King Fahd University of Petroleum & Minerals Department of Management and Marketing MKT 345 - Marketing Research by Dr. Alhassan G. Abdul-Muhmin

Lectures 1 & 2 Introduction to Marketing Research and its Role in a Firm

Reference: Zikmund, Chapter 1

LEARNING OUTCOMES

At the end of the discussion you should be able to: 1. define marketing research 2. identify and explain key concepts in the definition of marketing research 3. explain the difference between basic and applied research 4. list and explain the different ways in which marketing research serves an organization 5. list the conditions under which research may not be conducted prior to a marketing decision 6. identify the different kinds of marketing research suppliers in the global, GCC, and Saudi Arabia marketing research industry

WHAT IS MARKETING RESEARCH?

1. A systematic and objective process of generating information to aid in marketing decisions (Zikmund 8e, p. 3) 2. The application of the scientific method in searching for the truth about marketing phenomena Zikmund & Babin 9e, p. 3) What keywords can be identified from these definitions?

THE KEY WORDS

• From Zikmund 8e, the key words are:

1. Information 2. Process 3. Systematic 4. Objective 5. Decisions

• From Zikmund & Babin 9e, they are:

1. Scientific method 2. Truth 3. Marketing phenomena

The Key Words

1. Information –

– The primary function of marketing research (MR) is to provide information, not just to collect data. – Thus the MR function is also responsible for analyzing data collected, interpreting results, drawing conclusions, making recommendations, and communicating these to the decision maker.

2. Decisions –

– MR is usually conducted not just for the sake of doing research, but because the results will be used in decision making. – Research helps the decision-maker by reducing the risk of making a wrong decision.

The Key Words

3. Process – – MR is a process consisting of distinct activity stages – Decisions have to be made in each stage 4. Systematic – – MR should be conducted systematically (i.e. in an orderly manner) NOT haphazardly (or in a disorganized manner) 5. Objectivity – – MR should conducted objectively (i.e. without bias from the person doing the research) NOT subjectively (i.e. with the results depending on who is doing the research)

The Key Words

6) The Scientific Method • The scientific method is defined as the methods, techniques, and procedures used to ensure that research is conducted in a

systematic

and

objective

manner.

– Thus “science” is not only about mixing chemicals and observing what happens; it is about being systematic and objective in trying to arrive at the truth about a phenomenon 7) Truth • Also referred to as “objective reality” • Facilitated by systematicity and objectivity in scientific inquiry 8) Marketing Phenomena • What distinguishes “marketing research” from other “social science research”

The Official A.M.A. Definition of Marketing Research

Marketing research is the function that links the consumer, customer, and public to the marketer through information information used to [make marketing decisions such as]: – identify and define marketing opportunities and problems; – generate, refine, and evaluate marketing actions; – monitor marketing performance; and – improve understanding of marketing as a process Marketing research [as a process]: – specifies the information required to address these issues; – designs the method for collecting the information; – manages and implements the data collection process; – analyzes the results; and – communicates the findings and their implications (Footnote # 11 for Chapter 1; on p. 796)

• 1.

2.

3.

4.

CLASSIFICATION OF MARKETING RESEARCH

There are several ways of classifying mkt research: By application of research results – basic vs applied research By focal research design – exploratory, descriptive, or causal research By type of data collected – qualitative or quantitative research By locus of problem – problem identification or problem solving research,

BASIC VS APPLIED RESEARCH

Basic (or Pure) Research

•Research that is conducted to: – expand the boundaries of knowledge – verify the acceptability of a given theory, or – learn more about a certain concept •The findings usually do not have immediate implications for marketing practice.

Applied Research

•Research that is conducted to provide information to: – solve a real-life marketing problem, or – make decisions about particular courses of marketing action

Both basic and applied research use the scientific method –

THE ROLE OF MARKETING RESEARCH IN A FIRM

• MR is important in most business firms because it helps them to: 1. implement the

marketing concept

the philosophy of modern marketing 2. carry out

strategic marketing

practice of modern marketing - the

1) The Role of MR in Implementing the Marketing Concept The Marketing Concept

idea that identifies three components to successful marketing: - is a modern philosophical 1. Consumer/Customer orientation 2. Cross-functional integration 3. Profit orientation  Long run profitability Other key concepts in modern marketing are: – –

Customer Relationship Management

(CRM)  building and maintaining long-term relationships with valued customers

Total Quality Management (TQM)

– focus on continuous, customer-driven quality improvements

..Marketing Research and the Marketing Concept

1. MR helps a firm to become customer oriented by providing information for the firm to: – identify customer needs – determine ways to satisfy those needs – measure customer satisfaction so the firm can improve its performance – eliminate the commercialization of products that are technically exciting, but that do not satisfy customer needs.

• 2. MR helps a firm to adopt a cross-functional integration by: – gathering market information, and – communicating the information to all relevant departments MR information links all departments to each other just like a string links the beads of a rosary together.

..Marketing Research and the Marketing Concept

3.

– – MR helps a firm to improve its profitability by providing information for: sales and cost analyses selective targeting, etc 3.

– MR helps a firm to implement CRM by: gathering and storing customer-related information – designing data-mining projects to better serve customers 4.

– MR helps a firm to implement TQM by analyzing and bringing the customer perspective to quality improvement efforts – collecting and analyzing information for bench-marking

2) The Role of MR in Strategic Marketing

Strategic Marketing

- What marketing managers do to help chart the future strategic directions of their firms. It generally involves: 1. identifying and evaluating market opportunities 2. analyzing market segments and selecting target markets 3. planning and implementing the marketing programs (the marketing mix) 4. analyzing marketing performance

Role of Marketing Research in Strategic Marketing: Identifying and Evaluating Market Opportunities

MR provides information for:

– diagnosing markets, e.g. changes in demographics, consumer tastes, preferences, etc – estimating market potentials and forecasts – evaluating market opportunities

Role of Marketing Research in Strategic Marketing: Analyzing Market Segments and Selecting Target Markets

Marketing Research provides information to determine:

1. segment characteristics 2. segment growth potential 3. segment attractiveness, etc

Role of Marketing Research in Strategic Marketing: Planning and Implementing Marketing Programs

MR provides information on all aspects of the 4Ps

1. Product research (e.g. concept testing, product testing, brand name evaluation, etc) 2. Pricing related information (e.g. competitive price levels, customers' price consciousness, effectiveness of price discounts, etc) 3. Place-related information (e.g. effectiveness of alternative distribution channels, retail site location, optimum amount of shelf space, etc) 4. Promotion-related information (e.g. effectiveness of different types of ads, sales promotion methods, message

Role of Marketing Research in Strategic Marketing: Analyzing Market Performance

Marketing Research provides information to:

1. determine market shares 2. assess brand health 3. assess customer satisfaction levels, etc.

FACTORS AFFECTING DECISION TO CONDUCT OR NOT CONDUCT MARKETING RESEARCH 1.

2.

3.

4.

Time Constraints

– When there are time constraints to a decision

research may not be conducted

Availability of Data

– When data to help solve the problem or make the decision is already available internally

research may not be conducted

Nature of the Decision

– When the decision is tactical as opposed to strategic

research may not be conducted

Benefits vs. Costs

information exceeds its benefit in reducing the risk of a wrong decision – When the cost of gathering the

research may not be conducted

. The relevant questions to ask are : – Is the payoff from the research worth the investment?

– Will the information collected improve the quality of the decision enough to justify the expenditure?

– Is the proposed expenditure the best use of the funds ?

Determining When to (or Not to) Conduct Marketing Research

Time Constraints

Is sufficient time available ?

Yes Availability of Data

Information already on hand inadequate?

Yes Nature of the Decision

Is the decision of strategic or tactical importance?

Yes Benefits vs. Costs

Does the information value exceed the research cost?

Yes No No No Do Not Conduct Marketing Research No Conduct Marketing Research

MARKETING RESEARCH SUPPLIERS & SERVICES EXTERNAL MARKETING RESEARCH SUPPLIERS FULL SERVICE

Syndicated Services Standardized research Services Internet Services Customize d Services

LIMITED SERVICE

Field Services Branded Products and Services Coding and Data Entry Services Analytical Services Data Analysis Services

Marketing Research Suppliers & Services

•

Full-service suppliers

–

Research suppliers that contract for the entire ad hoc marketing research project of a client.

–

Also typically provide:

•

Customized services –

Research services tailored to the needs of a specific client • •

Syndicated services –

Standardized information that is of interest to many clients who are willing to pay a subscription to obtain the information, e.g. retail audit services

Standardized services –

Typically involving development and use a unique methodology for investigating a phenomenon, e.g. TNS Tracker

•

Marketing Research Suppliers & Services

–

Limited-service suppliers Research suppliers that specialize in particular research activities, such as:

1. Field interviewing services 2. Coding and data entry services 3. Analytical services 4. Data analysis services 5. Branded marketing research products 6. etc