Marketing The Core 5th Edition Kerin Solutions Manual

Marketing The Core 5th Edition Kerin
Solutions Manual
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CHAPTER CONTENTS
PAGE
POWERPOINT RESOURCES TO USE WITH LECTURES..........................................7-2
LEARNING OBJECTIVES (LO) ......................................................................................7-4
KEY TERMS ......................................................................................................................7-4
LECTURE NOTES
• Chapter Opener: How Test Screenings and Tracking Studies Reduce Movie Risks....7-5
• The Role of Marketing Research (LO1; LO2)...........................................................7-6
• Step 1: Define the Problem........................................................................................7-7
• Step 2: Develop the Research Plan ............................................................................7-8
• Step 3: Collect Relevant Information (LO3; LO4) ...................................................7-10
• Step 4: Develop Findings (LO5) ..............................................................................7-26
• Step 5: Take Marketing Actions ...............................................................................7-27
• Sales Forecasting Techniques (LO6) ........................................................................7-29
APPLYING MARKETING KNOWLEDGE....................................................................7-33
BUILDING YOUR MARKETING PLAN........................................................................7-38
VIDEO CASE (VC)

• VC 7: Carmex®: Leveraging Facebook for Marketing Research ................................7-40
IN-CLASS ACTIVITIES (ICA): See the ICA CD in the Instructor’s Survival Kit Box
• ICA 7-1: Interpreting Census Data
• ICA 7-2: Websites for Marketers
• ICA 7-3: Designing a Taste Test Questionnaire for Howlin’ Coyote Chili
• ICA 7-4: Pepsi vs. Coke Taste Test
7-1 Chapter 7
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
POWERPOINT RESOURCES TO USE WITH LECTURES1
PowerPoint
Textbook Figures Slide2
Figure 7-1 Five-step marketing research approach leading to marketing actions (p. 149) ................7-7
Figure 7-2 Types of marketing information (p. 152) .......................................................................... 7-13
Figure 7-3 Nielsen Television Index Rating Report for network primetime households for
the week ending May 20, 2012 (p. 154)........................................................................... 7-20
Figure 7-4A Different types of questions in a sample Wendy’s survey (Q1-Q5) (p. 158).............. 7-27
Figure 7-4A (Q1) Open-ended question............................................................................................... 7-28
Figure 7-4A (Q2) Dichotomous question............................................................................................. 7-29
Figure 7-4A (Q3) Multiple choice question......................................................................................... 7-30
Figure 7-4A (Q4) Attitudinal question ................................................................................................. 7-31
Figure 7-4A (Q5) Semantic differential scale question....................................................................... 7-32
Figure 7-4B Different types of questions in a sample Wendy’s survey (Q6-Q9) (p. 159).............. 7-33
Figure 7-4B (Q6) Likert scale question................................................................................................ 7-34
Figure 7-4B (Q7) Media behavior question......................................................................................... 7-35
Figure 7-4B (Q8) Usage behavior question ......................................................................................... 7-36
Figure 7-4B (Q9) Demographic questions........................................................................................... 7-37
Figure 7-5 How marketing researchers and managers use information technology to turn
information into action (p. 162)........................................................................................ 7-44
Figure 7-6 Marketing dashboards present findings to Tony’s marketing manager that leads to
recommendations and actions (p. 165).............................................................................. 7-47
Figure 7-6A Annual sales .................................................................................................................... 7-48
Figure 7-6B Average annual sales per household .............................................................................. 7-49
Figure 7-6C Average annual sales per household, by household size.............................................. 7-50
Figure 7-6D Average annual sales per household, by age of children in household ....................... 7-51
Figure 7-7 Linear trend extrapolation of sales revenues at Xerox, made at the start of 2000
(p. 167) ............................................................................................................................... 7-55
Video Case 7—Figure 1: Facebook Open-Ended Poll Question (p. 170)........................................... 7-63
Video Case 7—Figure 2: Facebook Fixed Alternative Poll Question (p. 170) .................................. 7-63
Video Case 7—Figure 3: Potential Results from Three Possible Facebook Strategies (p. 171) ....... 7-65
Selected Textbook Images of Ads, Photos, and Products for Lecture Notes
Chapter Opener: Photo of The Hunger Games movie poster (p. 148) ..................................................7-4
Using Marketing Dashboards with an Excel Spreadsheet

Are the Carmex Social Media Programs Working Well?: Conversation Velocity, Share of Voice,
and Sentiment (pp. 160-161) ................................................................................................................. 7-40
1
For each PowerPoint resource listed, the page reference (p. x) or [p. y] in the textbook is where the figure or image is located.
2
The slide number references are for the PowerPoint presentation for this chapter, which is available on the Instructor’s
Resource CD-ROM or can be downloaded from the Marketing: The Core, 5/e website. See www.mhhe.com/kerin.
Chapter 7 7-2
POWERPOINT RESOURCES TO USE WITH LECTURES
PowerPoint
Marketing Matters and/or Making Responsible Decisions Slide
Marketing Matters—Technology: Online Databases and Internet Resources Useful to
Marketers (p. 153).................................................................................................................................. 7-17
Supplemental Figures
Figure 7-A Marketing research questions asked in test screenings of movies that lead to
specific actions [p. 147] ...................................................................................................7-5
Figure 7-B Comparison of types of surveys [p. 157]....................................................................... 7-25
Figure 7-C Typical problems when wording questions [p. 158]..................................................... 7-38
Figure 7-D Sales drivers: Factors that influence product or brand sales and are essential
for effective marketing programs [pp. 161-162].......................................................... 7-42
Figure 7-E Top-down forecast: Survey of Buying Power [pp. 166-167] ....................................... 7-56
Figure 7-F Build-up forecast: Apple’s four major product lines [pp. 166-167] ............................ 7-57
Quick Response (QR) Codes3

QR 7-1: The Hunger Games Movie Video (p. 148) ...............................................................................7-4
QR 7-2: Census 2010 Video (p. 152) .................................................................................................... 7-15
QR 7-3: Trend Hunter Video (p. 156) ................................................................................................... 7-23
QR 7-4: Carmex Video Case (p. 170).................................................................................................... 7-58
3
TV ads, videos, and video cases with QR Codes can be viewed on a separate media website for Marketing: The Core, 5/e,
which is core.kerin.tv. For example, to view QR 7-1, the proper URL syntax is http://core.kerin.tv/qr7-1.
7-3 Chapter 7
LEARNING OBJECTIVES (LO)
After reading this chapter students should be able to:
LO1: Identify the reason for conducting marketing research.
LO2: Describe the five-step marketing research approach that leads to marketing actions.
LO3: Explain how marketing uses secondary and primary data.
LO4: Discuss the uses of observations, questionnaires, panels, experiments, and newer data
collection methods.
LO5: Explain how information technology and data mining lead to marketing actions.
LO6: Describe three approaches to developing a company’s sales forecast.
KEY TERMS
constraints p. 150 observational data p. 154

data p. 151 primary data p. 151
information technology p. 162 questionnaire data p. 156
marketing research p. 148 sales forecast p. 166
measures of success p. 149 secondary data p. 151
Chapter 7 7-4
LECTURE NOTES
HOW TEST SCREENINGS AND TRACKING STUDIES

REDUCE MOVIE RISKS
What can movie studios do to reduce the risk of a box office failure?
A. What’s in a Movie Name?
• Movie studios use test screenings:
a. As a form of marketing research to…
b. Change the title, plot, etc. of a movie after…
c. A sample of the target audience has previewed it.
• Filmmakers want movie titles that:
a. Are concise. c. Capture the essence of the film.
b. Are attention-getting. d. Have no legal restrictions.
• These are the same factors that make a good brand name.
B. The Risks of Today’s (and Tomorrow’s) Blockbuster Movies
• Today’s films cost over $100 million to produce and market.
• To recoup these staggering costs and reduce risks, studios:
a. Conducting test screenings.

• Obtain the key reactions of consumers likely to be in the target audience.
• Recruit 300 to 400 moviegoers to attend a “sneak preview” of a film.
• [Figure 7-A] After seeing the movie, the audience fills out a survey to
critique the:
– Title, plot, characters, music.
– Marketing program (posters, trailers, etc.).
• The purpose: To identify improvements to make in the movie’s final edit.
b. Using tracking studies.

• Immediately before an upcoming film’s release to forecast its opening
week’s box-office revenue.
• Ask questions about their awareness of, interest in, and intention in seeing
the upcoming film this weekend.
7-5 Chapter 7
• Depending on the research results, the movie studio may run last-minute
ads to increase awareness, interest, and attendance at the film.
[QR Code 7-1: The Hunger Games Movie Video]

C. Converting Marketing Research Results into Actions
• “Mini” test screenings can be used to obtain funding for a new film project
(Example: Avatar).
• Marketing research:
a. Leads to decisive marketing actions.
b. Is often used to help develop sales forecasts.
I. THE ROLE OF MARKETING RESEARCH [LO1]

Marketing research in perspective: (1) what it is, (2) some difficulties in conducting it,
and (3) the five steps marketers use to conduct it.
A. What is Marketing Research?
• Marketing research is the process of defining a marketing problem and

opportunity, systematically collecting and analyzing information, and
recommending actions.
• Marketers conduct marketing research to reduce the risk of marketing decisions.
B. The Challenges of Doing Good Marketing Research
• Marketing researchers face difficulties in asking consumers questions about new,

unknown, or personal-type products.
a. Would consumers really know whether they are likely to buy a product that
they probably have never thought about before?
b. Even if consumers know the answer, will they reveal it? Will they give
honest answers to personal or status questions?
c. Will consumers’ actual purchase behavior be the same as their stated interest
or intentions (i.e., buy the same brand they say they will)?
• Marketing research must overcome these problems to obtain the information

needed so that marketers can make reasonable estimates about what consumers
want and will buy.
Chapter 7 7-6
C. Five-Step Marketing Research Approach [LO2]
• A decision is a conscious choice from among two or more alternatives.
• Decision-making is a more formal, structured approach that marketers use to

consciously choose from a set of alternatives to try to improve the outcomes of
decisions.
• [Figure 7-1] Marketers use a 5-step marketing research approach to collect

information from consumers to improve marketing decisions and actions.
II. STEP 1: DEFINE THE PROBLEM

Fisher-Price shows how to define the marketing problem and its two key elements:
• Setting the research objectives.
• Identifying marketing actions the research suggests.
A. Set the Research Objectives
• Research objectives are specific measurable goals the decision maker seeks to
achieve in conducting the marketing research.
• In setting research objectives, the purpose of research must be clear in order to

take marketing actions.
Supplemental Lecture
• Marketers must specify the kind of research they want when setting research
objectives. The three types of marketing research are:
a. Exploratory research provides ideas about a relatively vague problem.
b. Descriptive research tries to find:

• The frequency that something occurs.
• The extent of a relationship between two factors.
c. Causal research tries to determine the extent to which the change in one
factor changes another one. Examples: Experiments and test markets.
B. Identify Possible Marketing Actions
• Effective decision makers develop specific measures of success, which are

criteria or standards used in evaluating proposed solutions to the problem.
• Different research outcomes—based on the measure of success—lead to different

marketing actions.
7-7 Chapter 7
• If all the research outcomes lead to the same marketing actions, then marketing
research should NOT be done since it would be useless and a waste of money.
• Marketing researchers know that defining a problem is an incredibly difficult task.
a. If the objectives are too broad, the problem may not be researchable.
b. If too narrow, the value of the research results may be seriously lessened.
• This is why marketing researchers spend time in defining a marketing problem

precisely and writing a formal proposal that describes the research to be done.
III. STEP 2: DEVELOP THE RESEARCH PLAN

The second step in the marketing research process involves:
• Specifying the constraints on the marketing research activity.
• Identifying the data needed for marketing decisions.
• Determining how to collect the data.
A. Specify Constraints
• The constraints in a decision are the restrictions placed on potential solutions to a

problem.
• Common constraints in marketing problems are limitations on the time and

money available to solve the research problem.
B. Identify Data Needed for Marketing Actions
Often marketing research studies collect a lot of data that are interesting but irrelevant
for marketing decisions that result in marketing actions.
C. Determine How to Collect Data
Two key elements in deciding how to collect data are (1) concepts and (2) methods.
1. Concepts.
a. Concepts are ideas about products or services.
b. Marketing researchers frequently develop a new-product concept, which is a

picture or verbal description of an offering the firm might offer for sale.
2. Methods.
a. Methods are the approaches that can be used to collect data to solve all or part
of a research problem.
Chapter 7 7-8
b. Issues in developing a research plan include:
• Can we ask consumers questions that they can answer?
• Is observing consumers’ behavior better than asking them questions?
• Can we observe behavior without biasing the results?
c. Information on useful methods is available in tradebooks, textbooks, and

handbooks that relate to marketing and marketing research.
d. Some periodicals and journals summarize useful methods that solve marketing
problems.
e. The American Marketing Association publishes the Journal of Marketing and

the Journal of Marketing Research.
f. Special methods vital to marketing research are:

• Sampling.
– Involves selecting representative elements from a population, such as
distributors, customers, or prospects, in order to ask them questions.
– Their answers are then treated as typical of that population.
• Statistical inference. Involves drawing conclusions or generalizing the
results from the data obtained from the sample taken to the larger
population from which the sample was drawn.
LEARNING REVIEW
1. What is marketing research?
Answer: Marketing research is the process of defining a marketing problem and

opportunity, systematically collecting and analyzing information, and recommending
actions.
2. What is the five-step marketing research approach?
Answer: The five-step marketing research approach provides a systematic checklist for
making marketing decisions and actions. The five steps are: (1) define the problem;
(2) develop the research plan; (3) collect relevant information (data); (4) develop findings;
and (5) take marketing actions.
3. What are constraints, as they apply to developing a research plan?
Answer: Constraints in a decision are the restrictions placed on potential solutions to a

problem, such as time and money. These set the parameters for the research plan—due
dates, budget, etc.
7-9 Chapter 7
IV. STEP 3: COLLECT RELEVANT INFORMATION [LO3]
• Collecting enough relevant information to make rational, informed marketing
decisions can entail collecting an enormous amount of information at great expense.
• Data are the facts and figures related to the problem.
• [Figure 7-2] Data are divided into:
a. Secondary data are facts and figures that have already been recorded prior to the
project at hand.
b. Primary data are facts and figures that are newly collected for the project.
A. Secondary Data: Internal
• Internal secondary data, the internal records of a company, are the most easily
accessible marketing information.
• Can be divided into two related parts:
a. Marketing input data relate to the effort expended to make sales, ranging:
• From sales and advertising budgets and expenditures.
• To salespeople’s call reports.
b. Marketing outcome data relate to the results of the marketing efforts,

including, , and.
• Billing records on shipments. • Communications from customers.
• Sales and repeat sales.
B. Secondary Data: External
• Published data from outside the organization are external secondary data.
• Includes data published by the U.S. Census Bureau:
a. Census 2010 was a count of the U.S. population in 2010.

• Is conducted every 10 years.
• Contains detailed information on American households, such number, age,
sex, race/ethnic background, income, occupation, and education.
• Marketers use these data to identify characteristics and trends of ultimate
consumers.
[QR Code 7-2: Census 2010 Video]
Chapter 7 7-10
[ICA 7-1: Interpreting Census Data]
b. Recently, the Census Bureau began collecting data annually from a smaller
number of people through the American Community Survey.
c. The Census Bureau also publishes the Economic Census.

• Is conducted every five years.
• The latest is the 2007 Economic Census.
• These reports are vital to business firms selling products and services to
organizations.
• Contains data on the number and size of establishments in the U.S. that
produce a product or service on the basis of its:
– Geography (states, zip codes, etc.).
– Industry sector (Manufacturing, Retail Trade, etc.).
– NAICS code.
• Syndicated panels.
a. Consist of market research firms that pay households and businesses to…
b. Record all their purchases using a paper or electronic diary.
c. Allow researchers to economically obtain answers to questions:

• That require consistent data collection over time such as…
• How many times did customers buy our products this year over last year?
d. Examples of data obtained from syndicated panels:

• Nielsen Media Research’s TV ratings.
• J. D. Power’s automotive quality and customer satisfaction surveys.
• Other data service firms:
a. Provide information on:

• Household demographics. • Media behavior.
• Lifestyle. • Coupon redemptions.
• Product purchases. • Sampling promotions.
b. Include firms like SymphonyIRI Group’s InfoScan and Nielsen’s Scantrack.
c. Can collect, analyze, interrelate, and present all this information.
7-11 Chapter 7
d. Sales data are:
• Scanned at the checkout counters of supermarket, drug, convenience, and
mass merchandise retailers.
• Critical to allocate scarce marketing resources.
• Trade associations, universities, and business periodicals also provide detailed

data to market researchers and planners.
• Other data are available via the Internet using search engines such as Google.
[ICA 7-2: Websites for Marketers]
MARKETING MATTERS
Technology: Online Databases and Internet Resources Useful to Marketers
Information contained in online databases available via the Internet consists of

indexes to articles in periodicals and statistical or financial data on markets, products, and
organizations that are accessed either directly or via Internet search engines or portals
through keyword searches.
a. Statistical and financial data on markets, products, and organizations include:
• Statistical data: STAT-USA and the Census Bureau.
• Financial data: The Wall Street Journal, CNBC, and Fox Business News.
b. Portals and search engines include:
• Portals: USA.gov.
• Search engines: Google, Yahoo!, and Bing.
C. Advantages and Disadvantages of Secondary Data
• Marketers generally obtain secondary data first and then collect primary data.
• Advantages of secondary data are:
a. Time savings if data:

• Have already been collected and published (Census data).
• Exist internally within the firm (sales reports).
b. Low cost, such as free or inexpensive Census reports.
c. Greater level of detail, especially in Census data.
Chapter 7 7-12
• Disadvantages of secondary data are:
a. May be out of date. Example: Census data are collected every 5 or 10 years.
b. The Census Bureau created the American Community Survey for this reason.
c. The definitions or categories may not be quite right for the project.
d. The data are collected for another purpose and may not be specific enough for
the project.
LEARNING REVIEW
4. What is the difference between secondary and primary data?
Answer: Secondary data are facts and figures that have already been recorded prior to the
project at hand, whereas primary data are facts and figures that are newly collected for the
project.
5. What are some advantages and disadvantages of secondary data?
Answer: Advantages of secondary data are the time-savings, the low cost, and the greater
level of detail that may be available. Disadvantages of secondary data are that the data may
be out of date, unspecific, or have definitions, categories, or age groupings that are wrong
for the project at hand.
D. Primary Data: Watching People [LO4]
• The two ways to collect new or primary data for a marketing study are by
(1) watching people and (2) asking them questions.
• Observational data:
a. Are facts and figures obtained by watching how people actually behave.
b. Are collected by mechanical, personal, and neuromarketing methods.
1. Mechanical Methods.
a. [Figure 7-3] Nielsen Media Research national TV ratings are mechanical

observational data collected by a “people meter” that:
• Connects to a box attached to TV sets, DVR cable boxes, satellite dishes,
etc. in over 9,000 households across the country.
• Is a remote that is pressed when a viewer begins and finishes watching a
TV program.
• Stores and transmits the data from the set-top box each night to Nielsen.
• Data are also collected using less sophisticated meters or TV diaries
(a paper-pencil measurement system).
7-13 Chapter 7
b. In early 2012, Nielsen introduced “cross-platform campaign ratings” that
combine its existing TV ratings with its new online campaign ratings.
c. On the basis of all these observational data, Nielsen then calculates the rating
and share of each TV program:
• With 114.7 million TV households in the U.S., a single ratings point
equals 1 percent, or 1,147,000 TV households.
• A share point is the percentage of TV sets in use tuned to a particular
program.
• A 1% change in a rating point:
– Means gaining or losing millions of dollars of the over $61 billion in
ad revenue…
– Because advertisers pay rates based on the TV audience size.
• As Figure 7-3 shows, advertisers can expect to pay more for a 30-second
TV ad on NCIS than one on The Mentalist.
• Broadcast and cable TV networks:
– May change the time slot or even cancel a TV program…
– If its ratings are consistently poor and…
– Advertisers are unwilling to pay a rate based on a higher guaranteed
rating.
d. But TV advertisers today have a special problem:

• With about three out of four TV viewers skipping ads with a DVR or
TiVo, or channel surfing during commercials, how many people are
actually seeing the TV ad?
• Nielsen Media Research and Media Check offer advertisers minute-by-
minute measurement of how many viewers stay tuned during TV ads.
2. Personal Methods. Other observational data collection methods include

watching consumers in person and videotaping them.
a. Mystery shoppers.
• Pose as a customer and observe behaviors.
• Are paid by firms to check on:
– The quality and pricing of their products.
– The integrity of and customer service their employees provide.
• Provide clients with unique marketing research information that can be
obtained in no other way.
Chapter 7 7-14
b. Two other observational approaches:
• Watching consumers in person.
• Recording consumers with video cameras.
c. Ethnographic research.
• Is a specialized form of observational research.
• Occurs when trained observers:
– Seek to discover subtle emotional reactions…
– As consumers encounter products in their “natural use environments,”
such as in their homes, cars, etc.
d. Personal observation has advantages and disadvantages:
• Is useful and flexible.
• Can be costly and unreliable when different observers report different

conclusions in watching the same event.
• Can reveal what people do, but cannot easily determine why they do it.
3. Neuromarketing Methods. Global brand expert, Martin Lindstrom:
a. Merged neuroscience—the study of the brain—with marketing.
b. Believes that most marketing research is wasted because consumers’ feelings

toward products and brands reside deep within the subconscious part of their
brains.
c. Neuromarketing uses a cap with dozens of sensors to measure brain waves to

understand consumers.
d. Studied the brain scans of more than 2,000 participants.
e. Analyzed their buying processes.
f. Example: Campbell Soup’s label change.
E. Primary Data: Asking People
• Most people have filled out some kind of a questionnaire or received a telephone
or an e-mail to get their opinions about a particular product, service, or idea.
• We can divide these questioning techniques into (1) idea generation methods and
(2) idea evaluation methods.
• Questionnaire data are facts and figures obtained by asking people about their
attitudes, awareness, intentions, and behaviors.
7-15 Chapter 7
1. Idea Generation Methods—Coming Up with Ideas.
a. Individual interviews.
• Involve a single researcher asking questions of one respondent.
• Has this advantage:
– Able to probe for additional ideas…
– Using follow-up questions to a respondent’s initial answers.
• Has this disadvantage: Is very expensive.
b. Depth interviews.
• Are a special kind of individual interview…
• In which researchers ask lengthy, free-flowing questions to…
• Probe for underlying ideas and feelings of respondents.
c. Focus groups:
• Are informal sessions of 6 to 10 past, present, or prospective customers:
– In which a discussion leader, or moderator, asks their opinions about…
– The firm’s and its competitors’ products, how they use them, and
special needs that they don’t address.
• Are often video-recorded and conducted in special rooms with a one-way
mirror so that marketers can hear and watch consumer reactions.
• Can be effective in uncovering ideas that:
– Are often difficult to obtain with individual interviews…
– Due to the peer interaction of the members.
d. Marketing researchers are also relying on “fuzzy front end” methods:

• Are attempts to identify elusive consumer tastes or trends.
• Are used by consumer product firms to find new product ideas.
• Example: Trend Hunter identifies “emerging shifts in social behavior,”
which are driven by changes in pop culture that can lead to new products.
[QR Code 7-3: Trend Hunter Video]

2. Idea Evaluation Methods—Testing an Idea.
a. In idea evaluation, the marketing researcher tests ideas to help the marketing
manager recommend marketing actions.
Chapter 7 7-16
b. Idea evaluation often involves using these conventional questionnaire formats:
• Personal interview. • Fax.
• Mail. • Online (e-mail and Internet).
• Telephone. • Mall intercept interview.
c. These surveys are administered to a large sample of past, present, or

prospective consumers.
d. [Figure 7-B] Researchers have to make important trade-offs to balance cost of

a particular method against the expected quality of the information obtained.
e. Survey types and trade-offs are:

• Personal interview surveys.
– Are flexible in asking probing questions or getting reactions to visual
materials.
– Are very costly to conduct.
• Mail surveys.
– Are easy to conduct.
– Are relatively inexpensive.
– Are usually biased because those most likely to respond have had
especially positive or negative experiences with the product or brand.
• Telephone interviews.
– Allow flexibility.
– Are efficient if computer-assisted telephone interviewing (CATI) is
used.
– Can generate biased results since respondents are likely to hang up on
the interviewer due to the perceived intrusion.
• Online surveys.
– Consist of both e-mail and Internet surveys.
– Increasingly, many organizations use this method to have consumers
assess their products and services.
– Why? Because most consumers have an Internet connection and an
e-mail account and address.
7-17 Chapter 7
– E-mail surveys.
* Marketers embed a survey in an e-mail sent to targeted
respondents.
* When they open the e-mail, consumers can either:
◊ See the survey directly or…
◊ Click on a link to access it from a website.
* Disadvantages of e-mail surveys. Some consumers:
◊ View e-mail surveys as “junk” or “spam.”
◊ May choose not to receive them if they use a spam blocker.
◊ May purposely or inadvertently delete them, unopened.
– Internet surveys.
* Most consumers have access to the Internet at home and/or work.
* Marketers can ask consumers to complete a “pop up” survey in a
separate window when they access an organization’s website.
* Marketers use this method to evaluate the design and usability of
their websites.
* Disadvantages of Internet surveys. Some consumers:
◊ Have a “pop-up blocker” that…
◊ Prohibits a browser from opening a separate window that
contains the survey.
◊ Thus, these consumers won’t be able to participate in the
research.
– Advantages of both e-mail and online surveys:
* The cost is relatively minimal.
* The turnaround time from data collection to report presentation is
much quicker than the traditional methods.
– Disadvantages of both e-mail and online surveys:
* Consumers, especially those participating in online panels, can
complete the survey multiple times, creating a significant bias in
the results.
* Some consumers view these surveys as intrusive and an invasion
of privacy.
f. The foundation of all research using questionnaires is developing precise

questions that get clear, unambiguous answers very efficiently.
g. [Figure 7-4] Question formats as depicted in a Wendy’s survey that assessed

fast-food restaurant preferences among present and prospective consumers:
Chapter 7 7-18
• Q1: Open-ended question.
– Allows respondents to:
* Express opinions, ideas, or behaviors in their own words, which…
* Captures the “voice” of respondents.
* Is useful in:
◊ Understanding consumer behavior.
◊ Identifying product benefits.
◊ Developing advertising messages.
– Without being forced to choose among alternatives that a marketing
researcher has predetermined.
• Q2: Dichotomous question.
– Is the simplest form of a fixed alternative question.
– Has only a “yes” or “no” response.
• Q3: Closed-end or fixed alternative question.
– Requires respondents to select one or more response options.
– Has a set of predetermined choices.
• Scale question.
– Is a fixed alternative question with three or more choices.
– Consists of the following types:
* Q5: Semantic differential scale.
◊ Is a five-point scale in which…
◊ The opposite ends have one- or two-word adjectives that have
opposite meanings.
* Q6: Likert scale.
◊ Is a five-point scale in which…
◊ The respondent indicates the extent to which he or she agrees
or disagrees with a statement.
• Q1 to Q8. These questions inform the marketing researcher about the
respondents’:
– Likes and dislikes in eating out.
– Frequency of eating out at fast-food restaurants generally and at
Wendy’s specifically.
– Sources of information used in making decisions about fast-food
restaurants.
7-19 Chapter 7
• Q9: Demographic questions.
– Provide details about the respondents’ personal or household
characteristics.
– May be used to segment the market.
h. [Figure 7-C] Typical problems to guard against in wording questions:

• It is essential that questions be worded precisely so that:
– All respondents interpret the same question similarly.
– Marketing actions developed are consistent with the findings based on
the data.
• Types include leading, ambiguous, unanswerable, two questions in one,
nonexhaustive, and nonmutually exclusive).
• Responses to these problem questions can lead to dramatically different
marketing actions directly to current or prospective customers.
i. The high cost of using personal interviews in homes has increased the use of
mall intercept interviews:
• Personal interviews of consumers visiting shopping centers.
• Advantages and disadvantages:
– Reduce the cost of personal visits to consumers in their homes.
– Provide flexibility to show respondents visual cues.
– But people interviewed may not be representative of the consumers
targeted, giving a biased result.
j. Electronic technology has revolutionized traditional concepts of interviews

and surveys:
• Kiosks in a shopping mall. On a touch screen:
– Respondents read questions.
– Key in their answers.
• Automated telephone interviews.
– An automated voice asks questions.
– Respondents key replies on a touch-tone telephone.
[ICA 7-3: Designing a Taste Test Questionnaire for Howlin’ Coyote Chili]
F. Primary Data: Other Sources
There are three other methods of collecting primary data exist that overlap somewhat
with observational or questionnaire methods.
Chapter 7 7-20
1. Social Media.
a. Facebook, Twitter, and other social media are changing:

• The way people connect with each other.
• The way today’s products are advertised and sold.
b. New kinds of marketing research must reflect:

• The more direct connections of advertisers with present and prospective
buyers.
• The speed and volume of customer feedback data.
• The new marketing metrics and measures of success of social media
promotions.
c. Carma Laboratories Inc., maker of Carmex lip balm, has a history of

accessibility to customers.
• Founder Alfred Woelbing personally responded to every customer letter.
• Today, Carma Labs uses social media programs to help promote its
products.
– Can conduct marketing research using social media listening tools
to…
– Understand the nature of online lip balm conversations.
d. Carmex uses these marketing metrics to assess its social media programs for
its line of products:
• Conversation velocity. Total Carmex mentions on the Internet.
• Share of voice. Total Carmex mentions on the Internet as a percentage of
all major lip balm brands.
• Sentiment. The percentage of Carmex share-of-voice mentions that are
(a) positive, (b) neutral, or (c) negative.
• Facebook “likes.” The number of Facebook fans, likes, or likers that
“like” a specific Facebook brand page.
e. These metrics are tracked by search engines that comb the Internet for
consumers’ behaviors and brand mentions.
f. Marketing researchers want to glean information from these websites to

“mine” the consumer-generated content in real time.
g. However, the sample of individuals from whom this content was gleaned may
not be statistically representative of the market.
7-21 Chapter 7
USING MARKETING DASHBOARDS
Are the Carmex Social Media Programs Working Well?
You are a marketing consultant to Carmex, asked to assess its social media activities
for its lip balm product line. Carmex has recently launched new social media programs and
promotions, including:
• Facebook and Twitter contests to allow Carmex likers and followers to win free
samples by connecting with Carmex.
• A “Carmex Kiss” widget allows users to upload their photo and to send an animated
kiss to a friend.
a. Your Challenge. To assess how the Carmex social media programs are doing, you
use five metrics:
• Carmex conversation velocity—total mentions on the Internet.
• Facebook likers—the number of Facebook users in a time period who have liked
Carmex’s Facebook brand page.
• Twitter followers—the number of Twitter users in a time period who follow
Carmex’s Twitter feed.
• Carmex share of voice—Carmex mentions on the Internet as a percentage of
mentions of all major lip balm brands.
• Carmex sentiment—the percentage of Internet Carmex share-of-voice mentions
that are positive, neutral, or negative.
b. Your Findings. Analyzing the marketing dashboards, you reach these conclusions:
• The number of both Facebook likers and Twitter followers is up significantly for
2012 compared to 2011.
• The Carmex share of voice of 35 percent is good compared to the top brand, and
is up 12 percent since last year.
• The Carmex sentiment dashboard shows:
– 80 percent of the mentions are positive, up 23 percent over the last year.
– Only 15 percent of the mentions are negative.
c. Your Actions.
• You conclude that Carmex’s social media initiatives are doing well.
• The next step is to identify which initiatives are doing particularly well, and
build on these successes.
Chapter 7 7-22
2. Panels and Experiments.
a. A panel is a sample of consumers or stores from which researchers take a

series of measurements to see if consumers change their behavior over time.
• The NPD Group collects data about consumer purchases such as apparel,
food, and electronics from its Online Panel, which consists of nearly
2 million individuals globally.
• An advantage of panels is that it measures switching behavior from one
brand to another over time.
• A disadvantage of panels is that:
– The marketing research firm needs to recruit new members continually
to replace those who drop out.
– These new recruits must match the characteristics of those they replace
to keep the panel representative of the marketplace.
b. An experiment involves obtaining data by manipulating factors under tightly

controlled conditions to test cause and effect.
• The interest is in whether changing one of the independent variables
(a cause) will change the behavior of the dependent variable that is studied
(the result).
• In marketing experiments:
– The independent variables are:
* Sometimes called the marketing or sales drivers.
* Often one or more of the marketing mix elements:
◊ Product (features). ◊ Promotion (advertising).
◊ Price. ◊ Place/distribution.
– The dependent variable is:
* Usually a change in purchase behavior (incremental increases in
unit or dollar sales)…
* Of individuals, households, or organizations.
– Test markets:
* Are experiments that…
* Offer a product for sale on a limited basis in a defined area to…
* Evaluate the likely effectiveness of potential marketing actions.
• A disadvantage of experiments:
– Outside factors (such as actions of competitors)…
– Can affect the dependent variable (such as sales), which…
– Distorts the results of an experiment and the actions that could follow.
7-23 Chapter 7
c. A researcher’s task is to identify the effect of the marketing variable of
interest on the dependent variable when the effects of outside factors in an
experiment might hide it.
[ICA 7-4: Pepsi vs. Coke Taste Test]

3. Information Technology.
a. Involves operating computer networks that collect, store, and process data.
b. Extracts hidden information from large databases containing data such as:
• Household product purchases. • TV viewing behavior.
• Barcode scanners at checkout counters.
c. [Figure 7-5] Marketing managers:

• Can “drown in an ocean of data” about or generated from the market,
consumers, and competition.
• Need to adopt strategies to manage it all.
d. The Internet and the PC help make sense of this data ocean.
e. The marketer’s task is to convert this data ocean into useful information that
leads to marketing actions.
f. Figure 7-5 shows how marketers use information technology to frame

questions that provide answers leading to marketing actions:
• Computers:
– Are linked through sophisticated communication networks to…
– Access and retrieve data from internal and external sources.
• These data sources:
– Are stored, organized, and managed in databases, which…
– Collectively form a data warehouse.
• The marketer queries the databases in the information system with
marketing questions needing answers.
• The questions go through statistical models that organize, manipulate, and
analyze the relationships that exist among the data.
• The results are presented in tables and graphics for easy interpretation.
• Marketers use sensitivity analysis to:
– Query the database with “what if” questions.
– Determine how a hypothetical change in a driver like advertising can
affect sales.
Chapter 7 7-24
g. [Figure 7-D] Traditional marketing research involves identifying possible
marketing/sales/brand drivers and then collecting data about them.
• Drivers are the factors that influence the buying decisions of a household
or organization and, hence, affect sales.
• Drivers can be hypothesis tested to determine which will increase the
consumer behavior measured (sales, coupon redemptions, etc.).
4. Data Mining.
a. Is the extraction of hidden predictive information from large databases to find

statistical links between consumer purchasing patterns and marketing actions.
b. Example: Running a joint promotion between Skippy Peanut Butter and

Welch’s Grape Jelly since both tend to be purchased together for sandwiches.
c. Some unexpected pairings arise from data mining:

• Example: Men buying diapers often also buy beer.
• Placing them near each other, with potato chips in between them,
increases the sales of all three.
d. Retailers use radio-frequency identification (RFID) technology, which is a

“smart tag” microchip on the product to tell them what items are purchased
together and when.
e. Data mining related to the Internet and social media is increasing

dramatically:
• In 2012, companies are expected to spend $840 million for online data,
twice the 2009 amount.
• There will be a greater focus on the more than $2 billion spent annually on
social media advertising.
G. Advantages and Disadvantages of Primary Data
• Advantages of primary data:
a. Are more timely.
b. Are more specific to the problem being studied.
• Disadvantages of primary data:
a. Are more costly.
b. Are more time consuming to collect than secondary data.
7-25 Chapter 7
LEARNING REVIEW
6. What is the difference between observational and questionnaire data?
Answer: Observational data are facts and figures obtained by watching, either mechanically
or in person, how people actually behave. Questionnaire data are facts and figures obtained
by asking people about their attitudes, awareness, intentions, and behaviors.
7. Which type of survey provides the greatest flexibility for asking probing questions:
mail, telephone, or personal interview?
Answer: personal interview (or individual/depth interview)
8. What is the difference between a panel and an experiment?
Answer: A panel is a sample of consumers or stores from which researchers take a series of
measurements. An experiment involves obtaining data by manipulating factors under
tightly controlled conditions to test cause and effect, such as changing a variable in a
customer purchase decision (marketing drivers) and seeing what happens
(increase/decrease in unit or dollar sales).
V. STEP 4: DEVELOP FINDINGS [LO5]

Mark Twain once observed, “Collecting data is like collecting garbage. You’ve got to
know what you’re going to do with the stuff before you collect it.”
A. Analyze the Data
• Marketers are presented with a set of marketing problems to resolve, such as:
a. “How are sales doing and what factors might be contributing to sales?”
b. “Who are our customers and what actions can we do to reach them?”
c. “What factors contribute to the level of sales experienced over a time period?”
• Once the answers or data are identified and analyzed, marketers can then develop
actions for their marketing plans and implement them.
B. Present the Findings
• [Figure 7-6] Findings should be clear and understandable from the way the data
are presented. Managers are responsible for actions.
• The results should be delivered in:
a. Clear pictures (i.e., graphically).
b. If possible, on a single page.
Chapter 7 7-26
• Figure 7-6A to Figure 7-6D present the marketing dashboards for the findings of a
sales analysis for Tony’s Pizza described in the text.
a. Figure 7-6A: Annual Sales.

• Shows the annual growth of the Tony’s Pizza brand is stable.
• Is virtually flat from 2009 through 2012.
b. Figure 7-6B: Average Annual Sales per Household.

• Shows more households are buying pizzas.
• It’s just that each household is buying fewer Tony’s pizzas. Average
household purchases of Tony’s Pizza have declined from:
– 3.4 in 2009 to…
– 3.1 in 2012.
• The number of households buying pizza:
– Is growing, and that’s good news for Tony’s but…
– They’re just not buying Tony’s Pizza as much—a source of concern.
c. Figure 7-6C: Average Annual Sales per Household, by Household Size.

• Shows the source of the problem:
– Average annual sales to households with 1-2 people are stable but…
– Average annual sales to households with 3-4 and 5 or more are
• Households with 3 or more people usually consist of households with
children.
d. Figure 7-6D: Average Annual Sales per Household, by Age of Children in the
Household.
• The picture now has become clear.
• The problem that emerges is the serious decline in the average pizza
consumption in households with younger children, particularly those aged
6- to 12-years.
e. Identifying a sales problem in households with children 6- to 12-years old is

an important discovery, as Tony’s sales are declining in a market segment that
is known to be one of the heaviest in buying pizzas.
VI. STEP 5: TAKE MARKETING ACTIONS

Effective marketing research doesn’t stop with findings and recommendations—someone
has to identify the marketing actions, put them into effect, and monitor how the decisions
turn out.
7-27 Chapter 7
A. Make Action Recommendations
Data analysis and findings must lead to recommendations that trigger marketing
actions (an ad campaign, a special event promotion, etc.). For Tony’s Pizza, the
recommendations are:
• Develop an advertising program that targets children 6 to 12 years old.
• Create a monthly promotion calendar with children 6 to 12 years old in mind.
• Develop a special event program that reaches children 6 to 12 years old.
B. Implement the Action Recommendations
To implement these action recommendations, Tony’s Pizza should:
• Undertake advertising research to develop ads that appeal to children in the 6-to-
12 age group and their families.
• Give the research results to an advertising agency, which develops several sample
ads.
• Test three of these ads on children to identify the most appealing one, which is
used for the next advertising campaign.
C. Evaluate the Results
There are two aspects of the evaluation process:
• Evaluating the decision itself. This involves monitoring the marketplace to

determine if action is necessary in the future.
• Evaluating the decision process used.
a. Was the marketing research and analysis used to develop the

recommendations effective?
b. Was it flawed? If so, could it be improved for similar situations in the future?
• While systematic analysis does not guarantee success, it can improve a firm’s
success rate for its marketing decisions.
Chapter 7 7-28
LEARNING REVIEW
9. How does data mining differ from traditional marketing research?
Answer: Data mining is the extraction of hidden predictive information from large
databases to find statistical links between consumer purchasing patterns and marketing
actions. Marketing research identifies possible drivers and then collects data.
10. In the marketing research for Tony’s Pizza, what is an example of (a) a finding and
(b) a marketing action?
Answer: (a) Figure 7-6A depicts annual sales from 2009 to 2012; the finding is that annual
sales are relatively flat, rising only 5 million units over the 4-year period. (b) Figure 7-6D
shows a finding (the decline in pizza consumption) that leads to a recommendation to
develop an ad targeting children 6 to 12 years old (the marketing action).
VII. SALES FORECASTING TECHNIQUES [LO6]

• Forecasting potential sales is often a key goal in a marketing research study.
• Good sales forecasts are important for a firm as it schedules production.
• A sales forecast:
a. Is the total sales of a product that a firm expects to sell during a specified time
period under specified environmental conditions and its own marketing efforts.
b. Assumes consumers’ preferences remain constant and competitors don’t change

prices.
• Marketers regularly want an annual sales forecast, such as 5,000 units sold or
$75 million in sales revenue in 2013 for a product line or market segment.
• Marketers use three other sales forecasting techniques: (1) judgments of the decision
maker, (2) surveys of knowledgeable groups, and (3) statistical methods.
A. Judgments of the Decision Maker
• Most sales forecasts are judgments of an individual decision maker.
• A direct forecast involves estimating the value to be forecast without any

intervening steps.
• A lost-horse forecast involves:
a. Starting with the last known value of the item being forecast.
b. Listing the factors that could affect the forecast.
7-29 Chapter 7
c. Assessing whether the factors have a positive or negative impact in the future.
d. Making the final forecast.
B. Surveys of Knowledgeable Groups
To estimate what a firm’s sales will be next year, ask people who are likely to know
something about future sales.
• A survey of buyers’ intentions forecast.
a. Involves asking prospective customers if they are likely to buy the product
during some future time period.
b. Can be effective for industrial products with few prospective buyers.
• A salesforce survey forecast.
a. Involves asking the firm’s salespeople to estimate sales during a coming

period.
b. Since salespeople are in contact with customers, they are likely to know what
they like and dislike.
c. Salespeople can be unreliable forecasters about a product’s sales—painting:

• Too rosy a picture if enthusiastic.
• Too grim a forecast if their sales quota and compensation are based on it.
C. Statistical Methods
• The best-known statistical method of forecasting is trend extrapolation:
a. Involves extending a pattern observed in past data into the future.
b. Assumes that the underlying relationships in the past will continue into the
future.
c. Is the basis of the method’s key strength: simplicity.
d. If this proves wrong, the forecast is likely to be wrong.
• [Figure 7-7] Linear trend extrapolation.
a. Is when the pattern is described with a straight line.
b. You draw a line to fit the past data and project it into the future to give the
forecast values.
Chapter 7 7-30
Supplemental Lecture
• Two basic approaches to sales forecasting are: (1) subdividing the total sales forecast
(top-down forecast) or (2) building the total sales forecast by summing up its
components (build-up forecast).
a. [Figure 7-E] Top-down forecast.

• Subdivides an aggregate forecast into its principal components.
• Example: A shoe manufacturer wants to estimate the percentage of its total
shoe sales in a state and develop state-by-state forecasts for shoe sales for the
coming year. The “Survey of Buying Power,” published annually by Sales
and Marketing Management magazine, is a widely used source of such top-
down forecasting information.
• Figure 7-E shows that the state of New York has 6.73 percent of the U.S.
population, 7.16 percent of the U.S. effective buying income (EBI), and 5.60
percent of the U.S. retail sales.
– If the shoe marketer wants to use a single factor related to expected shoe
sales, it would choose the factor that has been most closely related to shoe
sales historically, in this case the percentage of U.S. retail sales.
– The top-down forecast would then be that 5.60 percent of the firm’s sales
would be made in the state of New York.
• Sometimes multiple factors are considered:
– The buying power index (BPI) developed by Sales and Marketing
Management magazine gives weights of 0.2 (population), 0.5 (EBI), and
0.3 (retail sales) to these three factors.
– The top-down forecast might use an index that includes the population and
consumer income in New York, as well as retail sales.
BPINew York = (0.2 × population%) + (0.5 × EBI%) + (0.5 × retail sales%)
BPINew York = (0.2 × 6.7335%) + (0.5 × 7.1614%) + (0.3 × 5.5958%)
BPINew York = (1.3467%) + (3.5807%) + (1.6787%)
BPINew York = 6.6061% or 6.6%
• Thus, the BPI forecasts that 6.6 percent of the firm’s shoe sales will occur in
New York—significantly higher than if retail sales alone were used.
b. [Figure 7-F] Build-up forecast.

• A build-up forecast sums the sales forecasts of each of the components to
arrive at the total forecast.
• It is a widely used method when there are identifiable components, such as
products, product lines, or market segments in the forecasting problem.
7-31 Chapter 7
Supplemental Lecture Continued
• Figure 7-F shows how Apple could use the build-up approach to develop an
aggregate four-quarter (or one year) sales forecast involving its four principal
product lines: Desktops, Laptops, iPods, iPhones, and iPads.
• The total quarterly sales revenue for Apple is the sum of the individual
forecasts for each line.
• These are based on the forecasts for each model in that line, which for
simplicity are aggregated, and relates to Apple’s segmentation strategy
discussed in Chapter 8.
LEARNING REVIEW
11. What are the three kinds of sales forecasting techniques?
Answer: They are: (1) judgments of the decision maker; (2) surveys of knowledgeable
groups; and (3) statistical methods.
12. How do you make a lost-horse forecast?
Answer: To make a lost-horse forecast, begin with the last known value of the item being
forecast, list the factors that could affect the forecast, assess whether they have a positive or
negative impact, and then make the final forecast.
Chapter 7 7-32
APPLYING MARKETING KNOWLEDGE
1. Suppose your dean of admissions is considering surveying high school seniors about
their perceptions of your school to design better informational brochures for them.
What are the advantages and disadvantages of doing (a) telephone interviews and
(b) an Internet survey of seniors who have requested information about the school?
Answers: When choosing to use a telephone interview or Internet survey, the marketing
researcher must balance the cost against the expected quality of the information obtained,
which is affected by the time required to complete the survey, equipment required, previous
experiences, ability to probe the responses given, interview bias, anonymity of the
respondent, etc. Specific advantages and disadvantages are listed below.
a. Telephone interview.
1. Advantages.
• Virtually everyone in the senior high school class has a land line/mobile
telephone.
• A representative sample of high school seniors may be obtained.
• The telephone interview permits answers to be probed easily to obtain extra
information from respondents.
• It is moderately expensive, assuming a reasonable completion rate. To reduce
costs, some marketing researchers use automated/computerized-calling systems
instead of live human beings to complete the telephone interviews.
• Some anonymity is given to respondents since there is not a face-to-face
interview, and a specific mailing address is not known to the market researcher.
2. Disadvantages.
• The difficulty of getting students to respond to telephone questions and to
respond to scaled questions they can hear but not see in writing.
• Including students in the sample who have no interest in the school.
• Moderately expensive, assuming a reasonable completion rate.
• Some interviewers can bias the results due to the inflection of their voices when
asking questions.
• Respondents typically limit calls to 5 to 15 minutes in length. Any interview
that lasts longer will substantially increase noncooperation—respondents just
hang up.
• Some potential respondents may have caller ID or other screening technology
that allows them to not answer calls from unapproved telephone numbers.
• Past experiences of telemarketers using a marketing research telephone survey
as a guise for a sales call.
7-33 Chapter 7
• Very intrusive—market researchers typically call during the ‘dinner hour’ from
5:30 p.m. to 9:00 p.m.
• Many potential qualified respondents have unlisted telephone numbers and/or
placed themselves on the federal government’s Do Not Call registry. This
eliminates them from the universe of qualified respondents, thereby introducing
bias into the results since the marketing researcher is not able to adequately
reach the desired target market.
• Many potential qualified respondents use their mobile phones as the primary
telephone and therefore may not want to cooperate due to connect charges.
b. Internet surveys.
1. Advantages.
• The sampled respondents have shown their interest in the university so the
response rate should be high.
• Usually the least expensive method, assuming adequate completion rates. It is
relatively easy to design an Internet survey, post it to a website, and generate
e-mails requesting respondent cooperation using off-the-shelf software.
• No opportunity to bias results since form is completed without an interviewer.
• Some anonymity given to respondents since there is not a fact-to-face interview
or a specific mailing address is not known to the market researcher.
2. Disadvantages.
• Getting new ideas from seniors not requesting information.
• Little flexibility to probe responses or ask complex questions since the self-
administered online form must be short and simple to complete.
• Potential qualified respondents need to have a computer, Internet connection,
and an e-mail address to send the survey to.
• Some respondents have ‘junk mail’ filters that prohibit unapproved e-mails.
• Respondents may get ‘spammed’ with other unwanted e-mail surveys or their
e-mail addresses are sold to other firms.
• E-mail survey forms are visually different than mail or fax surveys and require
typing or selecting the desired responses with a keyboard or mouse.
Chapter 7 7-34
2. Wisk detergent decides to run a test market to see the effect of coupons and in-store
advertising on sales. The index of sales is as follows:
What are your conclusions and recommendations?
Answer: Although the coupon without the in-store ads provides a 44% sales increase
during the week of the coupon, it drops off significantly to a modest 8% during the week
following the coupon. The really sizable sales increase occurs by combining the coupon
with in-store ads to reinforce consumer awareness and interest in Wisk. Assuming the
revenues generated from increased sales of Wisk exceed the expense of the in-store ads, the
results suggest that Wisk run a coupon along with in-store ads to maximize its sales, since
they increased a whopping 168% during the week of the coupon, and only dropped 24% to
203% during the week following the coupon.
3. Suppose Fisher-Price wants to run a simple experiment to evaluate a proposed chatter

telephone design. It has two different groups of children on which to run its
experiment for one week each. The first group has the old toy telephone, whereas the
second group is exposed to the newly designed pull toy with wheels, a noisemaker, and
bobbing eyes. The dependent variable is the average number of minutes during the
two-hour play period that one of the children is playing with the toy, and the results
are as follows:
Should Fisher-Price introduce the new design? Why?
Answer: Assuming that the average number of minutes in the play period (the dependent
variable) that one of the children is playing with the toy is an adequate measure of
effectiveness of toy design (the independent variable), Fisher-Price should introduce the
new toy. The reason is that the playtime of 62 minutes with the new toy design far exceeds
the 13 minutes of playtime with the old toy design.
7-35 Chapter 7
4. Nielsen Media Research obtains ratings of local TV stations in small markets by
having households fill out diary questionnaires. These give information on (a) who is
watching TV and (b) the program being watched. What are the limitations of this
questionnaire method?
Answer: Using diaries to record television viewing habits has problems because most
people don’t keep a continuous record of the television programs they have watched but
instead wait until the end of several days or a week and then try to reconstruct their viewing
behavior. This usually results in serious errors. In addition, the adult who records the
family viewing may miss many of the programs watched by younger children or members
of the family who are watching TV when the adult is not present.
5. The format in which information is presented is often vital. (a) If you were a harried
marketing manager and queried your information system, would you rather see the
results in tables or charts and graphs? (b) What are one or two strengths and
weaknesses of each format?
Answers: Delivering the results in “pictures” (charts and graphs) and on a single page if
possible helps the marketing manager to see results more quickly.
a. Tables.
1. Strengths are allowing quantities of data to be summarized succinctly, provided that

good column heads and row stubs have been selected. Data can be presented in
detail—e.g., to the nearest penny or percentage point.
2. Weaknesses are overwhelming the reader with large quantities of data, in which key
points can be lost. Even an experienced interpreter may need time to tease out the
critical information from a table of data.
b. Charts and graphs.
1. Strengths are allowing high and low points to be seen at a glance. A line or bar
graph or a pie chart will be the best choice in different circumstances. If data points
are too close together, more space can be assigned to sharpen the picture.
2. Weaknesses are lack of precision and backup detail.
Combining tables, charts, and graphs can overcome the weaknesses and benefit from the
strengths of each format. Whenever location is an issue, a map can be helpful in
pinpointing where to attack the problem and which people might be best able to take action
(e.g., which salespeople might call on specific accounts).
Chapter 7 7-36
6. (a) Why might a marketing researcher prefer to use secondary data rather than
primary data in a study? (b) Why might the reverse be true?
Answers: Secondary data are facts and figures that have already been recorded before the
project at hand. Primary data are facts and figures that are newly collected for the project.
a. Advantages of secondary data relative to primary data.
1. There is a tremendous timesaving if the data are already collected and published.
2. The cost is typically low or even free.
3. There may be a greater level of detail, especially for U.S. Census data.
b. Disadvantages of secondary data relative to primary data.
1. The data may be out of date, especially for U.S. Census data.
2. The definitions or categories might not be quite right for the project.
3. Because the data were collected for another purpose, they may not be specific
enough for the project.
7. Which of the following variables would linear trend extrapolation be more accurate
for? (a) Annual population of the United States or (b) annual sales of cars produced
in the United States by Ford. Why?
Answer: Linear trend extrapolation would be more useful for projecting annual population
of the U.S. rather than annual sales of cars produced by Ford because past population
trends are more likely to continue into the future than are new car sales, which can be
impacted by economic conditions more quickly than population growth.
7-37 Chapter 7
BUILDING YOUR MARKETING PLAN
To help you collect the most useful data for your marketing plan, develop a three-
column table:
1. In column 1, list the information you would ideally like to have to fill holes in your
marketing plan.
Answers: Data sources were also touched on briefly in the Chapter 1: Building Your
Marketing Plan when students were selecting a marketing plan topic. Without some
available data on the proposed plan, a different product, service, or organization should
have been selected. Some of these information needs may consist of market size, market
share, or target market characteristics (demographics, usage, media, etc.).
2. In column 2, identify the source for each bit of information in column 1, such as an
Internet search, talking to prospective customers, looking at internal data, and so
forth.
Answers: Some of these sources could include Census data, sales reports, mail survey of
prospective customers, interviews with owners or managers, etc.
3. In column 3, set a priority on information you will have time to spend collecting by
rating them: 1 = most important; 2 = next most important; and so forth. [Note: This is
a 3-pt. scale.]
Answers: This three-column table never appears in the marketing plan itself. But if done
well, the tool can generate sufficient data upon which the marketing mix strategies are
based. Suppose a student team is developing a marketing plan an existing small, family-
owned florist shop. A portion of this three-column table might look as follows:
Chapter 7 7-38
NEEDED INFORMATION INFORMATION SOURCE PRIORITY
• Present target market customers 3

• Internal company records
(households and institutions)
• Satisfaction and wants of present
• Simple, 7-question survey 3
customers
• Potential target market customers • Map and observation of potential
2
(households and institutions) customers in local retail trading area
• Yellow-pages; map of 15-mile radius
• Competitors 2
retail trading area
• Suppliers of flowers, other supplies • Yellow-pages; interview with owners 1
• Pricing of Yellow Pages ad, direct

• Cost of advertising media 3
mail, local newspaper ad
• Break-even data (rent, utilities, 3
• Interview with owners
average selling price, etc.)
This prioritizes the data collection tasks. Inform students that some secondary data
collection is necessary before a survey can be developed since the students need to have
some understanding of the market and its environment. Also, if students plan on collecting
primary data, they need to allow for sufficient time to design the instrument, collect the
data, analyze the data, and the develop marketing actions.
Helping with Common Student Problems
Students writing marketing plans often have the classic problem of procrastinators—
trying to collect and interpret the data the day before the plan is to be submitted to the instructor.
This needed data analysis step is intended to force students to anticipate the information required
and to obtain it before the last minute.
7-39 Chapter 7
TEACHING NOTE FOR VIDEO CASE 7
Carmex®: Leveraging Facebook for Marketing Research
Synopsis
Show Slide 7-58. Both Carmex® lip balms and recently-introduced skin care products
are produced by Carma Laboratories, a family-owned company that has taken pride in
connecting to its customers since its founding, 75 years ago. The case focuses on how to do
marketing research using Facebook to decide which two of three new possible flavors might be
put into quantitative testing. The two key Facebook metrics that will be used in reaching the
decision are “likes” and “engagement.” The three Facebook strategies are being considered
that are expected to have differing effects on likes and engagement as well as costs: (1) a poll
question on Carmex’s Facebook wall, (2) a contest on Facebook, and (3) both a poll and
contest. The case challenges students both to understand the two metrics and the effects on
them by using three alternative strategies on Facebook.
Teaching Suggestions
1. Review the In-Class Activity ICA 7-1 about introducing Carmex to Foreign Markets if
you did not teach it when covering Chapter 6 on global marketing. You might review
this ICA to obtain additional background on Carmex.
2. Bookmark both the Carmex website (mycarmex.com) and Facebook brand page
(facebook.com/Carmexlipbalm) on your classroom computer.
3. Ask the class several questions concerning lip balm use and the common brands:
• How many of you use lip balm? Do you use it seasonally or throughout the year?
What kind of packaging do you prefer—jar, stick, or tube?
• Among users, what brand(s) do you use?
• Have you ever gone on a lip balm home page or a brand page on Facebook?
4. Point out to the class the new metrics now used with the emergence and growth of social
media. Some examples coming from both the Carmex video case and Chapter 8 in the
textbook include:
• Likes and likers (or Facebook “fans”). • Share of voice.
• Engagement. • Sentiment.
• Twitter followers.
These are strikingly different, say, from Starch scores for magazine ads that are covered
in the advertising chapter such as “noted,” “read some,” and “read most.”
[QR Code 7-4: Carmex Video Case]

Chapter 7 7-40
Answers to Questions
1. What are the advantages and disadvantages for the Carmex marketing team in
collecting data to narrow the flavor choices from three to two using (a) an online
survey of a cross-section of Internet households or (b) an online survey of Carmex
Facebook likers?
Answers:
a. An online survey of a cross section of Internet households.

• Advantage. The outstanding advantage is that the population from which the
sample is drawn is representative of all Internet households. So the population
includes non-users of lip balm and also users of competing lip balms.
• Disadvantages. That advantage is offset by some major disadvantages:
– Cost. The cost of selecting the sample of Internet households is far higher.
– Many households in the sample can’t be reached. They may have “spam
blockers” that may prevent the survey from being viewed.
– Many households receiving the survey may not respond. This is a form of a
“nonresponse problem.” The respondents may see them as “junk” e-mails and
delete them, unopened. Or, recipients may open them, not be lip balm users,
and not respond. The effect is to make the actual respondents a tiny fraction of
the population sampled.
– Longer time to get results. It may take days or weeks to obtain the online
survey data.
b. An online survey of Carmex Facebook likers.

• Advantages.
– Low cost. It is very inexpensive to send out the survey question(s).
– Quick response. Results are often available within hours.
– Interest of the population sampled. Consumers who use the Facebook brand
page are highly interested in Carmex lip balm and are likely to take the time to
respond.
– Easy to respond. Respondents can simply click on a flavor to register their
preference.
• Disadvantages. The key disadvantages relate to the danger of not reaching some
respondents of interest because they are not Carmex’s Facebook likers:
– Nonusers of Carmex lip balm. The sample misses these potential buyers.
– Carmex lip balm users who are not Carmex Facebook likers. The sample also
misses this group, whose opinions are also very important.
7-41 Chapter 7
2. (a) On a Facebook brand page, what are “engagement” and “likes” really measuring?
(b) For Carmex, which is more important and why?
Answers:
a. What “engagement” and “likes” are measuring. Engagement measures liker

interaction with the Carmex page. It measures how often likers post on the Carmex
wall, like a Carmex post or reply to a Carmex post. Likes measures the size of the
Carmex community (the number of people who “like” the Carmex brand Facebook
page).
b. Which is more important for Carmex. In this scenario, engagement is the more
important metric because Carmex needs its community to engage and answer the
question about its flavor preferences. Adding a contest or additional activity to grow
likes would serve to help a larger initiative to grow the size of the community but does
not answer the flavor question.
3. (a) What evokes consumers’ “engagement” on a brand page on Facebook? (b) What
attracts consumers to “like” a brand page on Facebook?
Answers:
a. “Engagement” on a Facebook brand page. It depends on the brand, but most

consumers look for brand news, topical information, and new content posted regularly
in a “voice” relevant to the consumer. Here, “voice” refers to the language and tone of
the content.
b. “Like” on a Facebook brand page. Contests, promotions, and coupons are all
consistent growth “drivers” that help make consumers “like” a brand page.
4. (a) What are the advantages of using a fixed-alternative poll question on Facebook?
(b) When do you think it would be better to use an open-ended question?
Answers: Show Slide 7-63.
a. Fixed-alternative question. A fixed-alternative poll question allows consumers to

answer a question quickly with little involvement, such as simply clicking on an
answer, and relative anonymity.
b. Open-ended question. An open-ended question works well when a brand is looking

for deeper engagement from its fans. It will get fewer responses, but fans may spend
several minutes drafting a response to a post like “Happy Father’s Day! Tell us about
what makes your dad so special.” Facebook does not measure depth of engagement,
only quantity. A brand will have lower engagement metrics on a post like that, even
though the engagement from those who responded is deeper.
Chapter 7 7-42
5. (a) If you had a limited budget and two weeks to decide which two flavors to put into
quantitative testing, would you choose a “poll only” or a “contest only” strategy?
Why? (b) If you had a sizable budget and two months to make the same decision,
which scenario would you choose? Why?
Answers: Show Slide 7-65.
a. Poll vs. contest: limited time and budget. The poll would be the easiest and cheapest
way to get an answer to the flavor question. It could easily be accomplished during the
two-week time limit and available budget.
b. Poll vs. contest: more time and budget. The poll and contest combination will get the
answer to the flavor question and grow the size of the Carmex community, which is an
ongoing goal.
Epilogue
Carmex has been making lip balm since 1937. But in the last five years, it has stressed
growth and become more competitive. During this time, Carmex has relied on Bolin Marketing
to lead its domestic marketing, new product development, international distribution, and online
initiatives. As a result, Carmex’s business has more than doubled.
During the last five years, Carmex has seen growth on all fronts. It has extended its core
line of lip balm products into new flavors and varieties. It has also expanded into nearly forty
international markets. Carmex developed a line of premium lip balms for women, Carmex
Moisture Plus, and extended the line to include tinted lip balms. Most recently, Carmex
launched a line of skin care products, its first venture outside of lip care. Carmex has used social
media tools extensively in developing these initiatives.
7-43 Chapter 7

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Marketing The Core 5th Edition Kerin

LEARNING OBJECTIVES (LO) ......................................................................................7-4

KEY TERMS ......................................................................................................................7-4

APPLYING MARKETING KNOWLEDGE....................................................................7-33

BUILDING YOUR MARKETING PLAN........................................................................7-38

VIDEO CASE (VC)

Using Marketing Dashboards with an Excel Spreadsheet

Quick Response (QR) Codes3

After reading this chapter students should be able to:

LO1: Identify the reason for conducting marketing research.

LO3: Explain how marketing uses secondary and primary data.

LO6: Describe three approaches to developing a company’s sales forecast.

constraints p. 150 observational data p. 154

measures of success p. 149 secondary data p. 151

HOW TEST SCREENINGS AND TRACKING STUDIES

A. What’s in a Movie Name?

• Movie studios use test screenings:

a. As a form of marketing research to…

b. Change the title, plot, etc. of a movie after…

c. A sample of the target audience has previewed it.

• Filmmakers want movie titles that:

a. Are concise. c. Capture the essence of the film.

b. Are attention-getting. d. Have no legal restrictions.

B. The Risks of Today’s (and Tomorrow’s) Blockbuster Movies

• Today’s films cost over $100 million to produce and market.

• To recoup these staggering costs and reduce risks, studios:

a. Conducting test screenings.

b. Using tracking studies.

[QR Code 7-1: The Hunger Games Movie Video]

a. Leads to decisive marketing actions.

b. Is often used to help develop sales forecasts.

I. THE ROLE OF MARKETING RESEARCH [LO1]

A. What is Marketing Research?

• Marketing research is the process of defining a marketing problem and

• Marketers conduct marketing research to reduce the risk of marketing decisions.

B. The Challenges of Doing Good Marketing Research

• Marketing researchers face difficulties in asking consumers questions about new,

• Marketing research must overcome these problems to obtain the information

• A decision is a conscious choice from among two or more alternatives.

• Decision-making is a more formal, structured approach that marketers use to

• [Figure 7-1] Marketers use a 5-step marketing research approach to collect

II. STEP 1: DEFINE THE PROBLEM

• Setting the research objectives.

• Identifying marketing actions the research suggests.

A. Set the Research Objectives

• In setting research objectives, the purpose of research must be clear in order to

a. Exploratory research provides ideas about a relatively vague problem.

b. Descriptive research tries to find:

B. Identify Possible Marketing Actions

• Effective decision makers develop specific measures of success, which are

• Different research outcomes—based on the measure of success—lead to different

• Marketing researchers know that defining a problem is an incredibly difficult task.

• This is why marketing researchers spend time in defining a marketing problem

III. STEP 2: DEVELOP THE RESEARCH PLAN

• Specifying the constraints on the marketing research activity.

• Identifying the data needed for marketing decisions.

• Determining how to collect the data.

• The constraints in a decision are the restrictions placed on potential solutions to a

• Common constraints in marketing problems are limitations on the time and

B. Identify Data Needed for Marketing Actions

C. Determine How to Collect Data

a. Concepts are ideas about products or services.

b. Marketing researchers frequently develop a new-product concept, which is a