MKGT 368 Review for Exam 1

1. MKGT 368Review for Exam 1 Spring 2011

2. Role ofMarketing Researchin Managerial Decision-MakingChapter 1

3. What is Marketing? • American Marketing Association Definition: • Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. • In sum, marketing is about… • meeting needs • delivering value to all people affected by a transaction • getting the right product to the right folks at the right time/place for the right price using an appropriate combination of promotional techniques (the four Ps)

4. What is Marketing Research? • American Marketing Association (p. 4 in your book): • …the function that links an organization to its market through the gathering of information. This information allows for the identification and definition of market-driven opportunities and problems and allows for the generation, refinement and evaluation of marketing actions. It allows for the monitoring of marketing performance and improved understanding of marketing as a business process. • Malhotra & Peterson (2006, p. 5): • …the systematic and objective identification, collection, analysis, dissemination, and use of information that is undertaken to improve decision making related to identifying and solving problems (also known as opportunities) in marketing. • Feinberg et al. (2008, p. 4): • … the systematic process of using formal research and consistent data gathering to improve the marketing function within an organization. This information is used to identify opportunities and problems, monitor performance, and link marketing inputs with outputs of interest, such as awareness, satisfaction, sales, share and profitability.

5. The “Marketing Concept” • Need for marketing research based on “marketing concept” • Idea introduced in 1952, GE’s Annual Report: • The (marketing) concept introduces the marketer at the beginning rather than at the end of the production cycle and integrates marketing into each phase of the business. Thus, marketing, through its studies and research, will establish for the engineer, the designer, and manufacturer, what the customer wants in a given product, what price he (or she) is willing to pay, and where and when it will be wanted. Marketing will have authority in product planning, production scheduling, and inventory control, as well as in sales, distribution, and servicing of the product. • Gave rise to the “Marketing System” • Conceptual model linking Independent Variables (causes) to Dependent Variables (outcomes) • Understanding the link between IVs and DVs (and reducing uncertainty) is a key function of marketing research 

6. Marketing System Dependent Variables Independent Variables Behavior Awareness Knowledge Liking Preference Intent to buy Purchase Understanding relationship between IVs and DVs is a key function of MR Marketing Mix (controllable) Pricing Promotion Product Distribution Situational Factors (uncontrollable) Demand Competition Legal/political Economic climate Technology Gov regulation Performance Measures Sales Market share Profit ROI Image From Feinberg et al. (2008)

7. The Decision-Making Process 1. Recognize a unique marketing problem or opportunity 2. Clarify the decision (what do we need to know?) 3. Identify alternative courses of action 4. Evaluate the alternatives 5. Select a course of action 6. Implement selected course of action and monitor results From Feinberg et al. (2008)

8. Common Questions Addressed by Marketing Researchers • Where are new market opportunities (based on macroenvironmental trends)? • How should we segment the market (based on customer characteristics)? • How are we doing (compared to the competition)? Are consumers satisfied with our product or service? If not, what should we improve? • How should we position our product (relative to the competition)? • How will people respond to a new product concept? Test marketing… • If our product is priced at $100, what will be the expected demand? • How effective is our advertising? Promotions? Sales force? • What’s in store for the future, and how should we adapt?

9. Marketing Research Process:Transforming Data into InformationChapter 2

10. Overview • Types of Marketing Research Firms • When is Marketing Research Needed? • Decision-Makers vs. Researchers • Iceberg Principle: Symptoms vs. Underlying Problems • Steps in Marketing Research • Elements in a Marketing Research Proposal • Unethical Activities in Marketing Research

11. Marketing Research Industry Research Supplier Internal External Full Service Limited Service Syndicated Customized Internet Field Services Data Coding and Entry Data Analysis Synovate AC Nielsen Greenfield On-Line SDR Atlanta Field Work Chicago Davis Coding Group Malhotra & Peterson (2006)

12. When is Marketing Research Needed? Exhibit 2.3 Can decision problem be resolved with subjective information? YES Type of information Decision Maker NO NO Don’t undertake the Info research process Nature of decision Is problem of strategic importance? YES Is secondary data inadequate for addressing the problem? NO Availability of data YES Bring in Marketing Researcher NO Time constraints Is there enough time to collect data for managerial decision? YES NO Are there enough resources ($, people) to carry out the study? Resources required YES NO Cost/Benefit Ratio Does value of research outweigh costs of research? Do undertake the Info research process YES

13. When NOT to conduct research… • Sufficient information for a decision already exists • Insufficient time for research – must make an immediate decision • Insufficient resources for research • When costs of research are greater than its benefits

14. Components of the Research Proposal Purpose of proposed research plan (problem, objectives) Type of study (e.g., exploratory, causal, primary, secondary etc.) Define target population and sample size Describe sampling technique and actual data collection methods to be used Research instruments to be used Possible managerial benefits Proposed cost of whole project Describe primary researchers and research firm Proposed tables (how data might be presented)

15. Researchers vs. Decision-Makers Researchers Decision-Makers Like to explore new questions Can tolerate long investigations Not concerned about cost Enjoy surprises Tentative; speak in probabilities Interested in past behavior • Want info to confirm decision • Want quick information • Less willing to pay for more info • Dislike & reject surprises • Decision- and results-oriented • Interested in future performance

16. Iceberg Principle: Symptoms vs. Problems

17. Four Broad Phases in Information Research Ten steps 

18. Ten Steps in Information Research

19. Unethical Activities… • by Client (End User) • Solicit proposals, but choose none. Use proposals as a guideline for how to conduct one’s own study. • Promise a long-term relationship to get a low introductory rate, but then never follow through with more projects • by Researcher • Unethical pricing: promise low price, then jack it up • Fail to provide (promised) incentives to research subjects • Abuse respondents; promise short survey that turns into an hour; pass along information without permission; collect information without permission • Selling useless research services • Interviewers make up data (“curbstoning” or “rocking chair” interviewing) • Interviewers create “phantom” data (duplicate actual data to boost sample) • Change or fail to report results in an effort to reach a certain conclusion • by Respondent • Give misleading responses (can include “socially desirable” responding)

20. Qualitative Methods:Interviews and Focus GroupsChapters 6-7

21. Qualitative vs. Quantitative Methods • Qualitative • Used in exploratory designs to gain prelminary insights into decision problems and opportunities • Quantitative • Using formalized standard questions and predetermined response options (yes, no) in questionnaires or surveys administered to large numbers of respondents • Differences Between Qualitative and Quantitative Approaches 

24. Focus Groups • Focus Groups • Formalized small group of people have an interactive, spontaneous discussion on one topic or concept • Can… • help identify root problem underlying symptoms • help identify questions to ask in a survey • provide insights into quantitative results • uncover hidden needs, wants, attitudes, feelings, perceptions and motives regarding products/services • lead to new ideas for products/services • help develop new measures for quantitative survey • provide insights into how people “experience” products/services (what they mean to them)

25. Composing a Focus Group • Selecting Participants • Select a good group of participants (relatively homogenous groups make people feel comfortable, but should have some variability in views) • Potential group members should have enough knowledge to contribute • Try to incorporate some randomization in selection (within a target group) • Size should be between 8-12 people with a moderator • Use a friendly invite and provide incentives (typically between $75-100) • Pick a comfortable location

26. Some Additional Interview Techniques • Case Study • Analyze in depth one or more situations similar to the problem you are trying to solve • Experience Interviews • Interview people believed to be knowledgeable about the problem you are trying to solve • Protocol Interviews • Ask people to verbalize the thought processes and activities they would go through in a given situation (e.g., buying a car) • Articulative Interviews • Listening to people in order to identify value conflicts they may have (e.g., want to buy a nice bike but also be frugal)

27. Projective Techniques • Definition • Techniques that allow a person to “project” their thoughts, feelings or motives onto others, a situation, or an object • Types • Word association: When I say “GO” you say_____ • Sentence completion: Students at WSU are _____ • Picture tests: Write or tell a story in response to a picture • Thematic apperception test: series of pictures; you tell the story • Cartoon (balloon) test: fill in the dialogue of a cartoon • Role playing in a given situation

28. Analyzing Qualitative Data • Inductive Approach • Goal is understanding why people do what they do and what products/service mean to them • Insights and theory-development are “bottom up” • They emerge as researchers read and interpret responses • Insights are “contextualized” within a culture/subculture (thick description)

29. Nisbett & Wilson (1977, Psych Review)Telling More Than We Can Know:Verbal Reports on Mental Processes • Not aware of a response (snake phobics) • Not aware of a stimulus (the cord puzzle) • Not aware of a connection between stimulus and response (nylons) • So what? So this: we may need more creative interview techniques to get into people’s minds. • Enter Dr. ClotaireRapaille

30. Dr. ClotaireRapaille Archetype Discoveries Worldwidehttp://www.rapailleinstitute.com/ I don’t care what you’re going to tell me intellectually. I don’t care. Give me the reptilian. Why? Because the reptilian always wins.

31. Dr. ClotaireRapaille Internationally known expert in Archetype Discoveries and Creativity Archetype: In psychology, according to the theory of psychologist Carl Jung, an idea or way of thinking that has been inherited from the experience of the race and remains in the consciousness of the individual, influencing his perception of the world. (Webster’s) Dr. Rapaille's technique for market research based on his work in the areas of psychiatry, psychology, and cultural anthropology. Dr. Rapaille searches for the “code” behind certain words and ideas (e.g., luxury), and uses these insights to help marketers promote their products.

32. Dr. ClotaireRapaille On the Limitations of Traditional Marketing Researchers: “They are too cortex, which means that they think too much, and then they ask people to think and to tell them what they think. Now, my experience is that most of the time, people have no idea why they’re doing what they’re doing. They have no idea, so they’re going to try to make up something that makes sense. Why do you need a Hummer to go shopping? “Well, you see, because in case there is a snowstorm.” No. Why [do] you buy four wheel drive? “Well, you know, in case I need to go off-road.” Well, you live in Manhattan; why do you need four wheel drive in Manhattan? “Well, you know, sometime[s] I go out, and I go—” You don’t need to be a rocket scientist to understand that this is disconnected. This is nothing to do with what the real reason is for people to do what they do. So there are many limits in traditional market research.” Dr. Rapaille in action: Finding the code for “luxury”  (42:20)

33. The Reptilian Brain Reptilian Oldest part of brain from an evolutionary perspective Paul D. MacLean (1913 - 2007) American physician Neuroscientist Yale, NIMH • Triune Brain Theory • Reptilian brain (instincts) • Limbic system (emotion) • Neocortex (higher order thought)

34. Descriptive Designs:Surveys & ObservationsChapter 8 Is X related to Y?

35. When Are Descriptive Designs Appropriate? • Want to describe current characteristics of a market (e.g., attitudes toward an existing product or certain aspects of the marketing mix) • Want to understand your target market’s characteristics (e.g., demographics, psychographics) • Want to understand relationships between variables (e.g., price and purchase) or differences between groups (e.g., attitudes toward water filters between hikers and backpackers)

37. Sampling vs. Nonsampling Errors • Sampling Error • Statistically speaking, the difference between the sample results and the population parameter • Assuming perfect survey, sampling frame, execution, and respondents, we will still have error due to sampling • Sampling error becomes smaller with larger sample • Nonsampling (or Systematic) Error • A variety of errors that are not related to sampling error and/or sample size

38. Four Characteristics of Systematic Error • Nonsampling (Systematic) Error … • Leads to “systematic variation” in responses (e.g., skewed toward more socially desirable responses) • Is controllable (e.g., via good survey design and procedures) • Can not be estimated (whereas sampling error can be estimated; margin of error in a poll) • Are interdependent (i.e., one type of systematic error can lead to another) • Conceptual breakdown (Exhibit 7.2) – Handout in class

39. Non-Response Errors • Non-response error occurs when… • The final sample differs from the planned sample • Often happens when you can’t contact those in the planned sample or they refuse to participate • Those who choose not to respond often of lower income, education, and more likely to be male • Non-response can limit generalizability of findings to broader population • Strategies for reducing non-response error • Create good rapport, respect respondent’s time, enhance credibility of research sponsor, use shorter questionnaires

40. Response Error (Bias) • Response error occurs when… • The responses people give are not accurate • May occur due to • Deliberate falsification (e.g., social desirability, hostility) • Unconscious misrepresentation (e.g., faulty memory, desire to please researcher) • Might be able to detect with reaction times • Very fast or very slow RTs may tell you something

42. Sampling Errors • Population specification (frame) error • Your population is all Republicans, but you define your population as Republicans in WA • Sample selection error • When an inappropriate sample is selected from the desired population • May be due to either poor sampling procedures or intentionally excluding certain people from the sample • Sample frame error • Sample frame = list of potential people in your target population • Sample frame error = when the sample frame is not representative of your population (e.g., only those with email addresses)

43. Four Broad Categories of Survey Methods • Person Administered • In-home, executive, mall-intercept, purchase-intercept • Telephone Administered • Either by a person or completely automated • Self Administered • Panels, drop off, mailed survey • Computer Assisted • Fax, email, internet

44. Person Administered Surveys Advantages Disadvantages Interviewer can adapt to respondent Interviewer can create good rapport with respondents Interviewer can clarify questions and get insight via non-verbal responses Interviewers can ensure they are sampling the correct people • Can be slow • Interviewers may incorrectly interpret response (selective listening) • Interviewers may give off “clues” to the “correct” response • Can be expensive

45. Telephone Surveys Advantages Disadvantages Can monitor interviewers for quality control Less expensive than person administered Following up if respondent not available first time is inexpensive People who don’t agree to person administered (e.g., due to time constraints) may be more willing to do a telephone interview • Can’t use visual stimuli (though might be possible with cell phones) • Can be hard to keep a large amount of info in memory during interview • People bail on long phone interviews • Public is distrusting; can limit sample

46. Self Administered Surveys Advantages Disadvantages Low cost (no need for interviewer) Respondents not rushed, can take time if they want to Interviewer can’t bias response Anonymity can lead to more truthful responses • Can’t obtain any information beyond what is presented on survey (no follow up questions or probing possible) • Low response rates • If respondent doesn’t understand, can’t ask an interviewer; may lead to response errors • Data comes in slowly; may require several re-contacts

47. Paco UnderhillThe “King” of Observation www.envirosell.com

48. When to Use Observation • When the respondent may not be able to accurately recall the frequency of a behavior, and/or may be inclined to give misleading answers • When the response in question is a behavior (rather than a feeling) • When the behavior in question is relatively frequent and occurs within a limited time frame • When the behavior in question can be observed (e.g., in public)

49. Observation Advantages Disadvantages Gain data on actual behavior (rather than self-reported behavior which may be biased) • Generalizing from a limited number of observations can be difficult • May be difficult to understand why the behavior occurred • If doing observation in person (not recorded), possible to miss important behaviors (or other people)

50. Causal DesignsChapter 9 Understanding when (and why) X  Y