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CHAPTER 1

The Nature and Scope of Marketing Research


0CHAPTER SUMMARY
The role of marketing research is to help managers to better understand the environment in which they operate in order to improve the quality of the strategic marketing decisions they make. An increasing number of firms routinely use marketing research to generate relevant information for developing effective strategies, particularly in the early stages of strategy formulation. This is driven by the fact that increasing numbers of firms are embracing the marketing conceptthe philosophy of customer orientation urging firms to uncover customer needs first and then coordinate all their activities to satisfy those needs. As an essential link between marketing decision makers and the markets in which they operate, marketing research can and should play an important role in all three stages of planning and decision making: identifying marketing opportunities and constraints, developing and implementing marketing strategies, and evaluating the effectiveness of marketing plans. Concisely defined, marketing research is a set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers involved in marketing goods, services, or ideas. Three principles serve as the foundation for useful marketing research: (1) attend to the timeliness and relevance of research, (2) carefully and clearly define research objectives, and (3) do not conduct research to support decisions already made. Such principles are as crucial to the effectiveness of marketing research as are quantitative tools and techniques. Finally, marketing research by itself cannot be expected to provide sound marketing decisions. It can, however, serve as a resource for decision makers. It can take the form of basic research, which creates new knowledge, or applied research, which solves a specific problem.

0KEY TERMS
10. Marketing mix 20. Marketing strategy 30. Marketing plan 40. Marketing concept 50. Marketing research 60. Information 70. Basic research 80. Applied research 90. In-house marketing research 100. External marketing research 110. Centralized organizational structure 120. Decentralized organizational structure 130. Mixed organizational structure

Copyright Houghton Mifflin Company. All rights reserved.

Chapter 1: The Nature and Scope of Marketing Research

0CHAPTER OBJECTIVES
After reading and understanding the material in this chapter, the student should be able to do the following: 10. Identify the role of marketing research in strategic decision making. 20. Define the process of marketing research. 30. Identify the three principles for generating information useful to managers. 40. Explain why marketing research requires analysis and interpretation of data. 50. Discuss the relationship between marketing research and decision making. 60. Describe the wide variety of applications for marketing research. 70. Identify various career opportunities in marketing research.

00CHAPTER OUTLINE
I0. The Role of Marketing Research in Strategic Planning and Decision Making Our primary focus is on the role of marketing research in marketing strategy decisions. A0. Identifying Marketing Opportunities and Constraints Identifying marketing opportunities and constraints is a logical starting point for developing marketing strategies. 10. Embracing the Marketing Concept Conducting marketing research to understand customers is becoming widespread as an increasing number of firms embrace the marketing concept (the philosophy of customer orientation urging firms to uncover customer needs first and then coordinate all their activities to satisfy those needs). 20. Understanding the Competitive Environment Marketing research is vital to maintaining and improving a companys overall competitiveness. nless managers understand the external environment, they cannot intelligently plan for the future. U

M any organizations continually collect and evaluate environmental information to identify future market opportunities and threats. B0. Developing and Implementing Marketing Strategies To benefit fully from the opportunities uncovered in the marketplace, a firm must develop an effective marketing strategy with an effective marketing mix: the nature of its product ways to promote the product the price charged to potential customers the means used to make the product available to them

Good marketing research will identify whether the marketing mix is effective enough to maximize the benefits to the firm from available opportunities (sales, profits, customer satisfaction, and value).

Copyright Houghton Mifflin Company. All rights reserved.

Chapter 1: The Nature and Scope of Marketing Research

Some of the most successful new-product introductions have been preceded by extensive marketing research that helped develop one or more elements of their marketing mixes. C0. Evaluating the Effectiveness of Marketing Plans Getting feedback from the marketplace and taking corrective action for elements of products or services that need fixing is often referred to as controlling or the control function. Controlling is an important component of the planning and decision-making process and another area in which marketing research provides solutions. To succeed in the marketplace, a firm must at least periodically monitor market conditions, usually by obtaining feedback from customers, and answer control-related questions such as: What is the market share of our product? Is its share increasing, decreasing, or staying the same? Who are its users? Are the nature of the users and the volume of their purchases consistent with our expectations (goals)? If not, why not?

Only marketing research, not marketers intuition, can yield accurate answers to such questions. II0. Definition of Marketing Research Marketing research is 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 the understanding of marketing as a process. specification of the information required to address issues design of the method for collecting information management and implementation of the data collection process analysis of the results communication of the findings and their implications

Marketing research involves a variety of tasks:

III0. Basic Marketing Research Principles0 A0. Principle # 1: Attend to the Timeliness and Relevance of Research Marketing research can lead to erroneous decisions if not done on a timely basis. The research must be relevant to the current situation. B0. Principle # 2: Define Research Objectives Carefully and Clearly Careful and clear definition of research objectives is a key requirement for accurate and beneficial marketing research outcomes. Researchers must pay careful attention to research objectives.

Copyright Houghton Mifflin Company. All rights reserved.

Chapter 1: The Nature and Scope of Marketing Research

C0. Principle # 3: Do Not Conduct Research to Support Decisions Already Made Conducting marketing research when potential research users have already made up their minds is not a productive use of scarce resources. IV0. The Importance of Analysis and Interpretation A common misconception about marketing research is that it is merely a set of tools for data collection and recording. The data must be analyzed and the analyses interpreted before firms reap any tangible benefits from the research. Data is different from information.

Analysis and interpretation of data are essential for marketing research to be truly beneficial to decision makers. Information results from careful analysis of data. Information is needed for effective decision making.

V0. Marketing Research AidsBut Does Not ReplaceDecision Making Marketing research cannot provide sound marketing decisionsit serves as a resource for decision makers. The information must be relevant, timely, and reliable. It must accurately diagnose the nature of the question or problem. It must ask the right questions at the right time in the data-gathering process. One cannot substitute for the other.

There is an interactive relationship between marketing research and decision making.

A0. When Research Results and Decisions Differ There are times when decisions are made counter to the research findings. Results can be factored into a long-term strategy. B0. Relationship of Marketing Research to Decision Making Marketing research both influences and is influenced by decision-making activity within an organization. An interactive relationship also exists between an organizations environment and its decision-making activity.

VI0. Marketing Research Applications Marketing research applications can be classified as either basic research (conducted to generate or create knowledge) or applied research (conducted to solve a problem). VII0. Organization of and Careers in Marketing Research Firms can acquire the information relevant for marketing decision making through in-house marketing research and/or through external marketing research (contracting the research to outside agencies). Both in-house and external marketing research contexts provide career opportunities in marketing research.

Copyright Houghton Mifflin Company. All rights reserved.