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Marketing Research :

Introduction and
MBS 2016
Boeing 2
Satmetrix plus 3

Real time feedback to Network Station NBC

Television shows are altered to based on viewer feedback
Mc Donalds 4
Toyota Scion 5
Coca-Cola Lost Millions Because of This
Market Research Mistake
In the mid-1980s, the Coca-Cola Company made a decision to introduce a new beverage product
The company had evidence that taste was the single most important cause of Cokes 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
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The new product was introduced and the original formula was withdrawn from the market.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 simultaneously.
Ultimately, New Coke was withdrawn from the market.
What went wrong?

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.
Definition of Marketing Research 8

Marketing research is the systematic and objective

and use of information
For the purpose of improving decision making related to the
identification and
solution of problems and opportunities in marketing
Market Research 9

Specifies the information necessary

to address these issues
Manages and implements the data
collection process
Analyzes the results
Communicates the findings and their
Classification of Marketing Research 10
Problem-Identification Research
Research undertaken to help identify problems which are not
necessarily apparent on the surface and yet exist or are likely to
arise in the future.
e.g. LEGO only 9% female users

Problem-Solving Research
Research undertaken to help solve specific marketing problems.
Examples: segmentation, product, pricing, promotion, and
distribution research.
LEGO: Research to understand small girls pattern of playing with toys
A Classification of Marketing Research

Marketing Research 11

Identification Research

Market Potential Research Segmentation

Market Share Research Research
Market Characteristics Product Research
Sales Analysis Research Pricing Research
Forecasting Research
Business Trends Research Promotion Research
Distribution Research
Problem-Solving Research
Table 1.1 12
Determine the basis of Test concept
segmentation Determine optimal product
Establish market potential design
and Package tests
responsiveness for various
segments Product modification
Select target markets Test marketing
Problem-Solving Research 13
Table 1.1

Pricing RESEARCH Promotional RESEARCH

Pricing Policies Copy Decisions

Price elasticity of demand Media decisions
Creative Advertising
Initiating and responding Testing
to price changes
Problem-Solving Research 14

Distribution Research

Attitudes of Channel Members

Location of Retail and Wholesale outlets
Types of Distribution
Channel Margins
Problem Identification and Problem Solving Research 15

Problem : Not creative in introduction of new products and

catering to needs of Adults

Research findings: kids orientation , high prices, adults wanted

quick foods with no preparation
Solutions : Introduced new flavors for adult palate
Introduced new products like nutri grain cereal
Kelloggs New Products 16
Marketing Research Process
Step 1: Defining the Problem

Step 2: Developing an Approach to the Problem

Step 3: Formulating a Research Design

Step 4: Doing Field Work or Collecting Data

Step 5: Preparing and Analyzing Data

Step 6: Preparing and Presenting the Report

The Role of Marketing Research 18
Customer Groups
Controllable Environmental
Marketing Factors
Marketing Economy
Research Technology
Laws & Regulations
Social & Cultural
Distribution Factors
Assessing Marketing
Providing Political Factors
Information Decision
Needs Making

Marketing Managers
Market Segmentation
Target Market Selection
Marketing Programs
Performance & Control
Marketing Research Suppliers &
Services 19
Internal suppliers
External suppliers
Full-service suppliers
Syndicated services
Standardized services
Customized services
Internet services
Limited-service suppliers
Field services
Focus groups and qualitative services
Technical and analytical services
Project Sears : Department Store Patronage

Purpose : Assess relative strengths and weaknesses of

Sears as compared to competitors

Goal : Formulate marketing programs to boost the

declining sales of Sears
Project Sears : Department Store Patronage

Research: Survey of households to get information on

- familiarity with department stores
- frequency of shopping in each
- choice criteria for stores and their relative importance
- evaluation of stores on choice criteria
- preference rating ,
- ranking
- degree of agreement with lifestyle statements and
- demographics
Project Sears : Department Store Patronage

Outcome : Customer perception and preference for Department stores

Areas of weakness w.r.t factors influencing consumers choice identified
Areas of weakness in product categories identified
Marketing Programs designed to overcome these weaknesses
Developed positioning strategy to attain desirable store image
International Marketing Research 23

Starbucks in Japan
Research to understand preferences of
Japanese customers

Acceptable Price
range 250-280
Plenty of food
items on menu like
salads and
Defining a Marketing
Research Problem and
Developing an Approach
The Problem Definition Process
Tasks Involved
Fig. 2.1
Discussion Interviews Secondary Qualitative
with with Data Research
Decision Maker(s) Experts Analysis

Environmental Context of the Problem

Step I: Problem Definition

Management Decision Problem

Marketing Research Problem

Step II: Approach to the Problem

Analytical Specification
Objective/ Model: Research Hypotheses of
Theoretical Questions
Foundations Verbal, Information
Graphical, Needed

Step III: Research Design

Tasks Involved in Problem Definition

Discussions with Decision

Interviews with Industry Experts
Secondary Data Analysis
Qualitative Research
The Problem Audit

The problem audit is a comprehensive examination of a

marketing problem with the purpose of understanding its
origin and nature.
1. The events that led to the decision that action is needed,
or the history of the problem
2. The alternative courses of action available to the DM
3. The information that is needed to answer the DM's
Mc Donalds : Problem Audit 29

Research Issue: Strategic decision at Mc Donalds to retain

market share
1. Events that led to the decision that action is needed- Losing
market share to competitors and unsuccessful campaigns
2. Alternative courses of action : new menu items, price
reduction, new outlets
3. Criteria for evaluation of alternative courses of action- Market
share and profitability
4.Information that is needed to answer DM s questions
Factors to be Considered in the
Environmental Context of the Problem





Got Milk 31

Got Milk 32

1990 s Milk sales declining

Findings of research milk is not central drink, it but was used in
combination with certain foods , milk was strongly missed when none
Management Decision Problem and Marketing
decision Problem

Management Decision Marketing Research

Problem Problem
Asks what the DM wants to do Asks what information is needed
Action Oriented and how it should be obtained
Focuses on symptoms Information oriented
Management Decision Problem

Should a new product be introduced?

Marketing Research Problem

To determine consumer preferences and purchase

intentions for the proposed new product.
Management Decision Problem 36

Should the advertising campaign be changed?

Marketing Research Problem

To determine the effectiveness of the current advertising

Management Decision Problem 38

Should the price of the brand be increased?

Marketing Research Problem 39

To determine the price elasticity of demand and the

impact on sales and profits of various levels of price
Management Decision Problem Vs. Marketing Research Problem

Management Decision Problem Marketing Research Problem

Should a new product be To determine consumer preferences

introduced? and purchase intentions for the
proposed new product

Should the advertising To determine the effectiveness

campaign be changed? of the current advertising

Should the price of the To determine the price elasticity

brand be increased? of demand and the impact on sales
and profits of various levels of price
Proper Definition of the Research Problem

Marketing Research Problem

Broad Statement

Specific Components
Components of an Approach

Objective/Theoretical Foundations
Analytical Model
Research Questions
Specification of the Information Needed
The Role of Theory in Applied Marketing
Research Task Role of Theory
1. Conceptualizing
Provides a conceptual foundation and understanding of the basic processes
and identifying underlying the problem situation. These processes will suggest key dependent
key variables and independent variables.
2. Operationalizing
Theoretical constructs (variables) can suggest independent and dependent
key variables variables naturally occurring in the real world.
3. Selecting a Causal or associative relationships suggested by the theory indicate
may whether
research design a causal or descriptive design should be adopted.
4. Selecting a The theoretical framework may be useful in defining the population and
sample suggesting variables for qualifying respondents, imposing quotas, or stratifying
the population
(see Chapter 11).
5. Analyzing andThe theoretical framework (and the models, research questions and hypotheses
interpreting data
based on it) guide the selection of a data analysis strategy and the interpretation
of results (see Chapter 14).
6. Integrating The findings obtained in the research project can be interpreted in the light of
findings previous research and integrated with the existing body of knowledge.
Research Questions and Hypotheses

Research questions (RQs) are refined

statements of the specific components of
the problem.
A hypothesis (H) is an unproven
statement or proposition about a factor or
phenomenon that is of interest to the
researcher. Often, a hypothesis is a
possible answer to the research question.
Importance of Problem Definition 45
HD : Problem Definition 46

Harley Davidson made a comeback in year 2000

In 2007, it had 50% market share
Decision to be taken Whether to invest in new
production facilities ?
Management was risk averse (having experiences sales
decline earlier because of fast growth and resulting
quality issues)
HD : Approach to Problem 47
1. Discussion with industry experts indicated :
Brand loyalty was the major factor impacting sales and repeat sales of motorcycles
2. Secondary data revealed that
Majority of Motor Cycles also own Cars,SUV s , etc.
3. Focus group with motor cycle owners indicated
Motorcycles not a primary source of transportation, but for recreation
Brand loyalty
4. Forecasts indicated:
Increase in consumer spending and recreation in 2015
Consumers becoming increasingly sophisticated and value conscious
Consumers valued brand image and well known brands were having loyalty
HD : Definition of Management Decision

Should Harley invest to produce more motor

cycles ?
HD : Marketing Research Problem 49

Whether customers would be loyal

buyers of HD in the long term?
Research Questions for HD 50

Who are HD Customers?

What are their and Demographic and Psychographic characteristics

Can different types of customers be distinguished ?

It is possible to segment the market?

Are the customers loyal to HD?

What is the extent of Brand Loyalty?

Hypothesis developed for HD based on
Research Question

Research Question : Can motor cycle buyers be segmented

based on psychographic characteristics?
Associated Hypothesis:

H1: There are distinct segments of motor cycle buyers

H2: Each segment is motivated to own a Harley for a different
H3: Brand loyalty is high among HD customers in all segments
Theory guiding the Research 52

Brand Loyalty is the result of positive beliefs ,attitude,

and experience with the brand.
HD : Research Conducted 53

Qualitative and Quantitative Research

1. Focus group of HD owners, would be owners and non-

2. 16000 surveys mailed
a.Understand demographic , psychographic and sociological
profile of customers
b.Understand their subjective appraisal of Harvey
Survey Results for HD 54

16000 surveyed to get psychographic, demographic profile and subjective

appraisal of HD
Major findings
Seven categories of customers adventurous, traditionalist, pragmatist,
loners, status seekers, classy capitalists and misfits; H1 supported
All considered HD as symbol of freedom , independence and power;H2
All were long term loyal customers of HD; H3 supported
HD decision taken 55

To invest in enhancing production facilities

Marketing Research Problem Definition :Sears 56

Broad Statement : Determine the major strengths and weaknesses of

Sears vis a vis its major competitors w.r.t factors that influence store
Major components :

What criteria do households use when selecting Departmental Stores

How do HHs evaluate Sears and its competitors on choice criteria
Which stores are patronized while shopping for specific product categories

An analytical model is a set of variables and their

interrelationships designed to represent, in whole or in
part, some real system or process.

In verbal models, the variables and their relationships

are stated in prose form. Such models may be mere
restatements of the main tenets of a theory.
Graphical Models


Understanding: Evaluation


Mathematical Models

Mathematical models explicitly specify the

relationships among variables, usually in equation form.

Y = f ( X1+ X2 ----------Xn)
Sears Project 60

RQ: Do the customers of Sears exhibit store loyalty?

H1: Customers who are store-loyal are less knowledgeable about the
shopping environment.
H2: Store-loyal customers are more risk-averse than are non-loyal
Sears Project 61

Specification of Information Needed

Component 1
The researcher identified the following factors as part of the choice criteria: quality of
merchandise, variety and assortment of merchandise, returns and adjustment policy, service
of store personnel, prices, convenience of location, layout of store, credit and billing
policies. The respondents should be asked to rate the importance of each factor as it
influences their store selection.
Component 2
The researcher identified nine department stores as competitors to Sears based on
discussions with management. The respondents should be asked to evaluate Sears and its
nine competitors on the eight choice criteria factors.
Sears Project 62

Component 3
16 different product categories were selected, including women's dresses,
women's sportswear, lingerie and body fashion, junior merchandise, men's
apparel, cosmetics, jewelry, shoes, sheets and towels, furniture and bedding,
and draperies. The respondents should be asked whether they shop at each
of the 10 stores for each of the 16 product categories.
Sears Project 63

Component 4

Information should be obtained on the standard demographic characteristics

and the psychographic characteristics of store loyalty, credit use, appearance
consciousness, and combining shopping with eating.
Case : Dell 64

What is the role that Marketing Research can play in helping Dell maintain
and build on its leadership position in the personal computers market?

What Problem identification Research should Dell undertake ?

What problem solving research should Dell undertake?

Case Dell 65

Define the Management Decision problem facing Dell when it seeks to maintain and
build on its leadership position ?

Define the corresponding marketing Research Problem.

Present a graphical model describing consumers selection of a personal computer


Formulate three research questions ,with one or more hypothesis associated with each