TURNING MARKETING INFORMATION INTO ACTION

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  I. THE ROLE OF MARKETING RESEARCH
  A. Definition of Marketing research
  The process of	defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions to improve an organization’s marketing activities.
  Why?	Cannot provide answers with complete assurance, Can reduce risk and uncertainty to improve decision making.
  B. Good Marketing Research Is Difficult
  Do consumers really know whether they are likely to buy new product? If they know the answer, will they tell? Will they buy it if they say that they will
  C. Steps in Making Effective Decisions:
  II. STEP 1: DEFINE THE PROBLEM
  Fisher-Price’s toy testing shows how to define the problem and its two key elements: setting the research objectives and identifying marketing actions suggested by the research. This is how Fisher-Price designers developed the Chatter Telephone.™
  A. Set the Research Objectives
  Objectives are	specific measurable goals the decision maker seeks to achieve in solving a problem.
  Typical marketing objectives	increasing revenues and profits discovering what consumers are aware of and want finding out why a product isn’t selling well.
  B. Identify Possible Marketing Actions
  C. Define Measures of Success
  Criteria or standards used in evaluating proposed solutions to the problem. Will different research outcomes will lead to different marketing decisions. If all the research outcomes lead to the same action, the research is useless and a waste of resources.

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• III. STEP 2: DEVELOP THE RESEARCH PLAN
  A. Specify the constraints on the research activity,
  Restrictions placed on potential solutions by the nature and importance of the problem. Common constraints are limitations on time and money available to solve problems.
  B. identifying the data needed for marketing actions, and
  Often research studies collect data that are interesting but irrelevant for marketing decisions that result in marketing actions. Focus on collecting data that help managers make clear decisions
  C. Determine how to collect the data.
  1.Concepts	Hypothesis Conjecture or idea about the relationship of two or more factors or what might happen in the future. Can come from many sources: theoretical reasoning, marketing studies, technical breakthroughs, informal conversations, educated guesses, customer suggestions. A new-product concept is a tentative description of a product or service the firm might offer for sale.
  2.Methods
  The approaches that can be used to collect data to solve all or part of a problem. Information on useful methods is available in marketing research textbooks and handbooks. The Journal of Marketing and the Journal of Marketing Research summarize various methods and techniques valuable in addressing marketing problems.
  Marketing Methods
  Sampling	Probability sampling
  	Precise rules to select the sample Each element of the population has a specific known chance of being selected.
  	Nonprobability sampling
  	Arbitrary judgments to select the sample Chance of selecting a particular element may be unknown or 0. It may be chosen when research time and budgets are limited.
  statistical inference	drawing conclusions about a population (the “universe” of all people, stores, or salespeople about which generalizations will be made) from a sample (some elements of the universe) taken from that population. The sample should be representative of the population Otherwise, bias can be introduced, resulting in bad marketing decisions.

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• IV. STEP 3: COLLECT RELEVANT INFORMATION .
  Internal Secondary Data	External Secondary Data
  financial statements sales reports research reports customer demographics product purchase files.	U.S. Census Bureau reports, trade association reports, studies by market research firms that are offered for sale, business periodicals containing market studies. These data are available online via the Internet; they can be located using a search engine. New marketing data services offer single-source data-information provided by a single firm on household demographics and lifestyle, product purchases, TV viewing behavior, and responses to coupons and free-sample promotions. The principal advantage of single-source data is the ability of one service to collect, analyze, interrelate, and present all this information.
  A general rule is always to obtain secondary data first and then collect primary data. • Advantages of secondary data: Time savings if data have already been collected. Low cost, such as free or inexpensive census reports. Greater level of detail, especially in U.S. Census bureau data. • Disadvantages of secondary data: May be obsolete or out of date. Definitions or categories may not be quite right for your project. Data collected for another purpose may not be specific enough for your project.
  Facts and figures that are newly collected for the project. Two ways to collect new or primary data observing people and asking them questions. 1.Observational Data Obtained by watching how people actually behave Observational data are both useful and flexible Can be costly to obtain and unreliable when different observers report different conclusions about the same event. Can reveal what people do, it cannot easily determine why they do it mechanical observational data National TV ratings use a people meter, a box attached to TV sets, VCRs, cable boxes, and satellite dishes in 5,000 households across the U.S. Internet user behavior is tracked by mouse clicks from over 225,000 users in 26 countries via an electronic meter installed on their home or work computers. Whereas Nielsen ratings rank the top national TV programs, Nielsen//NetRatings rank the top websites for selected countries in Asia, Europe, and the Americas. Videotaping is another observational approach. ethnographic research anthropologists look for subtle emotional reactions as consumers encounter products in their “natural use environment,” such as in their home, car, or hotel. 2.Questionnaire Data Facts and figures obtained by asking people about their attitudes, awareness, intentions, and behaviors. Essential that the researcher concentrate on questions directly related to the marketing problem at hand. Questionnaire data can be used for hypothesis generation hypothesis evaluation: Studies for hypothesis generation test ideas discovered in the hypothesis generation stage Individual interviews involve a single researcher asking questions of one respondent. Focus groups informal sessions of 6 to 10 customers discussion leader asks opinions. “Fuzzy front end” methods attempt to identify elusive consumer tastes and trends before typical consumers have recognized them themselves. Unusual techniques to spot consumer trends early include having teenagers complete a drawing and hiring “cool hunters,” people with tastes far ahead of the curve. (1) Mail, fax, and Internet or e-mail surveys . cost less per respondent convenient for respondents to complete low response rates Can be biased by higher response rates from especially positive or negative users Have high evaluation costs owing to large sample sizes (2) Telephone surveys are flexible Increasingly difficult to complete because respondents may hang up on the interviewer. (3) Mall intercept interviews Personal interviews of consumers while on visits to shopping centers Increased dramatically owing to the high cost of reaching respondents in their homes. These interviews provide the flexibility to show visual cues such as ads or actual product samples A disadvantage is that people selected for interviews may not be representative of the consumers targeted. impacts the quality of results. Phrasing a question properly is critical to obtain useful marketing research information. Typical problems in wording questions include: Writing questionnaires Leading questions. Ambiguous questions. Unanswerable questions. Two questions in one. Nonexhaustive questions. Nonmutually exclusive questions. (1) Open-ended questions Respondents express opinions, ideas, or behaviors in their own words. This captures the “voice” of respondents. (2) Closed-end or fixed alternative questions Select one or more response options from a set of predetermined choices. The simplest form of a fixed alternative question is the dichotomous question, which allows only a “yes” or “no” response. (3) A fixed alternative question with three or more choices uses a scale. Semantic differential scale, opposite ends have one- or two-word adjectives that have opposite meanings. Respondents check at one of the intervening points how important or unimportant the meaning is to them. Likert scale, a respondent indicates the extent to which he or she agrees or disagrees with a statement. Electronic technology has revolutionized traditional concepts of interviews and surveys. Respondents can walk up to a kiosk in a shopping mall, read questions off a screen, and key in their answers on a touch screen. In fully automated telephone interviews, an automated voice asks questions, and respondents key replies on a touch-tone telephone. 3.Panels and Experiments • A panel Sample of consumers or stores from which researchers take a series of measurements. • An experiment Obtain data by manipulating factors under tightly controlled conditions to test cause and effect. Experiments can be influenced by outside factors (such as actions of competitors) that can distort the results of the experiment and affect variables (such as sales).

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• C. Using Information Technology to Trigger Marketing Actions
  Information technology	involves designing and managing computer and communication networks to provide a system to satisfy an organization’s needs for data storage, processing, and access leading to effective marketing actions.
  Sales “Drivers	Factors that influence buying decisions. Can be marketing mix factors, such as product and distribution Can be uncontrollable factors, such as competition and the changing tastes Understanding drivers involves managing an ocean of data. The marketer’s task is to convert this data into useful information on which to base informed decisions. In practice, some market researchers distinguish “data”-the facts and figures- “information”-the distilled facts and figures whose interpretation leads to actions.
  Key Elements of an Information System	Information technology is used to frame questions querying the database to provide answers leading to marketing actions. The questions go through statistical models that analyze the relationships that exist among the data. The databases form the core or “data warehouse” where the ocean of data is collected and stored. After searching this data warehouse, the models select and link the pertinent data Presenting them in tables and graphics for easy interpretation. Sensitivity analysis - query the database with “what if … ?” questions to determine how a hypothetical change in a driver like advertising can affect sales.
  3.The Challenge in Mining Marketing	Data Making decisions from marketing information has many frustrations Timely, useful facts and insights about the market and competition play a key role in spending to drive sales. Time is scarce Information is incredibly complex. Seasoned professionals must organize and interpret information clearly, quickly, and simply to initiate timely marketing actions.
  4.Data Mining:	Extraction of hidden predictive information from large databases. Some purchase patterns are common sense. Other patterns link seemingly unrelated purchases. Supermarkets mined checkout data and discovered that men buying diapers in the evening sometimes buy a six-pack of beer as well. So they placed diapers and beer near each other. Placing potato chips between diapers and beer Placing potato chips between diapers and beer increased sales on all three. Successful data mining ultimately depends on human judgments by the marketing managers and researchers in how to select, analyze, and interpret the information.

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• V. STEP 4: DEVELOP FINDINGS
  A. Analyze the Data
  Clear, visual, and concise answers are a competitive advantage to decision makers. However, clear analysis takes time, expertise, and creativity.
  B. Present the Findings
  Findings must be clear. This means	get to the heart of the matter avoiding distracting side issues deliver results visually a single page if possible.

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• VI. STEP 5: TAKE MARKETING ACTIONS
  A. Identify the Action Recommendations
  B. Implement the Action Recommendations
  Actions are the whole point of the research: You have to know what’s going on in the market If you find that there is a problem, you have to take steps to fix it.
  C. Evaluate the Results
  Evaluation is an ongoing process.	Evaluate the decision itself. Monitor the marketplace Set up proactive systems to determine if action is necessary in the future. Evaluate the decision process used. Keep vigilant for other news from the marketplace that corroborates or refutes the analysis

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• VII. MARKET AND SALES FORECASTING
  Forecasting or estimating the actual size of a market is often a key goal in a marketing research study. Good sales forecasts are important for a firm as it schedules production. To develop a sales forecast involves understanding
  A. Basic Forecasting Terms
  1.Market or Industry Potential
  market potential, or industry potential,	Maximum total sales of a product by all firms to a segment during a specified time period under specified environmental conditions and marketing efforts of the firms.
  Market potential for cake mix sales to U.S. consumers in 2005 might be 12 million cases-what Betty Crocker, Aurora Foods, and other producers would sell under certain assumptions. If one of the assumptions proves false, the estimate of market potential will be too high or too low. Assumptions upon which the estimate is made: Past patterns of dessert consumption continue. The same level of promotional effort continues relative to other desserts.
  2.Sales or Company Forecast
  sales forecast, or company forecast,	Maximum total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions its own marketing efforts.
  Example: Betty Crocker might develop a sales forecast of 4 million cases of cake mix in 200 Assumptions upon which the forecast is made: Past patterns of dessert consumption will continue in the future. The same level of advertising expenditures continues among Betty Crocker and other dessert producers. Average prices charged for cake mixes, adjusted for inflation, remain relatively stable. If Duncan Hines suddenly cuts its advertising in half, Betty Crocker’s cake mix sales forecast probably will be too low.
  B. Two Basic Approaches to Forecasting
  1.Top-Down Forecast	Subdivide an aggregate forecast into its principal components. “Survey of Buying Power,” published annually by Sales and Marketing Management magazine, is a widely used source of top-down forecasting information.
  2.Buildup Forecast	Sum the sales forecasts of each of the components to arrive at the total forecast. Widely used when there are identifiable components such as products, product lines, or market segments in the forecasting problem.
  C. Specific Sales Forecast Techniques
  1.Judgments of the Decision Maker
  Direct forecast	Estimating the value to be forecast without any intervening steps. For example, how many quarts of milk should I buy?
  Lost-horse forecast	Start with the last known value of the item being forecast List the factors that could affect the forecast Assess whether they have a positive or negative impact Making the final forecast.
  2.Surveys of Knowledgeable Groups
  Survey of buyers’ intentions	Ask prospective customers whether they are likely to buy the product during some future time period.
  Salesforce survey	Ask the salesforce to estimate sales during a coming period.
  Jury of executive opinion	Ask knowledgeable executives inside the firm-such as vice presidents of marketing, research and development, finance, and production-during a coming period.
  Survey of experts	Ask experts on a topic to make a judgment about some future event.
  3.Statistical Methods
  Trend extrapolation.	Assumes that the underlying relationships in the past will continue into the future This is the basis of the method’s key strength: simplicity. In practice, marketing managers often use several of the forecasting techniques to estimate market size. Do three separate forecasts based on different sets of assumptions: “Best case” with optimistic assumptions. “Worst case” with pessimistic assumptions. “Most likely case” with most reasonable assumptions.