THE ROLE OF MARKETING RESEARCH IN DECISION MAKING

The Role of Marketing Research in Decision Making

Marketing Research - The planning, collection, and analysis of data relevant to marketing decision making and the communication of the results of this analysis to management. Three Functional Roles of Marketing Research: 1. Descriptive Function - the gathering and presentation of statements of fact. 2. Diagnostic Function - The explanation of data. 3. Predictive Function - Specification of how to use the descriptive and diagnostic research to predict the result of a planned marketing decision The Importance of Marketing Research to Management 1. Improving the quality of decision making 2. Finding out what went wrong 3. Understanding the marketplace Types of Research Applied Research - (marketing research primarily conducted by practitioners, or for them by academicians) is research aimed at solving a specific, pragmatic problem such as for better understanding of the marketplace, determination of why a strategy or tactic failed, and reduction of uncertainty in management decision making. Basic Research - (marketing research conducted solely by academicians) is research aimed at expanding the frontiers of knowledge rather than solving a specific, pragmatic problem.

Deciding factors of Whether or Not to Conduct Market Research

1. Lack of resources 2. Research results won't be useful 3. Poor timing in the marketplace 4. The decision has already been made 5. When managers can't agree on what they need to know to make a decision. 6. When decision-making information already exists. 7. When the costs of conducting research are greater than the benefits

PUBLISHED SECONDARY DATA, COMPUTERIZED DATABASES AND DECISION SUPPORT SYSTEMS

Primary Data - is data generated from a survey, observation, or experiment just to solve
the particular problem under investigation.

Secondary Data - is data that had been previously gathered for some other purpose, other
than the current research problem under investigation. Internal - is secondary data that is already within the investigator's firm that is, or should be, contained in the firm's internal database. External - is secondary data that is already available from other organizations or persons (in what your firm refers to as external databases if such information is computerized).

a. Advantages (or Reasons to Use) Secondary Data:

1. It may help to clarify or redefine the definition of the problem as part of the exploratory research process. 2. It may actually provide a solution to the problem. 3. It may provide or identify primary data research method alternatives. 4. It may alert the marketing researcher to potential problems or difficulties that may be encountered in the research process (such as sample selection difficulties, response biases experienced by other researchers in the same area, and respondent hostilities or lack of cooperation). 5. It may provide necessary background and build creativity into the planning of the research report.

b. Limitations of Secondary Data:

1. Lack of Availability - the needed data may be unavailable. 2. Lack of Relevance - the available data may be expressed in units or measures that cannot be used by the researcher. 3. Inaccurate Data - previous researchers may have published data containing errors that may distort your research results. They may have committed errors in sampling procedures, data collection, data coding, data analysis, or in the presentation (printing) of the data as printed for your use.

While the researcher can never be certain of total accuracy of published secondary data, its accuracy can be somewhat assessed by asking the following questions: - Who gathered the data? - What was the purpose of the study that generated the data? - What information was collected and from who ("who" refers to the population)? - When was the information collected - How was the information collected? (mail, survey, interview) - Is the information consistent with other, similar information?

RESEARCH METHODOLOGIES Qualitative Research - uses words, rather than numbers, to explain research findings. Quantitative Research - uses numbers in a form of mathematical analysis to explain research findings. Popularity of Qualitative Research (reasons): a) Cheaper to conduct than quantitative research (usually); b) Understanding of in-depth motivations may be gained; c) The results may improve the efficiency of subsequent empirical research; d) Combining techniques usually improves overall research effectiveness. Limitations of Qualitative Research: a) Does not always detect small differences in a marketing mix (or in anything else). b) The results are not necessarily representative of the population of interest (due to small sample size and/or using a nonprobability sample). c) Researchers in the field without good formal training can seriously bias results, even if accidentally. .

PRIMARY DATA COLLECTION: SURVEY METHOD What is a survey? Statistical surveys are used to collect quantitative information about items in a population. Surveys of human populations and institutions are common in political polling and government, health, social science and marketing research. A survey may focus on opinions or factual information depending on its purpose, and many surveys involve administering questions to individuals. When the questions are administered by a researcher, the survey is called a structured interview or a researcheradministered survey. When the questions are administered by the respondent, the survey is referred to as a questionnaire or a self-administered survey.

Advantages and disadvantages of surveys

Advantages

It is an efficient way of collecting information from a large number of respondents. Very large samples are possible. Statistical techniques can be used to determine validity, reliability, and statistical significance. Surveys are flexible in the sense that a wide range of information can be collected. They can be used to study attitudes, values, beliefs, and past behaviors. Because they are standardized, they are relatively free from several types of errors. They are relatively easy to administer. There is an economy in data collection due to the focus provided by standardized questions. Only questions of interest to the researcher are asked, recorded, codified, and analyzed. Time and money is not spent on tangential questions. Cheaper to run.

Disadvantages

They depend on subjects motivation, honesty, memory, and ability to respond. Subjects may not be aware of their reasons for any given action. They may have forgotten their reasons. They may not be motivated to give accurate answers, in fact, they may be motivated to give answers that present themselves in a favorable light. Structured surveys, particularly those with closed ended questions, may have low validity when researching affective variables. Although the chosen survey individuals are often a random sample, errors due to nonresponse may exist. That is, people who choose to respond on the survey may be different from those who do not respond, thus biasing the estimates. Survey question answer-choices could lead to vague data sets because at times they are relative only to a personal abstract notion concerning "strength of choice". For instance the choice "moderately agree" may mean different things to different subjects, and to anyone interpreting the data for correlation. Even yes or no answers are problematic because subjects may for instance put "no" if the choice "only once" is not available.

Characteristics of researcher-administered surveys

Fewer misunderstood questions and inappropriate responses. Fewer incomplete responses. Generally higher response rates and better information on nonresponse, but... Respondents may be unwilling to discuss sensitive topics with a stranger. Greater control over the environment that the survey is administered in. Additional information can be collected from respondent. Subject to interviewer bias (e.g. answers influenced by desire to impress interviewer). Generally expensive/time-consuming to run.

Characteristics of self-administered surveys

Respondents are more likely to stop participating mid-way through the survey (dropoffs). Respondents cannot ask for clarification. Low response rate in some modes. Often respondents returning survey represent extremes of the population - skewed responses (consequence of low response rates). Allows shy respondents to answer sensitive questions in private. No interviewer intervention available for probing or explanation. Respondents can read the whole questionnaire before answering any questions. Free of interviewer bias.

Modes of Data Collection

Telephone

use of interviewers encourages sample persons to respond, leading to higher response rates Interviewers can increase comprehension of questions by answering respondents' questions. fairly cost efficient, depending on local call charge structure good for large national (or international) sampling frames some potential for interviewer bias (e.g. some people may be more willing to discuss a sensitive issue with a female interviewer than with a male one) cannot be used for non-audio information (graphics, demonstrations, taste/smell samples) unreliable for consumer surveys in rural areas where telephone penetration is low three types: o traditional telephone interviews o computer assisted telephone dialing o computer assisted telephone interviewing

Mail

The questionnaire may be handed to the respondents or mailed to them, but in all cases they are returned to the researcher via mail. cost is very low, since bulk postage is cheap in most countries long time delays, often several months, before the surveys are returned and statistical analysis can begin not suitable for issues that may require clarification respondents can answer at their own convenience (allowing them to break up long surveys; also useful if they need to check records to answer a question) no interviewer bias introduced large amount of information can be obtained: some mail surveys are as long as 50 pages response rates can be improved by using mail panels o members of the panel have agreed to participate o panels can be used in longitudinal designs where the same respondents are surveyed several

Online surveys

can use web or e-mail web is preferred over e-mail because interactive HTML forms can be used often inexpensive to administer very fast results easy to modify response rates can be improved by using Online panels - members of the panel have agreed to participate if not password-protected, easy to manipulate by completing multiple times to skew results data sets created in real time some are incentive based (such as Survey Vault or YouGov) may skew sample towards a younger demographic compared with CATI often difficult to determine/control selection probabilities, hindering quantitative analysis of data Use in large scale industries.

Personal in-home survey

respondents are interviewed in person, in their homes (or at the front door) very high cost suitable when graphic representations, smells, or demonstrations are involved often suitable for long surveys (but some respondents object to allowing strangers into their home for extended periods) suitable for locations where telephone or mail are not developed skilled interviewers can persuade respondents to cooperate, improving response rates potential for interviewer bias increasing use of computer-assisted personal interviewing (CAPI) to streamline data collection/processing and guide sequencing of complex surveys

Personal mall intercept survey

shoppers at malls are intercepted - they are either interviewed on the spot, taken to a room and interviewed, or taken to a room and given a self-administered questionnaire socially acceptable - people feel that a mall is a more appropriate place to do research than their home potential for interviewer bias fast easy to manipulate by completing multiple times to skew results

Methods used to increase response rates

brevity - single page if possible financial incentives o paid in advance o paid at completion non-monetary incentives o commodity giveaways (pens, notepads) o entry into a lottery, draw or contest o discount coupons o promise of contribution to charity preliminary notification foot-in-the-door techniques - start with a small inconsequential request personalization of the request - address specific individuals follow-up requests - multiple requests claimed affiliation with universities, research institutions, or charities emotional appeals bids for sympathy convince respondent that they can make a difference guarantee anonymity legal compulsion (certain government-run surveys)

Sampling
Sample selection is critical to the validity of the information that represents the populations that are being studied. The approach of the sampling helps to determine the focus of the study and allows better acceptance of the generalizations that are being made. There are two different approaches to sampling in survey research

There is nonprobability sampling approach. In this approach the researcher does not know each element's probability of selection in the sample. The most commonly used nonprobability sampling method is the convenience sampling approach. With this method, it only samples those who are available and willing to participate in the survey. The use of this approach allows for convenience for the researcher while possibly losing data validity due to the lack of representation.

The probability sampling approach for research methods gives each element a known chance of being included in the sample. This method is closer to a true representation of the population. It can be difficult to use due to cost of a rigorous sampling method, and difficulty in obtaining full coverage of the target population, but the generalizations that come from it are more likely to be closer to a true representation of the population. Different forms of probability sampling are designed to achieve various benefits - e.g. theoretical simplicity, operational simplicity, detailed information on subpopulations, or minimal cost. Some common forms:

Questionnaire construction
A questionnaire is a series of questions asked to individuals to obtain statistically useful information about a given topic. When properly constructed and responsibly administered, questionnaires become a vital instrument by which statements can be made about specific groups or people or entire populations. Types of questions
1. Contingency questions - A question that is answered only if the respondent gives a

particular response to a previous question. This avoids asking questions of people that do not apply to them (for example, asking men if they have ever been pregnant). 2. Matrix questions - Identical response categories are assigned to multiple questions. The questions are placed one under the other, forming a matrix with response categories along the top and a list of questions down the side. This is an efficient use of page space and respondents time. 3. Closed ended questions - Respondents answers are limited to a fixed set of responses. Most scales are closed ended. Other types of closed ended questions include: o Yes/no questions - The respondent answers with a yes or a no. o Multiple choice - The respondent has several option from which to choose. o Scaled questions - Responses are graded on a continuum (example : rate the appearance of the product on a scale from 1 to 10, with 10 being the most preferred appearance). Examples of types of scales include the Likert scale, semantic differential scale, and rank-order scale (See scale for a complete list of scaling techniques.). 4. Open ended questions - No options or predefined categories are suggested. The respondent supplies their own answer without being constrained by a fixed set of possible responses. Examples of types of open ended questions include: o Completely unstructured - For example, What is your opinion of questionnaires? o Word association - Words are presented and the respondent mentions the first word that comes to mind.

o o o

Sentence completion - Respondents complete an incomplete sentence. For example, The most important consideration in my decision to buy a new house is . . . Story completion - Respondents complete an incomplete story. Picture completion - Respondents fill in an empty conversation balloon. Thematic apperception test - Respondents explain a picture or make up a story about what they think is happening in the picture

Question sequence

Questions should flow logically from one to the next. The researcher must ensure that the answer to a question is not influenced by previous questions. Questions should flow from the more general to the more specific. Questions should flow from the least sensitive to the most sensitive. Questions should flow from factual and behavioural questions to attitudinal and opinion questions. Questions should flow from unaided to aided questions. According to the three stage theory (also called the sandwich theory), initial questions should be screening and rapport questions. Then in the second stage you ask all the product specific questions. In the last stage you ask demographic questions.

Completed by P.Suthaharan BBA (Marketing Sp) (Col) E-mail haran5555@gmail.com This document could be downloaded at http://www.scribd.com/haran5555