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Chapter 8 Marketing Research and Sales Forecasting 169
CHAPTER 8
MARKETING RESEARCH AND SALES FORECASTING
CHAPTER OVERVIEW
Collecting and managing information about what customers need and want is a challenging task for any
marketer. This chapter focuses on marketing research—the process of collecting and using information
for marketing decision making. It explains that data comes from a variety of sources—from well-planned
studies, sales force reports, accounting records, or published reports, and from controlled experiments
and computer simulations.
The chapter also focuses on the impact of technology in the market research process—right from data
mining, data collection, analysis of the gathered information to market research decision making and
planning—which is aimed at gathering business and competitive intelligence.
Chapter 8 also includes the ways market research affects promotional decisions, sales forecasts, and
growth predictions. Why is research needed? Marketers use research to understand their customers,
target customer segments, and develop long-term customer relationships—all keys to profitability.
Information collected through marketing research underlies much of the decision making involved in
market segmentation, discussed in Chapter 9.
Marketing research function is the primary source of the information and is clearly central to effective
marketing decisions. This chapter also explains how marketing research techniques are used to make
accurate sales forecasts, a critical component of marketing planning.
• The Opening Vignette and Evolution of a Brand profile Polaris Marketing Research, named for
the night sky’s guiding North Star. Based in Atlanta, Polaris was founded in 1989 and has grown
steadily since then, undertaking six major expansions and adding to its already long list of
business clients. It is a full-service firm, and their services include: customer satisfaction and
loyalty, brand research, employee research, customer retention and win-back, and new-product
development, intended to help customers identify, understand, and retain current and future
customers. They also provide a free guide to marketing research. Find more details in “Polaris
Marketing Research Shows the Way.”
• Solving an Ethical Controversy looks into the Census promotions that included television, radio,
print, Web advertisements, and videos on Facebook, MySpace, Twitter, and YouTube. On one
hand, it was important to raise awareness among the U.S. citizens, but, the amount of dollars
spent in wasteful promotions and training has raised eyebrows. “Should the government buy
expensive advertising?” Pros, cons, and summary of the issue will be discussed in “Looking into
Census Bureau Spending on Advertising.”
• Marketing Success illustrates the increasing use of mobile applications that can map the
consumers, identify their locations, while keeping the privacy of the consumers intact. Sense
Networks, a New York City based startup is developing software that helps capture consumer
activity. The challenges, strategies, and the outcome of mapping consumers are described in
"Mapping the Market."
• Career Readiness provides advice on a popular and relatively inexpensive form of marketing
research in “Planning Effective Online Surveys.” Online surveys give respondents anonymity,
which helps most people speak more freely, and the chance to answer questions at their pace.
Tips are provided on how to create successful online surveys, making sure that the marketer gets
the desired results and that the respondents’ time is not wasted.
• Chapter Case 8.1 highlights the case of Oberto Sausage, an 85-year-old family business in
Washington State directly to mass merchandisers and supermarket chains. The company uses a
computer-based forecasting program, which takes manual input, providing flexibility to the
decision makers to modify the forecasts as per the changes in the external business environment.
More details in “Oberto Sausage: A Recipe for Forecasting.”
• Collaborative Learning Exercises are provided in several areas related to marketing research
and sales forecasting—The Marketing Research Process, Sampling Techniques, Primary
Research Methods, and Garbology.
• Video Case 8.2 Synopsis includes an overview of Ogden Publications. The video is designed to
expand and highlight the concepts in this chapter and the concepts and questions covered in the
written video case.
LECTURE OUTLINE
Opening Vignette and Evolution of a Brand—Polaris Marketing Research Shows the Way. How do
companies know whether to change their online marketing strategy? What benefits do you think Polaris
offers its current and potential customers? How does the partners’ dedication to quality translate into
results for Polaris’s customers?
Chapter Objective 1: Describe the development of the marketing research function and its major
activities.
Key Terms: marketing research, syndicated services, full-service research suppliers, limited-service
research suppliers
PowerPoint Basic: 4, 5
PowerPoint Expanded: 4-7
1. What is marketing research?
a. Marketing research is the process of collecting and using
information for marketing decision making
b. Data comes from a variety of sources, such as well-planned
studies, sales force reports or accounting records, or controlled
experiments and simulations
c. By presenting pertinent information in a useful format, marketing
research aids decision makers in analyzing data and suggesting
possible actions,
d. Marketing research helps marketers in understanding
customers, targeting customer segments, and developing long-
term relationships
2. The marketing research function
a. The underlying purpose of marketing research is to find out
more about consumers, clearly central to effective customer
satisfaction and customer relationship programs
situation analysis
iii. Exploratory interviews with informed persons outside the
firm are referred to as informal investigation
b. Using internal data
i. Marketers can find valuable data in their firm’s own
internal records such as sales records, financial
statements, and marketing cost analyses
ii. Sales analysis compares actual and expected sales
based on forecasts, often using sales quotas to look at
expected and actual results based on a detailed sales
forecast by territory, product, customer, and salesperson
iii. Other breakdowns divide transactions by customer type,
product, sales method, order type, or order size
iv. Sales analysis is one of the least expensive and most
important sources of marketing information
v. Accounting data, often summarized in financial
statements, can be used to compare current and
previous years against industry benchmarks
vi. Marketing cost analysis is the evaluation of expenses for
tasks such as selling, warehousing, advertising, and
delivery to determine profitability
vii. These forms of internal data are most useful when they
provide information linked to other forms of marketing
research
4. Formulate a hypothesis
a. A hypothesis is a tentative explanation for some specific event
b. It is a statement about the relationship among variables that
carries clear implications for testing this relationship
c. It sets the stage for in-depth research by clarifying what
researchers need to test
d. While not all studies test specific hypotheses, a carefully
designed study can benefit from a clear hypothesis set up
before beginning data collection and analysis
5. Create a research design
a. A research design is a master plan or model for conducting
marketing research
b. It helps clarify for marketers that the study will measure what
they want it to measure
c. It also allows for the selection of the respondents, or sample, to
be studied
6. Collect data
a. Marketing research gathers two kinds of data—secondary and
primary
b. Secondary data is information from previously published or
compiled sources (such as U.S. Census data)
c. Primary data is information collected for the first time specifically
for a marketing research study
d. Secondary data offers two important advantages:
i. It is less expensive to gather
ii. It takes less time to locate and use the data
e. Secondary data also has limitations:
1. What are the six steps in the marketing research process? The marketing
research process can be divided into six specific steps: (1) defining the
problem, (2) conducting exploratory research, (3) formulating hypotheses, (4)
creating a research design, (5) collecting data, and (6) interpreting and
presenting the research information.
Chapter Objective 3: Distinguish between primary and secondary data and identify the sources of
each type.
Key Terms: none
PowerPoint Basic: 7, 8
PowerPoint Expanded: 16-18
1. Marketing research methods
a. Data collection is clearly an integral part of the process—without
it there would be no research
b. A time-consuming task is determining what method to use to
obtain data, usually either secondary or primary data collection
2. Secondary data collection
a. Most secondary data is available at little or no cost
b. The challenge is selecting from a wealth of sources only that
data which is relevant to the problem or issue being studied
c. Secondary data consists of two types:
2. What are the major methods of collecting secondary data? Sources of internal
data include sales records, product evaluation, sales force reports, and records
of marketing costs.
3. What are the major methods of collecting primary data? Three principal
methods of primary data collection are observation, survey, and experiment.
Chapter Objective 4: Explain the different sampling techniques used by marketing researchers.
Key Terms: sampling, population, universe, probability sample, simple random sample, stratified sample,
cluster sample, nonprobability sample, convenience sample, accidental sample, quota sample
PowerPoint Basic: 9, 10
PowerPoint Expanded: 19, 20
1. Sampling techniques
a. Sampling is the process of selecting survey respondents or
research participants
b. Sampling is important because, if a study fails to involve
consumers who accurately reflect the target market, the
Chapter Objective 5: Identify the methods by which marketing researchers collect primary data.
Key Terms: interpretative research, mall intercepts, focus groups, controlled experiment, test marketing
PowerPoint Basic: 11
PowerPoint Expanded: 21-31
1. Primary research methods
a. Marketers use a variety of methods for conducting primary
research, including observation, surveys, and controlled
experiments
1. What are the principal methods for collecting primary data? The principal
methods for collecting primary data are observation, surveys, and controlled
experiments.
2. Identify the different types of survey methods. Different survey methods may
include telephone interviews, personal interviews, focus groups, mail surveys,
fax surveys, and online or other Internet-based methods.
Chapter Objective 6: Explain the challenges of conducting marketing research in global markets.
Key Terms: ethnographic studies
PowerPoint Basic: 12, 13
PowerPoint Expanded: 32, 33
1. Conducting international marketing research
a. Though the steps are similar, new challenges arise when
gathering information about consumers in foreign markets
b. U.S. firms can tap many secondary resources when researching
global markets, particularly through the government
i. One major information source is the U.S. government,
which offers a wealth of information through its
dedicated Web site, Export.gov, It provides data by
country (more than 120 countries) and by industry (more
than 110 business sectors)
ii. The U.S. Department of Commerce offers one-click
access to business, trade, and economic information
through its STAT-USA® Web site, which features more
than 200,000 trade releases, international research
reports, country analyses, and trade and procurement
leads
2. Challenges of conducting international marketing research:
a. Language issues—communicating the message in the most
effective way
b. Cultural issues—capturing local citizens’ interests while avoiding
missteps that could unintentionally offend them
c. Business environment—political and economic conditions,
potential for growth, and trade regulations that affect research
studies and data collection
d. Some adjustment in the collection of data for primary research
may be necessary
i. Some methods do not easily transfer across national
boundaries
ii. Face-to-face interviewing is the most common method
used outside the U.S.
iii. Mail surveys are usable only in developed countries,
otherwise they are useless due to low literacy rates,
unreliable mail service, and lack of address lists
iv. Telephone surveys may not be suitable in areas where
service is limited or phone ownership is rare
v. Focus groups may be difficult to arrange due to social
and cultural issues
e. Some firms tap local researchers or those experienced in global
studies to investigate foreign markets
3. Interpretative research
a. Interpretative research is an observational method developed by
social anthropologists to explain behavior that operates below
conscious thought
b. It provides insights into consumer behavior and the ways in
which consumers interact with brands
i. It is often called as ethnographic studies because the
researcher spends an extensive amount of time
studying the culture (“ethnographic” means a researcher
takes a cultural perspective of the population studied)
ii. For that reason, interpretative research is used
domestically to look at consumer behavior in a foreign
country, where language, ideals, values, and
expectations are subject to different influences
d. Interpretative research focuses on understanding the meaning
of a product or the consumption experience in a consumer’s life
e. It captures what they actually do, not what they say they do
1. What are some U.S. organizations that can serve as sources of international
secondary marketing data? The Departments of Commerce and State offer
reports and guides to many countries. Other sources include state trade offices,
small-business development centers, and U.S. embassies in various nations.
2. What is the most common method of primary data collection outside the
United States? Face-to-face interviewing remains the most common method for
conducting primary research outside the United States.
Chapter Objective 7: Outline the most important uses of computer technology in marketing
research.
Key Terms: marketing information system (MIS), marketing decision support system (MDSS), data
mining, data warehouse
2. What is data mining? Data mining is the process of searching through huge
consumer information files or data warehouses to detect patterns that can help
marketers ask the right questions and guide marketing decision making.
1. Describe the jury of executive opinion. The jury of executive opinion combines
and averages the outlooks of top executives from areas such as marketing,
finance, production, and purchasing.
2. What is the Delphi technique? The Delphi technique solicits opinions from
several people but also includes input from experts outside the firm such as
academic researchers.
1. Outline the development and current status of the marketing research function.
In 1879 the first organized marketing research project took place. In the early 20th century, the first
commercial research department was established. Early research was unsophisticated until the 1930s,
when statistical methods led to improved sampling techniques. Today, most leading U.S. manufacturers
have marketing research departments, and the size and organizational form of the marketing research
function are usually tied to the firm’s structure. Firms now organize research units by product lines,
brands, geographic areas, or the type of research needed. Advances in computer technology have led to
significant changes in data collection, simulations, and analysis.
2. What are the differences between full-service and limited-service research suppliers?
Full-service research suppliers are organizations that contract with clients to conduct complete marketing
research projects (providing qualitative and quantitative data from field studies, face-to-face and phone
interviews, online surveys, as well as public opinion polls, etc.) Limited-service research suppliers are
marketing research firms that specialize in a limited number of activities, such as conducting field
interviews, testing promotional materials, or doing data processing.
3. List and explain the steps in the marketing research process. Trace a hypothetical study through the
stages in this process.
The steps in the marketing research process include the following: defining the problem, conducting
exploratory research, formulating a hypothesis, creating a research design, collecting data, and
interpreting and presenting the research information. The chances of making good decisions improve
when the right information is provided at the right time during the marketing research process.
Imagine that the management at a firm making refrigerated cookie dough, would perceive the need for
more information if the product’s market share dropped from 10 to 6 percent this year. To define the
problem, the firm looks for underlying causes of market share loss. It conducts exploratory research,
discussing the problem with informed sources within the firm and with wholesalers, retailers, customers,
and others outside the firm. It also examines secondary data sources. Through its customer and retailer
research, it learns that consumers are dissatisfied with the texture of the dough. Customers pointed to
this as a major difference between the firm’s brand and other more successful market brands. Based on
this information, managers formulate a hypothesis: to regain market share, they will improve the
crispness of their cookie dough. To test this hypothesis, managers create a research design involving a
new dough recipe and choose three cities—say, Chicago, Milwaukee, and Cleveland—as test markets.
Sales are analyzed every month over a three-month period. Secondary data from government and
commercial sources are also collected to determine if the market for cookie dough is growing or leveling
off. It could be that health and fitness concerns have impacted its sale. The firm is particularly interested
in tracing how the percentage of single women who are also heads-of-households had changed over the
past year. In the interpretation and presentation phase, marketers draw conclusions about the collected
information. Based on results in test market cities, they decide to market the reformulated product
throughout the U.S. They introduce the change in a nationwide advertising campaign aimed particularly
at the growing market of single women who are also heads-of-households.
4. Distinguish between primary and secondary data. When should researchers collect each type of data?
Primary data is information collected for the first time specifically for a marketing research study, through
observation, survey, or controlled experiment. Secondary data is information from previously published or
compiled sources (such as U.S. Census data), so it has the advantage of being less expensive to gather
and taking less time to locate and use. Researchers should collect primary data when specific and up-to-
date information is critical to their analysis, when they have sufficient time and money to conduct the
analysis; and when the good or service warrants the expense. They should collect secondary data when
they want abundant and relatively inexpensive information quickly. But they need to consider that data
collected for an unrelated purpose may not be completely relevant to the marketer’s specific needs, and
published data can quickly become obsolete.
5. What is sampling? Explain the differences between probability and nonprobability samples and identify
the various types of each.
Sampling is the process of selecting survey respondents or research participants. A probability sample is
one in which every member of the population has a chance of being selected (including random samples,
stratified samples, and cluster samples). A nonprobability sample relies on personal judgment in the
selection process (including convenience and quota samples).
6. Distinguish among surveys, experiments, and observational methods of primary data collection. Cite
examples of each method.
Surveys are primary data collection methods in which data are collected (through personal or telephone
interviews, or mail, fax, or online questionnaire responses). Observational studies are conducted by
actually viewing the overt actions of respondents, and understanding how consumers behave in certain
situations (through personal observation or mechanical techniques). Experiments, the least used
methods, are scientific investigations in which the researcher controls or manipulates a study (through a
test group, comparing its results with those of a control group).
7. Define and give an example of each of the methods of gathering survey data. Under what
circumstances should researchers choose a specific approach?
The five methods of gathering survey data are personal interviews, telephone interviews, mail surveys,
fax surveys, and online surveys. Personal interviews should be used when the interviewer needs to get
detailed information from the respondent. Telephone interviews should be used when a quick and
inexpensive way of obtaining small amounts of relatively impersonal information is needed. Mail surveys
should be used to get national data at a reasonable cost. Fax surveys should be used when speed is
critical, often to survey businesses rather than individual households. Online surveys should be used to