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The concept of marketing research, its definition, role, and process. It discusses how marketing research links consumers, customers, and public to marketers through information. The document also covers the importance of marketing research in developing and implementing marketing strategies, including identifying opportunities, analyzing market segments, planning and implementing a marketing mix, and analyzing marketing performance. The document further explores the role of marketing research in a digital and social media age and discusses the criteria for determining when to conduct marketing research.
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The marketing decision
Data analysis and report presentation
Problem definition
Fieldwork and data collection
Research design
Measurement
The role of marketing research and the research process
1
The role of marketing research
and the research process
To understand the difference between basic and applied marketing research. To understand the managerial value of marketing research as a management decision-making tool and its role in the development and implementation of marketing strategy. To understand when marketing research is needed and when it should not be conducted. To understand that marketing research sits within a global context and is continuously changing in response to new communication technologies. To list the stages in the marketing research process.
One way in which the impact of marketing research can be evaluated is by examining some of the winners and finalists of the Market Research Society (MRS) awards in 2018. These are judged by industry peers and take into account how much research has provided insights and outcomes that are useful for clients. The 2018 Award for Application of Research^1 was presented to the agency McCann Manchester for the work it did for Aldi, which followed their shoppers’ journey towards Christmas. This research combined ethnographic and observational research of 20 Aldi shoppers over nine weeks, in order to study in depth their motivations and behaviours as part of annual Christmas shopping trips. The research showed that that Aldi shoppers are ‘master planners’ who carefully budget and plan their Christmas shopping. This led Aldi to reconsider their communications regarding gifting and in brochures, and to realise that the purchase of a fresh, yet value-for-money turkey was a tipping point for higher purchases within the store, usually occurring one week before Christmas. The results of this research were also validated via survey research involving the broader population.
Market research is also essential for many not-for- profit organisations and to give voice to those who are not considered as part of government policy. The MRS winner for Public Policy / Social Research 2 , ICM Unlimited, conducted research about disability benefits reforms in the United Kingdom, focusing on the impact on those individuals with multiple sclerosis (MS). Proposed legislation for a 20-metre mobility rule would have dramatically the pension eligibility of MS suffers. Through the MS Society, the agency developed a four-stage methodology of stakeholder interviews, a
IN FOCUS
Source: Shutterstock.com/Victor Wong
Marketing research defined Marketing research can be defined as the function that links the consumer, customer and public to the marketer through information – information used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.^4 Marketing research specifies the information required to address managerial decision-making, designs the method for collecting the information, manages and implements the data-collection process, analyses the results, and communicates the findings and their implications. This definition suggests first that marketing research information is not intuitive or haphazardly gathered. Literally, research (re-search) means ‘to search again’. The term connotes patient study and scientific investigation wherein the researcher takes another, more careful look at the data to discover all that is known about the subject. Second, if the information generated or the data collected is to be accurate, marketing researchers must be objective. Researchers should be detached and impersonal rather than biased and attempting to support their preconceived ideas. If bias enters into the research process, the value of the research is considerably reduced. The importance of striving for objectivity cannot be over-emphasised: without objectivity, research is valueless. This definition of marketing research is not restricted to any one aspect of the marketing mix. The objective of the research is to facilitate the managerial decision-making process for all aspects of the firm’s marketing mix: pricing, promotion, distribution and product decisions. By providing the necessary information on which to base decisions, marketing research can reduce the uncertainty of a decision and thereby decrease the risk of making the wrong decision. However, research should be an aid to managerial judgement, not a substitute for it. Management is more than conducting marketing research; applying the research remains a managerial art. For example, a few years ago, research indicated that women who bought frozen dinners tended to lead hectic lives and had trouble coping with everyday problems. Using this information, an advertising agency developed an ad for Beef Short Cuts in Australia that showed a run-down working mother flopping into a chair just before her family was to arrive home for dinner. Suddenly realising that she had a problem, the woman had the bright idea of cooking a Beef Short Cuts meal. But the beginning of the ad turned out to be a terrible mistake. The company quickly found out that the last thing working mothers wanted to be reminded of was how tired they were. Research can suggest directions for changes in the marketing mix, but it cannot ensure the correct marketing execution. Finally, this definition of marketing research is limited by one’s definition of marketing. Although research in the marketing area of a for-profit corporation is marketing research, a broader definition of marketing research includes non-profit organisations such as the MS Society (UK), the Singapore Art Museum and the BBC. Each of these organisations exists to satisfy social needs, and each requires marketing skills to produce and distribute the products and services that people want. Hence, marketing research may be conducted by organisations that are not business organisations. National governments, for example, perform many functions that are similar, if not identical, to those of business organisations. Public service managers may use research techniques for evaluative purposes in much the same way as managers at Samsung or Mazda. This book explores marketing research as it applies to all types of organisations and institutions that engage in some form of marketing activity.
Research in a digital and social media age Change is a certainty, and the tools of marketing research reflect technological evolution as much as any area of business. Later in the book, we will discuss state-of-the-art research technologies, but here we introduce the notion of digital marketing and how it works with marketing research to help shape value. Digital marketing is a term used to capture the various electronic, communicative technologies through which marketing enterprises (suppliers, manufacturers, retailers etc.) work together with customers towards enhancing value from interaction, including exchange and relationships.^5 In the early 20th century, the widespread adoption of telephones greatly facilitated communication. In the late 20th century, optical scanners made traditional mechanical cash registers obsolete, along with band-stampers (a
marketing research The function that links the consumer, customer and public to the marketer through information that identifies and defines marketing opportunities and problems; generates, refines and evaluates marketing actions; monitors marketing performance; and improves understanding of marketing as a process.
digital marketing The various electronic, communicative technologies through which marketing enterprises work together with customers towards enhancing value from interaction.
device used to stamp the price, in purple ink, on cans, jars and boxes in stores) and label guns, and allowed the automatic recording of all sales to be fed into computers in real time. Today, so-called smart technologies (phones, tablets, computers) are ubiquitous, enabling not only online purchases to be recorded, but app usage, search behaviour, and a consumer’s whereabouts as well – all become potentially useful data. Figure 1.1 provides an overview of how marketing research fits into the business dynamic, with a particular emphasis on digital technologies. Marketing research programs digital technologies to collect information, and that information feeds back into marketing research as consumers use various devices and applications. When a consumer creates a product review and shares it on Facebook, that review has the potential to become data in a marketing research project. Marketing strategy helps shape research questions, and the resulting research enables the design of the marketing mix. All of these activities feed directly or indirectly into consumption value. And, to the extent that marketing enables value creation, other stakeholders realise value as well. Marketing research serves as the nerve centre for the socially engaged marketing firm.
Basic research and applied research One purpose of conducting marketing research is to develop and evaluate concepts and theories. Basic or pure research attempts to expand the limits of knowledge; it is not aimed at solving a particular pragmatic problem. It has been said that there is nothing so practical as a good theory. Although this is true in the long run, basic marketing research findings generally cannot be immediately implemented by a marketing executive. Basic research is conducted to verify the acceptability of a given theory or to learn more about a particular concept. Applied research is conducted when a decision must be made about a specific real-life problem. Our focus is on applied research – studies that are undertaken to answer questions about specific problems or to make decisions about particular courses of action or policies.
basic (pure) research Research conducted to expand the limits of knowledge, to verify the acceptability of a given theory, or to learn more about a specific concept. applied research Research conducted when a decision must be made about a real-life problem.
Marketing research
Marketing strategy
Consumer behaviours Media usage Searching Shopping Buying Experiencing Engaging
Marketing mix Product Price Place Promotion Brand management
Consumption value Utilitarian – solutions Hedonic – experiences Other value Owners Employees Community
Digital technologies
FIGURE 1.1 » MARKETING RESEARCH IS THE NERVE CENTRE FOR THE ORGANISATION ALWAYS RECEIVING, PROCESSING AND DISTRIBUTING INFORMATION
not, and from these results, new knowledge is acquired that may lead to a new theory or the modification of an existing theory. Use of the scientific method in applied research ensures objectivity in gathering facts and testing creative ideas for alternative marketing strategies. In basic research, scientific research contributes to conclusions that, over time, contribute to the development of general laws about phenomena like price and value. The scientific method is the philosophy and way of doing scientific research, the results of which are the basis for knowledge growth and better decision-making.
THE MANAGERIAL VALUE OF MARKETING RESEARCH FOR STRATEGIC DECISION-MAKING
Effective marketing management requires research. Mastercard found that acceptance of new mobile payment technology (PromptPay) in Thailand was only successful due to detailed anthropological research of some 5– hours per family. 7 The research showed that in rural Thailand, the reliance on cash and government payments meant delays and trips into towns. The political situation in that country also made trust of any institution a concern for the population. The research also used local anthropologists to understand particular local cultural nuances. The result was that the research helped build trust with rural people, and the PromptPay mobile technology was introduced with them in mind. For example, PromptPay was modified to pay utility bills, which was an issue for many in rural Thailand as it had to be linked to banks that charge higher fees. The research also revealed a desire for simplicity and automation, without the need to enter details repeatedly. It led to an increase in PromptPay users (as of November 2018) to 44.5 million people (from a population of 69 million), with 765 million transactions and 3.9 trillion baht in money transfers. While the previous example shows the value of proper market research to society and business, we can explore the importance of market research in developing and implementing a marketing strategy in four stages:
1 identifying and evaluating opportunities
2 analysing market segments and selecting target markets
3 planning and implementing a marketing mix that will satisfy customers’ needs and meet the objectives of the organisation
4 analysing marketing performance.
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EXPLORING RESEARCH ETHICS ➜ IS NEUROMARKETING RIGHT OR WRONG? 8
Market researchers are now turning to the relatively new technologies of EEGs (electroencephalograms), fMRI (functional magnetic resonance imaging), galvanic skin response measures and eye-tracking tools to measure the hierarchy of effects of consumer emotion driving consumption, rather than relying on traditional methods such as focus groups and surveys. This approach is often called neuromarketing. Experimental research suggests that consumers are more likely to believe that neuromarketing is ethical, even if it breaches concerns of privacy and informed consent, when it is used for a not-for profit-organisation (e.g., an organisation seeking to reduce alcohol consumption
Source: iStockphoto/CGinspiration
among university students) rather than a profit-orientated company (e.g., a brewery targeting university students). In fact, around 60 per cent of respondents reacted favourably
to the use of neuromarketing techniques, despite their concerns, when it was used by a not-for-profit organisation.
DISCUSS
Does this case convince you that this type of research is ethical? What is the reason for this? What does your local code of market research practice say about ethics and consent in this case?
Identifying and evaluating opportunities Before developing a marketing strategy, an organisation must ask where it wants to go and how to get there. Marketing research can help answer these questions by investigating potential opportunities to identify attractive areas for company action. Marketing research may provide diagnostic information about what is occurring in the environment. A mere description of some social or economic activity, such as trends in consumer purchasing behaviour, may help managers to recognise problems and identify opportunities for enriching marketing efforts. An excellent example of this is recent worldwide research in Formula One (F1) motor racing.^9 The research took place across nine international markets – Australia, Brazil, China, Germany, Italy, Russia, Saudi Arabia, the United Kingdom and the United States – and in its first year, TV audiences increased by 6 per cent across key markets and F1 became the fastest-growing global sports social media platform. The research focused on the audience experience of an F1 event, what it really feels like through the eyes of a fan, which was showcased on social media such as Facebook. It involved several extensive survey research studies of 1000 respondents in each of the nine key markets – in-depth filmed interviews with fans. The results were used in more-targeted messages, sent to fans around the globe, and showcased with international partners. The research was clearly effective, with audiences increasing globally by 11 per cent in 2017. A second example is a research study on running shoes, the purpose of which was to investigate the occasions or situations associated with product use – that is, when individuals wore their running shoes. The researchers found that most owners of running shoes wore shoes while walking, not running. Also, most of this walking was part of a regular daily activity like shopping or commuting to work. Many of the people who wore running shoes for routine activities considered the shoes an alternative to other casual shoes. This research ultimately led to the development of the walking shoe designed for comfortable, everyday walking.^10 Market opportunities may be evaluated using many performance criteria. For example, the performance criterion of market demand typically is estimated using marketing research techniques. Estimates of market potential or predictions about future environmental conditions allow managers to evaluate opportunities. Accurate sales forecasts are among the most useful pieces of planning information a marketing manager can have. Complete accuracy in forecasting the future is not possible because change is continually occurring in the marketing environment. Nevertheless, objective forecasts of demand or changing environments may be the foundations on which marketing strategies are built.
Analysing and selecting target markets The second stage of marketing strategy development is to analyse market segments and select target markets. Marketing research is a significant source of information for determining which characteristics of market segments distinguish them from the overall market. Market segmentation studies can be used, for example, to identify new segments of ecologically friendly foods, and sometimes results may provide management with more significant insights into market choice. For example,
fell between that of examples of positive and negative eWOM. Lower prices were also not enough to reduce the perceived risk of service with a negative eWOM.^16 Research may answer many questions about price. Is there a need for seasonal or quantity discounts? Are coupons more effective than price reductions? Is a brand price elastic or price inelastic? How much of a price difference is optimal to differentiate items in the product line?
REAL WORLD SNAPSHOT ➜ HOW LEGO BECAME HOT AGAIN 17
The success of The Lego Movie and Lego sales concurrently at an all-time high suggest that the company understands its consumers well. However, this was not always the case. Just a decade ago, sales of Lego were at an all-time low; the company was losing US$1 million a day and posting record losses. Lego then engaged a market research firm, specialising in anthropological research, to observe the roots of play of its customers (parents and children) in their
own homes. These teams of anthropological researchers observed play in homes in Los Angeles, New York, Chicago, Munich and Hamburg. They made photo diaries and interviewed parents and their children. The research revealed that play habits had not changed; children just wanted the freedom to experiment on their own with Lego and build something masterful, or as the CEO of Lego Paal Smith-Meyer put it, ‘Lego takes time’.
Outline any possible ethical issues involved in this research. Consult market research industry DISCUSS codes and privacy legislation in your region.
Distribution research Golden Books traditionally distributed its small hardcover children’s books with golden spines to upmarket book retailers. When it researched where its customers would prefer to purchase Golden Books, the company learned that mass merchandisers, supermarkets and pharmacies would be just as popular distribution channels as the upmarket stores. Tesco, Sogo and Marks & Spencer are among the many major retailers that have researched home shopping services via the Internet. New interactive media, virtual reality and lower costs of home delivery as a means of distribution have the potential to revolutionise channel-of-distribution systems, and millions of dollars are being spent to research this alternative. Although most distribution research does not have the dramatic impact of the research on Internet shopping systems, research focused on developing and improving the efficiency of channels of distribution is essential to many organisations. A typical study in the distribution area may be conducted to select retail sites or warehouse locations. A survey of retailers or wholesalers may be conducted because the actions of one channel member can significantly affect the performance of other channel members. Distribution research often is needed to gain knowledge about retailers’ and wholesalers’ operations, and to learn their reactions to a manufacturer’s marketing policies. Sometimes, market research can identify new opportunities for retailers and marketers in regional areas. This is very much the case in regional and rural Australia, where 38 per cent of the country’s population live (8.8 million people), and who have a higher yearly spend on groceries ($93000) than their metropolitan counterparts. The media costs of reaching this market are also substantially lower than in the capital cities of Australia.^18 Promotion research Research that investigates the effectiveness of premiums, coupons, sampling deals and other sales promotions is classified as promotion research. Promotion research includes buyer motivation studies to generate ideas for copy
development, media research, and studies of advertising effectiveness. However, the most time, money and effort are spent on advertising research. Marketing research findings have found that different appeals are effective in mainland cities like Shanghai and Hong Kong. Both regions preferred advertisements that were entertaining, but Shanghai people preferred more realistic advertisements and not those that made people look stupid compared to those in Hong Kong. Shanghai viewers also preferred advertisements that were more stylish and classy than those in Hong Kong.^19 Based on such research, marketers therefore need to adopt separate media campaigns for regions within China. Media research helps an advertiser decide whether television, newspapers, magazines or other media are best suited to convey the advertiser’s message. Choices among media alternatives may be based on research that shows how many people in the target audience each advertising vehicle can reach. Although the population of New Zealand is small, at around 4.5 million, there are a number of local newspapers that are widely read by many local communities, and these are not owned by the two dominant publishing groups. Consumers believe they reinforce a sense of belonging, and they are likely to purchase products and services from companies that advertise in them. Research in Japan suggests that most Japanese favour the 15-second advertising slot for image-based and peripheral messages. Long commute times of around 70 minutes a day to the office mean they have ample time to read newspapers and magazines. Therefore, marketers in Japan, based on this research, run two campaigns: an awareness and corporate branding campaign on television, and a more detailed and informative campaign in print.
The integrated marketing mix The individual elements of the marketing mix do not work independently. Hence, many research studies investigate various combinations of marketing ingredients to gather information to suggest the best possible marketing program.
Analysing marketing performance After a marketing strategy has been implemented, marketing research may serve to inform managers whether planned activities were executed correctly and are accomplishing what they were expected to achieve. In other words, marketing research may be conducted to obtain feedback for the evaluation and control of marketing programs. This aspect of marketing research is especially crucial for successful total quality management. Performance-monitoring research refers to research that regularly, sometimes routinely, provides feedback for the evaluation and control of marketing activity. For example, most firms continuously monitor wholesale and retail activity to ensure early detection of sales declines and other anomalies. In the grocery and pharmaceutical industries, sales research may use Universal Product Codes (UPC) on packages read by electronic cash registers and digital checkout counters to provide valuable market-share information to store and brand managers interested in the retail sales volumes of their products. Market-share analysis and sales analysis are the most common forms of performance-monitoring research. Almost every organisation compares its current sales with previous sales and with competitors’ sales. However, analysing marketing performance is not limited to the investigation of sales figures. Other forms of performance-monitoring research include the ‘Tell Coles’ customer feedback surveys and research on the Victorian Child Protection Agency, using the exit surveys of past staff to identify potential problems within the organisation. In many universities today, student surveys on unit evaluation and teaching form a vital part of the performance-monitoring process of teaching. Increasingly, the evaluation of health programs is also conducted by market research companies: another type of performance monitoring. When analysis of marketing performance indicates that things are not going as
performance- monitoring research Research that regularly provides feedback for the evaluation and control of marketing activity.
deciding whether to make a decision without research or to postpone the decision in order to conduct research, managers should ask three questions:
1 Will the payoff or rate of return be worth the investment?
2 Will the information gained by marketing research improve the quality of the marketing decision enough to warrant the expenditure?
3 Is the proposed research expenditure the best use of the available funds?
For example, the development of the Mazda MX-5 or Miata sports car was conducted without detailed marketing research. The Japanese product development team wanted to present management with a fully working model that met engineering and design innovations, rather than being constrained by more conservative market research findings. The team was also worried that upper management might not have accepted on paper what was, for the company, a radical design. The MX-5, unlike other Mazdas at the time, had a rear-wheel drive, which meant it would be a risky proposition since production costs would be higher. However, since its launch in the late 1980s the car has been an unqualified success. Nowadays though, Mazda, in the development of new MX-5 models, conducts more detailed marketing research, especially with respect to body shape and design. Nevertheless, without the luxury of hindsight, managers made a reasonable decision not to conduct research. They analysed the cost of the information (that is, the cost of test marketing) relative to the potential benefits of the information. The situation is different now as Mazda may have more to lose in terms of sales of a famous brand than was the case in the past when the MX-5 was initially designed as a car for the speciality market.Figure 1.3 outlines the criteria for determining when to conduct marketing research.
MARKETING RESEARCH IN THE TWENTY FIRST CENTURY
Marketing research, like all business activity, has been strongly influenced by two significant trends in business: increased globalisation, and the rapid growth of the Internet and other information technologies. These trends will continue, and likely accelerate, as the 21st century progresses. We consider their significance in marketing research here.
Global marketing research Marketing research has become increasingly global. Some companies have extensive international marketing research operations. Upjohn conducts marketing research in 160 different countries. Nielsen, known for its television ratings, is the world’s largest marketing research company; two-thirds of its business comes from outside the United States.
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Yes Yes Yes
Time constraints Availability of data Nature of the decision Beliefs versus costs
No No No No
Yes
Do not conduct marketing research
Is sufficient time available before a managerial decision must be made?
Is the information already on hand inadequate for making the decision?
Is the decision of considerable strategic or tactical importance?
Does the value of the research information exceed the cost of conducting research?
Conduct marketing research
FIGURE 1.3 » DETERMINING WHEN TO CONDUCT MARKETING RESEARCH
Companies that conduct business in foreign countries must understand the nature of those particular markets and judge whether they require customised marketing strategies. For example, although the nations of the European Union share a single formal market, marketing research shows that Europeans do not share identical tastes for many consumer products. Marketing researchers have found no such thing as a typical European consumer: language, religion, climate and centuries of tradition divide the nations of the European Union. A British firm that advised companies on colour preferences found inexplicable differences in Europeans’ preferences in medicines. The French prefer to pop purple pills, but the British and Dutch favour white ones. Consumers in all three countries dislike bright red capsules, which are big sellers in the United States. This example illustrates that companies that do business in Europe must judge whether they need to adapt to local customs and buying habits.^20 Although the nature of marketing research can differ around the globe, the need for marketing research is universal. Throughout this book we discuss the practical problems involved in conducting marketing research in Asia, Europe, the Middle East and elsewhere.
Communication technologies Virtually everyone is ‘connected’ today. And increasingly, many people are ‘connected’ nearly all the time. The typical university student spends several hours a day on YouTube, Facebook and other social networking sites that connect them to content and to others. Each move provides access to information but also leaves a record of data that tells a great deal about that particular consumer. Across the United States, Walmart gathers and stores more data every hour (about 3 petabytes) than exists in the collections of the Library of Congress. The amount of data now is not discussed in terms of megabytes or terabytes, but zetabytes (1 sextillion bytes – 1 and 21 zeros). The speed with which people exchange information continues to increase. During the 1970s, exchanging information overnight from anywhere in the continental United States was heralded as a near miracle of modern technology. Today, we can exchange information from nearly anywhere in the world to nearly anywhere else in the world almost instantly. A researcher can get on Skype, WhatsApp or FaceTime and interview decision-makers anywhere as long as an Internet connection is present. Our smart devices enable us to converse, but they also serve as a means of communication that can even involve marketing research data. Marketing researchers arm trained interviewers with iPads and similar devices that can display graphic images to respondents and provide a structured guide to the interview. Thus, the expressions ‘time is collapsing’ and ‘distance is disappearing’ capture the tremendous revolution in the speed and reach of our communication technologies. As recently as the 1970s, most computer applications required expensive mainframe computers found only in huge corporations, major universities and large governmental/military institutions. Researchers could expect to wait hours or even longer to get results from a statistical program involving 200 respondents. Today, even the most basic laptop computers can solve complicated statistical problems involving hundreds of thousands of data points in practically a nanosecond. Small, inexpensive appliances like a smartphone access software and data existing on a cloud (large servers that supply information and software to large numbers of Internet users), reducing the need for specialised software and conventional personal computers. More and more, all manner of appliances like refrigerators, air conditioners and even light globes deposit information in a database.
STAGES IN THE RESEARCH PROCESS As previously noted, marketing research can take many forms, but a systematic inquiry is a common thread. Systematic inquiry requires careful planning of an orderly investigation. Marketing research, like other forms of scientific inquiry, involves a sequence of highly interrelated activities. The stages of the research process overlap continuously, and it is somewhat of an oversimplification to state that every research project has precisely the same ordered sequence of activities. Nevertheless, marketing research often follows a general pattern. The stages are: 1 defining the problem 2 planning a research design
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because the conclusions from research studies usually generate new ideas and problems that need to be investigated. Note that the organisation of this textbook follows each stage in the research process, with Chapter 2, which discusses defining the problem, followed by a series of chapters on research designs such as exploratory/qualitative research (Chapter 3), secondary research (Chapter 4), survey research (Chapter 5), observational research (Chapter 6) and experiments (Chapter 7). This is then followed by a discussion of measurement (Chapter 8) and questionnaire design (Chapter 9). Chapters 3 to 9 thus make up the section of the text that addresses planning a research design. The next step, collecting a sample, is addressed in Chapter 10. Chapter 11 deals with the following step in the research process: data preparation. Chapters 12, 13, 14 and 15 discuss analysing data, with an overview of fundamental to advanced statistical analysis. Finally, Chapter 16 discusses the presentation of research reports, including deriving important conclusions for managers. Note that there is no one overall approach (methodology) – in terms of research design, means of collecting data, analysing data and presenting findings – that is perfect. In each stage of the research process, decisions and trade- offs must be made under constrained budgets and times. What can be said is that some research designs, samples, means of collecting data, analysis and market research reports are better than others. The choices a researcher must make throughout the research process are discussed briefly in the next section and in greater detail throughout this textbook.
Alternatives in the research process The researcher must choose among a number of alternatives during each stage of the research process. The research process can be compared to a map. On a map, some paths are better charted than others, some are difficult to travel, and some are more interesting and beautiful than others. Rewarding experiences may be gained during the journey. It is important to remember that there is no single right or best path for all journeys. The road one takes depends on where one wants to go and the resources (money, time, labour and so on) available for the trip. The map analogy is useful for the marketing researcher because, at each stage of the research process, there are several paths to follow. In some instances, the quickest path will lead to appropriate research because of time constraints. In other circumstances, when money and human resources are plentiful, the appropriate path may be quite different. Exploration of the various paths of marketing research decisions is the primary purpose. The following sections briefly describe the six stages of the research process. (Each stage is discussed in greater depth in later chapters.) Figure 1.4 shows the decisions that researchers must make in each stage. This discussion of the research process begins with problem discovery and definition because most research projects are initiated to remedy managers’ uncertainty about some aspect of the firm’s marketing program. Discovering the problem Figure 1.4 shows that the research process begins with problem discovery. Identifying the problem is the first step towards its solution. In general usage, the word ‘problem’ suggests that something has gone wrong. Actually, the research task may be to clarify a problem, define an opportunity, or monitor and evaluate current operations. The concept of problem discovery and definition must encompass a broader context that includes analysis of opportunities. It should be noted that the initial stage is problem discovery rather than definition. The researcher may not have a clear-cut statement of the problem at the outset of the research process; often, only symptoms of the problem are apparent at that point. Sales may be declining, but management may not know the exact nature of the problem. Thus, the problem statement often is made only in general terms; what is to be investigated is not yet explicitly identified. Defining the problem In marketing research, the adage ‘a problem well defined is a problem half-solved’ is worth remembering. This adage emphasises that an orderly definition of the research problem lends a sense of direction to the investigation.
A decision-maker must recognise the nature of the problem or opportunity, identify how much information is available, and determine what information is needed. The significant aspects of defining a problem in market research are the degrees of certainty and uncertainty, and the level of ambiguity.
Certainty Complete certainty means that all the information the decision-maker needs is available; the decision-maker knows the exact nature of the marketing problem or opportunity. For example, an advertising agency may need to know the demographic characteristics of subscribers to magazines in which it may place a client’s advertisements. The agency knows exactly what information it needs and where to find the information. If a manager is entirely sure about both the problem or opportunity and future outcomes, then research may not be needed at all. However, perfect certainty, especially about the future, is rare.
Uncertainty Uncertainty means that the manager grasps the general nature of desired objectives, but the information about alternatives is incomplete. Predictions about forces that shape future events are educated guesses. Under conditions of uncertainty, effective managers recognise that spending additional time to gather information to clarify the nature of a decision can be valuable.
Ambiguity Ambiguity means that the nature of the problem to be solved is unclear. Objectives are vague, and decision alternatives are difficult to define. This is by far the most challenging decision situation. Marketing managers face a variety of problems and decisions. Complete certainty and predictable future outcomes may make marketing research a waste of time. However, under conditions of uncertainty or ambiguity, marketing research becomes more attractive to the decision-makers. The more ambiguous a situation is, the more likely it is that additional time must be spent on marketing research. Careful attention to the problem definition stage allows the researcher to set the proper research objectives. If the purpose of the research is clear, the chances of collecting necessary and relevant information and not collecting surplus information will be much higher. To be efficient, marketing research must have clear objectives and definite designs. Unfortunately, little or no planning goes into the formulation of many research problems. One example is the low uptake of electric cars in many countries. Research in the United Kingdom suggests that motorists are hesitant to switch to electric cars because of concerns about the lack of charging points and the perceived cost of replacing the battery. For car manufacturers, the concern is over the lack of a standard interchangeable battery across models.^21 It should be emphasised that the word ‘problem’ refers to the managerial problem (which may be a lack of knowledge about consumers or advertising effectiveness) and the information needed to help solve the problem. Defining the problem must precede the determination of the purpose of the research. Frequently, the marketing researcher will not be involved until line management has discovered that some information about a particular aspect of the marketing mix is needed. Even at this point, the exact nature of the problem may be poorly defined. Once a problem area has been discovered, the marketing researcher can begin the process of precisely defining it. Although the problem definition stage of the research process probably is the most important one, it frequently is a neglected area of marketing research. Too many researchers forget that the best place to begin a research project is at the end. Knowing what is to be accomplished determines the research process. An error or omission in problem definition is likely to be a costly mistake that cannot be corrected in the later stages of the process. Chapter 2 discusses the problem definition in greater detail. Marketing research provides information to reduce uncertainty. It helps focus on decision-making. Sometimes, marketing researchers know exactly what their marketing problems are and design careful studies to test specific hypotheses. For example, a soft-drink company introducing a new clear cola might want to know whether a gold
problem definition stage The stage in which management seeks to identify a clear-cut statement of the problem or opportunity.
The best expression of a research objective is a well-formed, testable research hypothesis. A hypothesis is a statement that can be refuted or supported by empirical data. For example, an exploratory study might lead to the hypothesis that a market share decline recognised by management is occurring predominantly among households in which the head of the household is 45 to 65 years old with an income of £30000 per year or less. Another hypothesis might be that concentrating advertising efforts in monthly waves (rather than conducting continuous advertising) will cause an increase in sales and profits. Once the hypothesis has been developed, the researcher is ready to select a research design.
Planning the research design After the researcher has formulated the research problem, the research design must be developed as part of the research design stage. A research design is a master plan that specifies the methods and procedures for collecting and analysing the needed information; it is a framework for the research plan of action. The objectives of the study determined during the early stages of the research are included in the design to ensure that the information collected is appropriate for solving the problem. The researcher also must determine the sources of information, the design technique (survey or experiment, for example), the sampling methodology, and the schedule and cost of the research.
Exploratory research Exploratory research usually is conducted during the initial stage of the research process. This is generally qualitative research. The preliminary activities undertaken to refine the problem into researchable form need not be formal or precise. Exploratory research is not intended to provide conclusive evidence from which to determine a particular course of action. Mostly exploratory research is conducted with the expectation that subsequent research will be required to provide such conclusive evidence. Rushing into detailed surveys before less expensive and more readily available sources of information have been exhausted can lead to severe mistakes. Marketing researchers must be aware of potential problems when deciding precisely what research design will best solve their research problems.
research design A master plan that specifies the methods and procedures for collecting and analysing needed information. research design stage The stage in which the researcher determines a framework for the research plan of action by selecting a basic research method. exploratory research Initial research conducted to clarify and define a problem.
REAL WORLD SNAPSHOT ➜ HOW REALISTIC ARE RESEARCH RESULTS?
Many managers view consumer research as a necessary precursor to product introduction. Unfortunately, innovative products that lack much in common with existing products often prove this attitude to be wrong. Hairstyling mousse is now a massive hit, yet its initial US market tests flopped. People said it was ‘goopy and gunky’, and that they did not like its feel when it ‘mooshed’ through their hair. Similarly, when the telephone answering machine was consumer tested, it faced an almost universally adverse reaction, since most individuals felt that using a mechanical device to answer a phone was rude and disrespectful. Eventually, of course, many people regarded their answering machines as indispensable and dreaded scheduling daily activities without them – until the advent of mobile devices, that is. In the same vein, the computer mouse flunked its initial
testing. Surveys indicated that potential customers found it awkward and unnecessary.
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Surveys about new food products face terrible problems. A person’s desire for food is powerfully influenced by the ambience of the location, dining companions, and what foods were eaten recently, all of which confound and confuse the results of survey research. Even more erratic results come from studies of children’s
food, such as a new cereal or snack. Kids’ responses are strongly swayed by how well they like the people doing the test and the playthings available. Worse, kids quickly change their minds, and in a taste test of several foods a child can judge one food the best but an hour later proclaim the same food ‘icky’.
After reading this, and then the chapter, explain how you think market research can provide DISCUSS more realistic results?
For example, suppose a Chinese fast-food restaurant chain is considering expanding its hours and product line with a breakfast menu. Exploratory research with a small number of current customers might find a strong negative reaction to eating a spicy vegetable breakfast at a Chinese fast-food outlet. Thus, exploratory research might help crystallise a problem and identify the information needed for future research. The purpose of the exploratory research process is to progressively narrow the scope of the research topic and transform ambiguous problems into well-defined ones that incorporate specific research objectives. By investigating any existing studies on the subject, talking with knowledgeable individuals and informally investigating the situation, the researcher can progressively sharpen the concepts. After such exploration, the researcher should know accurately which data to collect during the formal phases of the project and how to conduct the project.Figure 1.4 indicates that managers and researchers must decide whether to use one or more exploratory research techniques. As Figure 1. indicates, this stage is optional. The marketing researcher can employ techniques from four fundamental categories to obtain insights and gain a clearer idea of the problem: secondary data analysis, pilot studies, case studies and experience surveys. Here, we will briefly discuss secondary data and focus group interviews, the most popular type of pilot study. Secondary data Secondary data, or historical data, is data previously collected and assembled for some project other than the one at hand. (Primary data are data gathered and assembled specially for the project at hand.) Secondary data often can be found inside the company, at a public or university library, or on the Internet. In addition, some firms specialise in providing various types of information, such as economic forecasts, that are useful to many organisations. The researcher who gathers data from the Australian Bureau of Statistics (see http://www.abs.gov.au ) or from The Economist Intelligence Unit (see http://www.eiu.com ) is using secondary sources. A literature review – a survey of published articles and books that discusses theories and past empirical studies about a topic – is an almost universal first step in academic research projects. A literature survey also is typical in many applied research studies. Students who have written term papers should be familiar with using computer search systems, indexes to published literature and other library sources to compile bibliographies of past research. Suppose, for example, that a bank is interested in determining the best site for additional automated teller machines. A logical first step would be to investigate the factors that bankers in other parts of the country consider essential. By reading articles in banking journals, management might quickly discover that the best locations are inside supermarkets located in residential areas where people are young, highly educated and earning higher-than-average incomes. These data might lead the bank to investigate census information to determine where in the city such people live. Reviewing and building on the work already compiled by others is an economical starting point for most research.
