An Introduction to Marketing Research Successful entrepreneurs must adapt to an ever-changing business environment. In addition to the everyday aspects of running a business, a company has to consider materials, energy shortages, inflation, economic recessions, unemployment, and technological changes. A profitable company must also respond to the market with its products and advertising. A critical tool for measuring the market and keeping competitive is effective marketing research. In this chapter, we will introduce marketing research and discuss the tools you need to be successful. WHAT IS MARKETING RESEARCH? Think of marketing research as a search for information that will help you succeed in capturing market share. To begin, let’s consider the differences between fundamental and applied research. Fundamental research seeks to extend the boundaries of knowledge in a given area and doesn’t necessarily solve your immediate problems. Nevertheless, it has useful applications. It reveals information and relationships that could be useful at a later date. For example, The Green Yogurt company conducted fundamental research about consumer preferences for certain combinations of fruits, nuts, and caramel that differ in sugar type and strength of sweetness. Applied research gathers information to solve a specific problem or set of problems. For instance, customers engaged in a blind taste test would respond with what they specifically liked or disliked about a new yogurt product compared to a competitor’s product. You would use this information to tune your business plan, focus your advertising campaign, or improve your product. FOCUSING YOUR RESEARCH Marketing research focuses on understanding the customer, the company, and the competition. These relationships are at the core of marketing research. Companies must understand and respond to what customers want from their products. However, this relationship is always influenced by competitors and how their products are received by your market. Thus, you must clearly identify the customer, company, and competition before developing a research project. There are several important factors you must consider before you begin, including: • Your customers and competition • Awareness and image of your product • Product usage • Undiagnosed problems with your product • Customer desires and needs for new product development At the Qualtrics “Survey University,” we have identified twenty different types of applied research surveys that are fundamental to marketing research. Each focuses on a different aspect of marketing research and your business activities, and provides deep insights into your company’s market position, your products, your competition, and the market in general. These are shown in Exhibit 1.1. EXHIBIT 1.1 TWENTY DIFFERENT TYPES OF MARKETING SURVEYS 1 - MARKET DESCRIPTION SURVEYS: Determine the size and relative market share of the market. Provide key information about market growth, competitive positioning and share of market. 2- MARKET PROFILING-SEGMENTATION SURVEYS: Identify customers and non-customers, and why they are or are not your customers. Often a descriptive market segmentation and market share analysis. 3 - STAGE IN THE PURCHASE PROCESS / TRACKING SURVEYS: Where is the customer in the adoption process? Shows market Awareness – Knowledge – Intention – Trial – Purchase – Repurchase of the product. 4 - CUSTOMER INTENTION - PURCHASE ANALYSIS SURVEYS: Customer motivation to move from interest in the product to actual purchase. Key to understanding customer conversion, commitment and loyalty. 5 - CUSTOMER ATTITUDES AND EXPECTATIONS SURVEYS: Does the product meet customer expectations? Attitudes formed about the product and/or company. Improve ads, customer conversion, commitment and loyalty. 6 - CUSTOMER TRUST - LOYALTY – RETENTION ANALYSIS SURVEYS: Depth of consumer attitudes formed about the product and/or company. Especially for high priced consumer goods with long decision and purchase processes. 7 - NEW PRODUCT CONCEPT ANALYSIS SURVEYS: Appropriate in the initial screening of new product concepts. Likes and dislikes, acceptability and likelihood of purchase are especially useful measures. 8 - NEW PRODUCT ACCEPTANCE AND DEMAND SURVEYS (CONJOINT ANALYSIS): Estimating demand for new product descriptions, graphics, or prototypes. Yields market share estimates for alternative concept configurations. 9 - HABITS AND USES SURVEYS: Understanding usage situations, including how, when and where the product is used. May include a real or virtual pantry audit. 10 - PRODUCT FULFILLMENT SURVEYS: Evaluation of promised attribute and feature benefits (both tangible and intangible). Are expectations produced by advertising, packaging, and product appearance fulfilled? 11 - COMPETITIVE PRODUCT AND MARKET POSITIONING: “Best Practices” study of “How does the market view us relative to the competition?” Compares attributes and benefits of the product. 12 - BRAND EQUITY SURVEYS: What is psychological value that a brand holds in the marketplace? A composite of brand awareness, brand quality, brand associations and brand loyalty measures. 13 - ADVERTISING VALUE IDENTIFICATION AND ANALYSIS SURVEYS: Mapping the hierarchical attributes, benefits and values associated with and portrayed by an advertisement. Means-end analysis is often part of this type of study. 14 - ADVERTISING MEDIA AND MESSAGE EFFECTIVENESS SURVEYS: Identifies the impressions, feelings, and effectiveness in moving the respondent to a desired goal (increased awareness, product information, trial, repeat purchase). 15 - SALES FORCE EFFECTIVENESS SURVEYS: Sales activities, performance and effectiveness in producing the desired and measurable effect or goal. Often measured in a 360 degree survey completed by the sales person, the client (evaluating the sales call) and the supervisor responsible for evaluating the sales person. 16 - SALES LEAD GENERATION SURVEYS: (1) Timely use and follow-up of sales leads, (2) Qualifying sales leads (thereby saving valuable sales force time) and (3) Providing more effective tracking of sales leads. 17 - CUSTOMER SERVICE SURVEYS: Focus in detail on the actual customer service that was received, the process involved in receiving that service and the evaluation of the participants in the service process. 18 - CUSTOMER SERVICE REPRESENTATIVE (CSR) SURVEYS— ATTITUDES, BURNOUT, TURNOVER AND RETENTION: Customer Service Representatives hold attitudes that reflect on their job related activities including (1) the allocation of time; (2) solutions to customer needs; (3) how to improve their job; (4) best practices; (5) how well internal departments help customers. Focuses on reducing costs and increasing the quality of customer relationships. 19 - SALES FORECASTING AND MARKET TRACKING SURVEYS: Expert estimates of the market, judgmental bootstrapping (expert based rules describing how to use available secondary market information), conjoint analysis (estimation of consumer choice prefer- ences), and self-reported intentions to make future purchases. 20 - PRICE SETTING SURVEYS AND ELASTICITY OF DEMAND ANALYSIS: Estimates of demand elasticity, optimal price points, and prices too low or too high. Estimates for different product-service segments, or usage situations. Source: qualtrics/university/researchsuite/survey-types/market-surveys/market-survey-types Each of these surveys focuses on a specific area of research that will be addressed in later chapters. For now, let us focus on the basics. FIGURE 1.1 THE RESEARCH PROCESS STAGES Problem Formulation Cost-Value Analysis Method of Inquiry Research Design Data Collection Design Planning & Survey Design Data Collection THE BASIC RESEARCH PROCESS Given these 20 different types of marketing research studies, select one that you find interesting and then ask yourself two questions: first, how can you conduct your own marketing research for this study? And second, what are the basic steps you need to follow in order to complete your project? In this chapter, we will show you the steps of conducting such a research project. Figure 1.1 shows the stages in the research process. While these steps are presented in order, you can be creative and adapt the steps to meet your business needs. Some steps can be completed in parallel to speed the project as it begins to develop. The major basic research issues are shown in Exhibit 1.2. STAGE 1: FORMULATING THE PROBLEM Formulating a problem is the first step in the research process. In many ways, research starts with a problem that management is facing. This problem needs to be understood, the cause diagnosed, and solutions developed. However, most management problems are not always easy to research. A management problem must first be translated into a research problem. Once you approach the problem from a research angle, you can find a solution. For example, “sales are not growing” is a management problem. Translated into a research problem, we may examine the expectations and experiences of several groups: potential customers, first-time buyers, and repeat purchasers. We will determine if the lack of sales is due to (1) poor expectations that lead to a general lack of desire to buy, or (2) poor performance experience and a lack of desire to repurchase. What then is the difference between a management problem and a research problem? Management problems focus on an action. Do we advertise more? Do we change our advertising message? Do we change an under-performing product configuration? If so, how? Research problems, on the other hand, focus on providing the information you need in order to solve the management problem. Analyzing/ Interpreting Data Research Report EXHIBIT 1.2 BASIC RESEARCH ISSUES As technology advances, marketing researchers continually look for ways to adapt new technology to the practice of research. However, researchers must never forget that research basics cannot be overlooked. Rather, what must be done is to adapt the new techniques and technologies to these basics. All studies must address the following basic issues (Anderson, Berdie, & Liestman, 1984): 1 - ASK THE RIGHT QUESTIONS. This is the essence of project design and the heart of proper planning. Every project is unique, and as such must be tailored to the user’s needs. 2- ASK THE RIGHT PEOPLE. The goal of sample design should be that only those people who are of interest to the researcher are contacted, and that those contacted are representative of the group of interest 3 - ASK QUESTIONS THE RIGHT WAY. It is not enough to be able to ask the right questions; they must be asked the right way. This is the essence of questionnaire design. If the wording of the questions is not clear to the respondents, the results will be useless. Pretesting the questionnaire is crucial for ensuring that responses are the ones that are needed. 4 - OBTAIN ANSWERS TO QUESTIONS. Data collection is central to all marketing research. The techniques used should minimize non-response while maximizing response. 5 - RELATE ANSWERS TO THE NEEDS OF THE RESEARCH USER/CLIENT. Data seldom speaks for itself. Proper data analysis is needed if a study is to have any value to the user. Here there is a risk of letting advanced techniques become the master of the researcher rather than the opposite. Common sense is a valuable tool for the researcher when considering alternative analysis approaches for any project. 6 - COMMUNICATE EFFECTIVELY AND IN A WAY THAT THE CLIENT UNDERSTANDS. Many good projects are ruined because the information that is reported to the user is in a form that is not understandable. Reports must tell the user what information is relevant, and how it is relevant to the issues at hand. Once you’ve created a research problem, you have to develop a research question. A research question gives your research direction. From the research question, a hypothesis or hypotheses can be formulated to guide the research. A hypothesis should include a statement about the relationship between two or more variables and carry clear implications for testing the stated relationship. For example, you might need to know if and how your customers’ positive and negative product expectations are confirmed or disconfirmed upon product use. HOW TO FORMULATE THE RESEARCH PROBLEM Problem formulation is simplified once we define the components of the research problem. 1. Specify the Research Objectives A clear statement of objectives will help you develop effective research. It will help the decision makers evaluate your project. It’s critical that you have manageable objectives. (Two or three clear goals will help to keep your research project focused and relevant.) 2. Review the Environment or Context of the Problem As a marketing researcher, you must work closely with your team. This will help you determine whether the findings of your project will produce enough information to be worth the cost. In order to do this, you have to identify the environmental variables that will affect the research project. These variables will be discussed in-depth in later chapters. 3. Explore the Nature of the Problem Research problems range from simple to complex, depending on the number of variables and the nature of their relationship. If you understand the nature of the problem as a researcher, you will be able to better develop a solution for the problem. To help you understand all dimensions, you might want to consider focus groups of consumers, sales people, managers, or professionals to provide what is sometimes much needed insight. 4. Define the Variable Relationships Marketing plans often focus on creating a sequence of behaviors that occur over time, as in the adoption of a new package design, or the introduction of a new product. Such programs create a commitment to follow some behavioral pattern in the future. Studying such a process involves: • Determining which variables affect the solution to the problem. • Determining the degree to which each variable can be controlled. • Determining the functional relationships between the variables and which variables are critical to the solution of the problem. During the problem formulation stage, you will want to generate and consider as many courses of action and variable relationships as possible. 5. The Consequences of Alternative Courses of Action There are always consequences to any course of action. Anticipating and communicating the possible outcomes of various courses of action is a primary responsibility in the research process. Exhibit 1.3 provides an example of a company introducing a new product based on research that did not examine relevant variables in the consumer purchase decision. EXHIBIT 1.3 “NEW COKE” VERSUS ORIGINAL COKE In the mid-1980s, the Coca Cola Company made a decision to introduce a new beverage product (Hartley, 1995, pp. 129–145). The company had evidence that taste was the single most important cause of Coke’s decline in the market share in the late 1970s and early 1980s. A new product dubbed “New Coke” was developed that was sweeter than the original-formula Coke. Almost 200,000 blind product taste tests were conducted in the United States, and more than one-half of the participants favored New Coke over both the original formula and Pepsi. The new product was introduced and the original formula was withdrawn from the market. This turned out to be a big mistake! Eventually, the company reintroduced the original formula as Coke Classic and tried to market the two products. Ultimately, New Coke was withdrawn from the market. What went wrong? Two things stand out. First, there was a flaw in the market research taste tests that were conducted: They assumed that taste was the deciding factor in consumer purchase behavior. Consumers were not told that only one product would be marketed. Thus, they were not asked whether they would give up the original formula for New Coke. Second, no one realized the symbolic value and emotional involvement people had with the original Coke. The bottom line on this is that relevant variables that would affect the problem solution were not included in the research.
Posted on: Sun, 01 Sep 2013 08:29:36 +0000
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