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Introduction, Nature & Scope of Marketing Research

Dr. A. K. Dey

Reference Books
Business Research Methods
Cooper & Schindler

Marketing Research an Applied Orientation


Naresh Malhotra

Marketing Research Text & Cases


Boyd, Westfall & Stasch
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Objectives
Understand Marketing Research (MR) Understand relevance of MR for marketing decisions Develop appreciation of MR & its applications Know the procedure of conducting Develop familiarity with each step of procedure
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What is Business Research?


A systematic Inquiry whose objective is to provide information to solve managerial problems.

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Why Study Research?


Research provides you with the knowledge and skills needed for the fast-paced decision-making environment

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Why Managers need Better Information


Global and domestic competition is more vigorous Organizations are increasingly practicing data mining and data warehousing

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The Value of Acquiring Research Skills

To gather more information before selecting a course of action To do a high-level research study To understand research design To evaluate and resolve a current management dilemma To establish a career as a research specialist
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Types of Studies Used for Research

Reporting Descriptive Explanatory Predictive


Types of Marketing Research are different from type of studies

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Types of Studies
Reporting
To provide an account or summation of some data or generate some statistics

Descriptive
To discover answers to questions who, what, when, where and sometimes how
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Types of Studies
Explanatory
It goes beyond description and attempts to explain the reasons for the phenomenon that the descriptive study only observed Correlation Study or Hypothesis testing

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Types of Studies
Predictive
To predict when and in what situations the event will occur To also control a phenomenon once we can explain and predict it

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Different Styles of Research


Applied Research
Emphasis on solving practical (specific) problems It could be exploring opportunities also
Rectifying an inventory system that is resulting into lost sales Opportunity to increase stockholder wealth by acquiring another firm

Pure Research/Basic Research


Emphasis on problem solving but of a general nature (not specific)
Effect of coupon as against rebate to stimulate demand

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What is Good Research?


Following the standards of the scientific method Purpose clearly defined Research process detailed Research design thoroughly planned Limitations frankly revealed High ethical standards applied
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What is Good Research?

(cont.)

Following the standards of the scientific method (cont.) Adequate analysis for decisionmakers needs Findings presented unambiguously Conclusions justified Researchers experience reflected
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The Manager-Researcher Relationship


Managers obligations Specify problems Provide adequate background information Access to company information gatekeepers Researchers obligations Develop a creative research design Provide answers to important business questions
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Manager-Researcher Conflicts
Managements limited exposure to research Manager sees researcher as threat to personal status Researcher has to consider corporate culture and political situations Researchers isolation from managers
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When Research Should be Avoided


When information cannot be applied to a critical managerial decision When managerial decision involves little risk When management has insufficient resources to conduct a study When the cost of the study outweighs the level of risk of the decision
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Need for MR
A manager takes decisions His responsibility is to reduce risk of failure in decision making Risk arises due to lack of relevant information A manager always seeks information to improve quality of decision making Information can be collected through MR Hence, MR is an important tool for managerial decision making

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MR & Marketing Decisions


For Production, Finance, Personnel
Most of the required info are available within the organization; Hence easy to collect & analyze Formal procedures are used to improve quality : Stats Methods for QC, PERT & CPM, Queuing Theory, Optimization Techniques etc

For Marketing information mostly exist outside the organization


In In In In consumer behaviour, perception, minds competitive moves new government rules & regulations social & political changes
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MR & Marketing Decisions


Other problems for collecting information required for marketing decisions are
Being external collection is cumbersome & expensive Variables are often qualitative & dynamic making measurements difficult & inaccurate Variables are complex & interact with each other
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Risk of using wrong information


Choice of wrong information may lead to
Excessive expenditure Decision going astray Hind Sanitaryware Becoming uncompetitive & losing out S Kumars Internet centers & Modular Kitchen Market may vanish all of a sudden fashion garments

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Sources of Knowledge
Empiricists attempt to describe, explain, and make predictions through observation Rationalists believe all knowledge can be deduced from known laws or basic truths of nature Authorities serve as important sources of knowledge, but should be judged on integrity and willingness to present a balanced case
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The Essential Tenets of Science


Direct observation of phenomena Clearly defined variables, methods, and procedures Empirically testable hypotheses Ability to rule out rival hypotheses Statistical justification of conclusions Self-correcting process
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Ways to Communicate
Exposition
descriptive statements that merely state and do not give reason

Argument
allows us to explain, interpret, defend, challenge, and explore meaning
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Important Arguments in Research


Deduction is a form of inference that purports to be conclusive Induction draws conclusions from one or more particular facts

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The Building Blocks of Theory


Concepts Constructs Definitions Variables Propositions and Hypotheses Theories Models
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Understanding Concepts
A concept is a bundle of meanings or characteristics associated with certain events, objects, conditions, situations, and behaviors Concepts have been developed over time through shared usage

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Understanding Concepts
The success of research hinges on: how clearly we conceptualize how well others understand the concepts we use

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What is a Construct?
A construct is an image or idea specifically invented for a given research and/or theory-building purpose.

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Types of Variables
Independent Dependent Moderating Extraneous Intervening

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Types of Variables
Independent & Dependent
Leadership style & Employee performance or Job satisfaction Price of a product & Demand

Independent
Cause, Stimulus, Predictor, Antecedent

Dependent
Effect, Response, Criterion, Consequence
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Types of Variables
Moderating
In each relationship there is one Independent Variable (IV) & one Dependent Variable (DV) Moderating variable is a second independent variable that has significant effect on the originally stated IVDV relationship
Four day work week (IV) will lead to higher productivity (DV), especially among young workers (MV)
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Four day work week (IV) will lead to higher productivity (DV)

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Types of Variables
Extraneous
Infinite number of extraneous variables (EV) exist that might effect the relationship Most of such variables have little or no effect on the given situation and these may be ignored Others may have highly random occurrence as to have little impact For productivity example: election of a new mayor, rainy days, bird flu, strike etc

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Types of Variables
Intervening
Intervening variable (IVV) is defined as a factor which theoretically effects the observed phenomenon but can not be seen measured or manipulated Its effect can be inferred from the effects on the observed phenomenon
Four day work week (IV) will lead to higher productivity (DV) by increasing job satisfaction (IVV)
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Propositions & Hypotheses


Proposition
A statement about concepts that may be judged as TRUE or FALSE if it refers to observable phenomenon Proposition formulated for empirical testing is Hypothesis Example
Infosys employees have higher than average achievement motivation
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The Role of the Hypothesis


Guides the direction of the study Identifies facts that are relevant Suggests which form of research design is appropriate Provides a framework for organizing the conclusions that result
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Characteristics & Types of a Good Hypothesis

A good hypothesis should fulfill three conditions:


Must be adequate for its purpose Must be testable Must be better than its rivals

Hypothesis types
Descriptive Relational: Correlation & Causal
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Types of Hypothesis
Descriptive
Describes the existence, size, form or distribution of some variables Eighty percent of shareholders of HLL favour increasing the companys cash dividend Do shareholders of HLL favour an increased cash dividend?

It can also be stated as research question


Either form is acceptable, but descriptive hypothesis format has advantages

Encourages researcher to crystallize thinking Encourages to think about implications of either an accepted or rejected finding Useful for testing statistical significance
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Types of Hypothesis
Relational
Statements that describe the relationship between two variables with respect to some case Foreign (variable) refrigerators are perceived to be of better quality (variable) by Indian consumers (case)
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Types of Relational Hypothesis


Two types: Correlation & Causal Correlation
Merely states that variables occur together without implying that one causes the other
People in Kerela give more importance to education than people in Punjab In an office old employees are more responsive than young employees
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Types of Relational Hypothesis


Causal (or Explanatory)
There is an implication that existence of (or a change in) one causes or leads to a change in the other
Causal variable is called Independent variable and the other Dependent variable Advertisement causes higher sales Increase in income leads to higher savings
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The Value of a Theory


Narrows the range of facts we need to study Suggests which research approaches will yield the greatest meaning Suggests a data classification system Summarizes what is known about an object of study Predicts further facts that should be found
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Definition of Marketing Research


American Marketing Association
MR is the systematic gathering, recording and analyzing of data about problems related to the marketing of goods & services MR is the systematic design, collection, analysis & reporting of data & findings relevant to a specific marketing situation facing the company
It may be relevant to add the word continuous to the above definitions
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Philip Kotler

Purpose of MR
To improve quality of decision making process by providing information To help reduce the risk associated with managerial decision making
Risk due to two types of uncertainties:
Example : FORD Edsel car for youth

About the expected outcome About the future environment

To discover opportunity & exploit profitably


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For example : Frooti, Velvette, Mother Dairy, Dhara, Pan Parag


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Scope of MR
Consumers of products & services
Product & product design Distribution Channels Advertising Impact
Pricing, Sourcing, Physical attributes Performance, Dealer Satisfaction, Own vs Multi-brand Image, Positioning, Media Planning, Message Content & Prioritizing Govt spending. Mood of the Industry, State of Economy
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Buyer behaviour, Influencers, Buying habits, Incentives

Macro Level Phenomenon

MR Procedure
Five Steps
1.Problem Definition 2.Research Design 3.Field Work 4.Data Analysis 5.Report Preparation & Implementation

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The Management-Research Question Hierarchy

Management Decision

4 3

Measurement Questions Investigative Questions

2 1

Management Questions Research Questions

Management Dilemma
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The Management-Research Question Hierarchy


Conduct an employee survey for outcomes of change in compensation structure If compensation scheme is changed, will good sales persons leave?

Management Decision

4 3 2

Introduce individual incentive? Quota based incentive? Advertise more? How can we improve sales in south?

Why are sales declining in south while sales are booming in all other regions?
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Working with the Hierarchy


Management Dilemma The symptom of an actual problem Not difficult to identify a dilemma, however choosing one to focus on may be difficult Needs proper prioritizing

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Working with the Hierarchy


Management Question Categories Choice of purposes or objective Generation and evaluation of solutions Troubleshooting or control situation

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Working with the Hierarchy


Fine tune the research question
Examine concepts and constructs Break research questions into specific second-and-third-level questions Verify hypotheses with quality tests Determine what evidence answers the various questions and hypothesis Set the scope of your study
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Working with the Hierarchy


Investigative Questions Questions the researcher must answer to satisfactorily arrive at a conclusion about the research question

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Working with the Hierarchy


Measurement Questions The questions we actually ask to extract information from respondents

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Other Processes in the Hierarchy


Exploration Recent developments Predictions by informed figures about the prospects of the technology Identification of those involved in the area Accounts of successful ventures and failures by others in the field
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Research Process Problems


The Favored Technique Syndrome Company Database Strip-Mining Unresearchable Questions Ill-Defined Management Problems Politically Motivated Research

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MR Procedure
Five Steps
1.Problem Definition 2.Research Design 3.Field Work 4.Data Analysis 5.Report Preparation & Implementation

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1. Problem Definition
Any situation requiring further investigation is a problem Not all problems require fresh MR to be carried out. Many can be decided upon based on past data, trend, experience
Distributor Credit Manufacturing out put Stocking level

Problem Definition should be

Specific neither too broad nor too narrow Target outcome should be precise Should be manageable within time & resource available
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1. Problem Definition an example


Incomplete Problem Definition 1. Product Refrigerator Better Problem Definition Refrigerator Ordinary & Frost free

2. Market
3. Market Segment 4. Current Mkt Share 5. Problem

West Zone
---Not available Sales not picking up at the rate at which they should To find out the reason

West Zone with spl ref to Mumbai, Nashik, Pune & Nagpur
Office & Institutional Sector & NOT Households 12% over all 3% in Office & Inst Last year our growth 5% Industry grew by 25% To find out the reasons for shortfall in our growth rate in office & inst segments & suggest specific strategies followed by Brands A&B 58

6. MR Problem

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2. Research Design
It spells out how to achieve stated MR objectives Consists of
Data Collection Method Specific Research Instruments Sampling Plan

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2. Research Design
Data Collection Method
Secondary Data Primary Data
Observation Survey (Most widely used) Experimentation

Specific Research Instruments


Camera, Tape, People Meter, Tally Sheet, Questionnaire

Sampling Plan
Who How How How is to be surveyed? many? are they to be selected? are they to be reached? Sampling unit Sample size Sampling Procedure Sampling Media

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Questionnaire Design Some comments


Arrangement should be from easy to difficult Easy to understand language Sequencing should be proper no back & forth references Only important questions must be asked Short questionnaire helps in obtaining better response More close ended questions they help in analysis Response should be captured on proper scaling Decide whether to give incentive to respond or not
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3. Field Work
Involves planning, execution, supervision & checking for errors MR must be planned & executed well so as to complete within resource & time limits Progress to be closely monitored to avoid time & cost overrun Extensive back checks & spot checks will improve the quality of MR output
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4. Data Analysis
Done in two phases
Classification of raw data
Quantitative vs Qualitative Chronological, Geographical, Demographic

Summarizing the data


Frequency distribution, Mean, Median, Mode, Range, Variance, Standard Deviation Data Analysis Methods Four classes
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4. Data Analysis.Contd.
Analytical Methods Four classes:
Tests of Significance :Sampling Statistics, Chi Square Analysis & Analysis of Variance Explaining Observed difference I: Cross Tabulation, Correlation & Regression Explaining Observed difference II: Linear Discriminant Analysis & Automatic Interaction Detector Identifying Interdependencies: Cluster, Factor & Conjoint Analysis
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5. Report Presentation
Report must have following sections
Executive Summary Objectives & Methodology Summary, Conclusion, Recommendation Sample Characteristics & Basis of selection Detailed findings Questionnaires & other supporting documents

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Marketing Research

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Secondary Research

Secondary Data Inexpensive May not be relevant May be old


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Internal Sources
Company Accounts Internal Reports and Analysis Stock Analysis Retail data - loyalty cards, till data, etc.

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External Sources
Government Statistics Trade publications Commercial Data IMRB, Gallup, Mintel, etc. Household Expenditure Survey Magazine surveys Other firms research Research documents publications, journals, etc.
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Sampling Methods
Sampling Methods: Probability Methods: Random, Stratified Random, Cluster Non Probability Methods: Convenience, Quota, & Judgment

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Sampling Methods - Probability


Sampling Methods: Random Samples equal chance of anyone being picked
May select those not in the target group indiscriminate Sample sizes may need to be large to be representative Can be very expensive
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Sampling Methods - Probability


Stratified or Segment Random Sampling
Samples on the basis of a representative strata or segment Still random but more focussed May give more relevant information May be more cost effective
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Sampling Methods - Probability


Cluster Sampling
Primarily based on geographical areas or clusters that can be seen as being representative of the whole population

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Sampling Methods Non Probability


Quota Sampling
Again by segment Not randomly selected Specific number on each segment are interviewed, etc. May not be fully representative Cheaper method
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Sampling Methods Non Probability


Multi-Stage Sampling
Sample selected from multi stage sub-groups

Snowball Sampling
Samples developed from contacts of existing customers word of mouth type approach!
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Primary Research

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Primary Research
Primary Research
First hand information Expensive to collect, analyse and evaluate Can be highly focussed and relevant Care needs to be taken with the approach and methodology to ensure accuracy Types of question Closed limited information gained; Open useful information but difficult to analyse
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Qualitative & Quantitative


Quantitative and Qualitative Information: Quantitative based on numbers 56% of eighteen year olds drink cold drink at least four times a week. Doesnt tell you why, when, how. Qualitative more detail tells you why, when and how!
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Purpose of Marketing Research

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Marketing Research
Advantages of Marketing Research
Helps focus attention on objectives Aids forecasting, planning and strategic development May help to reduce risk of new product development Communicates image, vision, etc. Globalisation makes market information valuable (HSBC adverts!!)
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Marketing Research
Disadvantages of Marketing Research
Information only as good as the methodology used Can be inaccurate or unreliable Results may not be what the business wants to hear! May stifle initiative and gut feeling Always a problem that we may never know enough to be sure!
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