
calc
> t
df, o
then reject H
o
.
Confidence Intervals
Hypothesis testing and Confidence Intervals
are two sides of the same coin.

interval
estimate of
x
s
X
t
) (
=
=
x
ts X
Confidence Interval Estimation

If o = .05 then,

Problem:
o = .01 n = 75 o =
.01

Since CI is for both sides, z-value is got for o/2 = .005
Z o/2 = 2.58

Test the hypothesis that the true mean weight of the
Hawkeyes football team is greater than or equal to 300
pounds with o = .05
H
0
: u
W
> 300
H
1
: u
W
< 300

At o = 0.05, CV
Z
= -1.645 (for a one-tailed test)
Since Z
ts
falls in the critical region

We ______________________ the null hypothesis
Test the hypothesis that the true mean weight of the Hawkeyes
football team is equal to 286 pounds with o = 0.01

H
0
: u
W
= 286
u
W
= 286

AT o = .01

CV
Z
= 2.58

Since Z
ts
< Cv
Z
we __________________ the null hypothesis

H
0
: P
A
= P
B

H
A
: P
A
not equal to P
B

Chain N Proportion of Stores
Open for 24 hours
A 40 -45
B 75 -40
And

= weighted average of sample proportions
Computation of t
ts
would proceed as follows:
df = n
1
+n
2
-2
(n
1
-1) + (n
2
-1)
o= .05
df = 113
Since

then
and
-1.96
.025
+1.96
.025
- +
Descriptive Statistics for two samples of students, liberal arts majors (n = 317)
and engineering majors (n = 592) include

The smaller the mean, the more students agree with the statement. The formula
for a t-test of mean differences for independent samples is

With being the standard error of the mean difference

Where

Is a weighted average of sample standard deviations. In this situation the
hypothesis:
Liberal arts majors Engineering majors
X 2.59 2.29
S 1.00 1.10

Pooled Std. dev
T
ts
= 2.59-2.29 / .07 = .30 / .07 = 4.29
= 1.07
Statistical techniques

Analysis of Variance (ANOVA)

Correlation Analysis

Regression Analysis
Analysis of Variance

ANOVA mainly used for analysis of
experimental data

Ratio of between-treatment variance
and within- treatment variance

Analysis of Variance (ANOVA)
Response variable - dependent variable (Y)
Factor(s) - independent variables (X)
Treatments - different levels of factors
(r
1
, r
2
, r
3
, )
One - Factor Analysis of Variance
Studies the effect of 'r' treatments on one response variable
Determine whether or not there are any statistically
significant differences between the treatment means
1
,
2
,...
R

H
o
: all treatments have same effect on mean responses
H
1
: At least 2 of
1
,
2
...
r
are different
Example
Product Sales
1 2 3 4 5 Total X
p

39 8 12 10 9 11 50 10
Price
Level 44 7 10 6 8 9 40 8

49 4 8 7 9 7 35 7

Overall sample mean: X = 8.333
Overall sample size: n = 15
No. of observations per price level: n
p
= 5
Example
Grand Mean
One - Factor ANOVA -
Intuitively
If: Between Treatment Variance
Within Treatment Variance

is large then there are differences between treatments
is small then there are no differences between treatments

To Test Hypothesis, Compute the Ratio Between the
"Between Treatment" Variance and "Within
Treatment" Variance
One - Factor ANOVA Table
Source of Variation Degrees of Mean Sum F-ratio
Variation (SS) Freedom of Squares

Between SS
r
r-1 MSS
r
=SS
r
/r-1 MSS
r

(price levels) MSS
u

Within SS
u
n-r MSS
u
=SS
u
/n-r
(price levels)

Total SS
t
n-1
One - Factor Analysis of Variance
Between Treatment Variance
SS
r
= E n
p
(X
p
- X)
2
= 23.3

Within-treatment variance
SS
u
= E E (X
ip
- X
p
)
2
= 34

Where
SS
r
= treatment sums of squares r = number of
groups
n
p
= sample size in group p X
p
= mean of
group p

X = overall mean X
ip
=sales at store i at
level p
r
i=1 p=1
n
p
r
=
=
One - Factor Analysis of
Variance
Between variance estimate (MSS
r
)
MSS
r
= SS
r
/(r-1) = 23.3/2 = 11.65

Within variance estimate (MSS
u
)
MSS
u
= SS
u
/(n-r) = 34/12 = 2.8

Where
n = total sample size r = number of groups
One - Factor Analysis of
Variance
Total variation (SS
t
): SS
t
= SS
r
+ SS
u
= 23.3+34 = 57.3

F-statistic: F = MSS
r
/ MSS
u
= 11.65/2.8 = 4.16

DF: (r-1), (n-r) = 2, 12

Critical value from table: CV
(o, df)
= 3.89

Marketing Research
Kumar, Aaker, Day
Eighth Edition
Chapter Nineteen
Correlation Analysis and
Regression Analysis
X and Y are random variables that are jointly normally distributed and, in addition,
that the obtained data consists of a random sample of n independent pairs of
observations (X
1
, Y
1
), (X
2
, Y
2
), . . . . (X
n
, Y
n
) from an underlying bi-variate
normal population.

Y = f(X)

any relationships?
Relationships 3 goals if any, how strong?
nature or form

Two of the most powerful and versatile approaches for investigating variable
relationships are correlation analysis and regression analysis.
Product moment correlation coefficient - - Pearson Rho, Y - - computation
Interpretation of Y
Not designed to measure relationships other than linear symetric
Assumptions underlying Y
Continuous, distributions are of the same shape range restriction problem
Significance evaluation - - statistical
- - substantive (Y
2
)
Contingency correlation, point bi-serial, Spearman partial correlation coefficients.
Measures the strength of the relationship
between two or more variables
Correlation
Measures the degree to which there is an association
between two internally scaled variables
Correlation Analysis (Contd.)
Positive Correlation
Tendency for a high value of one variable to
be associated with a high value in the second
Population Correlation ()
Database includes entire population
Correlation Analysis (Contd.)
Sample Correlation (r)
Measure is based on a sample
Reflects tendency for points to cluster
systematically about a straight line or falling
from left to right on a scatter diagram
R lies between -1 < r < + 1
R = o ---> absence of linear association

Correlation Analysis (contd)

This is called Pearson product - moment
correlation coefficient and lies between
-1 and +1.

Correlation coefficient is NOT an
indicator of causal relationship
between variables
Simple Correlation Coefficient
= ) ( * ) ( ) , ( Y Y X X y x Cov
i i
=
y
i
x
i
xy
S
Y Y
S
X X
n
r
) (
* *
) 1 (
1
y x
xy
xy
S S
Cov
r
*
=
Computation of Correlation Coefficient
Ranking for Cereal in Two Countries

Partial correlation coefficient - measure
of association between two variables
after controlling for the effects of one or
more additional variables

) 1 ( * ) 1 (
*
2 2
,
YZ XZ
YZ XZ XY
Z XY
r r
r r r
r

=
Computation of Spearman Correlation
Coefficient

Spearman Rank Correlation Coefficient - Index of
correlation between two rank-order variables.

Where Di is the difference between ranks associated
with a brand and n is the number of brands evaluated.
( ) 1
6
1
2
2
=

n n
D
r
i
i
s
( ) 1
6
1
2
2
=

n n
D
r
i
i
s
Testing the Significance of the
Correlation Coefficient
Null hypothesis:
H
o
: p equal to 0
Alternative hypothesis:
H
a
: p not equal to 0
Test statistic
t = r \ (n - 2) / (1 - r
2
)
Consider the Store example
In our example, n = 6 and r = .70. Hence,

If the test is done at o = .05 with n-2 = 4 degrees of freedom, then the critical
value of t can be obtained from the tables to be 2.78. Since 1.96<2.78, we
fail to reject the null hypothesis.
Regression Analysis
Used to understand the nature of the relationship
between two or more variables
A dependent or response variable (Y) is related
to one or more independent or predictor
variables (Xs)
Object is to build a regression model relating
dependent variable to one or more independent
variables
Model can be used to describe, predict, and
control variable of interest on the basis of
independent variables
Simple Linear Regression
Y
i
=
o
+
1
x
i
+
i

Where
Y
Dependent variable
X
Independent variable

o

Model parameter
Mean value of dependent variable (Y) when the
independent variable (X) is zero
Simple Linear Regression
(Contd.)

1
Model parameter
Slope that measures change in mean value of dependent
variable associated with a one-unit increase in the
independent variable

i

Error term that describes the effects on Y
i
of all factors
other than value of X
i
Assumption of the Regression
Model
Error term is normally distributed (normality
assumption)
Mean of error term is zero (E{E
i
} = 0)
Variance of error term is a constant and is
independent of the values of X (constant
variance assumption)
Error terms are independent of each other
(independent assumption)
Values of the independent variable X is fixed
(non-stochastic X)
Estimating the Model
Parameters
Calculate point estimate b
o
and b
1
of unknown
parameter
o
and
1

Obtain random sample and use this
information from sample to estimate o and
1

Obtain a line of best "fit" for sample data
points - least squares line
Y
i
= b
o
+ b
1
x
i
Values of Least Squares
Estimates b
o
and b
1

b
1
= n Ex
i
y
i
- (Ex
i
)(Ey
i
)
n Ex
i
2
- (Ex
i
)
2

b
o
= y - b
i
x
Where
y = Ey
i
; x = Ex
i

n n
Problem for Regression
Y X
Sales Advertising
3 7
8 13
17 13
4 11
15 16
7 6
Therefore the regression model would be

= -2.55 + 1.05 X
i

Y
2
= (0.74)
2
= 0.54

(Variance in sales (Y) explained by ad (X))
Assume that the S
bo
= 0.51 and
S
b1
= 0.26 at o = 0.5, df = 4, CV
t
=

Is b
o
significant? Is b
1
significant?
Residual Value
Difference between the actual and predicted
values
Estimate of the error in the population
e
i
= y
i
- y
i

= y
i
- (b
o
+ b
1
x
i
)
B
o
and b
1
minimize the residual or error sums of
squares (SSE)
SSE = Ee
i
2
= (E(y
i
- y
i
)
2

= [y
i
-(b
o
+ b
1
x
i
)]
2
Independent Variables
Null Hypothesis
There is no linear relationship between the
independent & dependent variables
Alternative Hypothesis
There is a linear relationship between the
independent & dependent variables
Independent Variables (Contd.)
Test Statistic
t = b
1
-
1

s
b1

Degrees of Freedom
V = n - 2
Testing for a Type II Error
Ho:
1
equal to 0
Ha:
1
not equal to 0
Decision Rule
Reject ho:
1
= 0 if > p value
Predicting the Dependent
Variable
y
i
= b
o
+ b
i
x
i

Error of prediction is y
i
- y
i

(y
i
- y)
2
= (y
i
- y)
2
+ (y
i
- y
i
)
2

Total variation (SST)
= Explained variation (SSM) + unexplained
variation (SSE)
Predicting the Dependent
Variable (Contd.)
SST
Sum of squared prediction error that would be obtained
if we do not use x to predict y
SSE
Sum of squared prediction error that is obtained when
we use x to predict y
SSM
Reduction in sum of squared prediction error that has
been accomplished using x in predicting y
Coefficient of Determination (R
2
)
Measure of regression model's ability to predict
R
2
= SST - SSE
SST
= SSM
SST
= Explained Variation
Total Variation

Multiple Linear Regression
A linear combination of predictor factors is
used to predict the outcome or response factors
Involves computation of a multiple linear
regression equation
More than one independent variable is
included in a single linear regression model
Evaluating the Importance of
Independent Variables
Which of the independent variables has the
greatest influence on the dependent variable?
Consider t-value for
i
's
H
o
:
i
= 0
If null hypothesis is true, b
i
(a non-zero estimate)
was simply a sampling phenomenon
Examine the Size of the Regression
Coefficients
Use beta coefficients when independent variables
are in different units of measurement
Standardized
i
= b
i
(Standard deviation of x
i
)
(Standard deviation of Y)
Compare coefficients with the largest value
representing the variable with the strongest impact
on the dependent variable
Multicollinearity
Correlations among predictor variables
Discovered by examining the correlates among
the X variables
Selecting Predictor Variables
Include only those variables that account for
most of the variation in the dependent variable
Stepwise Regression
Predictor variables enter or are removed from
the regression equation one at a time
Forward Addition
Start with no predictor variables in regression
equation
i.e. y =
o
+
Add variables if they meet certain criteria in
terms of f-ratio
Stepwise Regression (Contd.)
Backward Elimination
Start with full regression equation
i.e. y =
o
+
1
x
1
+
2
x
2
...+
r
x
r
+
Remove predictors based on F ratio
Stepwise Method
Forward addition method is combined with removal
of prediction that no longer meet specified criteria at
each stop
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Twenty
Discriminant and Canonical
Analysis
Discriminant Analysis
Used to classify individuals into one of two or
more alternative groups on the basis of a set of
measurements
Used to identify which variable contribute to
making classification
Major Uses
Prediction
Description
Objectives
Determining linear composites of the predictor
variables to separate groups by measuring between
groups variation relative to within-groups variation
Developing procedures for assigning new objects,
firms, or individuals, whose profiles, but not group
identity, are known, to one of the two groups
Testing whether significant differences exist between
the two groups based on the group centroids
Determining which variables account most in
explaining inter-group differences
Discriminant Function
z
i
= b
1
x
i1
+ b
2
x
i2
+ b
3
x
i3
+ ... + b
n
x
in

Where
z = discriminant score
b = discriminant weights
x = predictor (independent) variables
In a particular group, each individual has a discriminant score (z
i
)
z
i
= centroid (group mean)
Where
I = individual
Centroid
Indicates most typical location of an individual from a
particular group
Cut-off Score
Criterion against which each individuals
discriminant score is judged to determine into
which group the individual should be classified
For equal group sizes
Z
cut-off
= Z
A
+ Z
B

2

For unequal group size
Z
cut-off
= N
B
Z
A
+ N
A
Z
B
N
a
+ n
b
Determination of Significance
Null Hypothesis
In the population, the means of all discriminant
function in all groups are equal
H
o
:
A
=
B

If H
o
is rejected, interpret results
Interpretation
Generally, predictors with relatively large
standardized coefficients contribute more to
the discriminating power of the function
Canonical or discriminant loadings show the
variance that the predictor shares with the
function
Classification and Validation
Holdout Method
Use part of sample to construct classification
rule
Other subsample used for validation
Uses classification matrix and hit ratio to
evaluate groups classification
Uses discriminant weights to generate
discriminant scores for cases in subsample
Classification and Validation (Contd.)
U-method of Cross Validation
Uses all available data without serious bias in
estimating error rates
Estimated classification error rates
P
1
= m
1
P
2
= m
2

n
1
n
2

m
1
and m
2

Number of sample observations mis-classified in G
1

and G
2

Multiple Discriminant Analysis
Number of possible discriminant functions
= Min(p,m-1)
Where
M = number of groups
P = number of predictor variables
Canonical Correlation Analysis
Focuses on the relationship between one set of
dependent variables and one set of independent
variables
Application
Concept
Canonical Correlation Analysis
(Contd.)
Inputs
Outputs
Key Terms
Canonical correlation, Canonical loadings, Canonical root,
Canonical coefficients, Canonical cross-loadings
Assumptions (least restrictive)
Limitations
From the interpretation
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Twenty One
Factor and Cluster Analysis
Factor Analysis
Technique that serves to combine questions or
variables to create new factors
Purpose
To identify underlying constructs in the data
To reduce the number of variables to a more
manageable set
Factor Analysis (Contd.)
Methodology
Two commonly employed factor analytic procedures
Principal Component Analysis
Used when the need is to summarize information in a
larger set of variables to a smaller set of factors
Common Factor Analysis
Used to uncover underlying dimensions surrounding
the original variables
Principal Component Analysis
The objective of factor analysis is to represent each of these variables as
a linear combination of a smaller set of factors
This can be represented as
X
1
= I
11
F
1
+ I
12
F
2
+ e
1

X
2
= I
21
F
1
+ I
22
F
2
+ e
2

.
.
X
n
= i
n1
f
1
+ i
n2
f
2
+ e
n

Where
X
1
, ... x
n
represent standardized scores
F
1
,F
2
are the two standardized factor scores
I
11
, i
12
,....I
52
are factor loadings
E
1
,...E
5
are error variances
Factor
A variable or construct that is not directly observable
but needs to be inferred from the input variables
Eigenvalue Criteria
Represents the amount of variance in the original
variables that is associated with a factor
Scree Plot Criteria
A plot of the eigenvalues against the number of factors,
in order of extraction.
Percentage of Variance Criteria
The number of factors extracted is determined so that
the cumulative percentage of variance extracted by the
factors reaches a satisfactory level
Significance Test Criteria
Statistical significance of the separate eigenvalues is
determined, and only those factors that are statistically
significant are retained
Factor Scores
Values of each factor underlying the variables

Factor Loadings
Correlations between the factors and the
original variables
Communality
The amount of the variable variance that is explained
by the factor
Factor Rotation
Factor analysis can generate several solutions for any
data set. Each solution is termed a particular factor
rotation and is generated by a particular factor rotation
scheme

How Many Factors?
Rule of Thumb
All included factors (prior to rotation) must explain at least as
much variance as an "average variable"
Eigenvalues Criteria
Eigenvalue represents the amount of variance in the original
variables associated with a factor
Sum of the square of the factor loadings of each variable on a
factor represents the eigen value
Only factors with eigenvalues greater than 1.0 are retained
Scree Plot Criteria
Plot of the eigenvalues against the number of factors in
order of extraction
The shape of the plot determines the number of factors
Percentage of Variance Criteria
Number of factors extracted is determined when the
cumulative percentage of variance extracted by the
factors reaches a satisfactory level
Common Factor Analysis
The factor extraction procedure is similar to that of
principal component analysis except for the input
correlation matrix
Communalities or shared variance is inserted in the
diagonal instead of unities in the original variable
correlation matrix
Cluster Analysis
Technique that serves to combine objects to create new
groups
Used to group variables, objects or people
The input is any valid measure of correlations between
objects, such as
Correlations
Distance measures (Euclidean distance)
Association coefficients
Also, the number of clusters or the level of clustering can
be input
Cluster Analysis (Contd.)
Hierarchical Clustering
Can start with all objects in one cluster and divide
and subdivide them until all objects are in their own
single-object cluster
Non-hierarchical Approach
Permits objects to leave one cluster and join another
as clusters are being formed
Hierarchical Clustering
Single Linkage
Clustering criterion based on the shortest distance
Complete Linkage
Clustering criterion based on the longest distance
Average Linkage
Clustering criterion based on the average distance

Hierarchical Clustering (Contd.)
Ward's Method
Based on the loss of information resulting from
grouping of the objects into clusters (minimize within
cluster variation)
Centroid Method
Based on the distance between the group centroids (the
centroid is the point whose coordinates are the means
of all the observations in the cluster)
Non-hierarchical Clustering
Sequential Threshold
Cluster center is selected and all objects within a prespecified
threshold is grouped
Parallel Threshold
Several cluster centers are selected and objects within threshold
level are assigned to the nearest center
Optimizing
Modifies the other two methods in that the objects can be later
reassigned to clusters on the basis of optimizing some overall
criterion measure
Number of Clusters
Determination of the appropriate number of clusters can be done
in one of the four ways
The number of clusters can be specified by the analyst in advance
The levels of clustering can be specified by the analyst in
advance
The number of clusters can be determined from the pattern of
clusters generated in the program
The ratio of within-group variance and the between-group
variance an be plotted against the number of clusters. The point
at which a sharp bend occurs indicates the number of clusters
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Twenty-Two
Multidimensional Scaling and
Conjoint Analysis
Multidimensional Scaling
Used to
Identify dimensions by which objects are
perceived or evaluated
Position the objects with respect to those
dimensions
Make positioning decisions for new and old
products
Approaches to Create Perceptual
Maps
Attribute based approaches
Non attribute based approaches
Perceptual map
Attribute
data
Nonattribute
data
Similarity Preference
Correspondence
analysis
MDS
Discriminant
analysis
Factor
analysis
Approaches To
Creating
Perceptual Maps
Attribute Based Approaches
If MDS used on attribute data, it is known as attribute
based MDS
Assumption
The attributes on which the individuals' perceptions of objects
are based, can be identified
Methods Used to Reduce the Attributes to a Small
Number of Dimensions
Factor Analysis
Discriminant Analysis
Basic Concepts of Multidimensional
Scaling(MDS)
MDS uses proximities among different objects
as input (proximity is a value which denotes
how similar or how different two objects, are
perceived to be)
MDS uses this proximities data to produce a
geometric configuration of points (objects), in
a two-dimensional space as output
Evaluating the MDS Solution
The fit between the derived distances and the
two proximities in each dimension is evaluated
through a measure called stress
The appropriate number of dimensions required
to locate the objects can be obtained plotting
the stress values against the number of
dimensions
Advantages of Attribute-based MDS
Attributes can have diagnostic and operational
value
Attribute data is easier for the respondents to
use
Dimensions based on attribute data predicted
preference better as compared to non-attribute
data
Disadvantages of Attribute-based
MDS
If the list of attributes is not accurate and
complete, the study will suffer accordingly
Respondents may not perceive or evaluate
objects in terms of underlying attributes
May require more dimensions to represent them
than the use of flexible models
Application of MDS With
Nonattribute Data
Similarity Data
Reflect the perceived similarity of two objects from the
respondents' perspective
Perceptual map is obtained from the average similarity
ratings
The power of the technique lies in the ability to find the
smallest number of dimensions for which there is a
reasonably good fit between the input similarity
rankings and the rankings of the distance between
objects in the resulting space
Application of MDS With
Nonattribute Data (Contd.)
Preference Data
An ideal object is the combination of all
customers' preferred attribute levels
Location of ideal objects is to identify
segments of customers who have similar ideal
objects, since customer preferences are always
heterogeneous
Issues in MDS
Perceptual mapping has not been shown to be
reliable across different methods
The effect of market events on the perceptual
maps cannot be ascertained
The interpretation of dimensions is difficult
When more than two or three dimensions are
needed, the usefulness is reduced
Conjoint Analysis
An extremely powerful and useful analysis tool
Used to determine the relative importance of
various attributes to respondents, based on their
making trade-off judgments
Useful in
Helping to select features on a new product/service
Predicting sales
Understanding relationships
Input
The dependent variable is the preference judgment that
a respondent makes about a new concept
The independent variables are the attribute levels that
need to be specified
Respondents make judgments about the concept either
by considering
Two attributes at a time
Trade-off approach
Full profile of attributes
Full profile approach
Output
A value of relative utility is assigned to each
level of an attribute called partworth utilities
The combination with the highest utilities
should be the one that is most preferred
And the combination with the lowest total
utility is the least preferred
Limitations
In the trade-off approach, the task is too
unrealistic
Trade-off judgments is being made on two
attributes, holding the others constant
In the full-profile approach, the task can get
very demanding, if there are multiple attributes
and attribute levels
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Twenty-Three
Presenting the Results
Guidelines to Successful Presentations
Communicate to a Specific Audience
Know the Audience
Know Their Background and Objectives
Structure the Presentation
Introduction
Body
Summary
Guidelines to Successful
Presentations (Contd.)
Create Audience Interest
Motivate the Audience With Research Purpose
and Objectives
Be Specific and Visual
Avoid Talking or Writing in the Abstract
Address Validity and Reliability Issues
Written Presentation
Use of an Executive Summary
Use Main Heading and Subheadings
Use Computer Generated Tables and Graphs
Use Informative Headings
Oral Presentation
Don't Read
Use Visual Aids
Make Sure That the Start Is Positive
Avoid Distracting the Audience
Involve the Audience
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Twenty-Four
Traditional Applications of Marketing
Research: Product, Price, Distribution and
Promotion
New Product Research
New Product Research Process
Generation of new product concepts
Evaluation and development of those
concepts
Evaluation and development of the actual
products
Testing in the context of the marketing
program
New Product Research (Contd.)
Need Identification
Perceptual maps
Social and environmental trends
Benefit structure analysis
Product users
Focus-group interviews
Lead user analysis
Concept Identification
Concept Evaluation And Development
Use Testing
Blind use test
Predicting Trial Purchase
Pre-test Marketing
Test Marketing
Designing the sell-in market test
Selecting the test cities
Implementing and controlling the test
Timing
Measurement
Costs of a test market
Controlled Distribution Scanner Markets (CDSM)
Projecting Trial, Repeat and Usage Rate Using Panel Data
Pricing Research
Gabor and Grainger method
Multi-brand choice method
Research for Profit-oriented Pricing
Research for Share-oriented Pricing
Distribution Research
Warehouse and Retail Location Research
Center-of-gravity Simulation
Computerized Simulation Models
Catchment Area Analysis
Outlet Location Research
Distribution Research (Contd.)
Number and Location of Sales Representatives
Sales effort approach
Statistical analysis of sales data
Field experiments
Computerized models of sales force size and
allocation by market and by product line
Advertising Research
Criteria
Recognition
Recall
Persuasion
Forced exposure, brand preference change
On-air tests -- brand preference change
Customized Measures of Communication / Attitude
Advertising Research (Contd.)
Purchase Behavior
Coupon stimulated purchasing
Split-cable tests
Tracking Studies
Diagnostic Testing
Copy Test Validity
Qualitative Research
Audience Impressions of the Ad
Adjective Checklist
Eye Movement
Physiological Measurement
Budget Decision
Media Research
Measuring print vehicle audiences
Measuring broadcast vehicles audiences
Sales Promotion Research
Promotional Tools
Price Discounts
Features
Displays
Coupons / Rebates
Sweepstakes
Sales Promotion Research (Contd.)
Promotional Strategy
Hi-lo
Every Day Low Price (EDLP)
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Twenty-Five
Contemporary Applications of
Marketing Research
Competitive Advantage
Porters Diamond
5 Forces That Shape Competition
Current competitors
The threat of new entrants
The threat of new substitutes
The bargaining power of customers
The bargaining power of suppliers
Assessing Competitive Advantage

Market share Marketing skills audit
Recall share Comparison of relative
costs
Advertising share Comparison of winning
versus losing competitors
R&D share Identifying high-leverage
phenomena
Market-based Process-based
Brand Equity
Defined as a set of brand assets and liabilities linked
to a brand, its name and symbol, that add or subtract
from the value provided by the product
The Assets Are
Brand Loyalty
Name Awareness
Perceived Quality
Brand Associations
Other Proprietary Brand Assets
Measuring Brand Equity
Excess Price Approach
Observation
Customer Research
Trade-off Analysis
Impact on Customer Evaluation
Measuring Brand Equity (Cont.)
Replacement Cost Approach
Stock Price Approach
Future Earnings Approach
Discounting the future profit stream
Applying an earnings multiplier
Customer Satisfaction
Customer satisfaction research should be done
at planned intervals so as to track satisfaction
over time
Customer Satisfaction (Contd.)
Measurement Process
Define goals and specify how information will be used
Discover what is important to customers and
employees
Measure critical needs
Act on the information
Measure performance over time
Total Quality Management
The process of managing complex change in
the organization with the aim of quality
improvement

Total Quality Management (Contd.)
The Characteristics of an Organization That
Has Successfully Implemented TQM
Everyone in the organization must be trained and
educated continuously
Establishment of quantifiable measures of progress
Formation of cross functional teams that are
empowered and motivated
Use of formal tools, techniques to maintain quality
Total Quality Management (Contd.)
Information Requirements
Measurement must be specific
Track the correct measure
Measure the outputs of the highest value to the customer
Measure process and results
Anticipate future customer and process requirements
Total Quality Management
(Contd.)
Analysis of Data in a TQM Company
Who performs the analysis?
What analytical techniques are used?
Which data are analyzed and at what level of detail?
How are data aggregated, and how are relations
between data groups cross-referenced?
How does the company improve its analytical
capabilities?
Benchmarking
Identify what is to be benchmarked
Identify comparative companies
Determine data collection method, and collect
data
Determine current performance levels
Project future performance levels
Communicate benchmark findings, and gain
acceptance
Establish functional goals
Develop action plans
Implement specific actions, and monitor
progress
Recalibrate benchmarks
Benchmarking (Cont.)
Marketing Research
Aaker, Kumar, Day
Eighth Edition
Chapter Twenty-Six
Emerging Applications of Marketing
Research: Database Marketing and
Relationship Marketing
Database Marketing
Database
Definition
A customer list to which has been added information
about the characteristics and the transactions of
these customers. Businesses use it to cultivate
customers and develop statistical profiles of
prospects most like their present customers
Need
Define your target group
Go into your database
Create a matched set
Expose the test variable
Minimize other marketing efforts while the test is going on
Allow test program enough time to work
Measure results by comparing the two groups sales
Take action. If test results warrant going ahead, then
Implement it
Database Marketing (Cont.)
Elements
A unique identifier such as an ID or match code
Name and title of individual and/or organization
Mailing address, including ZIP Code
Telephone number
Source of order, inquiry, or referral
Date and Purchase details of first transaction
Recency/frequency/monetary transaction history
Credit history and rating
Relevant demographic data for consumer buyers
Relevant organizational data for industrial buyers
Benefits
Customers are easier to retain than acquire
Determine their lifetime value
Developing relationships with customers
Ways to Gather Consumer Data
Rebate Cards
Suggestion Cards
Warranty Registration Cards
Free Subscription Offer Cards
Directly Ask Consumers
Guerilla Tactics
Get the product right
Use low-tech targeting and creative thinking
Use other peoples data (OPD) first
Buy new media
Ways to Gather Consumer Data
(Cont.)
Types of Databases
Active
Inactive
Inquiries
Value Added Databases
Overlay of multiple databases
Identifying Most Profitable
Customers
Recency of Purchase
Frequency of Purchase
Monetary Value of Purchase
Validating Prospect Profiles
Benefits of Database Marketing
E-Commerce
Fundamentals
E-commerce influence
The impact of the net on purchases made entirely
off-line
E-commerce ordering
Captures the orders that are placed on-line but paid
for later via telephone or in-store
E-commerce buying
Combines ordering and paying on-line
Real-time marketing
The marketing process of personally customizing
goods or services that continuously update
themselves to track changing customer needs,
without intervention by corporate personnel, and
often without conscious or overt input from the
customer
E-Commerce (Cont.)
Relationship Marketing
Relationship Marketing Incorporates Three Elements
Identifying and building a database of current and potential
consumers which records and cross-references a wide range
of demographic and purchase information
Delivering differential messages to these people through
established and new media channels based on consumers'
characteristics and preferences
Tracking each relationship to monitor the cost of acquiring
the consumer and the lifetime value of his/her purchases
Integrated Marketing
Communications
The process of developing and implementing
various forms of persuasive communications
programs with customers and prospects over
time
The goal of the IMC is to influence or directly
affect the behavior of the selected
communications audience
Forecasting
Qualitative Methods
Jury of Executive Opinion
Sales Force Estimates
Surveys of Customer Intentions
Delphi Approach

Forecasting (Contd.)
Quantitative Methods
Time-series Extrapolation
Trend projection
Causal Models
Leading indicators
Regression models

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