Chapter 4

Managing Market Information

Coach

Highlights
1941- started as a family-owned, leather

goods workshop. Next 50 years- developed strong following for classically styled, high-quality leather hand bags & accessories. Offered basic hand bags designs in understated colors Earned reputation as classy but traditional sturdy standbys.

Problems
Mid-1990s: Decline in sales

More women entering workforce, wanting

more stylish & colorful bags Competitors like Prada, Gucci, Chanel responding to changing trends Coachs traditional styles looked very plain

Solution
Overhauled strategy- Started with extensive

marketing research Accessible Luxury- creating & marketing new kinds of bags to fill usage voids- offering different varieties in bags Convinced women to buy weekend bags, evening bags, backpacks, satchels, clutches, diaper bags, tote bags 2001- Coach launched the Signature collection, with the letter C. Introduced wristlet. 2004- Selling more than a million wristlets a year in 75 styles.

Marketing Research
Research revealed women interested in non

leather bags, mixing formal with casual Introduced Hamptons Weekend line-stylish fabric bags for summer weekend use. Research found out women were mixing formal with casual. Introduced Madison collection, formal evening bags during daylight hours Spent $3 million on marketing research, interviewing 14,000 women Sales increased over 177 percent & profits have increased sixfold

Marketers dont need more information, they need better information, better use of the information

THEREFORE
Companies must design effective marketing information systems that give managers the right information, in the right form, at the right time to help them make better marketing decisions.

The importance of market information:

Good marketers want insights to help them

interpret past performance as well as plan future activities. They need timely, accurate, and actionable information on consumers, competition, and their brands. They also need to make the best possible tactical decisions in the short run and strategic decisions in the long run.
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 Marketing research can be used for helping

marketers understand customer satisfaction & purchase behavior Help in assessing market potential & market share Help in assessing effectiveness of pricing, product, promotion & distribution strategies

Marketing Information System

Consists of people, equipment & procedures to gather, sort, analyze, evaluate & distribute timely & accurate information to marketing decision makers
1. 2.

3.
4. 5.

Assess market information needs. Develop market information Research market information Analyze market information Distribute market information

Assessing Marketing Information Needs

An MIS balances the information users would

like to have against what they really need & what is feasible to offer.

Company begins by interviewing managers to find out what information they would like. MIS monitors marketing environment to provide decision makers with key marketing decision information.

Developing Market Information

Internal Databases 2. Marketing Intelligence 3. Marketing Research
1.

 Internal Databases: Electronic collections of

consumer & market information obtained from data sources within the company's network.

Accounting, Marketing, Customer Service, Sales Force Departments.

Example: Pizza Hut claims to have the largest fast-food customer database in the world. The database contains detailed customer information on 40 million US households, at more than 7500 restaurants around the nation.

Internal Databases
Can be accessed more cheaply & quickly

Information may be incomplete or wrong

Keeping database updated requires effort.

Marketing Intelligence
Marketing Intelligence: The systematic collection &

analysis of publicly available information about competitors & developments in the marketing environment
Goal: To improve strategic decision making, assess

& track competitors actions, provide early warning of opportunities & threats

Can be collected from people inside the companyexecutives, engineers, scientists & sales force. Can be obtained from suppliers, resellers & customers. Observing competitors & monitoring their published information.

Marketing Research
The systematic design, collection, analysis & reporting of data relevant to a specific marketing situation facing an organization

THE MARKETING REASEARCH PROCESS

Defining the problem & research objectives

Developing the research plan for collecting information

Implementing the research plancollecting & analyzing data

Interpreting& recording findings

Defining the Problem & Research Objectives

Three types of objectives.

Exploratory Research: To gather preliminary information that will help define problem & suggest hypothesis. Descriptive Research: To better describe marketing problems, situations, or markets such as the market potential for a product or the demographics & attitudes of consumers. Causal Research: To test hypothesis about cause- and-effect relationships.

Developing the Research Plan

Researchers must determine the exact

information needed, develop a plan for gathering it efficiently & present the plan to management. Research plan outlines sources of existing data, contact methods, sampling plans & instruments for gathering new data. Research plan should be presented in a written proposal.

Step 2: Develop the Research Plan

Data Sources Research Instruments Contact Methods

Research Approach Sampling Plan

Marketing Research
Secondary Data: Information that already

exists somewhere, having been collected for another purpose

Primary Data: Information collected for the

specific purpose at hand

Secondary Data
Companies can buy secondary data reports

from outside organizations. Use commercial online databases. Secondary data can be obtained more quickly & at a lower cost than primary data. Secondary data should be evaluated to make sure that it is:

Relevant Accurate Current Impartial

Planning Primary Data Collection

Research Approaches
Observation Survey Experiment

Contact Methods
Mail Telephone Personal

Sampling Plan
Sampling Unit Sample Size Sampling

Research Instruments
Questionnaire Mechanical

Instruments

Procedure

Research Approaches
Observational Research: The gathering of primary

data by observing relevant people, actions & situations

Survey Research: The gathering of primary data by

asking people questions about their knowledge, attitudes, preferences & buying behavior
Experimental Research: The gathering of primary

data by selecting matched groups of subjects, giving them different treatments,& checking for differences in group responses

Observational Research
Fresh data can be gathered

by observing the relevant actors and settings. Ethnographic research is a particular observational research approach that uses concepts and tools from social sciences to provide a deeper understanding of how people live and work.
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Observational Research
Can obtain information that people are

unwilling & unable to provide Cannot measure feelings, attitudes & motives

Survey Research
Best suited for descriptive information

Major advantage- flexibility

Disadvantages

People maybe unwilling to respond Intrusion in privacy Unable to remember

Experimental Research
Best suited for causal information

Explains cause-and-effect relationship

Experimental Research
The most scientifically valid research is experimental

research. The purpose of experimental research is to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. Experiments call for:

Selecting matched groups of subjects. Subjecting them to different treatments. Controlling extraneous variables.

Checking whether observed response differences are

statistically significant
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Contact Methods
Mail Questionnaires Telephone Interviewing Personal Interviewing Individual Interviewing Group Interviewing Online marketing research Internet Surveys Online Panels Experiments Online Focus Groups

Mail Questionnaires
Mail questionnaires can be used to collect

large amounts of information at low cost More honest answers Less interviewer bias Inflexible Take long time for completion Low response rate Researcher has less control over sample

Questionnaires
A questionnaire consists of a set of questions

presented to respondents. Because of its flexibility, the questionnaire is by far the most common instrument used to collect primary data. Questionnaires need to be carefully developed, tested, and debugged before being administered.

The researcher carefully chooses the questions, wording, and sequence. The form of the question can influence the response. Marketing researchers used both closed-end and openend questions.

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 Closed-ended questionnaire specifies all

possible answers that are easier to interpret and tabulate Open-ended questionnaires allow respondents to answer in their own words are especially used for exploratory research

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Telephone Interviewing
Quickest method for obtaining information

Greater flexibility as compared to mail

questionnaires Higher response rate Higher cost rate May not want to discuss personal questions Introduces interviewer bias Time pressures can result in cheating

Personal Interviewing
Individual interviewing involves talking with

people in homes, streets, offices Flexible More costly as compared to telephone interviews Group interviewing consists of inviting 6 to 10 people to meet with a trained moderator to talk about a product/service Moderator focuses free & easy discussion Employ samples to keep time & costs down Sample is not that open & honest

Online Marketing Research

Includes Internet surveys Online panels Experiments Online focus groups May take form of Web Questionnaires Following click streams of online consumers Relatively less costly Best way to reach single, affluent, well-educated

audiences Less personal-devoid of all personal interaction Intrusion of consumer privacy biggest issue

Sampling Plan
WHO is to be surveyed?

- what sampling unit

HOW MANY people should be surveyed?

- what sample size

HOW should the people in the sample be chosen?

- what sampling procedure

 A sample is a segment of the population

selected for marketing research to represent the population as a whole. Probability Sample: Each population member has a known chance of being included in the sample. Non-Probability Sample: When probability sampling is too costly & time-consuming, then non-probability samples are used.
Read Table 4.4 pg 109

Research Instruments
Questionnaire

Closed-end Questionnaire Open-end Questionnaire People Meters Checkout scanners Eye cameras for checking eye movements. Skin sensors Brain sensors

Mechanical Instruments

Implementing the Research Plan

Involves collecting, processing & analyzing

the information. Researchers must also process & analyze the collected data to isolate important information & findings. Check data for accuracy & completeness. Results must be tabulated & statistical measures computed.

The Marketing Research Process

Step 3: Collect the Information

4 surveys problems:
1. 2. 3. 4. Respondents not home Respondents refuse to cooperate Respondents biased/dishonest answers Interviewers biased or dishonest
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Interpreting & Recording Findings

Managers & Researchers both should

interpret findings, draw conclusions, & report them to management.

Customer Relationship Management

Managing detailed information about

individual customers & carefully managing customer touch-points in order to maximize customer loyalty. Touch-points include:

Customer Purchases Sales Force Contacts Website visits Credit & Payment interactions Satisfaction Surveys

 CRM consists of sophisticated software &

analytical tools that integrate customer information Integrates everything that a companys sales, service & marketing teams know about individual customers CRM analysts develop data warehouses & data mining techniques CRM is part of an effective overall customer relationship strategy Focusing on the R in CRM

Benefits of using CRM

Using CRM companies can better provide

high levels of customer service & develop deeper customer relationships. CRM can be used to target consumers more effectively & create tailor made customized products

Distributing & Using Marketing Information

MIS must make information readily available

to managers Providing managers with performance reports, intelligence updates & reports Using Intranets (stored reports, shared work documents, contact information for employees) Using extranets (Suppliers, resellers, key customers & value network members to access account, product & other data).

Marketing Research in Small Businesses & Non-Profit Organizations

By observing things around them. Can monitor competitor advertising by collecting ads

from local media. Can conduct informal surveys using convenience samples. Can conduct their own simple experiments. Using secondary data, observation, surveys Business Section of local libraries

Read Bibbentuckers pg 114

International Marketing Research

Dealing in diverse markets in different countries. Vary greatly in levels of economic development,

cultures, customs, buying patterns. Scarcity of secondary data, researchers must collect own primary data. Research by telephone, mail, Internet or in person. Cultural difference/ language barriers Changes in attitude & customs Unwillingness to respond in different countries High illiteracy rates

Public Policy & Ethics in Marketing Research

Intrusions on Consumer Privacy

Misuse of Research Findings

Intrusions on Consumer Privacy

Consumers resent marketing research efforts

70% Americans say companies have too much

personal information 59% consumers refuse to give personal information 71% consumers believe that protecting information is a concern IBM, Citigroup, Amex, BOA, & Microsoft have a Chief Privacy Officer (CPO)- safeguard privacy of consumers who do business with company

Misuse of Research Findings

Research studies- powerful persuasion tools Few advertisers rig their research designs Blatantly misrepresent findings (Subtle

manipulation of sample or choice of wording of questions Some research companies are actually paid for companies with an interest in outcome. To avoid survey abuse associations have been formed (CASRO- Council of AMERICAN Survey Research Organization) CASRO develops codes of research ethics & standards of conduct