Marketing

Research

Dr. Jagrook Dawra

Save nature protect birds

 What does a manager do?

What is the most important skill he should have?

Why MR?
Why not to take decisions in absence of
information?
Shooting from the Hip Lee Iacocca

What is MR?
Information
Information processing
Tools and techniques
SWOT
Observation
One-on-one interviews
Complex statistical tools and techniques
Regression, Factor, Cluster, etc.

Focus is on
From marketing research to marketing
prediction
analytics
from
past
MR
MA
occurrences.
Focus is on analysis of survey-based carefully
collected data.

Data size typically in a few hundreds.

Focus on prediction from consumers

psychological aspects perceptions/ attitudes.

Data collection efforts are directed towards

obtaining a representative sample

Data
collection is
automatic
and often
mechanical.

 Evolution of an organization and its information

needs.
As an organization grows, its information needs
also grow.

Is there a real need for marketing research?

Research takes time and costs money.
Value of information vs. Cost of information?

Definition AMA

Marketing research: the function

that links the consumer, customer,
and public to the marketer through
information information used to
identify and define marketing
opportunities and problems;
generate, refine, and evaluate
marketing actions; monitor
marketing performance; and
improve the understanding of
marketing as a process.

Process

Detailed Process

The most Important

Step?

The most Important Step

Alice: Oh, no, no. I was just wondering if
you could help me find my way.
Cheshire Cat: Well that depends on where
you want to get to.
Alice: Oh, it really doesn't matter, as long
as...
Cheshire Cat: Then it really doesn't matter
which way you go.
Alice in Wonderland (Lewis Carroll)

 Research objectives, when achieved,

provide the information necessary to
solve the problem identified.
Research objectives state what the
researchers must do.

It all starts with

determining objectives
The formulation of a problem is often
more essential than its solution,
which may be merely a matter of
mathematical or experimental skill
Albert Einstein.

Qualitative vs. Quantitative

Tools
Measuring the world
Exploratory vs.
confirmatory
research.

Research Method

Types of Research
Exploratory Research: collecting information
in an unstructured and informal manner.
Descriptive Research refers to a set of
methods and procedures describing
marketing variables
Causal Research (experiments): allows
isolation of causes and effects.

Sources of Data

Primary Data: information collected

specifically for the problem at hand
Secondary Data: information already
collected

Research Instrument

Survey instrument
Asking the right question in the right way

Design Data
Collection Questionnaire
Software programs are available to assist
marketing researchers in preparing
questionnaires.

Sample Plan and Size

Sample plan refers to the process used to

select units from the population to be
included in the sample. Gives you
representativeness!
Sample size refers to determining how
many elements of the population should
be included in the sample. Gives you
accuracy!

Data Collection

Data collection is very important because,

regardless of the data analysis methods
used, data analysis cannot fix bad data.
Data collection errors may be attributed
to field workers or respondents.
Researchers must know the sources of
these errors and the controls to minimize
them.

Data Analysis

Data analysis involves entering data into

computer files, inspecting data for errors,
and running tabulations and various
statistical tests.
SPSS
Excel
Any other software

It is important to master the method and

not the software!

Some examples of our

Projects

LEPKASHI
Business Problem: Balancing Welfare with
Profits.
Artisans
Profits

Business objective: Increase Profits without

compromising artisan welfare.
Increase top-line (Sales)
Decrease bottom-line (Costs)

Research Objective

Increase marketing effectiveness of Lepakshi.

Decrease costs

Research Method

Interview Artisans
Why interviews?

Measure Sales peoples effectiveness

Measure customers perceptions and attitudes

Parameter

Average
(on a scale of 5)

Variance

Employee accuracy in counting and inventorying merchandise

3.88

0.90

Employee's ability to prevent damages due to mishandling of merchandise

3.67

1.19

Employee's ability in keeping the merchandise in a neat and orderly manner on sales floor

3.63

0.68

Employee's ability to get merchandise on sales floor (shelves, racks, display) quickly after merchandise arrival.

3.83

0.75

The employee's knowledge of products that he/ she is selling

3.75

0.98

3.75

0.67

Employee's ability to provide courteous service to customers.

4.04

0.91

The employee's ability to handle customer's complaints and/or service related problems

3.50

0.96

The employee follows proper procedures concerning product returns.

3.46

0.78

The employee's ability to suggest complementary or add-on products to the customers

3.54

0.61

3.64

0.51

The employee's ability to close the sale.

3.77

0.56

The employee's ability to promote sales of products having high profit margins.

3.92

0.78

The employee's ability to act as a resource to other departments or other sales people needing assistance.

3.63

0.77

The employee's ability to work well with fellow workers in the department.

3.65

0.78

3.76

0.52

The employee's knowledge of design, style, and construction of the product group.

3.25

1.07

The employee's knowledge of special promotions and/or advertised sale items.

3.42

0.95

The employee's knowledge of material, color co-ordination, and complimentary accessories related to the product.

3.50

0.87

The employee's ability to provide complete paperwork related to his work.

3.29

1.00

3.36

0.71

The employee's ability to provide complete paperwork for cash and credit transaction.

3.42

0.78

The employee shows up on time for work, sales meetings, and training sessions.

3.58

0.69

The employee accurately follows day-to-day instructions of immediate supervisor.

3.88

0.64

The employee's overall job related attitude

3.79

0.69

3.67

0.52

Merchandise Procedure Ability

Customer Service Ability

Sales Ability

Product Merchandise Knowledge

Knowledge of Store Policy

Customer Feedback Factor

Analysis
Factor
Average Score (out of 7)
Pleasant Store (1= unpleasant, 7= pleasant)

5.57

Attractive store (1= unattractive, 7= attractive)

5.43

Organized store (1= unorganized, 7= organized)

5.16

Clean (1= unclean, 7=clean)

5.71

Feel-good factor (Average)

5.47

Bright Store (1= dark, 7= bright)

5.25

Organized Layout (1= disorganized, 7 organized)

4.82

Good store (1= bad store, 7= good store)

5.53

Big store (1= small store, 7= Big store)

5.11

Opinion about the store (Average)

5.18

Spacious (1= crammed, 7= spacious)

4.52

Ease of locating items (1= difficult, 7=easy)

4.8

Good Range of products (1= not so good, 7= good)

4.67

Range (Average)

4.7

Helpful salesmen

5.25

Good service

4.99

Friendly personnel

5.32

Opinion about sales people (Average)

5.18

Salesmen aggression

3.09

Adequate salespeople

3.73

Salespeople aggressiveness and adequacy (Average)

3.41

Indian PC Market

Study done on 2004

Background
The Indian PC market 10 million units in 2003-2004
and is growing at a CAGR of 10%.
The Indian PC Industry consists of three major
segments: MNC Brands, Indian Brands and the
unorganized Unbranded sector
The MNC brands are perceived as strong brands
offering quality products at a premium.
Major MNC brands in the Indian market are:
Compaq, HP, IBM, Siemens, Acer and Dell.
The Indian brands are strong and medium brands,
offering quality products. Major ones are HCL,
Zenith, Wipro and Vintron.
The unbranded computer manufacturers are
perceived to be low cost manufacturers (in fact
assemblers) of computers. These manufacturers
have a great cost advantage vis--vis the branded
manufacturers

Background

While an MNC brand costs somewhere around

Rs. 40,000 and the Indian brand sells around
Rs. 35,000; the assembled computer from an
unbranded manufacturer is priced at just Rs.
25,000.
By number of units, the Assemblers have a
market share of 57.5%, followed by the MNC
brands (21.9%) and the Indian brands (20.6%).

Business Problem

How do we compete against the

unorganized market?
Research problem
What drives the assembled PC markets?
Price??
Something else?

Methodology
Conjoint and
Cluster analysis

Attribute

Levels

Price

Rs.
45,000

Rs.
35,000

Rs.
20,000

Performance High

Medium Low

Flexibility

High

Medium Low

Financing

Availabl Not
e
Availabl
e
On-Site Off-Site None

After Sales
Service
Type

Compaq Zenith

Unbrand
ed

Major Results

Attribute

Importance

Performance

36.44%

Flexibility

20.44%

Brand

17.48%

After Sales Service

14.38%

Price

8.22%

Financing options

3.05%

Benefit SegmentsComputers*
The Germans We want the best (35% )
The Indians We want the best today and
tomorrow (22.5%)
The Taiwanese We want it cheap with a
name (17.5%)
The Americans We want service too (25%)

The 1-Lakh Car

2004

Business Objectives

Where would the market share of the Tatas 1Lakh Car come from?
Bikes/ 2-Wheelers?
Maruti 800?
Second Hand Car?

Methodology

Self Explicated Conjoint

Results
Type
Bike
Maruti
800
2nd Midsized Car
2nd
Maruti
800

Existing
Choice
Share
16.42%
32.84%

Choice Shares after %

the Entry of Rs 1
Chan
Lakh Car
ge
18.18
13.43%
%
22.73
25.37%
%

34.33%

34.33%

16.42%

11.94%

0.00%
27.27
%

Brand Celebrity
Conformance

2007

Business Problem

How should we select a celebrity endorser

to maximize our advertising
effectiveness?

Research Problem

Can a Brand-Celebrity conformance be

measured?

Brands have a Personality

Jennifer Aaker
Brand Personality Dimensions
Sincerity
Excitement
Competence
Sophistication
Ruggedness

 Study
Exploratory Factor Analysis
Principal Component with Varimax
Rotation

Factor 1

Factor 2

Competence
& Sincerity
Good Nature

Factor 3

Factor 4

Sophisticatio
Excitement Ruggedness
n
Charisma &
Style

Good
Dancer

Good
Physique
Rough-nTough

Humility

Handsome

Youthful

Good Actor

Sexy

Rebellious

Good Family
man
Spoilt
Versitile
Energetic
Percentage Explained by each Factor

C
o
m
p
e
t
e
n
c
e
a
n
d
S
i
n
c
e
r
i
t
y

5.0
4.5

Amitabh B.
Hrithik Ro

4.0
A mir Khan
Sarukh Kha

3.5

Coke

Saif Ali K

3.0

Pepsi

2.5
Fardeen Kh

4.5

4.0
Excitment

3.5

3.0

3.5

4.0

Ruggedness

Plot of Coke & Pepsi with Present Endorsers


Coke
Pepsi
Sarukh Khan
0.675
0.665
Saif Ali Khan
0.785
0.392
Fardeen Khan
1.466
0.931
Amitabh B.
0.786
1.527
Hrithik Roshan
1.482
1.562
Amir Khan
0.389
0.723
Presently not endorsing either of the
2 brands
Sunny Deol
1.709
2.246
Sanjay Dutt
1.703
2.113
Salman Khan
1.936
1.899
Govinda
1.088
0.723
Akshay Kumar
0.710
1.658

Some common
mistakes in SIP

 Brand Effectiveness, Preference,

Cannibalization, Brand Performance,
Consumer Preference, etc. Constructs,
Measurement.
Connect between Background, Objectives,
Methodology, Results, Discussion and
Limitation.
Research based on Qualitative Data
Research based on Secondary studies.
Importance of Referencing.

Real Estate Market

of Goa

2013

VM Salgaocar Group

Ban on Mining in Goa

Venture into Real Estate
Start with a residential project at Talegaon in
Panjim
Offer premium flats with a lot of indoor and
outdoor recreational facilities.

How would you formulate a business/ research

problem for this project?

Business Problem

To study was to understand the Goa Real Estate

market
The findings of the study aimed at providing a
basic and preliminary understanding of
Environment
Customers
Competitors
Enablers

 Study 1: Real Estate environment.

Study 2: Consumer choice and preference
structure.
Study 3: Customer profiling and
segmentation.
Study 4: Competitor analysis.
Study 5: Study of enablers.

 Objective: Study macroeconomic factors, past trends both

local and global, risk factors affecting the real estate market.
Key deliverables: Detailed literature review of real estate
market in India, macro-level factors impacting the prices.

Study 1 objective

 Objectives:
Measure consumer preference, price-feature trade-offs
and willingness to pay.

Key deliverables: Utility curves, simulation

results, benefit segments

Study 2 Objectives

 Objectives:
This study explored the size and type of customer
segments.
The study shall also profile the customers in these
segments based on various demographic factors,
media habits, psychographics, etc.

Key deliverables:
Consumer segments, size of segments, profiles of
segments, create top target groups (who they are,
what theyre like, how to reach them)

Study 3 Objectives

 Objectives: Competitor analysis.

Who are the major competitors in
Goa? How are they positioned in
consumer minds? What are the
possibilities of differentiating a new
offering?
Key deliverables: competitor
Study
4 Objectives

analysis, positioning strategies.

Study 5 Objectives

Study of enablers in the real estate business in

Goa. Different government/ legal bodies, Banks,
etc., act as enablers in the real estate business
Key deliverables: Detail activities of enablers,
Interdependence of enablers on each other and
their influence on real estate business,
Preference structure of property dealers.

 Study was done and completed by students of

MR course of PGP 12-14 batch, guided by two
professors.

Research and Ethics

 A research company decides to leave a

message on prospective respondents
answering machines telling them that if
they call back in the next 24 hours, they
will receive a valuable prize if they take
part in a survey.

Ethical as long as true

 Upon completion of an interview, the

respondent is asked to provide the names
and telephone numbers of others he or
she thinks should take part in the survey.

Ethical - snowball sampling, referral

sampling

 A door-to-door salesman finds that by

telling people that he is conducting a
survey, they are more likely to listen to
his sales pitch.

Unethical sugging
Selling under the guise of research

What is frugging?
Fund-raising under the guise of research

 The cover letter of a mail questionnaire

says that it will "only take a few minutes
to fill out." But pretests have shown that
at least fifteen minutes are needed to fill
it out.

Unethical as few is vague

 Telephone interviewers are instructed to

assure the respondent of confidentiality
only if the respondent asks about it.

Ethical as long as confidentiality is true

 A client insists on inspecting the

completed questionnaires to assess their
validity, but the researcher suspects that
the client is really interested in finding
out what specific respondents said about
the client.

Unethical if the survey is confidential or

anonymous.

 A client insists on inspecting the

completed questionnaires to assess their
validity, but the researcher suspects that
the client is really interested in finding
out what specific respondents said about
the client.

Unethical if the survey is confidential or

anonymous.

 Respondents get a gift by Lottery.

Considered unethical by some Gambling.

 Institutional Review Board

Reviews/ Scrutinizes research to ensure
ethical practices and protect respondent
rights.

Code of Ethics
CASRO:
MRA:

www.casro.org
www.mra-net.org

ESOMAR: www.esomar.org
PMRS:

www.pmrs-aprm.com

Panels

Marketing research companies are making

greater use of panels.
Recruiting respondents who agree to
participate in future studies.

What does the course entail?

Module 1: Fundamentals - Problem Formulation, Research Design, Data collection
methods, sampling, validity and reliability, qualitative vs. quantitative research.
Module 2: Qualitative research techniques Indepth interviews, Focus group
discussions
Module 3: Research instrument Validity and Reliability, Questionnaire design.
Module 4: Scale construction and usage, EFA, CFA, SEM
Module 5: Behavioral research Design of experiments, Basic analysis difference
of means, ANOVA, Regression
Module 6: Segmentation Cluster analysis
Module 7: Positioning Multidimensional scaling
Module 8: Product and Pricing research Conjoint analysis, Test marketing
Module 9: Modelling choice LPM, Logit, Probit
Module 10: Business and marketing strategy PIMS
Module 11: Brand Valuation Models of Brand equity
Module 12: Writing a professional research report

Evaluation

Mid-term, end term and surprise quizzes

Three mini projects
Experimental design
Segmenting and Positioning study
Preference study

Small sample sizes (25 for each, from

classmates/ friends) allowed.
Purpose of the project is to learn from it
experiential learning.

To do
Read the case The Coop for the next class on Thursday/
Wednesday.
Open up a free account on qualtrics.com and familiarize
yourselves with its features.
CR to form groups and mail the list to me by Wednesday.
CR to form a group id for students of MR, coordinate with the
PGP/ IT office and communicate the same to all of us.

Exercise 1 [in-class]

Please write the names of five people in the

class you would like to form a group with.

Exercise 2 [optional]

Writing a research proposal

A sample shall be mailed to you.
Assume the role of a consultant.
Think of a business problem and study
objective(s).
Create a proposal

The Coop:
Market
Research

Fundamental
research
paradigms

Problems
Converting
this P to K

Instruments
The world
Knowledge

Converting P to K
Approach 1: Interpretivism

Approach 2: Positivism

Jaane bhi do
yaaron
Approach 1: Interpretivism

Approach 2: Positivism

What is a better Promotion

Strategy?
EDLP

6
5.5

MRP: $5.50
EDLP: Everyday
Low Price

5
Price in $ 4.5
4
3.5
3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Time

HiLo: High-Low

HiLo
6
5.5
5
Price in $ 4.5
4
3.5
3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Trip

 Research question: What effect does HiLo

promotion strategy have on trust on the store?

Approach 1: Interpretivism

Conduct an experiment:
Subject one group of people to EDLP strategy over
a period of time.
Subject another group of people to HiLo strategy
Collect data on how much they trust each store.
Conclude

Approach 2: Positivism

Studies show that people hate uncertainty.

Walmart that follows EDLP is more successful than Maceys that
follows HiLo.
HiLo involves more uncertainty than EDLP
We therefore postulate/ conjecture/ hypothesize:
H0: People will trust a store that follows EDLP strategy more than one
that follows HiLo

Conduct an experiment:
Subject one group of people to EDLP strategy over a period of time.
Subject another group of people to HiLo strategy
Collect data on how much they trust each store.
Accept or reject H0.

Focuses on
understand
Basic paradigms in research
ing what is
happening
in a
Positivism
Interpretivism
particular
context.
Let the
data lead
the way

Governed through explicitly stated theories

and hypotheses.

Researchers try to be emotionally neutral and

make a clear distinction between reason and
feeling, science and personal experience.

Positivists maintain a clear distinction

between facts and value judgments.

Qualitative
Research

87

Written replies to open ended questions.

Photos/ documents
Print ads/ story boards
Directors reports
Annual reports
Company minutes of meetings
Etc.

Recorded interviews (Voice/ Videos)

Magazine articles
Case studies written by 3rd parties
Online comments
On Consumer sites
Social networking sites
Etc.

Field notes

Forms of data
FGD records, etc.

88

Every animate and inanimate object on earth

will soon be generating data, including our
homes, our car, and yes, even our bodies.
Anthony D. Williams, Author Wickinomics

An average person today processes more data

in a single day than a person in 1500s did in an
entire lifetime.
Much of this data is qualitative, though
the analysis done on it may sometimes be
quantitative.

Analysis of
Qualitative Data

89

90
Common software that help in qualitative data analysis

NviVo
Atlas Ti
RQDA Freeware uses R

Using Nvivo

91

92

Using NVIVO

Helps organize qualitative data.

Also helps do some basic data analysis.
Basically gives a structure to qualitative data
and makes the analysis more scientific.

93

Qualitative analysis involves

94

What kind of data does

NVIVO handle?
Written text can be read directly.
Other formats like Photos, Audios, Videos, social
media, etc. can be analyzed if appropriately
coded.
Data can be easily exported/ imported to and
from Excel, Word, pdf and other file formats.

95

Where does the data come

from?
Interviews
FGDs
Secondary sources company files, memos,
minutes of meetings, etc.
Social media like Facebook, Twitter, Linkedin,
web pages, YouTube, Picasa, etc.
Field notes
Etc.

96
Helps you appropriately code.
Coded text can be easily organized into themes
Emergent themes consistently appearing are often called propositions.
Propositions are generalizable and have very few exceptions.

Descriptive statistics frequency of word occurrence, between and

within group analysis, cross tabulations, cluster analysis of word coding
and similarity.
Kappa coefficient [triangulation statistic between researchers]
Does not establish cause and effect relationships.
But data can be exported to Excel/ SPSS and analyzed.

What kind of analysis does

Nvivo do?

97

Why is coding important?

Qualitative analysis is often done to explore.

Simple text description is often not adequate.

98

Hermeneutics

Hermeneutics focusses on the meaning of the

qualitative data.
Video credit card

99

Historicity and
Hermeneutics
Understanding of a topic/ quote/ concept in a
particular historical context.
For e.g. We note that profits of a company have
been going down. One would be tempted to think
that there is something wrong with the company or
its management.
But if the context was put in place for instance:
The state of the economy was bad and that
recession had set in, the interpretation changes.

Important to incorporate context at the time of

taking field notes.

100

The Hermeneutic circle

It refers to the idea that one's understanding of

the text as a whole is established by reference
to the individual parts and one's understanding
of each individual part by reference to the
whole.

101
Interpretation of a text needs the researcher to
have some prior knowledge. For instance, she
needs to know the language, its vocabulary and
social conventions.
Social conventions change SMS lingo: LOL,
LMAO, TY, , , :-/
The more poetic a person is, more cryptic is his/
her language and interpretation is less
mechanical.
Mark Twain: I dont let my school interfere with my
education

Hermeneutics and prejudice

102

How much should you trust what is

written on Facebook/ Linkedin?
Written vs. verbal text vs. visual
interpretation
95% of interaction in the world is verbal.
Written text (written by respondents) comes after
due deliberation and a certain caution exercised
by the respondent, while verbal data is not so
much.
Emotions associated with the statements can be
captured only in verbal/ visual text and not
otherwise.
Verbal data cannot be accurately captured by
existing technology.

103

Attitude towards the brand

Attitude towards the
product
Attitude towards the
performance
Attitude towards the
attributes
Attitude towards the
aftersales service
Attitude towards the ease of
use

Whose attitude is there a difference between groups?

Men vs. women

Classification as per other
demographics.
Amateur vs. professional
photographer.
Usage heavy vs. light
user.
Usage purpose (wildlife/
friends and family/
scenery/ etc.)

Etc.

Example Attitude towards

Sony HSC 300

104
Advertisement deconstruction understanding the explicit
and implicit messages in an ad. A further analysis could be
done to reconcile the difference between the intended
positioning strategy and the perceived positioning of brands.
Director/ chairman report in the annual report of a company
emphasis laid down on CSR activities by companies and its
relationship with the movement of stock prices of that
company.
Analysis of Facebook/ twitter data on the pages of various
companies to bring out the attitude of consumers towards
these companies. [objective may need to be further focused]

Potential exercises

105

Potential exercises

Brand failures: using the cases in the book on brand failures

(and also perhaps the same authors book on brand
successes) build a generalized theory around what causes
brands to succeed/ fail. See if your emerging theory conforms
to the ones that already exist in the theory.
What type of comments/ content diffuse faster over social
media?
May need to control for size of the network.

Bluemountai
n Resorts

Surprise Quiz

Q1: Summarize the case in your own words (50-75

words max)
Q2: What were the major decisions that Gordon
Canning had to take in the case? (50-75 words max)
Max marks: 5. Min: 0 [in case you are absent/ not read
the case]
Grade F in the course if found using unfair means.
Max time 10 minutes.
Please do mention your name and enrollment number
on the top right hand side.

What did we learn from Blue

Mountain Resort Case?
How important business issues are converted
into research objectives.
Sampling Plan, method
Sample bias and response bias
Questionnaire construction

Measuremen
t in
Management

Issue of reliability and

validity
Two extremely important aspects of a good
research.
How many of you had questions vis--vis
reliability and validity built into your SIP
questionnaires?
What is Reliability?
Validity?

Validity

The degree to which

a measurement
instrument
accurately reflects
what it is designed to
measure.

Reliability

The degree to which a

measurement
instrument is
consistent in what it
measures.

Valid and Reliable

Valid but not Reliable

Not Valid but Reliable

Not Valid and not Reliable

A good instrument should

have:
Objectivity: Definition of the task at hand Objective
of playing darts is to hit the bulls eye
Have defined a rubrics for your projects sent it over
email.
Siddarths ability to hit the bulls eye
What is being measured? Siddarth? Ability?

Practicability: Online questionnaire may not be the right

instrument for a study on Indian Kirana store shoppers.
Reliability
Validity

True score test theory

Random sources
of error

Xo XT X S X R
Observed Score
True Score
Systematic sources
of error

Types of reliability

Test-Retest: stability of the instrument test it

2-3 times after a span of time.
Alternate form reliability: in test-retest
reliability, the same instrument is given the
second time. In alternate form, the questions
may change.
Split half reliability: if an instrument has six
questions that measure loyalty, compare the
results of first three with the next three.

 Types of Reliability
Internal consistency Several questions are often used to
measure one construct. E.g. Price consciousness is
measured using the statements below:

 Types of Reliability

Internal consistency is said to be achieved

when scores of items are highly correlated.
Cronbachs alpha is used to calculate internal
consistency.
Internal consistency is also called inter-item
reliability.

Inter rater reliability: more than two judges

judging a boxing match.
Three faculty members judging your SIP
presentations.

Types of Validity

Face validity: There is prima facie evidence to

say that the results are accurate. E.g. the study
predicts a market share of 45%. Secondary
sources also confirm this.

Types of Validity

Construct validity: Are we measuring the construct as it was

defined?
E.g. Brand Loyalty:
Behavioral angle: A customer is loyal to a brand if (s)he buys the brand
often.
How often did you buy toothpaste in the last one year?
Of these purchases, how often did you buy Colgate?

Attitudinal angle: A customer is loyal to a brand if (s)he has a positive

disposition towards it.
Please rate the following brands on a scale 1 to 5 (I = dislike, 5= like)
Colgate
Pepsodent
Close-up
Etc.

Types of Validity

Content validity: Are we measuring the construct fully?

Trust has three dimensions: Ability, Benevolence and Integrity.

Criterion validity:
Predictive validity:
high trust in a brand would lead to high purchase intention.

Concurrent validity
Measuring attitudinal loyalty and behavioral loyalty should be highly
correlated.

Convergent validity: Two or more methods of measurement

leading to similar results. E.g. market share being predicted by
analysis of scanner panel data and a survey method.
Discriminant validity: can a set of questions discriminate between
two constructs:

Types of Validity

What do the following questions measure?

Types of Validity

What do the following questions measure?

Classroom exercise1

Rishi measures attitudinal loyalty using a few

statements constructed by him and observes
low effect on repurchase intention.
Predictive validity?
Construct validity?
What needs to be done to rectify the situation?

Classroom exercise2

Chandan measures trust as an overall construct

and also measures it on its dimensions of
ability, benevolence and integrity. He observes
a difference between the mean scores of both
measurements.
Content validity?
How can this be corrected?

Classroom exercise3
Jaysun measures trust using its three dimensions and gets
the following Cronbach alphas:

Dimension

Cronbach alpha

Ability

0.85

Integrity

0.78

How would you interpret these?

What
corrective actions
would you take?
Benevolence
0.60

Framing of the questions

How important are the following

attributes in an insecticide. Please give
a rating between 1 (=not important at
all) and 10 (=Extremely important)
Brand
Safety
Ease of application
Action
Effectiveness
Smell
Price

 As a manager in an insecticide company, can

you use this information to design a product?

 Sir Humphrey: "You know what happens: nice young lady comes up to you.
Obviously you want to create a good impression, you don't want to look a
fool, do you? So she starts asking you some questions: Mr. Woolley, are you
worried about the number of young people without jobs?
Bernard Woolley: "Yes
SH: "Are you worried about the rise in crime among teenagers?
BW: "Yes
SH: "Do you think there is a lack of discipline in our Comprehensive schools?
BW: "Yes
SH: "Do you think young people welcome some authority and leadership in
their lives?
BW: "Yes
SH: "Do you think they respond to a challenge?
BW: "Yes
SH: "Would you be in favor of reintroducing Compulsory army Service?
BW: "Oh...well, I suppose I might be.
SH: "Yes or no?
BW: "Yes"

 Sir Humphrey: Alternatively the young lady can get the opposite result.
Bernard Woolley: "How?
Sir Humphrey: "Mr. Woolley, are you worried about the danger of war?
Bernard Woolley: "Yes
Sir Humphrey: "Are you worried about the growth of armaments?
Bernard Woolley: "Yes
Sir Humphrey: "Do you think there is a danger in giving young people guns
and teaching them how to kill?
Bernard Woolley: "Yes
Sir Humphrey: "Do you think it is wrong to force people to take up arms
against their will?
Bernard Woolley: "Yes
Sir Humphrey: "Would you oppose the reintroduction of Compulsory army
Service?
Bernard Woolley: "Yes" !!!

Assignment 1a
Questionnaire Design: Imperatives
Assignment: To be submitted group-wise.
Choose a questionnaire that you used for your SIP (any one of the
6/7)
Critically analyze the questionnaire, referring to the document
(Questionnaire Design: Imperatives)
Submit a report and an improved version of the questionnaire.
Make sure that the objective of the research is clearly mentioned on
the top.
Make sure the criticism is constructive you should touch upon
both the good and the not so good aspects of the questionnaire.
Make sure that everyone in the group is involved in the exercise.
Submission to be made in hard copy form to the CR.

Informed Consent Form

Types of Questions

Open-ended question presents no response

options to the respondent
Unprobed format seeks no additional information
Advantage:
Allows respondent to use his or her own words

Disadvantages:
Difficult to code and interpret
Respondents may not give complete answers

 Closed-ended question provides options

on the questionnaire that can be
answered quickly and easily.

Scale characteristics/ levels

Nominal scales: those that use only labels

Ordinal scales: those with which the
researcher can rank-order the
respondents or responses
Interval scales: those in which the
distance between each descriptor is equal
Ratio scales: ones in which a true zero
exists

Permissible statistics

Scale

Descriptive statistics

Inferential statistics

Nominal

Percentages, mode

Chi-square, binomial test

Ordinal

Percentile, median

Rank-order correlation,
Friedman ANOVA

Interval

Range, mean, standard

deviation

Correlations, t and z tests,

ANOVA, regression, factor,
cluster and several others

Ratio

Geometric mean,
harmonic mean

Coefficient of variation

Incentives

How large should the incentives be?

Measurement
of constructs
using a multiitem scale

 Likert scale
Semantic differential scale

 When we talk about attitudes, we are

talking about constructs of the mind as they
are expressed in response to our questions.
But usually all we really know are questions
we ask and the answers we get.
What does it mean if a finding is significant
or that the ultimate in statistical analytical
techniques have been applied, if the data
collection instrument generated invalid data
at the onset
Jacob Jacoby

Measurement in business
administration
Constructs borrowed from other disciplines.
Cognitive dissonance, attitude, utility

Constructs that are trans-disciplinary

Trust, fairness

Constructs developed by management

scientists
Repurchase intention, Brand equity, customer
loyalty, service quality, etc.

Challenge of measurement in
management
In physical sciences, measurement is almost
always additive.
Length: Ruler, cms.
Weight: Scale, kgs.
Time: Clock, minutes.

In marketing, is the measurement always

additive?

 Consider preference.
Additive:

Preference for a pair of jeans= [(importance of

attributes X desirability of its levels)]

Preference for a pair of jeans=

[(importance of
attributes X desirability of its levels)]

The problem is complicated further because the

various constructs interact with each other.

Multi-item scale
Instructions

Likert scale,
interval
scale

Scale items

Multi-dimensional scale
Ability

Benevolence

Integrity

Creating a reliable and valid construct

Adopted from
Churchill GA
(1979), A
Paradigm for
Developing a
Better Measure of
Marketing
Constructs, JMR,
pp. 64-73

How do you decide what you are measuring was

the construct of interest?
1.Domain of the construct.
. Define the construct very clearly
the buyer's cognitive state of being adequately or inadequately
rewarded in a buying situation for the sacrifice he has undergone.
The adequacy is a consequence of matching actual past purchase
and consumption experience with the reward that was expected
from the brand In terms of its anticipated potential to satisfy the
motives served by the particular product class. It includes not only
reward from consumption of the brand but any other reward
received in the purchasing and consuming process.
Howard and Sheth on Satisfaction

Need for preferential treatment: A customers inherent

psychological need to be given a preferential treatment that is not
generally imparted to other customers and at other times.

 Brand equity
Aaker (1996)
A set of assets, namely brand associations, brand
awareness, brand loyalty, perceived quality and
organizational associations that add or subtract
value from a product or service.

Park and Srinivasan (1994)

Preference not explained by objectively measured
levels of attributes.

Kamakura and Russell (1993)

Segment level brand preferences by removing the
effects of short-term advertising and price
promotions.

Keller (1995)
Differential effect that a brand knowledge has on
consumer response to the marketing of that brand.

2. Generate Sample of Items

Generate items from

Literature
Critical incidents
Focus groups

In the NPT exercise, 24 respondents were

interviewed.
Average length of interviews was about 45
minutes.
Items were also generated from past studies on
preferential treatment.

3. Purify the measure

The items should be correlated to each other.

If the construct has several components, then
the construct score is calculated by averaging
out the component score.
The items of the components should be correlated
to each other.

Chronbach alpha.
A measure of internal consistency

A good store

Personnel
attributes

Store attributes

Friendly personnel

Attractive

Good service

Clean

Helpful salesmen

Pleasant
Organized

Pricing policy
Reasonable prices
Discounts
Low prices

Purification of a measure

Repetitive exploratory factor analysis to identify

the components the construct is made of.
Confirmatory factor analysis is done to confirm
the factor structure.

4. Assess reliability with

new data
Face or content validity
Cronbach alpha

5. Assess construct validity

Internal consistency (measured by Cronbach alpha) is a

necessary but not sufficient condition for construct
validity.
The extent to which the construct is correlated with other
measures designed to measure the same thing.
Convergent validity: Do the different ways of measuring brand
equity converge to the same results?
Discriminant validity: The scale should be able to differentiate
between similar measures like brand loyalty and brand image.

Does the measure behave as expected?

Criterion validity: we expect BE to lead to BL. Does this
happen?

Optional Reading

Churchill GA (1979), A Paradigm for

Developing a Better Measure of Marketing
Constructs, JMR, pp. 64-73
Jennifer L Aaker (1997), Dimensions of Brand
Personality, JMR, pp. 347 356.

What needs to be done for

your projects?
Good news: You dont have to create a Scale.
You can use one from Handbook of Marketing
Scales
The handbook is available for ready reference in
the library.

Other source is academic journals available

over ebsco/ proquest
Study the scale given to you and make a brief
presentation on its definition, reliability and
validity measures, etc.

Behavioral
Research:
through
experimentation

Session 7

 Experiments marked the emergence of modern

science in the 16th and 17th century.
Bodies That Stay Atop Water or Move Within It.
(Galileo, 1612)
On loadstone and magnetic bodies. (William Gilbert,
1600)

An experiment is a way of systematically

observing a phenomenon.

An experiment is different
from mere observation
Early scientists like Aristotle based their
scientific findings merely by observation.
Francis Bacon the creator of empiricism.
Baconian methods (scientific methods)
He taught that not only should we observe nature
in the raw, but also twist the lions tale, that is,
manipulate our world in order to learn its secrets

Hacking on Francis Bacon (1983)

Modern scientists emphasize the need to

control for all extraneous influences that
might bias or limit observation.

Experiments and causation

in management
Used to study an extremely well defined
focused phenomenon.
Do consumers prefer concept A/B/C
What is more attractive 10% off or 10% more
What is the psychological impact of pricing a
product as Rs. 79.00 vs. Rs. 80.00?

Used to study cause and effect.

Effect

Counterfactual David Hume (1711-1776)

In an experiment we observe what did happen
when treatment was given.
Counterfactual is the knowledge of what would
have happened if the treatment was not given.

Effect = difference between what happened

as a result of the treatment and what would
have happened without the treatment
(counterfactual).
Control condition

10% off
Does the demand for Colgate increase if it is at a discount of 10%?
Have observations (Sales) for non-discount periods.
Take observations for discount period.
Can the increased sales be attributable to the discount?
What about extraneous factors?
Are the consumers same in both the instances?

It is not possible to simultaneously give and not give discounts to the

same consumers.

Cause probing research tries to create reasonable approximations

to physically impossible counterfactual.
Make probabilistic inferences.
1st video: Versace

Causal Relationship
A causal relationship occurs only when:
The cause preceded the effect
The cause was related to the effect
We can find no other plausible explanation for the effect other than
the cause.

In an experiment:
We manipulate the presumed cause
We see whether variation in the cause is related to variation in the
effect.
We use various methods to reduce the plausibility of other
explanations for the effect.

Video 2: Does size of a plate make you obese? [1:16 4:38;

17:36].

Correlation does not prove

causation
Income and education are correlated.
Do you need to have high income to have good education or do you
need to have good education to have high income?
There may be a correlation, but no causation
There may be a unidirectional causation
High income > high education OR

High education > high income .

There may be a bi directional causation

High income > high education > high income

The relationship may not be causal at all, but due to a third variable (often
called a Confound).
Wisdom causes bot income and education to be high.

Manipulable and nonmanipulable causes

Manipulable
Dosage, extent of discount, format of discount,
color and type of packaging, etc.

Non manipulable
Age, gender, number of times they have bought a
particular brand, etc.

After an experiment
B

Casual Description

A affects C.
B also affects C.
A affects C by a larger amount as compared to B.
B moderates the relationship between A and C
[A*B have a significant effect on C]
Or B mediates the relation between A and C

Casual explanation

Some terms and definitions

Experiment: a study in which an intervention is deliberately
introduced to observe its effects.
Randomized experiment: an experiment in which units are assigned to
receive the treatment or an alternative condition by random process.
Quasi experiment: an experiment where units are not assigned
randomly.
Natural experiment: is not really an experiment because the cause
cannot be manipulated.
Field experiment: experiment done in the field (say organization)
Correlational study is usually synonymous with non-experimental or
observational study; a study that observes the size and direction of
relationship among variables.

 Independent variable cause that is

manipulated.
Dependent variable effect of interest.
Video 3: Do creative people buy Apple
products?
Does owning an Apple product make you
creative?

Most experiments are highly local

but have general aspirations
Experiments are localized and particularistic
Study the affect of one or two causes on a particular variable of
interest.
The aim is to make general statements about these localized
phenomenon.

While experiments are used in practical applications, they are

also widely used in theory construction.
Video 4: Asch Experiments

Asch experiments

Two types of respondents:

Genuinely believe the group is right. (referent
informational influence)
Go along with the group to avoid the discomfort
of not complying with the group. (normative
influence)

What happened when the nave respondent

got an ally in the group?
How did Asch prove normative influence?

UTOS: Components of
experiment
Units
Treatments
Observations
Settings in which the study is conducted.

Generalizations

Construct validity generalizations - inferences

about constructs that research operations
presents.
External validity generalizations - inferences
about whether casual relationship holds over
variations in persons, settings, treatment and
measurement variables.

Videos

Video 1: Does brand have an effect on

evaluation of a product?
Video 2: Does size of a plate make you fat?
1:16 4:38; 17:36 onwards

Video 3: Creative and innovative people buy

Apple. But does buying the brand Apple
make you creative?
Video 4: Asch experiments.

More than one causes

A 2-cause case: does

color of packing and
country of origin
have an effect on
customer willingness
to pay for yogurt?
Black vs. white packing
Country not mentioned
vs. Switzerland (or
Swiss) mentioned on
the pack

An example:
Simona Botti, Ann L. Mcgill (2010)
The Locus of Choice: Personal
Causality and Satisfaction with
Hedonic and Utilitarian Decisions,
JOURNAL OF CONSUMER RESEARCH,
Vol. 37, pg 1065 1078.

 A museum director wonders whether to plan

the consumers visits or let them choose on
their own.
A spa wants to offer a discount coupon for its
treatments. It is wondering whether to give a
coupon that can be redeemed on any of the
treatments or to give one that can be
redeemed on a specific treatment?

 Consumers may consume

the same products or
services with different goals,
for example, for their own
pleasurea hedonic goal
or to achieve some higher
level purposea utilitarian
goal. This study investigates
whether this difference in
goals influences
satisfaction with an
outcome that was either
self-chosen or externally
determined.

Goal: Hedonic vs. Utilitarian

Choice: Self-chosen vs. Externally determined

Consumption goals

Utilitarian

Hedonic

Fun, sensorial, spontaneous

Eating out for pleasure

Visiting a museum for fun

Functional. Sensible
and useful
Eating out to better
understand local
culture
Visiting the museum
for collecting material
for class project.

Locus of choice

Internal when a consumer chooses something

herself.
individuals perceive themselves to be meaningful
agents in what they will experience and attribute
outcomes to their own actions.

External choice made by fate or third party.

individuals perceive their experience as being
determined by causal forces beyond their control

 Four groups were created respondents were

randomly allocated among these four groups.

Study 1: 2 by 2 design
A moderately large U.S. city is
planning to open a new
photography museum. The
curators are testing different
formats. You have been selected
for the test. The curators have
asked you to imagine being a
an
tourist
visiting
the museum
art student
visiting
the
just
for fun.
You will material
be
museum
to collect
presented
with some options
for your bachelors
thesis.
about
to structure
a virtual
You willhow
be presented
with
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visit how to structure a
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The
curators
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You
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visit
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learning during the visit.

 Subsequently, the participants witnessed a

virtual visit.
People who were in the choice cell got to choose
and plan their visit, while the computer randomly
chose for those in the no-choice cell.

Dependent variable: satisfaction with the

outcome
How much did you like to visit the museum?

Study 1 results

 Choice enhanced the extent to which

participants liked the museum visit when their
decisions were led by the hedonic goal of
having fun.
However, when participants were driven by the
utilitarian goal of writing a thesis, they liked the
personally chosen museum visit only as much
as the curator-chosen one.

Alternative explanations

In study 1 the no choice condition involved an

expert making the choice on behalf of the
consumer. The mitigation in satisfaction
observed in the utilitarian condition could then
be explained with participants belief that the
curator was at least as qualified as they were in
selecting the most pedagogically effective
alternative.
The aim of the study was to tie the results to
personal causation and not to expertise.

Study 1: 2 by 2 design
Imagine that you have been
working
sufferingreally
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duringand
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and achieved
Your doctor
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Study 2 results

Setting up an
experiment

Prestudy

A prestudy is done before the study when the

researcher is not sure of the extent to which
the stimulus manipulations.
E.g. high vs. low discount how high is high?

 Treatment: The differential stimulus applied to

different groups.
Pretest: information gathered before the
treatment.
Posttest: information gathered after the
treatment.
Control: the group not given a treatment or the
group against which the dependent variable is
studied.

Experimental designs

One group Posttest-only design

X

O1

Students pass calculus exams (at levels

substantially over chance) after taking a course on
calculus.

one group post test only design with multiple

substantive post-tests.
X

{O1, O2, O3}

Detectives investigating a murder.

 One group pre-test post-test design.

O1 X

O2

Weight - exercise program weight

The removed treatment design

O1 X

O2

O1 Xrem

O2

Hawthorne experiments

 Post-test only design with nonequivalent groups

X

O1

O2

Random assignment

Random assignment of subjects in different

treatment groups ascertains that only the
treatment affects the dependent variable and
nothing else.

Manipulation checks

Some questions included in the questionnaire

that measure the ability of the treatment given
to manipulate the independent variable.
Manipulation checks are defined as a process
that is used to verify if the experiment worked
or works.
Where should the manipulation check questions
be placed in an experiment?

Analysis of experimental
data
T-test
ANOVA

Two sample comparison

An analyst at a department store wants to

evaluate a recent credit card promotion.
To this end, 500 cardholders were
randomly selected. Half received an ad
promoting a reduced interest rate on
purchases made over the next three
months, and half received a standard
seasonal ad.
Compare the spending of the two groups.
H0: prom = no_prom

Paired Sample Comparison

A physician is evaluating a new diet for her patients

with a family history of heart disease. To test the
effectiveness of this diet, 16 patients are placed on
the diet for 6 months. Their weights and triglyceride
levels are measured before and after the study, and
the physician wants to know if either set of
measurements has changed.
Determine whether there is a statistically significant
difference between the pre- and post-diet weights
and triglyceride levels of these patients.
H0W: old_wt = new_wt
H0T: old_tri = new_tri

One-way ANOVA exercise-1

A sales manager wishes to determine the
optimal number of product training days
needed for new employees. He has
performance scores for three groups:
employees with one, two, or three days of
training.
H0 : 1 = 2 = 3
H0 : 1 = 2 = 3

 In response to customer requests, an electronics firm is

developing a new DVD player. Using a prototype, the
marketing team has collected data. ANOVA is being used
to discover if consumers of various ages rated the design
differently.
Looking at the DVD data, market researchers ask:
Are the groups different from each other by age?
H0: 18-24 = 25-31 = = 53-59

Are the groups between 32 to 45 different from the others?

H0: 32-45 = <32

& >45

Are the two groups between the ages of 32 and 45 really

different?
H0: 32-38 = 39-45

Can participants under 32 and over 45 be considered

statistically equivalent?
H0: <32 = >45

 A sales manager wishes to determine the optimal

number of product training days needed for new
employees. He has performance scores for three
groups: employees with one, two, or three days of
training.
H0: 1 = 2 = 3

While significant group differences were found,

there are no prior hypotheses about how the
three groups should differ. Therefore, he has
decided to simply compare every group to every
other group.
H0: 1 = 2
H0: 1 = 3
H0: 2 = 3

Summary steps for ANOVA

Validate the assumption of variance equality

Obtain the ANOVA table and results
Visually inspect the group means
Perform custom contrasts, tailored to your
specific hypotheses
Compare each mean to every other mean,
assuming variance equality or not.

Regression Analysis

 Necessary Reading: Pilgrim Bank A

Regression Analysis
Includes any techniques for modelling
and analyzing several variables, when
the focus is on the relationship between
a dependent variable and one or more
independent variables.
Helps understand how the typical value
of the dependent variable changes
when any one of the independent
variables is varied, while the other
independent variables are held fixed

 Regression models predict a value of the

Y variable given known values of the X
variables
Prediction within the range of values in the
dataset used for model-fitting is known
informally as interpolation
Prediction outside this range of the data is
known as extrapolation

 Regression models involve the following

variables:
The unknown parameters denoted as
The independent variables, X
The dependent variable, Y
A regression model relates Y to a function of X and

Y 1 1X 1 2 X 2

Line fitting in regression

 We believe/ hypothesize: Revenues are

related to economy
=> Revenues (R ) are related to income
(Y), interest rates (I), prices (P), time (T)
=> R = a + b*Y + c*I + d*P + e*T
Assumptions:
All influences that are not included, have no
effect
All influences that are included have a
precise effect

Data Types

Crosssectional data (i.e., data collected at

one point in time)
Data Census

Time series data (i.e., data collected over

a period of time)
Stock prices, weather reports

Goodness of Fit & Statistical Significance

Goodness of fit include the
R-squared: %age of variation in dependent
variable as explained by the independents

Statistical significance can be checked by an

F-test of the overall fit: dependent variable
explained as a combination of the independents
t-tests of individual parameters: dependent
variable explained by the independent variable

Practice Set 1

How effective is my advertising program?

Dataset - 01 reg adexp.txt
Sales in million units
Ad expenditure in million $.

Is ad expenditure the only explanatory variable?

Is the model significant?
Does advertising expenditure significantly impact
sales?
What is the sales likely to be if ad expenditure is Zero?
What is the per mill $ impact of ad expenditure on
sales?

Practice Set 2

What impacts the sales of chicken in the United States?

Data set 02 reg chicken.txt

YEAR = Year
Y

= Per Capita Consumption of Chickens, Pounds

X2

= Real Disposable Income Per Capita, $

X3

= Real Retail Price of Chicken Per Pound, Cents

X4

= Real Retail Price of Pork Per Pound, Cents

X5

= Real Retail Price of Beef Per Pound, Cents

X6 = Composite Real Price of Chicken Substitutes

Per Pound, Cents

 Have we taken all possible variables in the

analysis?
Is the model significant?
Are all the variables significant?
How much consumption of chicken is
invariant of all other factors?
Do all variables impact all consumption
similarly?

Dataset 03 books.txt
Variable definitions
Grade: Grade obtained
Books: number of books owned
Attend: Number of classes attended

Model 1: Regress grade against books

Model 2: Regress grade against books with intercept term=0.
What happens to R-sq? is this a better model in terms of
prediction?

Calculate mean square error for both the models

Which is the better model in terms of prediction?

Data set books.txt: what is

the R-sq in each model.

Calculate the correlation between all the three variables.

Multiple regression, 04 car.txt

Variable definitions:
Car: number of minutes per week spent on taking
care of ones car
Sex: Gender, 0=female 1=male
Age: age in years
Extro: projection of self-image through objects (in
this case the car) they own.

Model 1: Run regression with all the variables.

Model 2: Run regression with all the variables but
use the stepwise feature.

Categorical independent
variables
05 stress.txt, Variables:
Stress: measured on a scale
Job: 1 = primary school teacher; 2 = Secondary
school teacher; 3 = College lecturer; 4 = old
university lecturer; 5 = new university lecturer.

Dummy variable coding

Effect coding

Moderation (Interaction)

06 test.txt; Variables:
LEARN: learning environment
TEST: test environment
0 = dry; 1 = wet

Score: marks

Research question: Does a person score more

when (s)he prepares and gives the test in the
same environment?

Moderation (interaction when one variable is

categorical and other is continuous)

07 stress1.txt: Variable definitions:

STRESS: the amount of stress in a persons life.
EVENTS: the number and severity of events that cause
stress (e.g. changing job, shifting house, etc.)
STATUS: 0 = single, 1 = married

Explore if:
Higher life event scores lead to higher levels of stress.
Married people feel less stress.
Having a partner reduces the impact of stressful events.
Events cause lesser stress in case of married people.

Standardize the continuous variables. (why?)

Moderation when both

independent variables are
continuous
03 books.txt
Grade: Grade obtained
Books: number of books owned
Attend: Number of classes attended

Is it important to read a number of books and

attend number of classes together to score
better?
Do not forget to normalize the two continuous
variables.

Mediation - Complete

Awareness

Image

Brand Equity

Perception of
Fair treatment

Customer trust

Repurchase
intention

Mediation - Partial

Awareness

Image

Brand Equity

Perception of
Fair treatment

Customer trust

Repurchase
intention

Rules to establish mediation*

1.

Show that X is a significant

predictor of Y.

2.

Show that X is a significant

predictor of M.

3.

; b is significant.

; d is significant.

Show that M is a significant

predictor of Y when we control for
X.

; r is significant

If q is not significant, it is
complete mediation,

If q is significant, it is partial
mediation.

*Baron and Kenny, 1986

Mediation: Data set 08

books
Variable definition
enjoy: degree of joy derived
from reading a book.

Buy

buy: number of books

bought
read: number of books read.

Does buying books

mediate (also tell fully or
partially) between
propensity to enjoy books
and the number of books
read?

Enjoy

Read

Pilgrim bank

Case 1

 Research Question:
Would encouraging transaction migration to
lower cost channels improve customer
profitability?

Research Objective:
Is there a difference between the profitability
of on-line and off-line customers?
Secondary objective:
Is profitability different for different types of
people?

Dummy variables

Income (Rs.)

D1

D2

D3

10000 and less

10000-20000

20000-30000

30000 and more

Dummy Variables

In excel, use if() function:

E.g. IF(G2=1200,1,0) and IF(G2=1300,1,0)

Regression analysis
Used for prediction and forecasting
Used to understand which among the
independent variables are related to the
dependent variable, and to explore the
forms of these relationships.
Can be used to infer causal relationships
between the independent and dependent
variables.

Multidimensional
Scaling:
Perceptual
mapping

Why is it used?

Positioning studies
Positioning- repositioning decisions
Product attribute finalization
Advertising decisions

MDS Map (Mental map)

Going to church

Outside Oriented
Doing voluntary
service

Going to a beauty
parlor

Family

Sunbathing

Powdering the baby

Personal

Baking a cake
Relaxing in a bath
Using a room
freshener
Using fabric softener

Wearing soft clothes

Smelling flowers

Windows to air out

the room
Cooking dinner

Home Oriented

Smoothening on a
hand lotion

Moisturizing face with

a cream

Two processes

Proxcal
Alscal

Typical MDS questionnaire PROXCAL

Using fabric
softener

Smelling a
flower
Going to a
parlor
Etc.

Using fabric
softener

Smelling a
flower

Small rating
for small
perceived
distance

large rating
for large
perceived
distance

Going to a
parlor

Etc.

Exercise

Eg. Toothpastes
Germ killing
Fresh breath
Calcium
Strong teeth
White teeth
Colgate
Close up
Pepsodent

 Brands may also form a part of the attributes.

Questionnaire for ALSCAL

Cards
Instructions given to
respondent:
Put the B-schools in
different piles, keeping
similar ones in one
pile and dissimilar
ones in different.
You can make as many
piles as you want.

How does rotation of axis

help in MDS

 MDS by itself is not enough. Why?

Conjoint
Analysis

Some questions that conjoint

answers
Why does a consumer buy a product A
rather than a product B?
What features/aspects of the product are
valuable to customers?
What are the trade-offs that a customer
make while buying a product?
How much is a consumer willing to pay for
a new feature of my product?
What is the set of attributes that will
maximize consumer choice?


What are the benefit segments in the
market place?
What should the product line be to satisfy
the desires of the benefit segment?
If my firm offers a product A and prices it
Rs. 20.00 and the competitor offers a
product B and prices it Rs. 15.00, what is
the likely market reaction?
Does the new product cannibalize the
sales of my existing product?

Preference
Emotional
Rational

Bundle
of
Attributes

Preference
due to
Attributes

Brand

Preference
due to
Brand

 Is the basis of differentiation (rational vs.

emotional) dependent on the type of product
category?
What products are more likely to be sold on
Rational basis (Attributes)?
Emotional basis (Brand)?

Customer Focused Product

Planning
Our marketing actions
Product, price

Customers

Competitors actions
Product, price

Customer preferences

Customer Choices

Multi-attributed view
of products
(Attribute bundle)

Market shares
Sales
Profits

Multi-attributed view of
products
Products

Level 1

Attribute 1

Attribute 2

Level 2

Level 3

Attribute 3

Multi-attributed view of
products
Preference for
Products

Attribute 1

Attribute 2

Attribute 3

Preference for
Level of attribute 1

Preference for
Level of attribute 2

Preference for
Level of attribute 3

 Overall preference for a product= preference

for attribute 1 + preference for attribute 2 +
preference for attribute 3n
Overall worth = sum of part-worths
Conjoint: considered jointly
Part-worths correspond to a single respondent.

Part-worth function model

Part-worth function model

Which of these products

would be more preferred?
Product A

Rs. 20

2 min

Product B

UA

UB

Rs. 20

Rs. 40

-11

2 min

0.5
min

12

Total

Total

Rs. 40

0.5 min

More preferred

 Typically many factors or attributes are

included.
Factors/ Attributes often include price and
brand name.

Deciding attributes

Related to consumer choice (based on

qualitative market research like FGDs or
Interviews)
Distinguish different product offerings.
Managerially relevant.

Deciding Levels of
Attributes
Distinct, mutually exclusive, and collectively
exhaustive.
Cover a range of interest (no extrapolation)
Try to keep the range of levels small (say 3 per
factor) and equal across factors

Mo-bike Pump

Factor

Levels

Explanation

Price

Rs. 500, Rs. 1000 or

Rs. 2000

Actual price paid by you

Size: fits in
a

Pocket, Fanny pack or The smallest space into which the

a book bag
product would fit comfortably. The
pocket, fanny pack or a book bag
would have space for other items as
well.

Total time

0.5 min, 2 min, or 10

min

Time to set up and connect the pump

to a flat tire, inflate the tire with
average effort to full pressure and
put the pump back

Ease of
inflation

Easy, medium or
difficult

Easy = even a 6-year-old can use

the product
Medium = even a 12 year old can
use the product
Difficult = requires an athletic adult

Designing conjoint cards

4 attributes, 3 levels each. 3 x 3x 3 x 3 = 81

possible cards (too many)
Choose a representative subset of say 18 cards.
Fractional Factorial design (conjoint designer
software given to you)

 Arrange the 16 cards given to you in order of

your decreasing preference. Keeping the most
preferred card on the top.
Also arrange the 4 shaded cards in the order of
decreasing preference.
How did you do it?

Cards

Next Class

Case: Sunbeam

Consumer choice
Choice Share
Market Share

Solibloc

Fits in a
pocket
0.5 min
Easy to
inflate
Rs. 2000

Airstick

Fits in a
book bag
10 min
Difficult to
inflate
Rs. 500

Airstick makes a change

Solibloc

Fits in a
pocket
0.5 min
Easy to
inflate
Rs. 2000

Airstick

Fits in a
book bag
10 min
Medium to
inflate
Rs. 500

What would happen if a new company Relistick

were to introduce a product
Solibloc
Airstick
Relistick
Fits

in a
pocket
0.5 min
Easy to
inflate
Rs. 2000

Fits

in a
book bag
10 min
Medium to
inflate
Rs. 500

Fits

in a
fannypack
2 min
medium to
inflate
Rs. 1000

CONJOINT PLAN='C:\Users\IIM-HP\Desktop\carpet_plan.sav'
/DATA='C:\Users\IIM-HP\Desktop\carpet_prefs.sav'
/SEQUENCE=PREF1 TO PREF22
/SUBJECT=ID
/FACTORS= package (DISCRETE)
brand (DISCRETE)
price (ANTIIDEAL)
seal (DISCRETE)
money (DISCRETE)
/PRINT=SUMMARYONLY.

Case 1:
Sunbeam

HLL

Soaps

Brand Line

Shampoos

Dove

Dove

Lifebuoy

Sunsilk

Dove

Fair and
Lovely

Clinic

Plus
Clinic All
Clear
Clinic Plus
Ayurvedic

Depth

plus

Body
Lotions
Dove

Breadth

Lifebuoy

Hamam

Conditioners

Ponds

Lirl
Product Line

Brand Family

Brand Portfolio

Redesigning of product lines

Mature
Redesign the product lines to make them more
responsive to needs and dictates of its markets.
To optimize market share of each product
category.
Goals:
What models should be in the line?
What should their physical appearance be?
What should their performance characteristics be?

Process

Consumer usage and attitude survey.

Consumer attribute and benefit survey.
A conjoint analysis survey.
Product line simulations.

 What were the different attributes of a food

processor that were considered?
What were the levels of these attributes?
How many distinct processor combinations are
possible with these attributes and levels?
How many were chosen for the study?

 Mathematics behind Conjoint Linear

Programming.
Was there a qualitative study that preceded the
conjoint study? What was the major objective
for this study?
How were the huge number of configurations
reduced to 27?

 What data was collected?

What was the relevance of each data item to
the study?
How was the data collected?
Notice how the job of sorting was made easy
for the respondents.

 What were the important attributes?

What is the benefit of having importance data?
What were the segmentation results?
How do you think they were found out?
Simulations?

 What makes you say that the results of the

exercise were valid (or not valid)?
What is base case simulation?
Assumptions during simulations.
Simulating what if scenarios.
What is the benefit of simulations?
How reliable are these simulations?

How does the software estimate

this?
Uses linear programming
E.g. Card 11 > Card 7
S(bookbag) + T(10 min) +

>

E(Medium) + P(500)
S(bookbag) + T(0.5 min) +
E(Difficult) + P(2000)

18

C2 = 153 such pairs

S(bookbag) + T(10 min) +

E(Medium) + P(500)
S(bookbag) + T(0.5 min) +
E(Difficult) + P(2000) + Z1
Min(Z1+Z2+Zn)

Deciding attributes

Related to consumer choice (based on

qualitative market research like FGDs or
Interviews)
Distinguish different product offerings.
Managerially relevant.

Deciding Levels of
Attributes
Distinct, mutually exclusive, and collectively
exhaustive.
Cover a range of interest (no extrapolation)
Try to keep the range of levels small (say 3 per
factor) and equal across factors

Designing conjoint cards

4 attributes, 3 levels each. 3 x 3x 3 x 3 = 81

possible cards (too many)
Choose a representative subset of say 18 cards.
Fractional Factorial design (conjoint designer
software given to you)

 Assignment

Designing Cards

design.exe

Reorder.exe

Estimating part-worth
utilities
Using Linmap
Estimated for each respondent
Enter data in a notepad in the following format
RES1 6 4 15 9 5 8 16 10 13 2 3 11 7 14 12 1 20 19
18 17

Change the extension from .txt to .dat

Pump.dat

Checkdat.exe

Assignment 2

Rearrange the cards and rank order them.

Input them into a text file and change its
extension from .txt to .dat
Check for mistakes using the program
checkdat.exe
What is the factor that you laid most importance
on? Is it consistent with your findings from the
analysis?
Use Linmap.exe to get utility curves and misorders
Input the data of your friends.
Use linmap.exe to get group utility curves.

Caution

Adding (or subtracting) the same constant to all

partworths of an attribute does not alter the
relative values of overall preference.
The fact that part-worth for 0.5 min is positive
and 10 min is negative does not mean that the
respondent likes 0.5 min and dislikes 10 min.
zero point on the partworth scale is arbitrary.
It is not meaningful to compare the part-worth of
the level of one factor with some partworth of
some other factor.
Units of measurements are arbitrary.
Transformations can be done. But they should be
done to all partworths of all attributes.

Other simulations and

analyses
Sensitivity of market share to other product
attributes.
Optimizing product bundle
Competitive price reactions
Price equilibrium calculations
Product line simulations
Competitive product improvements
Entry of new competitive products
Cross tabulation of results against different
segments

Word of caution

Market Share vs. Profits

Run simulation for different concepts.
Estimate costs of tooling/ manufacturing each
concept.
Compare profitability of alternative concept.

Limitation of Conjoint
Attribute list is not complete.
Aesthetics, smell, taste, etc difficult to capture.
Measurement, sampling errors are present.
Does not include the effect of an innovative
attribute or level.
How much does a consumer really value an
attribute?
May vary from time to time and situation to situation.

Cannot be used when the product category is so

radically new that customers dont even know how
they may use the product.
Cannot be used in image driven, holistic products
(e.g. perfumes, paintings)
Full profile conjoint does not take into effect the
interaction effect between attributes.

Primary uses of conjoint

Product line planning

New product evaluation (concept testing)
Competitive analysis
Pricing
Benefit segmentation

New developments in
conjoint

Full profile conjoint

Regression based conjoint
Trade off tables
Paired comparison
Self explicated conjoint
Hybrid methods
Choice based conjoint
Adaptive conjoint
HB Conjoint

Brand equity

Preference for the attribute Brand

Factor
Analysis

The Math behind

Factor Analysis
method

Factor Analysis
A

simple example

3 courses Finance, Marketing and Business Policy

If are marks (out of 10) obtained by the students,
Student

Finance

Marketing

Buss. Policy

 These

grades are functions of two underlying factors

[quantitative ability] and [Verbal ability]

Variable

Loading on

Finance

Marketing

Business Pol

Factor Analysis

Coefficient is a matrix of factor loadings

, are unobservable.

Assumptions

The

unobservable factors are independent of

each other
The error terms are independent of each other.

 It can be shown that

Communality

Specific
Variance

Variable
Variable

Variance-covariance matrix can be

calculated from the Xs and the
system of simultaneous equations can
be solved for s.

Rotation

Some terms

Bartletts test of sphericity:

H0: The population correlation matrix is an identity
matrix.

Kaiser-Meyer-Olkin (KMO) measure of sampling

adequacy:
Value should be > 0.5

Eigen value: total variance explained by each

factor.

Rotation
Varimax searches for a rotation of the original factors such
that the variance of the loadings is maximized.
Most popularly used method of rotation.

Qurtimax minimizes the number of factors needed to

explain each variable.
Equimax compromise between Varimax and Quartimax
While all the above are orthogonal rotations, sometimes,
oblique rotation provides a better explanation of the factors.
But this method is rarely used. They may be used when one
expects the factors to be slightly correlated.

Johnson wax

ASSESSOR

309

310

Test marketing using ASSESSOR

Objectives:
To test the potential of the new product
(acceptability, market share)
To test the effectiveness of proposed marketing
strategy (advertising, positioning, trial rate,
repeat purchase rate, etc.)

Key decision to take:

Should the product be launched?
Should the attribute(s) of the product be
changed?
Does the marketing program require any change?

311

ASSESSOR: 5 Tests

1.

Initial Questionnaire evoked set

2.

Preference questionnaire Conjoint

Ad was shown

3.

Ad recall

4.

Laboratory purchasing

5.

Brand ratings

312

1. Results: Market structure

What were the factors that emerged?

How were these factors arrived at?
How was enhance positioned?
How was agree positioned?
Was cannibalization likely?

313

314

2. Results: Advertising
Recall
What is recall?
How is it measured?
What attributes was Enhance associated with?

315

3. Results:
Trial Estimation
What was Enhances trial rate?
What was Agrees trial rate?
Was it sufficient?
What was Agrees trial rate at
ASSESSOR stage?
How do you increase trial?
Advertising
Increasing brand association with
an successful existing product.
pricing

316

4. Results: Repeat purchase

estimation
Did Enhance live up to expectation?
How did it compare with Agree?
How do you increase repeat purchase?

317

5. Results: Product
acceptance
What was wrong with Enhance ads

318

6. Results: Market share

prediction
Trial and Repeat model
Preference Model
Why were two models used for market share
estimation?
Convergent Validity

Trial and repeat model

M TS
M=Market share
T=ultimate cumulative trial rate (penetration)
S= Ultimate repeat purchase rate among buyers who ever made a trial purchase of the brand (retention)

319

320

Calculating T

CU

FKD

T=FKD+CU-(FKD x CU)
F= trial rate in ACCESSOR testultimate trial rate that would
happen if all consumers were
aware of the Ad.
K=long run probability that a
consumer will become aware of
the Enhance
D=Proportion of stores that will
carry Enhance
C=proportion of the target
market that receives the
samples.
U=proportion of those receiving
the samples that will use them

FKD CU
FKD CU

Calculating S
Purchase
cycle

Eligibility to
repeat

Repeat (R)

56.2

13.2

20%
3.8 of
19 =

15.4+15.2=
30.6
6.1

24.5

50.5

11.8

37.7

30.2

81

81%
65.6 of
81=

100 people tried a product.

81% repeat rate
20% switchback rate

Do not
Switchback

19

2nd

62.3

Switchback
(SB)

81

4th
Etc

321

100
65.6+3.8
69.4
=

Eligibility to
switchback

100-81=
19
81-65.6=
15.4

1st
3rd

Do not
repeat

7.5

0
19-3.8=
15.2

Calculating
S
322
90

80

70

60

50
buy this product
buy other product

40

30

20

10

0
0

Calculating S

SB
S
1 SB R
S=retention rate
SB= switchback rate
R=repeat purchase rate

323

324

325

Calculating market share

using Preference model
Conjoint to calculate preference
Probability of choosing a brand given the
preference for the brand and preference for
competing brands
Market share= proportion of consumers for
whom brand j is in the evoked set * average
probability of purchase of brand j

326

327

7. Results: Cannibalization

Using Conjoint.
No significant cannibalization effect.

328

Key question!!!

Should Enhance be launched in the present for in the present way?

Given the fact:
Enhance MDS results were not exciting.
Brand association results.
Market share predictions were also not very exciting.

What should be done?

Change:
Attributes
Ads
Positioning strategy
Something else (Brand, etc)

Drop the product

329

Was ASSESSOR helpful in taking an appropriate:

Product decision?
Strategic decision?

Discriminant
analysis

 Bank Loan: Can you predict a defaulter on the

basis of:
Stability years with current employer
Stability years at current address
Debt to income ratio
Credit card debt

 Can you predict customer choice for following offerings:

Basic service
E-service
Plus service
Total service

On the basis of:

Age
Marital status
Years at current address
Income
Level of education
Years at current employment
Retired/ active
Gender
No. of people in household?

Can you predict churn on the basis of above demographics?

The course on AMR

 Repetition of a few concepts

Research Process
Importance of Objectives
Research Design
Ethics
Basic concepts

Concepts

Measurement
Scale construction

Validity and reliability

Designing a good questionnaire
Importance of asking the right question in the right
manner.

Experimentation as against simple observation

Measurement Scale
Scale
Items

Dimension
s
Ability

Benevolence

Integrity

 Scaling technique:
Likert
Constant-sum
Pair-wise comparison
Rank order
Etc.

Data type
Nominal
Ordinal
Interval
Ratio

Techniques

Revisit
T-test, ANOVA

Factor analysis
Regression
Stepwise
Categorical independent variable (which is mostly
the case in marketing)
Dummy variable coding
Effects coding

 Interaction
When both variables are continuous
When both or one is categorical

Mediation: Complete or partial

MDS
Alscal
Proxcal

Conjoint
Using Linmap
Using SPSS

ASSESSOR

Next course

Follow-up: Marketing Analytics

Regression in depth
Assumptions, problems
Non-linear regression
Discriminant Analysis
Using regression in analyzing scanner panel data

Measuring choice (advanced conjoint)

Using Logit/ Probit

Lag models fixed and random effects models

Big Data
Sentiment analysis
Social network analysis
If time permits: SEM and PLS