MKT1003A/1705A

Principles of Marketing

Marketing Research
 The Importance of Marketing Research

Previous lesson: marketing planning and decisions are based on

information that marketers have to gather
Marketing research is the act of collecting, interpreting, and
reporting information concerning a clearly defined marketing
problem.
Firms must generate timely information, interpret it quickly, and
take action before the competition does.
 Importance of Market Research

The main role of market research is to provide

information
 Allows better decisions to be made
 More proactive
 Faster response
Marketers need a disciplined system to collect
information.

Market information = a marketer’s eyes & ears

Caveats to Marketing Research

• No research is perfect!
– Aids marketing decisions
– Part art, part science
• Cost of gathering information vs incremental
knowledge derived from research
• Time needed (forgo market testing)
 Marketing Research and the Four Ps
Products
• Need to be developed based on real customer needs and wants.
Pricing
• Price sensitivities, competitors’ prices
• Demand analysis is a type of research used to estimate how much
customer demand there is for a particular product and understand
the factors driving that demand.
Place
• Sales forecasting is a form of research that estimates how much of
a product will sell over a given period of time.
Promotion
• Advertising effectiveness studies and sales tracking are used to
measure the effectiveness of promotional programs.
Uses of Market Research
• How is the product actually used by consumers?
• Consumer trends
• When to launch product?
• Testing of advertising messages
• Choice of brand names
• Price setting
• To forecast sales
• etc…
 The Marketing Research Process
Firms follow five basic steps when they engage in the marketing
research process:
Step 1: Define the Problem and the
Research Objectives
Accurately and adequately defining the
management problem is the most important
task in the process
• It is the problem confronting management
– Asks what the decision maker needs to do
– Also called research purpose or aim
• Without this, money & effort will be wasted
 Issues in Defining the Problem
• Identify the real problem
• Identify what information is needed
• Don’t confuse the symptoms with problems
– Decline in sales?
– Leads to asking wrong questions

©McGraw-Hill Education
 Step 2: Plan Development
Plan development, often called research design, involves coming
up with a plan for answering the research question or solving the
research problem identified in the first step of the process.
Types of research:
• Exploratory research
• Descriptive research
• Causal research
 Types of Research
Research Type When Used How Conducted Type of Hypothesis
Exploratory Typical when Interviews, focus Questions designed
(open-ended) information is groups, and/or to gain broad
limited, such as observation understanding
when a firm enters
a new market.
Descriptive For situations when Surveys Multiple and
specifics of a market specific questions to
are not well defined gain specific
(i.e., who, what, understanding
when, where, how).
Causal To answer cause Experiments, often Questions that
and effect in a store setting assess why
questions, what something happens
caused an action to
happen, such as
“why are sales
increasing at only
some stores?”
 Qualitative Research
Includes exploratory research:
• Interview
• Focus group
• Observation
These methods can provide researchers a great deal of insight,
but they don’t always allow researchers to draw generalized
conclusions about the larger consumer population.
Focus Group

• A focus group is a gathering of six to ten people who are

carefully selected based on certain demographic,
psychographic, or other considerations and brought together
to discuss various topics of interest at length.
• A professional research moderator provides questions and
probes based on a discussion guide or agenda to ensure that
the right material gets covered.
• Moderators attempt to track down potentially useful insights
as they try to discern the real motivations of consumers and
why they are saying and doing certain things.
• The sessions are typically recorded.
 Quantitative Research
To collect the necessary data to achieve their research objective,
companies often turn to quantitative research:
• Surveys
• Experiments
• Mathematical modeling (of behavioral data)

Source: Gap Inc.

Advantages and Disadvantages of Research Methods
(1 of 2)
Research Method Type Advantages Disadvantages
Qualitative • Uncovers details • Results may be difficult
concerning the to measure objectively
motivations behind • Research can take longer
behaviors than quantitative
• Is not limited to a methods
predetermined set of • Potential for researcher
responses bias
• Can be a good way to • Individual participants
start research into a may not represent
marketing problem general target market
• Can be very flexible in • Small sample size
approach
• Can be used to generate
marketing ideas
Advantages and Disadvantages of Research Methods
(2 of 2)
Research Method Type Advantages
Quantitative • Results may be
generalizable to a larger
population
• Some methods can be
conducted quickly and
inexpensively
• Analysis of data can be
faster than in qualitative
research
• Can conduct causal
studies that indicate why
behaviors occur
• Can be cost effective
• Often convenient for
respondent
Disadvantages
• May be limited by
researchers’ questions
• Response rates can be
very low
• Difficult to determine
nonresponse bias
• Possible respondent self-
selection bias
• Participant resistance to
giving sensitive
information
 Experimental Research in Marketing Research
Experiments are a type of causal research.
Usually experimental research means investigating how a change in
an independent variable might cause changes in one or more
dependent variables.
Marketers also need to determine who is being researched in
different experimental conditions.
Two measures of validity:
• Internal validity is the extent to which changes in the outcome
variable were actually caused by manipulations of the
independent variable conditions.
• External validity is the extent to which the results of the
experiment can be generalized beyond the study sample of
subjects.
 Sampling: choose who to ask
Sampling is the process of selecting a subset of the population
that is representative of the target population.
Probability sampling ensures that every person in the target
population has a chance of being selected, and the probability of
each person being selected is known.
• Simple random sampling = everyone in the target population has an
equal chance of being selected
Nonprobability sampling does not attempt to ensure that every
member of the target population has a chance of being selected
• Quota sampling = firm chooses a certain number of participants
based on selection criteria such as demographics
• Snowball sampling = firm selects participants based on the referral
of other participants who know they have some knowledge of the
subject in question.
 Step 3: Data Collection
Secondary data is data that has been collected for purposes
other than answering the firm’s particular research question.
• Much less expensive than primary data, but may not shed
light on the specific nuances of a firm’s particular problem.

Primary data is data that is collected specifically for the research

problem at hand.
• Requires far more time and money than secondary data, but
may result in a more nuanced understanding of customers
and their behavior.
Differences between Primary and Secondary Data
Primary Data
Collection Method Examples Focus groups, surveys,
observations, data gathered by
equipment (e.g., video), in-
depth personal interviews
Advantages • Pertains only to firm’s
research
• May provide insight into
why and how consumers
make choices
Disadvantages • More expensive
• May be difficult to enlist
customer participation
• May take excessive amount
of time to collect
Examples of Use • To understand what motivates
consumers
• To determine the effect of
variables (e.g., price) on
product choice
• To gain feedback on company’s
existing and proposed products
Secondary Data
Literature reviews, online
electronic searches, company
records, marketing information
systems, private research
companies, boundary spanners
(e.g., salespersons)
• Less expensive (often free)
• Information typically readily
accessible
• Data may not be relevant
• Data may not be accurate
• Data may have been altered
• Data may contain bias
• To gather macroeconomic data
• To gather socioeconomic data
• To obtain information about
competitors
• To gain insight into international
cultures and markets
 Sources of Primary and Secondary Data (1 of 2)
Primary data can be qualitative or quantitative in nature and can
take the form of interviews, focus groups, observations, video
recordings, questionnaires, surveys, or experiments.
Secondary data can come from internal or external sources.
• Internal secondary data are collected by the company (e.g., sales by
product, information from loyalty cards, previous research reports,
etc.).
• External secondary data can come from many sources (e.g., Census
Bureau, academic journals, business publications, commercial online
databases).

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 Sources of Primary and Secondary Data (2 of 2)
Primary Data Sources Secondary Data Sources
Observations Previous research
Audio or video recordings Literature reviews
Interviews Online electronic searchers
Correspondence Company records
Focus groups Marketing information systems
Case studies Private research companies
Questionnaires Government reports
Online surveys Academic journals
Experiments Periodicals and mass media
Historical information
 Data vs Information
Data are facts or measurements of things or events.
Data are the building blocks of research.
Information is the result of formatting or structuring data to
explain a given phenomenon, or to define the relationship
between two or more variables.
Information is the result of data analysis.
 Step 4: Data Analysis
Analyzing qualitative data:
• Coding is the process of assigning a word, phrase, or number to a
selected portion of data so that it can later be easily sorted and
summarized.
• Can be challenging: results may be difficult to measure objectively
and without bias.
Analyzing quantitative data:
• Almost always involves the use of statistical analysis, which is the
mathematical classification, organization, presentation, and
interpretation of numerical data. 
• Descriptive statistics are used to describe characteristics of the research
data and study sample
• Inferential statistics are used to make inferences about a large group of
people from a smaller sample.
 Step 5: Taking Action
The culmination of the marketing research process is a formal,
written report to decision makers.
Research report findings should be presented in a clear and
understandable manner.
The research report should allow the marketing manager to
solve the marketing problem or provide answers to the
marketing manager’s questions.
Reports should communicate any limitations of the research.
 Marketing Research Ethics
Privacy:
• Companies must be careful not to go too far in collecting
information of a sensitive nature.
• At issue is the willful intrusion on the privacy of individuals.
Using data appropriately:
• Another ethical issue in marketing research is the misuse of
research methods and findings.
Marketing Research vs Marketing Analytics
1. Marketing research and marketing analytics work hand in
hand, but they are not the same thing.
2. Marketing research is an iterative process that gathers data
to answer a clearly defined research question. Marketing
analytics focuses on the data collected by marketing
researchers and how that data can be used.
3. Marketing analytics helps firms identify purchasing patterns;
data mining is one method that firms use to explore and
interpret these data.
4. Marketing analytics helps firms identify and interpret the
relationships among multiple sets of data with statistical
modeling.
Group Project Part 2
Consider what information about your assigned product
category that you could not obtain from secondary research,
that you would need to develop a marketing plan for it.
Design a questionnaire to gather data to get that necessary
information.
Be mindful of the usual pitfalls of questionnaire design.
Submission: Luminus (word doc with link to online survey)
Due date: 14 Sept, 11.59PM
Questionnaires

• Because of its flexibility, the questionnaire is by far the most

common instrument used to collect primary data.
• Questionnaires need to be carefully developed, tested, and
debugged before being administered.
• The wording and sequence of the question can influence the
response
• Refer to slide for pitfalls
• Pros and cons of closed-end and open-end questions
Designing the Questionnaire
• Translate research objectives into information
requirements
• Questions must address hypotheses to be tested
• Pretest preliminary versions of the questionnaire
Pitfalls of Questionnaire Wording
• Is the vocabulary simple enough? Do not use jargons.
• Are the words vague or ambiguous?
• Do you travel often? vs How often do you travel?
• Are the questions double-barrelled?
• Are you satisfied with the price and service of this restaurant?
• Are the questions leading and loaded?
• Don’t you think we should all recycle?
• Is the question applicable to all respondents?
• Why do you recycle?
• Ensure the categories in the options do not overlap or have
gaps
Sequence and Layout Decisions

Aaker, Kumar and Day, Marketing Research 9th ed.

Pretest your Questionnaire!

Aaker, Kumar and Day, Marketing Research 9th ed.