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Introduction, Nature & Scope of Marketing Research

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  1. Introduction, Nature & Scope of Marketing Research Dr. A. K. Dey

  2. Reference Books • Marketing Research an Applied Orientation • Naresh Malhotra & S. Dash • Business Research Methods • Cooper & Schindler • Marketing Research – Text & Cases • Boyd, Westfall & Stasch Res Method _ 1: Dr. Dey

  3. Some Important Aspects • In order to understand and appreciate Research Methodology following points must be very clear • What is Research? • What is Marketing Research? Why carry out Marketing Research? How it is different from Market Research? • What is Bus Res Methods or Research Methodology? • The connection between MR and managerial decision making. Res Method _ 1: Dr. Dey

  4. Some Important Aspects…Contd. • Is MR applicable in all situation? • Def of MR. • Scope of MR • Scientific & Non-scientific Research: Distinction between these • Validity & Reliability Res Method _ 1: Dr. Dey

  5. Some Important Aspects…Contd. • Six difficulties in applying scientific method to marketing • Investigator involved in the use of result • Imprecise measuring devices: How to measure attitudes? Intentions? Opinions? • Influence of measurement process on the result • Time pressure for the result • Difficulty in using experiments to test hypothesis • Great complexity of subjects Res Method _ 1: Dr. Dey

  6. Some Important Aspects…Contd. • Research Process: How to conduct a research? Which steps in which sequence? • How many types of research • Qualitative: Exploratory • Quantitative: Descriptive and Experimental • What is Research Design • Sampling Design • Scaling: Attitude Measurement • Questionnaire Construction Res Method _ 1: Dr. Dey

  7. Objectives • Understand Marketing Research (MR) • Understand relevance of MR for marketing decisions • Develop appreciation of MR & its applications • Know the procedure of conducting • Develop familiarity with each step of procedure Res Method _ 1: Dr. Dey

  8. What is Business Research? • A systematic Inquiry whose objective is to provide information to solve managerial problems. Res Method _ 1: Dr. Dey

  9. Why Study Research? • Research provides you with the knowledge and skills needed for the fast-paced decision-making environment Res Method _ 1: Dr. Dey

  10. Different Styles of Research • Applied Research • Emphasis on solving practical (specific) problems • It could be exploring opportunities also • Rectifying an inventory system that is resulting into lost sales • Opportunity to increase stockholder wealth by acquiring another firm • Pure Research/Basic Research • Emphasis on problem solving but of a general nature (not specific) • Effect of coupon as against rebate to stimulate demand Res Method _ 1: Dr. Dey

  11. What is Good Research? • Following the standards of the scientific method • Purpose clearly defined • Research process detailed • Research design thoroughly planned • Limitations frankly revealed • High ethical standards applied Res Method _ 1: Dr. Dey

  12. What is Good Research? (cont.) • Following the standards of the scientific method (cont.) • Adequate analysis for decision-maker’s needs • Findings presented unambiguously • Conclusions justified • Researcher’s experience reflected Res Method _ 1: Dr. Dey

  13. The Manager-Researcher Relationship • Manager’s obligations • Specify problems • Provide adequate background information • Access to company information gatekeepers • Researcher’s obligations • Develop a creative research design • Provide answers to important business questions Res Method _ 1: Dr. Dey

  14. Manager-Researcher Conflicts • Management’s limited exposure to research • Manager sees researcher as threat to personal status • Researcher has to consider corporate culture and political situations • Researcher’s isolation from managers Res Method _ 1: Dr. Dey

  15. When Research Should be Avoided • When information cannot be applied to a critical managerial decision • When managerial decision involves little risk • When management has insufficient resources to conduct a study • When the cost of the study outweighs the level of risk of the decision Res Method _ 1: Dr. Dey

  16. Need for MR • A manager takes decisions • His responsibility is to reduce risk of failure in decision making • Risk arises due to lack of relevant information • A manager always seeks information to improve quality of decision making • Information can be collected through MR • Hence, MR is an important tool for managerial decision making Res Method _ 1: Dr. Dey

  17. MR & Marketing Decisions • For Production, Finance, Personnel • Most of the required info are available within the organization; Hence easy to collect & analyze • Formal procedures are used to improve quality : Stats Methods for QC, PERT & CPM, Queuing Theory, Optimization Techniques etc • For Marketing – information mostly exist outside the organization • In consumer behaviour, perception, minds • In competitive moves • In new government rules & regulations • In social & political changes Res Method _ 1: Dr. Dey

  18. MR & Marketing Decisions • Other problems for collecting information required for marketing decisions are • Being external – collection is cumbersome & expensive • Variables are often qualitative & dynamic – making measurements difficult & inaccurate • Variables are complex & interact with each other Res Method _ 1: Dr. Dey

  19. Risk of using wrong information • Choice of wrong information may lead to • Excessive expenditure • Decision going astray – Hind Sanitaryware • Becoming uncompetitive & losing out – S Kumars Internet centers & Modular Kitchen • Market may vanish all of a sudden – fashion garments Res Method _ 1: Dr. Dey

  20. Scientific Method: The Essential Tenets of Science • Direct observation of phenomena • Clearly defined variables, methods, and procedures • Empirically testable hypotheses • Ability to rule out rival hypotheses • Statistical justification of conclusions • Self-correcting process Res Method _ 1: Dr. Dey

  21. Ways to Communicate • Exposition • descriptive statements that merely state and do not give reason • Argument • allows us to explain, interpret, defend, challenge, and explore meaning • Two types: Deduction & Induction Res Method _ 1: Dr. Dey

  22. Important Arguments in Research • Deduction is a form of inference that purports to be conclusive • Induction draws conclusions from one or more particular facts • For suitable examples consult book pages 32 - 34 Res Method _ 1: Dr. Dey

  23. The Building Blocks of Theory • Concepts • Constructs • Definitions • Variables • Propositions and Hypotheses • Theories • Models Res Method _ 1: Dr. Dey

  24. Understanding Concepts • A concept is a bundle of meanings or characteristics associated with certain events, objects, conditions, situations, and behaviors • Concepts have been developed over time through shared usage Res Method _ 1: Dr. Dey

  25. Understanding Concepts • The success of research hinges on: • how clearly we conceptualize • how well others understand the concepts we use • For customer loyalty use questions that tap faithfully the Attitude of participants • Attitudes are abstract, try to measure them using carefully selected concepts Res Method _ 1: Dr. Dey

  26. What is a Construct? • A construct is an image or idea specifically invented for a given research and/or theory-building purpose. • Constructs are required for more abstract concepts – “Personality”, “Satisfied Customer” Res Method _ 1: Dr. Dey

  27. Types of Variables • Independent • Dependent • Moderating • Extraneous • Intervening Res Method _ 1: Dr. Dey

  28. Types of Variables • Independent & Dependent • Leadership style & Employee performance or Job satisfaction • Price of a product & Demand • Independent • Cause, Stimulus, Predictor, Antecedent • Dependent • Effect, Response, Criterion, Consequence Res Method _ 1: Dr. Dey

  29. Types of Variables • Moderating • In each relationship there is one Independent Variable (IV) & one Dependent Variable (DV) • Four day work week (IV) will lead to higher productivity (DV) • Moderating variable is a second independent variable that has significant effect on the originally stated IV–DV relationship • Four day work week (IV) will lead to higher productivity (DV), especially among young workers (MV) Res Method _ 1: Dr. Dey

  30. Types of Variables • Extraneous • Infinite number of extraneous variables (EV) exist that might effect the relationship • Most of such variables have little or no effect on the given situation and these may be ignored • Others may have highly random occurrence as to have little impact • For productivity example: election of a new mayor, rainy days, bird flu, strike etc Res Method _ 1: Dr. Dey

  31. Types of Variables • Intervening • Intervening variable (IVV) is defined as a factor which theoretically effects the observed phenomenon but can not be seen measured or manipulated • Its effect can be inferred from the effects on the observed phenomenon • Four day work week (IV) will lead to higher productivity (DV) by increasing job satisfaction (IVV) Res Method _ 1: Dr. Dey

  32. Propositions & Hypotheses • Proposition • A statement about concepts that may be judged as TRUE or FALSE if it refers to observable phenomenon • Proposition formulated for empirical testing is Hypothesis • Example • Infosys employees have higher than average achievement motivation Res Method _ 1: Dr. Dey

  33. The Role of the Hypothesis • Guides the direction of the study • Identifies facts that are relevant • Suggests which form of research design is appropriate • Provides a framework for organizing the conclusions that result Res Method _ 1: Dr. Dey

  34. Characteristics & Types of a Good Hypothesis • A good hypothesis should fulfill three conditions: • Must be adequate for its purpose • Must be testable • Must be better than its rivals • Hypothesis types • Descriptive • Relational: Correlation & Causal Res Method _ 1: Dr. Dey

  35. Types of Hypothesis • Descriptive • Describes the existence, size, form or distribution of some variables • Eighty percent of shareholders of HLL favour increasing the company’s cash dividend • It can also be stated as research question • Do shareholders of HLL favour an increased cash dividend? • Either form is acceptable, but descriptive hypothesis format has advantages • Encourages researcher to crystallize thinking • Encourages to think about implications of either an accepted or rejected finding • Useful for testing statistical significance Res Method _ 1: Dr. Dey

  36. Types of Hypothesis • Relational • Statements that describe the relationship between two variables with respect to some case • Foreign (variable) refrigerators are perceived to be of better quality (variable) by Indian consumers (case) Res Method _ 1: Dr. Dey

  37. Types of Relational Hypothesis • Two types: Correlation & Causal • Correlation • Merely states that variables occur together without implying that one causes the other • People in Kerela give more importance to education than people in Punjab • In an office old employees are more responsive than young employees Res Method _ 1: Dr. Dey

  38. Types of Relational Hypothesis • Causal (or Explanatory) • There is an implication that existence of (or a change in) one causes or leads to a change in the other • Causal variable is called Independent variable and the other Dependent variable • Advertisement causes higher sales • Increase in income leads to higher savings Res Method _ 1: Dr. Dey

  39. The Value of a Theory • Narrows the range of facts we need to study • Suggests which research approaches will yield the greatest meaning • Suggests a data classification system • Summarizes what is known about an object of study • Predicts further facts that should be found Res Method _ 1: Dr. Dey

  40. Definition of Marketing Research • American Marketing Association MR is the systematic gathering, recording and analyzing of data about problems related to the marketing of goods & services • Philip Kotler MR is the systematic design, collection, analysis & reporting of data & findings relevant to a specific marketing situation facing the company It may be relevant to add the word “continuous” to the above definitions Res Method _ 1: Dr. Dey

  41. Purpose of MR • To improve quality of decision making process by providing information • To help reduce the risk associated with managerial decision making • Risk due to two types of uncertainties: • About the expected outcome • About the future environment • To discover opportunity & exploit profitably For example : Frooti, Velvette, Mother Dairy, Dhara, Pan Parag Res Method _ 1: Dr. Dey

  42. Scope of MR • Consumers of products & services Buyer behaviour, Influencers, Buying habits, Incentives • Product & product design Pricing, Sourcing, Physical attributes • Distribution Channels Performance, Dealer Satisfaction, Own vs Multi-brand • Advertising Impact Image, Positioning, Media Planning, Message Content & Prioritizing • Macro Level Phenomenon Govt spending. Mood of the Industry, State of Economy Res Method _ 1: Dr. Dey

  43. MR Procedure • Seven inter-related steps • Specifying research objectives • Preparing a list of needed information • Designing the data collection project • Selecting a sample type • Determining sample size • Organizing & carrying out the field work • Analyzing the collected data & report the findings Res Method _ 1: Dr. Dey

  44. 6 Management Decision 5 Measurement Questions 4 Investigative Questions 3 Management Questions 2 Research Questions Management Dilemma The Management-ResearchQuestion Hierarchy 1 Res Method _ 1: Dr. Dey

  45. The Management-ResearchQuestion Hierarchy 6 Management Decision 5 Conduct an employee survey for outcomes of change in compensation structure 4 If compensation scheme is changed, will good sales persons leave? 3 Introduce individual incentive? Quota based incentive? Advertise more? 2 How can we improve sales in south? 1 Why are sales declining in south while sales are booming in all other regions? Res Method _ 1: Dr. Dey

  46. Working with the Hierarchy • Management Dilemma • The symptom of an actual problem • Not difficult to identify a dilemma, however choosing one to focus on may be difficult • Needs proper prioritizing Res Method _ 1: Dr. Dey

  47. Working with the Hierarchy • Management Question Categories • Choice of purposes or objective • Generation and evaluation of solutions • Troubleshooting or control situation Res Method _ 1: Dr. Dey

  48. Working with the Hierarchy • Fine tune the research question • Examine concepts and constructs • Break research questions into specific second-and-third-level questions • Verify hypotheses with quality tests • Determine what evidence answers the various questions and hypothesis • Set the scope of your study Res Method _ 1: Dr. Dey

  49. Working with the Hierarchy • Investigative Questions • Questions the researcher must answer to satisfactorily arrive at a conclusion about the research question Res Method _ 1: Dr. Dey

  50. Working with the Hierarchy • Measurement Questions • The questions we actually ask to extract information from respondents Res Method _ 1: Dr. Dey