Marketing research: From Information To Action

This Chapter introduces a new Marketing Research Framework which is presented in a five-step marketing research approach. The Chapter provides a description of three types of research – exploratory, descriptive, and causal – in the context of setting research objectives, and examines different methods and techniques of obtaining data.

LEARNING OBJECTIVES

After reading this chapter you should be able to:

1. Identify the reason for doing marketing research, and describe the five-step marketing research approach leading to marketing actions.

2. Describe how secondary and primary data are used in marketing, including the uses of questionnaires, observations, experiments, and panels.

3. Explain how information technology and data mining link massive amounts of marketing information to meaningful marketing actions.

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The role of marketing research

To place marketing research in perspective, we can describe (1) what it is, (2) some of the difficulties in conducting it, and (3) the five steps marketing executives can use in conducting marketing research.

What is Marketing Research?

Marketing research is the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions. The broad goal of marketing is to identify and define both marketing problems and opportunities and to generate and improve marketing actions. Although marketing research isn’t perfect, it seeks to reduce risk and uncertainty to improve decisions by marketing managers.

Why good marketing research is difficult?

Ask a moviegoer if she liked the title for a film she just saw and you’ll probably get a straightforward answer. But often marketing researchers face difficulties in asking consumers questions about new, unknown products. For example,

• Suppose your company is developing a brand new product, never before seen by consumers. Would consumers really know whether they are likely to buy a particular product that they probably have never thought about before?

• Imagine if you, as a consumer, were asked about your personal hygiene habits. Even though you knew the answer, would you reveal it? When personal or status questions are involved, will people give honest answers?

• Will consumers’ actual purchase behavior be the same as their stated interest or intentions? Will they buy the same brand they say they will?

A task of marketing research is to overcome these difficulties and to obtain the information needed to make reasonable estimates about what consumers will or won’t buy.

Five-step marketing research approach to making better decisions

A decision is a conscious choice from among two or more alternatives. All of us make many such decisions daily. At work we choose from alternative ways to accomplish an assigned task. At college we choose from alternative courses. As consumers we choose from alternative brands. No magic formula guarantees correct decisions.

Managers and researches have tried to improve the outcomes of decisions by using more formal, structured approaches to decision making, the act of consciously choosing from alternatives. The systematic marketing research approach used to collect information to improve marketing decisions and actions uses five steps (Figure 2). Although the five-step approach described here focuses on marketing decisions, it provides a systematic checklist for making both business and personal decisions.

FIGURE 2

Five-step marketing research approach leading to marketing actions

Step 1 Define the problem Set research objectives Identify possible marketing actions

Step 2 Develop the research plan Specify constraints Identify data needed for marketing actions D etermine how to collect data

Step 3 Collect relevant information by specifying Secondary data P rimary data

Step 4 Develop findings Analyze data Present findings

Step 5 Take marketing actions Make actions recommendations Implement action recommendations Evaluate results

Lessons learned for future research

Concept check

What is marketing research? What are the five steps marketing research uses to help lead to marketing actions?

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STEP 1: DEFINE THE PROBLEM

Designers at Fisher-Price, the nation’s top marketer of infant and preschool toys, seek to develop toys they think kids will like, but the problem is: How can they be cer­tain kids will like the toys? As part of their marketing research, Fisher-Price gets children to play at its state-licensed nursery school in East Aurora, New York. From behind one-way mirrors, Fisher-Price designers and marketing researchers watch the children use, and abuse, the toys to develop better products.

The original model of a classic Fisher-Price toy, the Chatter Telephone™, was simply a wooden phone with a dial that rang a bell. Observers noted, however, that the children kept grabbing the receiver like a handle to pull the phone along behind them, so a designer added wheels, a noisemaker, and eyes that bobbed up and down.

Fisher-Price’s toy testing shows how to define the problem and its two key elements: setting the research objectives and identifying possible marketing actions suggested by the research.

Set the Research Objectives

Objectives are specific, measurable goals the decision maker - in this case, an exec­utive at Fisher-Price - seeks to achieve in solving a problem. Typical marketing objectives are increasing sales and profits, discovering what consumers are aware of and want, and finding out why a product isn’t selling well. For Fisher-Price, the immediate research objective was to decide whether to market the old or new tele­phone design.

In setting these research objectives, marketers have to be clear on the kind of research they are about to do. The three kinds of research are:

1. Exploratory research provides ideas about a relatively vague problem. General Mills discovered that the initial version of its Hamburger Helper wasn’t satisfactory for many consumers, so it interview them to get ideas to improve the product.

2. Descriptive research generally involves trying to find the frequency that some­thing occurs or the extent of a relationship between two factors. So when Gen­eral Mills wants to study how loyal consumers are to its Wheaties, it can obtain data on the number of households buying Wheaties and competitive products.

3. Causal research, the most sophisticated, tries to determine the extent to which the change in one factor changes another one. In the Fisher-Price example dis­cussed next, changing the toy designs is related to changes in the amount of time children play with the toy. Experiments and test markets, discussed later, are examples of causal research.