Business

Marketing Research

3rd Edition
Jan Wiid & Colin Diggnes
ISBN 978 148 511 200 6

© Juta and Company Ltd, 2016 Marketing Research 3e

Business

Chapter 1

Perspectives on marketing research

© Juta and Company Ltd, 2016 Marketing Research 3e

Learning Outcomes

After studying this chapter, you should be able to:

• Describe the key concepts relating to marketing research and understand
their usage in the correct context.
• Explain the role of marketing research and its contribution to decision
making in the marketing context.
• describe what a marketing information system (MIS) and its various
components are; and
• distinguish between internal and external research, and which factors to
use for a given research project.
Introduction
• Making a decision is an important component of the management of an
organization.
• Internal and external environmental information reduces risks and makes
decision making, that takes place in a dynamic environment, easier
• Data needs to be appropriate and in the correct format for the specific
decision.
• This data must be managed so that the correct information can be made
available to management as the need arises.
• A marketing information system is used to gather, sift, analyze, store and
make data and information available to management.
The need for marketing information
• “Knowledge is Power” is a common phrase often quoted in
the business world. Knowledge comes from information
which comes from data, which comes from marketing
research.
• Marketing information is crucial for the organisation if it is to
develop products and strategies that keep pace with the
changing environment.
• Marketing Research serves two important purposes:
– Provides the organisation with information about
customer demand for products and services
– Gives customers the opportunity to express their views
and needs and thus influence decision making to ensure
they get the products and services that they want.
Marketing research as a link between the
organisation and the customer
Organisation decision
makers

Informs

Marketing research

Influences

Marketing decisions

Customer/society

Figure 1: Marketing research as a link between the organisation and the customer

© Juta and Company Ltd, 2016 Marketing Research 3e

• Marketing management in a developed community should be
directed at the future.
It must:
– anticipate environmental changes;
– predict the direction and impact of these changes; and
– plan accordingly.
• Management needs information about all possible internal
and external environmental factors that can influence the
organisation’s marketing affairs and results.
• Changes in the internal and external environments
that are putting pressure on the need for marketing
information include:
– Socio-cultural changes, such as increasing urbanisation.
– Technological progress, such as increasing use of
computers.
– Increased consumer pressure.
– Competitive activities.
– Shorter product life cycles, expansion into new markets
and management of multiple distribution channels.
The key roles of Marketing
Research
• With so much pressure on the need for marketing
information, it is important from outset to understand what
marketing research can deliver to the marketing system.
• Marketing research performs three key roles:
– Descriptive research: which depicts a current situation.
– Diagnostic research: which diagnose the effects of a certain event in a
given situation
– Predictive research: which is used to predict or forecast the outcomes
of new strategies being developed.

The enormous increase in data available to management means that

the emphasis is no longer on data collection but on data management.
• Data needs to be available to the right
decision makers when, where and in the form
required.
• Difference between data and information:
– Data refers to all available statistics, opinions,
facts and predictions.
– Information is the data component that is
relevant to the decision in question.
Definition and scope of marketing
research
• One of the many definitions of marketing research is:
“The function that links the consumer, customer and
public to the marketer through information-
Information is used to:
– identify and define marketing opportunities and
problems;
– generate, refine, and evaluate marketing actions;
– monitor marketing performance; and
– improve understanding of marketing as a process.”
Marketing research definition cont.
• Marketing research is defined in simple terms
as:
“The systematic collection, analysis and
interpretation of information about all
marketing problems by means of recognised
scientific methods to provide information that
marketing management can use in the
decision-making process.”
Basic research vs. Applied research
• Marketing research can be classified as basic or applied
research.
– Basic Research:
More general and simply aims to obtain and generate information about aspects of
the marketing system. Little emphasis is placed on how to use or apply this
information in the marketing management process. The research is not aimed at a
specific organisation, but serves a broader purpose. This type of research is based
on a hypothesis and a theory. Most academic research published in academic
journals.

– Applied Research:
Aimed at helping management make better decisions about a specific aspect. The
research is conducted to solve a particular problem and is more specific to the
organisation.
Both use the scientific method of marketing research.
Scientific method of marketing
research:
• Science relies on facts, logic and methodology.
• Non-scientific methods relies on subjectivity, bias and personal preference or
intuition.
• The scientific method of marketing research refers to the techniques and
procedures used to investigate marketing phenomena in order to understand
them better.
• In scientific research, the risk is reduced through the analysis and
interpretation of empirical data.
• The basic steps followed in the scientific method:
– Identify a problem
– Design a study
– Conduct the research
– Test the hypothesis
– Report the results
Scientific vs. Non-Scientific
methods
• Three differences between scientific and non-scientific methods
influence fundamentally the validity and reliability of marketing
research.

1. Objectivity of the researcher

– Scientific research is based on facts and not on intuition or preconceived
notions.

2. Accuracy of measurement
– Measurement must be as accurate as possible. For example where electronic
instruments are used for measuring.

3. Continuous and comprehensive research

– When conducting scientific research, all aspects that can influence the results
of the research are taken into consideration.
Factors contributing to the
development of marketing research

• Shift from a production-oriented to a marketing–oriented

economy and management philosophy.
• Change in the cost structure of organisations.
• Shift in emphasis from price to non-price competition.
• Expansion of the production process.
• Increase in discretionary buying power.
• Increasing differentiation in supply.
• High cost of marketing.
• Emergence of the professional manager.
Characteristics of good research
• Good research should meet the following
requirements:
– Clearly defined research problem;
– Describe the research methodology in detail;
– Properly planned procedural design of the research to ensure that the
research are objective;
– Data analysis methods that are able to reveal the significance of the
collected data; and
– Research conclusions that are limited to the findings identified in the
data analysis;
– that honestly identify any shortcomings in the research design.
• Research has shown that researchers and users of research need to have the
following qualities:
– A willingness to learn. They should be able to recognise old and outdated
information.
– Technical competence. They should have the ability to develop, design, and
implement a research project.
– Honesty. They should honestly report or interpret findings.
– Be able to operate with incomplete information.
– Flexibility. They should be able to adapt to surprises throughout the process.
– Curiosity and a desire to seek out new knowledge.
– The ability to identify and ask the important questions.
– The big picture. They should be able to view the bigger picture.
– The ability to distinguish between important information and information that
is simply ‘nice to know’.
When is marketing research
necessary?
• Five key factors should be considered:
1. Time limits - Research can only be undertaken if enough time is
available.
2. Availability of data - important to determine whether sufficient
information is available for the decision concerned.
3. Nature of the decision -Decisions that will have a fundamental effect
on the running of the organisation will receive more attention than
less important ones.
4. Advantages versus cost -Research is expensive and must be of value
to the organisation.
5. Resources available - important to consider the resources available,
not only to conduct the research but also to implement the findings.
Marketing research in perspective
• Relationship between marketing research and marketing information
– Marketing information system (MIS) is a carefully developed plan for the flow of
information within the organisation.
– Comprises specific activities by certain functional departments within the organisation.
– Marketing research departments play a greater role in organisations that do not have an
MIS.
• Marketing research and decision making
– All modern definitions of marketing research emphasise the fact that research results
are always intended for decision making in the marketing management process.
– The task of marketing research is to provide information for decision‑making purposes.
– Marketing research and decision making are two different aspects, but they are
interdependent.
– The quality of the decisions is influenced by the quality of the research.
– If the problem is not properly defined, information will be obtained but not the correct
information for the problem.
 Marketing Information Systems
(MIS)
• With so much marketing information available to the marketer, a way
has to be found to organise this information so it can be readily
accessed for use in decision making.
Definition:
• Marketing information System can be defined as a set of inter-related
components that collect (or retrieve), process, store and distribute
information to support decision making and control in an organisation.
Generally speaking three types of information can be extracted:
• Recurrent information - Information that is continuously provided to managers.
• Monitoring information - Information that is obtained from sources relevant to
the particular company.
• Requested information - Specific information that is requested and then collected.
The value of marketing information
• For the MIS to be of any use, the information must be of high
quality and add value to the decision making process.
• It is very important that the information meets the following
criteria:
– Relevant (meaningful) - be able to use the information to make decisions
about target markets.
– Useful - made available in a form that the user can understand and apply.
– Timeous - information must be available on a continual basis.
– Accurate (valid) - information must reflect the realities of the situation.
– Adequate - Sufficient qualitative and quantitative information must be
available.
– Available - information should be in a form that is easy to access when
required.
The value of marketing information

Benefits Costs Value of

gained from associated marketing
the with obtaining information
information Minus the Equals for decision
information making

© Juta and Company Ltd, 2016 Marketing Research 3e

Objectives of an MIS
• The primary objective of an MIS is to make relevant, useful and timeous
information available and reducing the risk of making wrong decisions.
• Secondary objectives of an MIS vary according to the nature of the
organisation. They may include:
– To identify shortcomings in product sales and to improve the sales
performance of products and services.
– To distribute marketing activities more effectively among products or brands,
advertising campaigns, sales areas and advertising media.
– To identify the need for new products and provide information about possible
development and marketing of such products.
– To determine prices in order to remain competitive in a changing market
environment.
– To motivate sales staff in the field by means of the fair and just location of
sales areas.
Types of MIS
• The type of MIS in an organisation will depend on its size and the industry in which
it operates.
• MIS of a small organisation with a homogeneous type of products or a low
competition level will be relatively simple compared with that of a large
organisation with a diversified product range or high-level competition.
• Simple MIS consists of a routine data component and a special-purpose
component.
• Routine data can be obtained from internal sources (sales, stock, debtors and
creditors) and external sources (population growth, competitive activities and
trading association statistics).
• For the special-purpose component, marketing research must be conducted.
• If the organisation conducts the research itself, it is called internal research,
whereas research conducted by a marketing research agent is referred to as
external research.
• Larger organisations employ a more extensive MIS, see figure on next slide.
An extensive Marketing Information
System
Internal reporting subsystem Marketing Intelligence
(Internal secondary data) subsystem
•Accounting reports (External data – secondary or
•Production reports primary)
•Sales reports •Consumers
•Quality control reports •Competitors
•Engineering reports •Suppliers
•Goods returned reports •Distributors
•Professional associations
•Government bodies

Statistical subsystem Internal and/or external

(Modelling framework) marketing research subsystem
•Statistical methods (Research process
•Forecasting techniques •Problem definition
•Dynamic modelling •Research design
•Game theory •Data collection
•Elasticity models •Data processing
•Data analysis
•Reporting
Source: adapted from Tustin et al. (2005).

© Juta and Company Ltd, 2016 Marketing Research 3e

Marketing Decision Support
System(MDSS)
• Definition:
“ a co-ordinated collection of data, systems, tools and techniques with supporting
software and hardware by which an organisation gathers and interprets relevant
information from business and the environment and turns it into a basis for
marketing decisions.”
• Characteristics of a good MDSS:
– Interactive - the system should be easy to use by the user
– Flexible - provide information in different forms
– Discovery oriented - use the system to identify new trends or patterns
– User friendly - system should be easy to understand and use.
• The MDSS consists of the following components:
– Database - data system with internal and external information.
– Reports and displays – system are able to generate simple basic tables and reports.
– Modelling - system is able to manipulate data and conduct analyses.
– Analysis - able to make more in-depth calculations and analyses.
Internal and External Research
• Internal research is when an organisation conducts its own research.
• External research is when an organisation choose to use external
consultants.
• There are advantages and disadvantages involved with internal and
external research- see table 1.1 on page 20.
• When deciding whether to use external research suppliers, the following
factors should be considered:
– Credibility - issue of credibility arises when there is a potential conflict of interest.
– Competence - oorganisation needs to consider whether the necessary expertise exists
in-house to conduct a particular research project
– Capacity - internal research department may not have the time or capacity to conduct a
particular research project.
– Cost - mmaintaining a multidisciplinary research department can be very expensive and
is not necessary for many organisations.
 Summary
• Marketing research is the systematic collecting, analysing and interpreting of
information relating to specific marketing matters.
• Research is conducted in a scientific manner and must be objective,
accurate and extensive.
• Marketing research on its own does not solve problems, but it helps
management to make informed decisions about problems and
opportunities.
• Understanding the links between marketing research, marketing
information and decision making.
• Information is crucial in reducing the risk involved in decision making.
• Marketing information system’s objective is to collect, sift, process and make
the necessary information available to marketing management on a
continuous basis.