Marketing Research

Marketing Research - the process of defining a marketing problem and opportunity, systematically collecting and analyzing information and recommending actions.

Challenges: 1) Do consumers really know whether they are likely to buy a product they have never thought about before; 2)Will consumers be honest with the researchers; 3) Will consumers actually buy what they said in an interview they would buy?

Marketing Research is a tool to help business owners overcome these challenges so they can make reasonable estimates about what consumers will and won’t buy.

 Four Step Marketing Research Approach

                  * Define the Problem Carefully
* Develop a plan to collect the most appropriate information to  solve the problem

• Collect relevant data
• Develop a report that converts the data into findings and recommendations.

Step 1 Define the Problem - set research objectives

Objectives - are specific measurable goals the decision maker seeks to achieve in solving a problem. Typical marketing objectives are to: increase revenues and profits; discover what consumers are aware of and want; and find out why a product isn’t selling well.

Step 2 Develop the Research Plan

What data do you need for making decisions?  How are you going to collect the data?

Terms:

Concepts - are ideas about products or services
New Product Concept - a picture or verbal description of a product or service the firm might offer for sale to discover consumer reactions about the new product.
Methods - approaches that can be used to collect data to solve all or part of a problem.

Terms:

Sampling - involves selecting representative elements from the population, asking them questions, and treating their answers as typical of the group.

Statistical inference - generalize the results from the sample to a larger group to help decide on marketing actions.

Step 3 Collect Relevant Information

In order to make rational, informed decisions you have to collect an enormous amount of information, frequently at great expense.

Data - the facts and figures related to the problem.

Secondary Data - facts and figures that have already been recorded before the current project.

• Internal - company reports, sales reports from previous quarters or years
• External - Published by outside organizations such as US Census Bureau, trade associations, universities, business/trade periodicals, business books, companies web sites, etc.

Advantages: Saves Time, Low Cost (usually), can have a greater level of detail.

Disadvantages: May be out of date (Census 10 or 5 years), data may not be specific enough for the project.

Primary Data - facts and figures that are newly collected for the project.

• Observing People - facts and figures are obtained by

Watching  either mechanically or in person, how people actually behave. Examples: Mystery shoppers, People meters, etc

Advantage: Can reveal what people actually do and not what they say they do.

Disadvantage: Can be costly, does not reveal why people behave the way they do.  Conclusions can be unreliable when different observers interpret what they see differently.

• Questioning People - Questionnaire Data - facts and figures obtained by asking people about their attitudes, awareness, intentions, and behaviors. Examples: Individual Interviews, Focus Groups, Surveys, etc.

Advantages: more timely and specific to the problem being solved.

Disadvantage: Far more costly and time consuming to collect than secondary data.

Information Technology - operating computer networks that can store and process data..

Step 4 Deliver the Final Report

All this data has little value unless it is translated into recommendations that lead to actions for marketing managers.

Analyze the data
Present the Findings
Make Recommendations

SALES FORCASTING TECHNIQUES

Forcasting or estimating the potential sales is often a key goal in marketing research study.  Good sales forecasts are important for a firm as it schedules production or buys or hires.

A Sales Forecast - the total sales of a product that a firm expects to sell during a specified time period. Most are judgements developed by the decision maker.

A direct forecast - estimating without intervening steps

Lost horse forecast - 1. start with the last known value of the item being forecast. 2. list the factors that could affect the forecast. 3. Assess whether the factors have a positive or negative impact in the future. 4. Make the forecast.

Survey Knowledgeable Groups

To estimate what a firms sales will be next year, ask people who are likely to know something about future sales.

• Survey Buyers Intentions Forecasts - involves asking prospective customers if they are likely to buy the product during some future time period.
• A salesforce survey forecast - asking a firms salespeople to estimate sales during the coming period.

Statistical Methods

Trend Extrapolation - involves extending a pattern observed in past data into the future.  It assumes the underlying relationships in the past will remain and continue into the future.