how does marketing research help managers quizlet

BUS203: Principles of Marketing

Marketing Research: An Aid to Decision Making

Read this chapter. The American Marketing Association defines marketing research this way: "Marketing research is 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. Marketing research specifies the information required to address these issues, designs the methods for collecting information, manages and implements the data collection process, and analyzes and communicates the findings and their implications".

Procedures and Techniques in Marketing Research

Considering the relatively short span of time in which marketing research has developed since the 1930s, it is quite remarkable that so sophisticated and thorough a collection of procedures and techniques should have been developed. In many respects, marketing research has advanced faster than any other specialized area in marketing management. In view of the highly specialized nature of marketing research, it is not possible in this discussion to present more than an outline of the basic procedures and techniques.

It is important for a marketing manager to be familiar with the basic procedures and techniques of marketing research. It is true that many business people will never have occasion to engage personally in marketing research. However, it is quite likely that they will be faced with a need either to supervise an internal marketing research activity or to work with an outside marketing research firm. The manager who understands the research function is in a position to judge intelligently the proposals made by research specialists and to evaluate their findings and recommendations. Occasionally, the manager herself will have to seek solutions to marketing problems. It may not be possible to obtain the services of marketing research specialists. The manager familiar with the basic procedures of fact-finding in marketing should be able to supervise a reasonably satisfactory search for the information required.

There is no single set of steps in a market research procedure that is accepted by all. Indeed, each marketing research problem requires, to some degree, its own peculiar procedure. However, there is general agreement that four major activities should be performed in a thorough marketing research project. These are: (1) making a preliminary investigation; (2) creating the research design; (3) conducting the investigation; and (4) processing the data/reporting results (see Figure 3.3)

Making a Preliminary Investigation

There are two phases of activity in the preliminary investigation. The first of these involves the determination of the purpose and scope of the research. The second involves an investigation into the marketing environment called the informal assessment.

Determining the Purpose an d Scope of the Research

The basic and critical problem in marketing research is seldom the problem that appears on the surface. It is therefore necessary to explore beneath the surface to ascertain the nature and size of the problem. This is the vital first step and must be done correctly, since every subsequent phase of the project is directed at solving the basic problem. For the research to be worthwhile (indeed, for it not to be a waste of resources), the problem must be stated clearly and correctly. Failure to do so is the most serious of mistakes in this project.

FIGURE 3.3 The marketing research process

Correctly defining the research problem should lead to the establishment of the research parameters. A research study could be restricted by function (advertising); customer group (heavy users); market (Far East); and time frame (1999-2001). Because research is so costly, it is imperative that parameters are established and maintained.

The Informal Assessment

The second important phase of the preliminary investigation is called the informal assessment. This is an unstructured search of the marketing environment. It enables the researcher to become familiar with the problem setting. This is particularly important for the outside consultant who needs to become acquainted with the company, its customers, its products, and all of the marketing conditions surrounding the problems. But it is also wise for the company researcher to refresh his/her knowledge of those internal factors bearing on the problem and also to discover the external elements involved.

The informal investigation goes beyond merely "getting acquainted" with the problem and its marketing setting, however. The final result of the preliminary investigation is the creation of a set of research questions. In marketing research, theses questions can be stated as a tentative explanation of the problem that the research is designed to solve. For example, if a marketing manager is trying to solve a problem that involves an important loss of market share in a particular area of the country, an informal investigation might reveal three possible reasons for the decline in market position. These reason, until verified by thorough study, can best be stated as research statements:

1. The decline in market share is the result of increased competitive advertising in the area.

2. The decline in market share is the result of the test marketing of a new product by a major competitor.

3. The decline in market share is the result of "stock outs" at the retail level caused by a trucking strike in the area.

In attempting to verify one or more of these hypothetical statements, the researcher examines company records to uncover new sources of information or to discover relationships in old data with bearing on the current problem. Interviews with company executives and operating personnel are often conducted. Interviews are also conducted with various per- sons outside the company whose opinions might be expected to have some relevance to the problem. The preliminary search is always limited to obtaining an insight into the problem and into possible. solutions for it.

In the final phase of the preliminary investigation, the researcher analyzes the results he has so far obtained and restates them in the form of research questions to be tested in the subsequent research steps.

Creating the Research Design

The design of a marketing research project is the plan proposed for testing the research questions as well as collecting and processing information. The administration of the project according to the design insures that the fact-finding process will be adequately controlled. "Design" means more than simply using good market research procedures. Every research project should be individually designed to produce the kinds of information needed to solve a particular problem. For this reason, nc two market research projects are ever exactly alike.

Six steps are involved in creating a research design: choosing the approach, determining types of data needed, locating data sources, choosing a method of collecting data, selecting the sample, and anticipating/collecting the results.

Choosing the Approach

Three alternative approaches are possible in creating a research design. They are not mutually exclusive, but in most cases, the design of a research plan is limited to the use of one of the three.

The first approach is the experimental approach. This approach requires that certain procedural rules must be followed. Essentially, the variable of interest---e.g., price, message- must be manipulated and everyone participating in the experiment must have a known and equal chance of being selected.

In a market experiment, information relating to the basic problem is obtained through the use of a small-scale simulated program designed to test a specific research hypothesis. Suppose, for example, that we wish to test the question that families of similar size and economic characteristics living in three different cities purchase different amounts of a particular formula of a soft drink, such as Dr. Pepper. The first step would be to establish the research question: "For a given time period, the average fluid ounces of a Formula A, B, or C purchase in each city were the same". Next, a sample of the families in each city would be selected and randomly assigned either A, B, or C. Next, a survey would be taken to determine the number of ounces purchased by each family. Once this was done, a statistical test would be used to test the research question. If statistically significant differences in purchases of Formula A, B, or C of Dr. Pepper were noted, it could be concluded that taste does influence the amount of this soft drink purchased by families with the same social and economic characteristics. Of course, other hypotheses about soft drink purchasing could also have been tested using a slightly different method. For example, the effect of television advertising on the purchase of Dr. Pepper might have been studied by inspecting purchases in two or more cities that are in the same general area of the country (such as the Southwest) but in which different levels of television advertising had been used.

The second approach is the historical. In this approach, reliance is placed on past experiences in seeking solutions to marketing problems. Historical marketing facts are relevant only to the degree that they can be projected into the future. Fortunately, in many areas of marketing, this can be done with a good deal of confidence. Certain types of changes, such as populations and income distribution, come about rather slowly. The day-to-day effect of these changes on marketing is almost imperceptible. Projections of future population, gross national product, and consumer purchasing power are practically foolproof. Historical analyses of such factors as consumer behavior, competitive selling tactics, and distributors' buying practices tend also to be fairly reliable indicators of future behavior by these same marketing components. Often, it is possible to trace the experience of organizations similar to yours and assess how they dealt with similar problems. There are literally hundreds of case studies on companies such as Microsoft that are useful to many business functions. Learning from the mistakes of others makes good business sense.

The third approach that can be used in designing a marketing research plan is the survey approach. In the survey approach, marketing information is collected either from observation or by questionnaire or interview. In contrast to the experimental and historical method, in which the data are more or less directly related to the problem, the survey approach necessarily involves far more subjectivity and intuition on the part of the researcher making a customer make a purchase of a new TV reveals something about his motives: simply asking him why he is buying it is much better. Drawing conclusions from either observations of behavior or from the opinions offered by a respondent create important insights. The survey method is flexible. It can be adapted to almost any type of research design. For this reason, and because of the difficulties in creating marketing experiments and in collecting pertinent historical data, the survey approach is the most often used in marketing research.

Determining the Types of Data Needed

Three types of data are used: facts, opinions, and motivational information. The types of data required are partly identified by the nature of the problem to be solved. For instance, if the problem relates to production and inventory scheduling, the facts that are needed relate to market and sales potential. On the other hand, if the problem revolves around the choice between two new products, the opinions of potential customers are important considerations. Finally, if a problem involves the choice of an appropriate selling appeal, buyers' motivations are probably be most important. Facts are quantitative or descriptive information that can be verified. Opinions are ideas relating to a problem that are expressed by people involved in the solution. Motivations are basic reasons, recognized or unrecognized, that explain action. They are extremely difficult to discover.

Locating the Sources of Data

There are two general sources of data, secondary sources and primary sources.

Secondary source information has been previously published and can be either internal or external. Company records and previously prepared marketing research reports are typical of internal secondary source material. External secondary sources are widely available and can be found outside the organization. Excellent bibliographies of secondary data sources are available, especially online. There are eight primary sources of secondary market information:

1. Public libraries.

2. Universities-library facilities and bureaus of business and economic research.

3. Government agencies--especially departments of commerce, agriculture, and labor.

4. Professional and trade associations.

5. Commercial publishers--especially trade publications.

6. Research and nonprofit organizations.

7. Conferences and personal contact.

8. Computer-provided search systems.

There are tremendous advantages in using data from secondary sources. In the first place, the expense of gathering information from secondary sources is a fraction of the cost of collecting primary data. The time required to collect data is also less. Frequently, the information required to solve a management problem must be obtained quickly. Thanks to computer technology, it is now possible to gather, merge, and reformulate many secondary sources of data. This capability has made secondary data even more attractive.

The inherent limitations of using secondary sources data are twofold. First, the information is frequently dated. Second, seldom are secondary data collected for precisely the same reasons that the information is sought to solve the current marketing problem. In spite of these limitations, the advantages of secondary research are so great that it is a common procedure not to proceed with the collection of primary data until after a thorough search of secondary information source has been completed.

Primary information is obtained directly from its source. It involves data that are not available in published form or in company records. It is gathered specifically to answer your research question. The sources of primary information, however, cannot be as easily identified as can the sources of secondary market data. Having identified the information required to help management solve a problem, it is usually possible to identify the person or persons possessing the information desired. In some cases, the information can be obtained from one of several sources. In other situations, the information can be obtained only by contacting specific sources. For example, a manufacturer of vitamins for children discovered that it was necessary to obtain information from the users (children), purchasers (parents), sellers (for the most part, druggists), and purchase influencers (pediatricians). Similarly, a manufacturer of feed for dairy cattle found it desirable to seek market information from farmers, feed dealers, and dairy specialists. Obviously, it is expensive to collect marketing information from multiple sources, and often it is rather time-consuming. These two disadvantages are offset by the fact that the information so obtained is tailored to the specific problem at hand. Ultimately, the question as to which source of market information to use depends on the value of the information in relationship to the time and cost required to gather it.

Choosing the Method of Collecting Data

There are various methods of collecting data, both secondary and primary. Secondary sources of information, listed earlier, can be gathered through a number of means. A company may establish a data-gathering/storage system as part of their computer system. Sales, expenses, inventory, returns, and customer complaints are then gathered automatically. Or a company can subscribe to one or more public research companies that gather relevant information. Finally, a company can obtain information on a problem-by-problem basis.

There are three common methods used to collect primary information: observation, questionnaire, and self-report. Observational data collection may be the oldest method. Since the beginning of commerce, merchants have been watching their customers and Eon customers engage in a variety of behaviors. Examples include shopping, purchase, return, complaint behavior, and so forth. A local fast food manager might simply observe the expression on customers' faces as they eat a new sandwich. More formal observation techniques are also employed. Video cameras or audio systems can be targeted at customers. Researchers can also be hired to do license plate surveys in parking lots or simply record observations in a prescribed manner. There are even observational techniques that are quite intrusive. For instance, in the case of a pantry (cabinet) audit, the researcher comes to the consumer's home and actually takes an inventory of products found. Ethnography requires that the researcher practically move in with the consumer and observe various relevant behaviors. This technique is illustrated in the Newsline box that follows.

NEWSLINE: WHERE'S TH E BEEF?

A woman in suburban Baltimore is shopping for her family's meals for the week. She cruises past the poultry section, stopping only momentarily to drop a couple of packages of boneless chicken breasts into her cart. Then, the dreaded sea of red looms before her. Tentatively, she picks up a package of beef. "This cut looks good, not too fatty," she says, juggling her two-year-old on her hip. "But I don't know what it is. I don't know how to cook it," she confesses, and trades it for a small package of sirloin and her regular order of ground beef.

Scenes like these are replayed daily in supermarkets across the country. But this time, it's being captured on videotape by New York City-based Port ICo Research, part of a recent ethnographic study of beef consumers for the National Cattleman's Beef Association (NCBA) and major grocery retailers. And due in part to the trepidation of this one mother in Baltimore, many grocers' meat cases are now being rearranged to display beef by cooking method, rather than by cuts of meat. Simple, three-step cooking instructions will soon be printed on the packages.

Ethnographic research, which combines intense observation with customer interviews, shows companies how people live with products-how they purchase and use them in their everyday lives. Knowing what consumers do with beef is vital to the NCBA. The study cost the NCBA approximately $60,000 (studies might range from $5,000 to $800,000). PortiCo videotaped consumer's purchasing behavior as well as their preparation habits at home. The researchers interviewed them each step of the way what they thought about beef, why they did (or didn't) select particular cuts, and how they prepared the family meal. The retailers couldn't believe how little consumers knew about something that seemed as familiar to them as sliced bread or soft drinks.

The observation technique can provide important research insights, especially if consistent patterns are noted. This method is relatively inexpensive and can be implemented and completed quickly. Unfortunately, interpreting an observation is still very subjective and mistakes are made.

Gathering information through a questionnaire format reflects the most popular research technique. There are two interrelated issues: the design of the questionnaire and the administration of the questionnaire.

There are several rules of thumb that should be followed when designing a questionnaire. For example, a good questionnaire should be like a well-written story: it should be logical, relevant, easy to follow, and interesting to the reader/respondent. There are also a host of techniques and related guidelines. For example, Figure 3.4 illustrates the forms questions can take. A yes/no question is considered a closed-ended dichotomous question; i.e., responder must check one of two possible answers. Questions 4 and 5 are two types of scaled questions. Questions 6-8 are open-ended, in that respondent can provide any answer desired. Closed-ended questions are best used when the researcher desires a particular set of answers or feels the respondent is unlikely to come up with an original answer. Open- ended questions allow the respondent to come up with personal answers. Of course, there is a risk that the respondent will have no answer.

Other considerations are whether to place the easier questions at the beginning of the questionnaire, group similar questions, or place demographic questions at the end of the questionnaire. Again, the goal is to enable the respondent to answer the questionnaire easily and accurately.

The design of a questionnaire is a function of how the questionnaire is administered, and vice versa. Four techniques for administering a questionnaire are currently used: mail , telephone, personal interview, and online. In the mail technique, the questionnaire is distributed and returned through the mail. A typical packet might contain a cover letter explaining the purpose of the research, a copy of the questionnaire, a stamped self-addressed return envelope, and an incentive for compliance (cash, merchandise, contribution to charity, or copy of report). Mail questionnaires allow the researcher to ask a large number of questions over a broad range of topics. They also allow the respondent to answer the questionnaire at their leisure. Finally, the standardized format does not allow for subjective bias. Unfortunately, these advantages can become limitations. The longer the questionnaire, the less likely the individual will respond. in fact, a response rate of 10-20% is common with- out an incentive. Control is lost through the mail process. Did the targeted person answer the questionnaire? Did the respondent understand the questions? Did she/he complete the questionnaire? Was the questionnaire returned on time? The loss of control also means that the interviewer cannot probe further into an interesting or controversial answer.

A more convenient and faster way of gathering marketing information is to conduct a telephone survey. Names and related telephone numbers can be obtained directly from a telephone directory or from an internally or externally generated database. Telephone surveys are limited in several important ways, such as the difficulty of reaching the correct respondent, the problem of completing the interview if the respondent decides to hang up, and the inability to eliminate the bias introduced by not interviewing those without phones or individuals With unlisted numbers. Also, 10 - 15 questions are likely to be the maximum number to be asked. Therefore, only a limited number of topics can be addressed. In spite of these limitations, the telephone survey method has grown in popularity. The costs are relatively low, research companies can provide well-trained and technically supported inter- viewers, and the technique works if the research questions are limited and require a quick answer. Still, it would be better if they didn't call while you were eating dinner.

A. DIRECT QUESTIONS/CLOSED-ENDED 1. HAVE YOU PURCHASED A NEW AUTOMOBILE SINCE JANUARY 1 OF THIS YEAR:

2. IF YOU HAVE PURCHASED A NEW AUTOMOBILE, WHAT MAKE AND MODEL DID YOU BUY?

3. IF YOU HAVE NOT PURCHASED A CAR SINCE JANUARY 1, DO YOU NOW PLAN TO BUY A NEW AUTOMOBILE BEFORE DECEMBER 31 OF THIS YEAR?

• NOT DECIDED

4. IF YOU HAVE NOT DECIDED WHETHER OR NOT YOU WILL BUY A NEW AUTOMOBILE, DO YOU NOW THINK THAT IT IS _ EXTREMELY LIKELY _QUITE LIKELY UNLIKELY _EXTREMELY UNLIKELY

THAT YOU WILL BUY A NEW AUTOMOBILE BETWEEN NOW AND DECEMBER 31 ?

5. I TEND TO RELY HEAVILY ON THE REPUTATION OF A CAR BRAND DISAGREE                           AGREE                 2         3         4        5

B. DEPTH QUESTIONS/OPEN-ENDED 6. IF YOU HAVE NOT PURCHASED A NEW AUTOMOBILE, WHAT IS THE MOST IMPORTANT REASON FOR YOUR DECISION NOT TO BUY A NEW CAR?

7. THAT IS VERY INTERESTING. TELL ME MORE ABOUT THAT.

8. ANY OTHER REASONS?

FIGURE 3.4 Examples of questions used in marketing research

Although often very costly and time-consuming, personal interviews may constitute the best way of collecting survey information. Once compliance is gained, the well-trained interviewer can make sure the right person is answering, ask as many questions as necessary make sure questions are understood, probe in order to address new issues, and encourage the respondent to complete the questionnaire. With freedom comes bias. It is sometimes difficult for an interviewer to maintain objectivity. Asking questions with a certain intonation, changing the wording, or changing the ordering of questions can all modify responses.

There are several online information-gathering techniques that allow the respondent more freedom in providing answers. As one would expect, there has been a recent rapid technological evolution in this area. Online questionnaires can help web site sponsors to gauge customer satisfaction, profile visitors, and provide a way to measure traffic for advertisers beyond banner click-through. By using research tools such as exit surveys, e-tailers can find out why people are leaving their sites-and why they might not come back.

There are four popular types of online research. Pop-up surveys occur when visitors are intercepted when they leave certain pages of the web site. A questionnaire then appears in a box on top of their main browser screens asking for responses. With e-mail web surveys, a company sends an e-mail message asking the recipient to complete a survey. Some- times the survey is embedded in the e-mail itself. Other times the e-mail lists either a passworded location to visit or a unique location that only the addressee can access to fill out the survey. Online groups are much like traditional focus groups, but are conducted in a web-based chat room where select individuals are invited by the company or its research firm. Finally, in the case of moderated e-mail groups, discussions take place over a period of time with a group communicating bye-mail. A moderator compiles the answers and sends the summary back to the group for comments and follow-up.

The third technique used to gather research information is self-reporting. This technique allows the respondent to deliver the information in a somewhat unstructured format. One very popular version of this technique is the focus group. A focus group takes place in a room where approximately 8-10 individuals and a trained moderator gather to discuss a particular business problem or set of problems. Often, the room contains a two-way mirror, which the sponsors of the research sit behind in order to observe the process. The proceedings are audiotapes and/or videotaped. Focus groups have been an extremely popular type of data collecting for a long time. A great deal of diverse information can be gathered quickly (assuming there is a well-trained moderator). However, there are serious limitations. It's still a subjective process and interpretation is necessary. It is also expensive; often several thousand dollars per focus group. Finally, it is difficult to control the behavior of the participants. Some dominate and some say nothing. And some become the equivalent of professional focus group members and no longer are able to provide the hoped-for spontaneity.

According to a psychologically proven premise, it is possible by impersonalizing questions to obtain information from a respondent that he would not, or could not, otherwise provide. This method involves the use of the projective technique, and represents a second type of self-report technique. The intent of the projective technique is to give respondents an opportunity to answer questions without the embarrassment or confusion created by direct involvement. Several projective techniques are employed:

1. Word association tests. In the word association test, the respondent is asked to say the first word that comes into his mind upon the presentation of another word stimulus. The most obvious applications of this test are in research on brand recognition, company image, and advertising appeals.

2. Sentence completion tests. In a sentence completion test, the respondent is asked to complete a number of sentences with the first words that come to mind. A series of sentence completion questions used by a supermarket chain were: (a) I like to shop in an AG supermarket because... (b) I think that food prices are. (c) The thing that bothers me most about food shopping in an AG store is...

The sentence completion test is relatively simple to administer and easy to interpret. It is usually difficult, however, to reduce the finding from a sentence completion test to statistical form.

3. Fsychodrama. In the psychodramatic type of question, the respondent is asked to project himself into an artificial marketing situation. The obvious artificiality of the situation makes the psychodrama a "role-playing" experiment in which the respondent provides information based on his personal attitudes through his explanation of the artificial situation.

Perhaps the greatest deficiency of projective techniques is the difficulty of presenting the findings. The identification of attitudes, motives, opinions, and forth is not difficult; however, it is extremely hard to measure the importance of these factors.

Selecting the Sample In most marketing research, it is seldom necessary to conduct a complete census; i.e. , to talk to 100% of the target segment. To do so is time-consuming and expensive. For this reason most marketing surveys make use of samples. A sample is a group of elements (persons, stores, financial reports) chosen from among a "total population" or "universe". The value of a research project is directly affected by how well the sample has been conceived and constructed.

The selection of the sample to be investigated requires a master list, or a framework, from which they may be selected. The sampling frame is the "population" or statistical "universe" from which the sample units will be selected. The frame for a survey of attitudes of credit customers of a department store would be the company's list of customers using charge accounts.

Although there are many kinds of sample designs, all of them can be classified as either probability samples or nonprobability samples. In a probability sample, each unit has a known chance of being selected for inclusion in the sample. its simplest version is the simple random sample, in which each unit in the sample frame has exactly the same chance of selection. Examples of this include flipping a fair coin, whose sides have a 50% chance of turning up, and throwing an unloaded die, whose sides have a 162/3% chance of turning up. This same principle can be applied to the previous department store example. A sample of names could be selected from the company's list of charge customers according to a random process, such as that of using a table of random digits.

While in a probability sample the sampling units have a known chance of being selected, in a non probability sample the sampling units are selected arbitrarily. To return to our department store example, instead of using a table of random numbers to select a sample of charge customers, an arbitrary and more convenient method would be to take the first fifty or sixty names on the list.

Anticipating the Results Making the Report

The research plan should provide for: (1) procedures for processing the data; (2) procedures for interpretation and analysis of the findings; and (3) an outline of the final report. In reaching these decisions, it is usually helpful to work from the form and content of the final report. The report should present a summary of findings and recommendations for management action drawn up in the light of the reasons for the research. The kinds of facts to be presented and the manner of their presentation dictates the type of analysis to be undertaken. The kinds of analysis will, inturn, often suggest the method of data processing. Data processing in general refers to the procedures for sorting, assembling, and reporting data. It can be done manually by the use of work sheets or by computer programming. The method of data processing has important bearing upon the manner in which the data are collected and reported. Thus, the design of the project is often expedited by a thorough consideration of the kinds of results that are expected and how they will be handled in the fin a: report.

Anticipating the results of the project and preparing a "dummy" final report has another advantage. It is often helpful to use the results of this step in the research design to demon state to management the kind of project that is going to be undertaken. Agreement by the management group that the kinds of information anticipated will assist in the solving of a marketing problem is helpful in obtaining approval for the project and in restraining management expectations as to the scope and purpose of the project.

1.1 Marketing and the Marketing Process

Learning outcomes.

By the end of this section, you will be able to:

• 1 Define and describe marketing.
• 2 Describe the benefits of marketing to the organization, its interested parties, and society.
• 3 Explain the marketing process.

Marketing Defined

When you ask a group of people, “What’s marketing?” most people will answer “advertising” or “selling.” It’s true that both of these functions are part of marketing, but marketing is also so much more. The American Marketing Association (AMA) defines marketing as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” 6 That’s kind of a mouthful, so let’s see if we can simplify it a bit.

At its most basic level, marketing is made up of every process involved in moving a product or service from the organization to the consumer. It includes discerning the needs of customers, developing products or services to meet those needs, identifying who is likely to purchase the products or services, promoting them, and moving them through the appropriate distribution channels to reach those customers. Marketing, quite simply, is about understanding what your customers want and using that understanding to drive the business.

Marketing can also be defined as the set of activities involved in identifying and anticipating customer needs and then attempting to satisfy those needs profitably. 7 But what does that really mean? Let’s break down that definition:

• Identifying customer needs . This is typically where marketing research comes in. Methods of marketing research will be covered in a later chapter, but market research helps a company develop a detailed picture of its customers, including a clear understanding of their wants and needs.
• Anticipating customer needs . After analyzing the data collected, marketers can predict how products might be changed, adapted, or updated.
• Satisfying customer needs . If marketers have done their homework correctly and clearly understand their customers’ needs, consumers will be pleased with their product purchase and will be more likely to make additional purchases.
• Profitably . Profitability is a relatively simple term; it’s when a company’s revenue is greater than its expenses. In terms of marketing, the road to profitability means adding value to a product so that the price customers pay is greater than the cost of making the product. 8

Marketing in Practice

Reconciling segmentation and diversity.

We live in a multicultural world where diversity, equity, inclusion, and belonging (DEIB) is no longer the “right” thing to do; rather, it’s imperative. This is particularly true in marketing, because as the consumer population diversifies, brands have to authentically reflect a wide range of backgrounds and life experiences in order to effectively connect with consumers. Therefore, marketers must increasingly respect individual preferences, celebrate differences, and promote customization of products and services to meet customers’ needs, wants, and preferences.

At the same time, to profitably produce and sell a viable product or service, marketers must identify potential customer groups and types with certain characteristics in common—i.e., market segmentation. Segmentation requires assigning individuals to predefined categories with predictable behaviors, based on standardized assumptions.

How does segmentation differ from stereotyping? How can segmentation support diversity?

Read the following articles to further explore these nuances:

• Chron: “ Difference Between Stereotyping & Market Segmentation ”
• Retail Dive: “ Segmentation is dead !”
• Spectrem Group Blog: “ Why Segmentation Is OK in Market Research Not Life ”

Keep these questions in mind as you explore Unit 2 of this book, where you will learn more about Market Segmentation, Targeting, and Positioning before exploring the considerations of Marketing in a Diverse Marketplace .

How Marketing Benefits the Organization, Its Interested Parties, and Society

Before we go on, let’s consider all the people and groups that an organization needs to consider and serve. Interested parties are those persons or entities that have an interest in the success or failure of a company. These parties can be categorized into two types: internal and external, as shown in Figure 1.2 . You may see these people and groups referred to as “stakeholders” in business writing and other media.

Internal interested parties are entities that reside within the organization and that affect—or are affected by—the actions of the company. These entities include employees, owners, managers, and investors (shareholders). When we think about marketing, marketers often tend to look outward. They build strategies to engage customers and show them what the company has to offer.

You might think that marketing would be primarily directed toward those outside the company, like customers, but marketing is also directed toward internal groups. Internal marketing involves promoting the objectives, products, and services of a company to its internal constituents—particularly employees. 9

Think about a recent interaction you have had with a business employee. It could be the server who took your order at lunch or the sales associate at a big box store who showed you the features of the new laptop you were looking to purchase. Which interactions left you with a positive experience? Chances are that your evaluation of the experience is based on the interaction you had with the server or sales associate. That’s a function and benefit of good internal marketing, employees who are motivated and empowered to deliver a satisfying customer experience.

External interested parties include those outside the company, such as customers, creditors, suppliers, distributors, and even society at large. External groups don’t have a direct say in the company’s decision-making process. However they are vital to the success of the company because companies can only succeed with the support of others.

How does marketing benefit external parties? First, consider what marketing does for consumers. It draws out their needs, creates new demand, locates untapped opportunities, and determines the possibilities of selling new products. Second, marketing creates form, time, place, and possession utilities for the company’s goods and services. Utility refers to a product’s usefulness to customers so that they are convinced enough to make a purchase. In other words, when you hear “utility” in marketing, think “usefulness to customers.”

Marketing creates several different types of utility:

• Form utility . Form utility refers to how well an organization can increase the value of its product in the customer’s eyes by making changes and altering its physical appearance. 10 For example, when you want a donut or a pastry, you don’t want to buy the ingredients to make it; you want a donut in its final form so you can eat it. That’s where the bakery and form utility come into play. The bakery combines flour, sugar, eggs, and other ingredients to make the cakes, donuts, and pastries that you purchase.
• Time utility . Marketing creates time utility when it makes products and services available to customers so that they can buy it when it is most convenient for them. Consider how many stores are open evenings, weekends, or even 24/7 to make it convenient for customers to shop there!
• Place utility . Marketing creates place utility when it makes goods or services physically available, convenient, and accessible to customers. Consider the ease a company like Uber Eats adds to your life when you’re craving tacos in the middle of the night and you don’t feel like getting dressed and driving to go get them. You can have your food delivered to you!
• Possession utility . Marketers facilitate possession utility by ensuring that a product is relatively easy to acquire. For example, many automobile manufacturers offer low (or sometimes no) interest rates on car loans to make it easy for you to walk out the door with a new set of car keys. Possession utility also encompasses the pride or satisfaction you get from owning a new product, such as a great-fitting pair of running shoes or a smartphone with all of the features you’ve been wanting.

Marketing’s primary benefit to society is that it drives the consumer economy. Marketing leads to increased sales and revenue for a business which enables them to expand operations, create more internal jobs and external jobs for partners like suppliers. Marketing also contributes tax revenue to local, state, and federal governments, ultimately leading to overall economic growth.

The Marketing Process Defined

The marketing process refers to the series of steps that assist businesses in planning, analyzing, implementing, and adjusting their marketing strategy. Do an internet search for “steps in the marketing process,” and you’ll immediately see that some websites outline a 10-step process, whereas others propose a 4-step or 6-step process. For our purposes, we’re going to use a 5-step process.

Steps in the Marketing Process

The 5-step process (see Figure 1.3 ) involves understanding the marketplace and customers, developing a marketing strategy, delivering value, growing customer relations, and capturing value from customers. 11

Step 1: Understand Both the Marketplace and Customers

Before you can start the marketing process, you need to have a good idea of what your marketplace looks like. This means answering some basic questions about your customers, like who they are, their income and purchasing power, and how much they’re likely to spend (particularly on your products or services). If you decide to sell at lower prices in order to attain higher unit sales volume, your marketing strategy would look very different than if you decided to sell fewer products at a higher price.

Another way to approach this is to create separate brands and compete in both arenas. Consider Volkswagen . You might immediately think of the VW Beetle or the Jetta, but the company’s brand portfolio extends beyond VW passenger cars and SUVs. It’s also the parent company for Audi, Bentley, Lamborghini, Porsche, and others, and these vehicles sell at very different price points than VW passenger cars. 12

Step 2: Develop a Customer-Driven Marketing Strategy

Marketing strategy refers to a business’s overall “game plan” to focus its limited resources in order to reach prospective customers and turn them into paying customers, hopefully for the long run.

It’s said that there are two basic types of marketing strategy: a product-driven, “build-it-and-they-will-come” strategy and a customer-driven strategy, in which you analyze prospective consumers and then—and only then—create something that they want or need. We’re going to focus on the latter strategy. What happens in a customer-driven marketing strategy is that the company shifts the focus from the product or service itself to its users. Customers’ needs are the central focus and the point of beginning, not an afterthought. Your primary goal in a customer-driven marketing strategy is to determine what users want and/or need and then satisfy those users. Instead of being product-centric, it’s about being customer-centric and developing a mutually beneficial relationship with customers. 13

In a nutshell, it’s about establishing a connection and a relationship. It’s about understanding who your customers are, what their needs and wants are, and how you can best meet those needs and wants. It’s about knowing your target market better than your competitors do and creating a strong value proposition for those users—a promise of value that communicates the benefits of your company’s products or services. In short, it’s what makes your product or service desirable to potential customers, helps them understand why they should buy it, how your company’s product or service differs from those of its competitors, and how your offerings are superior to similar offerings from your competitors. 14

Step 3: Deliver High Customer Value

Customers have myriad buying options and alternatives today. Given that, how can a company attract and—even more importantly—retain its customers? The answer is relatively simple: you give them value for their money. By definition, customer value is the ratio between the perceived benefits and costs incurred by the customer in acquiring your products or services.

The mathematical formula is simple:

But “value” from the customer’s perspective is a complex term, because we’re really considering four different values types:

• Functional value: what the product “does” for the customer in terms of solving a particular want or need
• Monetary value: what the product actually costs relative to its perceived worth
• Social value: how much owning the product allows the customer to connect with others
• Psychological value: how much that product allows the customer to “feel better” 15

Value is increased by boosting the benefits (in the form of product, place, or promotion) or minimizing the price.

Step 4: Grow Profitable Customer Relations

The bottom line is that profitable customer relationships are the “secret sauce” of any business. This step in the marketing process is where marketers acquire, keep, and grow customer relationships. Successful marketers know that acquiring customers is one of the hardest (not to mention one of the most expensive) elements of marketing. However, when you know clearly who those potential customers are, you can more effectively determine how to reach them, thus maximizing your marketing dollars.

It isn’t enough to have a one-and-done sale. You want repeat buyers, so marketers need to remind customers about the company’s products and/or services and how those products and services have met their needs and improved their lives so they make repeat purchases. Marketers need to consider how to reach customers about their offerings and make it easy and convenient for those customers to make continued purchases.

When customers have a positive relationship with a company or its products or services, they’re more likely to become repeat buyers. Satisfied customers are also more likely to be interested in buying additional products or services from your company, and they tend to recommend products to others, further reducing the company’s costs of getting new customers. 16

Step 5: Capture Customer Value in the Form of Profits

The goal of successful customer relationship management (CRM) is creating high customer equity —the potential profits a company earns from its current and potential customers. It’s a relatively simple concept: increasing customer loyalty results in higher customer equity.

Increasing customer equity is the goal of marketers because it’s a bellwether for financial success. Think about it in simple terms: the higher a company’s customer equity, the more profit the company generates, and the more valuable that company (and its products or services) becomes on the market. 17

Careers In Marketing

Marketing jobs.

In every chapter of this book, you’ll find this Careers in Marketing section. It’s meant to outline various jobs so you can be well informed of all the things marketers do. These sections will outline various job roles, what you do day-to-day, qualifications needed, and sometimes even salary information.

If you’ve decided you want a job in marketing, it’s important to know what kinds of jobs exist and what’s expected in each role. Google and YouTube searches will bring you all kinds of information. It’s recommended that you check out the insights from people in these roles and maybe even connect with them to ask them questions. Please do your homework, and determine what you like to do with your day, what you’re good at, and how to build a network to find the right job for you.

Here are a handful of resources to get your thinking started:

• HubSpot: “ How to Start Your Marketing Career When You Know Nothing About Marketing ”
• Setup: “ The Marketing Career Path: From Entry-Level to Chief Marketing Officer ”
• Coursera: “ Your Guide to Landing an Entry-Level Marketing Job ”
• Skillshare: “ 12 Entry-Level Marketing Jobs You Can Pursue Right Now ”
• Indeed: “ Entry Level Marketing Salary in the United States ”

Whatever job role you choose, marketing is a creative, interesting, and at times exciting role where you can make a real impact on people’s lives. Enjoy!

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

• Form utility
• Time utility
• Place utility
• Possession utility
• Marketing creates value.
• Marketing is made up of every process involved in moving a product or service from your organization to the consumer.
• Marketing includes distribution decisions.
• Marketing is about building relationships.
• customer equity
• the value proposition
• customer value
• the marketing process
• Developing a customer-driven marketing strategy
• Delivering high customer value
• Growing profitable customer relations
• Capturing value from customers

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Want to cite, share, or modify this book? This book uses the Creative Commons Attribution License and you must attribute OpenStax.

Access for free at https://openstax.org/books/principles-marketing/pages/1-unit-introduction

• Authors: Dr. Maria Gomez Albrecht, Dr. Mark Green, Linda Hoffman
• Publisher/website: OpenStax
• Book title: Principles of Marketing
• Publication date: Jan 25, 2023
• Location: Houston, Texas
• Book URL: https://openstax.org/books/principles-marketing/pages/1-unit-introduction
• Section URL: https://openstax.org/books/principles-marketing/pages/1-1-marketing-and-the-marketing-process

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The Role of Market Research in the Successful Marketing Strategy

What exactly is market research?

Market research is the overall task of establishing questions about your intended market and finding answers to them. Market research usually falls into one of two categories.

Quantitative Research: The emphasis is on measurement

• Quantitative research provides a measure of how many people think, feel or behave in a certain way and uses statistical analysis to determine the results. If you want to know how many of your customers support a change in a product or service–and how strongly they support it–so that you can determine whether you have a business case for making that change, you would use quantitative research.

Qualitative Research: The emphasis is on understanding

• Qualitative research is an in-depth exploration of what people think, feel or do and, crucially, why. If you want to know why your customers behave as they do and what barriers there may be to their changing that behavior, you would use qualitative research to explore those issues.

In most cases, strategy requires utilizing both research types. This provides a broad overview of your intended market, brand opinion, strengths, weaknesses and potential ways to improve your efforts.

Why utilize market research?

Compiling the benefits of market research would take pages. However, these are four of the major benefits:

• Improving efficiency: When it comes to marketing, it is all about ROI . Without market research to back your strategy, your brand could be throwing money away. Depending on your business, this could be the difference between success and failure. Market research allows you to maximize the benefit of each dollar invested in your marketing.
• Positioning: When it comes to establishing your brand as a leader in your market, it is all about brand reputation. A major contributor to brand reputation is authority and innovation. By conducting research into the common concerns of those in your market, you can place your brand in a position to fill vital needs within your market. This creates an innovative appearance. With that, comes increased exposure and authority. Sometimes the best marketing strategy is simply knowing your market. Market research gives you to tools to do that.
• Identifying problems: Brand problems such as poor image, inconsistent voicing or poor targeting are not always apparent. With the hectic routine of growing your brand, things sometimes slip by unnoticed. Market research provides objective ways to assess your brand’s marketing from an outside point of view. By identifying problems with your marketing strategy or brand through marketing research, you can fix issues or shift directions before the problem becomes critical.
• Simplified brand expansion: The insights gained through market research extend far beyond your marketing strategy. By getting to know your market, you can promote your brand using their vocabulary, directly address their concerns, find new uses for existing products or services, ensure your marketing is reaching the proper audience and improve conversions or lead generation. All of this results in a cascade of benefits that reach every corner of your brand.

When to utilize market research?

Though market research has specific roles in creating a business plan, designing market strategies or expanding your brand, it is a tool that can be used for your business continuously. By alternating qualitative and quantitative methods, you can create routines that will ensure that your brand is always in the optimal position for success. Often one research cycle will uncover additional questions and fuel another. If you are constantly exploring your marketing practices and the state of your market, you are always primed to perform action for the right growth.

Marketing strategies will make or break businesses. Market research offers numerous ways to optimize your marketing strategies to improve the chances that your brand will succeed, grow and prosper.

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9 Key stages in your marketing research process

You can conduct your own marketing research. Follow these steps, add your own flair, knowledge and creativity, and you’ll have bespoke research to be proud of.

Marketing research is the term used to cover the concept, development, placement and evolution of your product or service, its growing customer base and its branding – starting with brand awareness , and progressing to (everyone hopes) brand equity . Like any research, it needs a robust process to be credible and useful.

Marketing research uses four essential key factors known as the ‘marketing mix’ , or the Four Ps of Marketing :

• Product (goods or service)
• Price ( how much the customer pays )
• Place (where the product is marketed)
• Promotion (such as advertising and PR)

These four factors need to work in harmony for a product or service to be successful in its marketplace.

The marketing research process – an overview

A typical marketing research process is as follows:

• Identify an issue, discuss alternatives and set out research objectives
• Develop a research program
• Choose a sample
• Gather information
• Gather data
• Organize and analyze information and data
• Present findings
• Make research-based decisions
• Take action based on insights

Step 1: Defining the marketing research problem

Defining a problem is the first step in the research process. In many ways, research starts with a problem facing management. This problem needs to be understood, the cause diagnosed, and solutions developed.

However, most management problems are not always easy to research, so they must first be translated into research problems. Once you approach the problem from a research angle, you can find a solution. For example, “sales are not growing” is a management problem, but translated into a research problem, it becomes “ why are sales not growing?” We can look at the expectations and experiences of several groups : potential customers, first-time buyers, and repeat purchasers. We can question whether the lack of sales is due to:

• Poor expectations that lead to a general lack of desire to buy, or
• Poor performance experience and a lack of desire to repurchase.

This, then, is the difference between a management problem and a research problem. Solving management problems focuses on actions: Do we advertise more? Do we change our advertising message? Do we change an under-performing product configuration? And if so, how?

Defining research problems, on the other hand, focus on the whys and hows, providing the insights you need to solve your management problem.

Step 2: Developing a research program: method of inquiry

The scientific method is the standard for investigation. It provides an opportunity for you to use existing knowledge as a starting point, and proceed impartially.

The scientific method includes the following steps:

• Define a problem
• Develop a hypothesis
• Make predictions based on the hypothesis
• Devise a test of the hypothesis
• Conduct the test
• Analyze the results

This terminology is similar to the stages in the research process. However, there are subtle differences in the way the steps are performed:

• the scientific research method is objective and fact-based, using quantitative research and impartial analysis
• the marketing research process can be subjective, using opinion and qualitative research, as well as personal judgment as you collect and analyze data

Step 3: Developing a research program: research method

As well as selecting a method of inquiry (objective or subjective), you must select a research method . There are two primary methodologies that can be used to answer any research question:

• Experimental research : gives you the advantage of controlling extraneous variables and manipulating one or more variables that influence the process being implemented.
• Non-experimental research : allows observation but not intervention – all you do is observe and report on your findings.

Step 4: Developing a research program: research design

Research design is a plan or framework for conducting marketing research and collecting data. It is defined as the specific methods and procedures you use to get the information you need.

There are three core types of marketing research designs: exploratory, descriptive, and causal . A thorough marketing research process incorporates elements of all of them.

Exploratory marketing research

This is a starting point for research. It’s used to reveal facts and opinions about a particular topic, and gain insight into the main points of an issue. Exploratory research is too much of a blunt instrument to base conclusive business decisions on, but it gives the foundation for more targeted study. You can use secondary research materials such as trade publications, books, journals and magazines and primary research using qualitative metrics, that can include open text surveys, interviews and focus groups.

Descriptive marketing research

This helps define the business problem or issue so that companies can make decisions, take action and monitor progress. Descriptive research is naturally quantitative – it needs to be measured and analyzed statistically , using more targeted surveys and questionnaires. You can use it to capture demographic information , evaluate a product or service for market, and monitor a target audience’s opinion and behaviors. Insights from descriptive research can inform conclusions about the market landscape and the product’s place in it.

Causal marketing research

This is useful to explore the cause and effect relationship between two or more variables. Like descriptive research , it uses quantitative methods, but it doesn’t merely report findings; it uses experiments to predict and test theories about a product or market. For example, researchers may change product packaging design or material, and measure what happens to sales as a result.

Step 5: Choose your sample

Your marketing research project will rarely examine an entire population. It’s more practical to use a sample - a smaller but accurate representation of the greater population. To design your sample, you’ll need to answer these questions:

• Which base population is the sample to be selected from? Once you’ve established who your relevant population is (your research design process will have revealed this), you have a base for your sample. This will allow you to make inferences about a larger population.
• What is the method (process) for sample selection? There are two methods of selecting a sample from a population:

1. Probability sampling : This relies on a random sampling of everyone within the larger population.

2. Non-probability sampling : This is based in part on the investigator’s judgment, and often uses convenience samples, or by other sampling methods that do not rely on probability.

• What is your sample size? This important step involves cost and accuracy decisions. Larger samples generally reduce sampling error and increase accuracy, but also increase costs. Find out your perfect sample size with our calculator .

Step 6: Gather data

Your research design will develop as you select techniques to use. There are many channels for collecting data, and it’s helpful to differentiate it into O-data (Operational) and X-data (Experience):

• O-data is your business’s hard numbers like costs, accounting, and sales. It tells you what has happened, but not why.
• X-data gives you insights into the thoughts and emotions of the people involved: employees, customers, brand advocates.

When you combine O-data with X-data, you’ll be able to build a more complete picture about success and failure - you’ll know why. Maybe you’ve seen a drop in sales (O-data) for a particular product. Maybe customer service was lacking, the product was out of stock, or advertisements weren’t impactful or different enough: X-data will reveal the reason why those sales dropped. So, while differentiating these two data sets is important, when they are combined, and work with each other, the insights become powerful.

With mobile technology, it has become easier than ever to collect data. Survey research has come a long way since market researchers conducted face-to-face, postal, or telephone surveys. You can run research through:

• Social media ( polls and listening )

Another way to collect data is by observation. Observing a customer’s or company’s past or present behavior can predict future purchasing decisions. Data collection techniques for predicting past behavior can include market segmentation , customer journey mapping and brand tracking .

Regardless of how you collect data, the process introduces another essential element to your research project: the importance of clear and constant communication .

And of course, to analyze information from survey or observation techniques, you must record your results . Gone are the days of spreadsheets. Feedback from surveys and listening channels can automatically feed into AI-powered analytics engines and produce results, in real-time, on dashboards.

Step 7: Analysis and interpretation

The words ‘ statistical analysis methods ’ aren’t usually guaranteed to set a room alight with excitement, but when you understand what they can do, the problems they can solve and the insights they can uncover, they seem a whole lot more compelling.

Statistical tests and data processing tools can reveal:

• Whether data trends you see are meaningful or are just chance results
• Your results in the context of other information you have
• Whether one thing affecting your business is more significant than others
• What your next research area should be
• Insights that lead to meaningful changes

There are several types of statistical analysis tools used for surveys. You should make sure that the ones you choose:

• Work on any platform - mobile, desktop, tablet etc.
• Integrate with your existing systems
• Are easy to use with user-friendly interfaces, straightforward menus, and automated data analysis
• Incorporate statistical analysis so you don’t just process and present your data, but refine it, and generate insights and predictions.

Here are some of the most common tools:

• Benchmarking : a way of taking outside factors into account so that you can adjust the parameters of your research. It ‘levels the playing field’ – so that your data and results are more meaningful in context. And gives you a more precise understanding of what’s happening.
• Regression analysis : this is used for working out the relationship between two (or more) variables. It is useful for identifying the precise impact of a change in an independent variable.
• T-test is used for comparing two data groups which have different mean values. For example, do women and men have different mean heights?
• Analysis of variance (ANOVA) Similar to the T-test, ANOVA is a way of testing the differences between three or more independent groups to see if they’re statistically significant.
• Cluster analysis : This organizes items into groups, or clusters, based on how closely associated they are.
• Factor analysis: This is a way of condensing many variables into just a few, so that your research data is less unwieldy to work with.
• Conjoint analysis : this will help you understand and predict why people make the choices they do. It asks people to make trade-offs when making decisions, just as they do in the real world, then analyzes the results to give the most popular outcome.
• Crosstab analysis : this is a quantitative market research tool used to analyze ‘categorical data’ - variables that are different and mutually exclusive, such as: ‘men’ and ‘women’, or ‘under 30’ and ‘over 30’.
• Text analysis and sentiment analysis : Analyzing human language and emotions is a rapidly-developing form of data processing, assigning positive, negative or neutral sentiment to customer messages and feedback.

Stats IQ can perform the most complicated statistical tests at the touch of a button using our online survey software , or data from other sources. Learn more about Stats iQ now .

Step 8: The marketing research results

Your marketing research process culminates in the research results. These should provide all the information the stakeholders and decision-makers need to understand the project.

The results will include:

• all your information
• a description of your research process
• the results
• conclusions
• recommended courses of action

They should also be presented in a form, language and graphics that are easy to understand, with a balance between completeness and conciseness, neither leaving important information out or allowing it to get so technical that it overwhelms the readers.

Traditionally, you would prepare two written reports:

• a technical report , discussing the methods, underlying assumptions and the detailed findings of the research project
• a summary report , that summarizes the research process and presents the findings and conclusions simply.

There are now more engaging ways to present your findings than the traditional PowerPoint presentations, graphs, and face-to-face reports:

• Live, interactive dashboards for sharing the most important information, as well as tracking a project in real time.
• Results-reports visualizations – tables or graphs with data visuals on a shareable slide deck
• Online presentation technology, such as Prezi
• Visual storytelling with infographics
• A single-page executive summary with key insights
• A single-page stat sheet with the top-line stats

You can also make these results shareable so that decision-makers have all the information at their fingertips.

Step 9 Turn your insights into action

Insights are one thing, but they’re worth very little unless they inform immediate, positive action. Here are a few examples of how you can do this:

• Stop customers leaving – negative sentiment among VIP customers gets picked up; the customer service team contacts the customers, resolves their issues, and avoids churn .
• Act on important employee concerns – you can set certain topics, such as safety, or diversity and inclusion to trigger an automated notification or Slack message to HR. They can rapidly act to rectify the issue.
• Address product issues – maybe deliveries are late, maybe too many products are faulty. When product feedback gets picked up through Smart Conversations, messages can be triggered to the delivery or product teams to jump on the problems immediately.
• Improve your marketing effectiveness - Understand how your marketing is being received by potential customers, so you can find ways to better meet their needs
• Grow your brand - Understand exactly what consumers are looking for, so you can make sure that you’re meeting their expectations

Download now: 8 Innovations to Modernize Market Research

Scott Smith

Scott Smith, Ph.D. is a contributor to the Qualtrics blog.

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Module 13: Marketing Function

The marketing research process, learning outcomes.

• Explain the process and goal of market research
• Explain how market research helps marketers validate their target markets

Marketing research is a useful and necessary tool for helping marketers and an organization’s executive leadership make wise decisions. Carrying out marketing research can involve highly specialized skills that go deeper than the information outlined in this module. However, it’s important for any marketer to be familiar with the basic procedures and techniques of marketing research.

It’s very likely that at some point a marketing professional will need to supervise an internal marketing research activity or to work with an outside marketing research firm to conduct a research project. Managers who understand the research function can do a better job of framing the problem and critically appraising the proposals made by research specialists. They are also in a better position to evaluate their findings and recommendations.

Periodically marketers themselves need to find solutions to marketing problems without the assistance of marketing research specialists inside or outside the company. If you are familiar with the basic procedures of marketing research, you can supervise and even conduct a reasonably satisfactory search for the information needed.

Click on the image for a larger view.

Step 1: Identify the Problem

The first step for any marketing research activity is to clearly identify and define the problem you are trying to solve. You start by stating the marketing or business problem you need to address and for which you need additional information to figure out a solution. Next, articulate the objectives for the research: What do you want to understand by the time the research project is completed? What specific information, guidance, or recommendations need to come out of the research in order to make it a worthwhile investment of the organization’s time and money?

It’s important to share the problem definition and research objectives with other team members to get their input and further refine your understanding of the problem and what is needed to solve it. At times, the problem you really need to solve is not the same problem that appears on the surface. Collaborating with other stakeholders helps refine your understanding of the problem, focus your thinking, and prioritize what you hope to learn from the research. Prioritizing your objectives is particularly helpful if you don’t have the time or resources to investigate everything you want.

To flesh out your understanding of the problem, it’s useful to begin brainstorming actual research questions you want to explore. What are the questions you need to answer in order to get to the research outcomes? What is the missing information that marketing research will help you find? The goal at this stage is to generate a set of preliminary, big-picture questions that will frame your research inquiry. You will revisit these research questions later in the process, but when you’re getting started, this exercise helps clarify the scope of the project, whom you need to talk to, what information may already be available, and where to look for the information you don’t yet have.

Marketing Research for Bookends

Your uncle Dan owns an independent bookstore called Bookends, and it’s not doing very well. (That’s you in the picture.) The store’s sales are down, and the rent is going up. Dan has turned to you for help, since you know a thing or two about marketing.

You need a lot of information if you’re going to help your uncle turn things around, so marketing research is a good idea. You begin by identifying the problem and then work to set down your research objectives and initial research questions:

Step 2: Develop a Research Plan

Once you have a problem definition, research objectives, and a preliminary set of research questions, the next step is to develop a research plan. Essential to this plan is identifying precisely what information you need to answer your questions and achieve your objectives. Do you need to understand customer opinions about something? Are you looking for a clearer picture of customer needs and related behaviors? Do you need sales, spending, or revenue data? Do you need information about competitors’ products, or insight about what will make prospective customers notice you? When do you need the information, and what’s the time frame for getting it? What budget and resources are available?

Once you have clarified what kind of information you need and the timing and budget for your project, you can develop the research design. This details how you plan to collect and analyze the information you’re after. Some types of information are readily available through  secondary research and secondary data sources. Secondary research analyzes information that has already been collected for another purpose by a third party, such as a government agency, an industry association, or another company. Other types of information need to come from talking directly to customers about your research questions. This is known as primary research , which collects primary data captured expressly for your research inquiry.   Marketing research projects may include secondary research, primary research, or both.

Depending on your objectives and budget, sometimes a small-scale project will be enough to get the insight and direction you need. At other times, in order to reach the level of certainty or detail required, you may need larger-scale research involving participation from hundreds or even thousands of individual consumers. The research plan lays out the information your project will capture—both primary and secondary data—and describes what you will do with it to get the answers you need. (Note: You’ll learn more about data collection methods and when to use them later in this module.)

Your data collection plan goes hand in hand with your analysis plan. Different types of analysis yield different types of results. The analysis plan should match the type of data you are collecting, as well as the outcomes your project is seeking and the resources at your disposal. Simpler research designs tend to require simpler analysis techniques. More complex research designs can yield powerful results, such as understanding causality and trade-offs in customer perceptions. However, these more sophisticated designs can require more time and money to execute effectively, both in terms of data collection and analytical expertise.

The research plan also specifies who will conduct the research activities, including data collection, analysis, interpretation, and reporting on results. At times a singlehanded marketing manager or research specialist runs the entire research project. At other times, a company may contract with a marketing research analyst or consulting firm to conduct the research. In this situation, the marketing manager provides supervisory oversight to ensure the research delivers on expectations.

Finally, the research plan indicates who will interpret the research findings and how the findings will be reported. This part of the research plan should consider the internal audience(s) for the research and what reporting format will be most helpful. Often, senior executives are primary stakeholders, and they’re anxious for marketing research to inform and validate their choices. When this is the case, getting their buy-in on the research plan is recommended to make sure that they are comfortable with the approach and receptive to the potential findings.

A Bookends Research Plan

You talk over the results of your problem identification work with Dan. He thinks you’re on the right track and wants to know what’s next. You explain that the next step is to put together a detailed plan for getting answers to the research questions.

Dan is enthusiastic, but he’s also short on money. You realize that such a financial constraint will limit what’s possible, but with Dan’s help you can do something worthwhile. Below is the research plan you sketch out:

Step 3: Conduct the Research

Conducting research can be a fun and exciting part of the marketing research process. After struggling with the gaps in your knowledge of market dynamics—which led you to embark on a marketing research project in the first place—now things are about to change. Conducting research begins to generate information that helps answer your urgent marketing questions.

Typically data collection begins by reviewing any existing research and data that provide some information or insight about the problem. As a rule, this is secondary research. Prior research projects, internal data analyses, industry reports, customer-satisfaction survey results, and other information sources may be worthwhile to review. Even though these resources may not answer your research questions fully, they may further illuminate the problem you are trying to solve. Secondary research and data sources are nearly always cheaper than capturing new information on your own. Your marketing research project should benefit from prior work wherever possible.

After getting everything you can from secondary research, it’s time to shift attention to primary research, if this is part of your research plan. Primary research involves asking questions and then listening to and/or observing the behavior of the target audience you are studying. In order to generate reliable, accurate results, it is important to use proper scientific methods for primary research data collection and analysis. This includes identifying the right individuals and number of people to talk to, using carefully worded surveys or interview scripts, and capturing data accurately.

Without proper techniques, you may inadvertently get bad data or discover bias in the responses that distorts the results and points you in the wrong direction. The module on Marketing Research Techniques discusses these issues in further detail, since the procedures for getting reliable data vary by research method.

Getting the Data on Bookends

Dan is on board with the research plan, and he’s excited to dig into the project. You start with secondary data, getting a dump of Dan’s sales data from the past two years, along with related information: customer name, zip code, frequency of purchase, gender, date of purchase, and discounts/promotions (if any).

You visit the U.S. Census Bureau Web site to download demographic data about your metro area. The data show all zip codes in the area, along with population size, gender breakdown, age ranges, income, and education levels.

The next part of the project is customer-survey data. You work with Dan to put together a short survey about customer attitudes toward Bookends, how often and why they come, where else they spend money on books and entertainment, and why they go other places besides Bookends. Dan comes up with the great idea of offering a 5 percent discount coupon to anyone who completes the survey. Although it eats into his profits, this scheme gets more people to complete the survey and buy books, so it’s worth it.

Step 4: Analyze and Report Findings

Analyzing the data obtained in a market survey involves transforming the primary and/or secondary data into useful information and insights that answer the research questions. This information is condensed into a format to be used by managers—usually a presentation or detailed report.

Analysis starts with formatting, cleaning, and editing the data to make sure that it’s suitable for whatever analytical techniques are being used. Next, data are tabulated to show what’s happening: What do customers actually think? What’s happening with purchasing or other behaviors? How do revenue figures actually add up? Whatever the research questions, the analysis takes source data and applies analytical techniques to provide a clearer picture of what’s going on. This process may involve simple or sophisticated techniques, depending on the research outcomes required. Common analytical techniques include regression analysis to determine correlations between factors; conjoint analysis to determine trade-offs and priorities; predictive modeling to anticipate patterns and causality; and analysis of unstructured data such as Internet search terms or social media posts to provide context and meaning around what people say and do.

Good analysis is important because the interpretation of research data—the “so what?” factor—depends on it. The analysis combs through data to paint a picture of what’s going on. The interpretation goes further to explain what the research data mean and make recommendations about what managers need to know and do based on the research results. For example, what is the short list of key findings and takeaways that managers should remember from the research? What are the market segments you’ve identified, and which ones should you target?  What are the primary reasons your customers choose your competitor’s product over yours, and what does this mean for future improvements to your product?

Individuals with a good working knowledge of the business should be involved in interpreting the data because they are in the best position to identify significant insights and make recommendations from the research findings. Marketing research reports incorporate both analysis and interpretation of data to address the project objectives.

The final report for a marketing research project may be in written form or slide-presentation format, depending on organizational culture and management preferences. Often a slide presentation is the preferred format for initially sharing research results with internal stakeholders. Particularly for large, complex projects, a written report may be a better format for discussing detailed findings and nuances in the data, which managers can study and reference in the future.

Analysis and Insights for Bookends: Target market validation

Getting the data was a bit of a hassle, but now you’ve got it, and you’re excited to see what it reveals. Your statistician cousin, Marina, turns out to be a whiz with both the sales data and the census data. She identified several demographic profiles in the metro area that looked a lot like lifestyle segments. Then she mapped Bookends’ sales data into those segments to show who is and isn’t visiting Bookends. After matching customer-survey data to the sales data, she broke down the segments further based on their spending levels and reasons they visit Bookends.

Gradually a clearer picture of Bookends’ customers is beginning to emerge: who they are, why they come, why they don’t come, and what role Bookends plays in their lives. Right away, a couple of higher-priority segments—based on their spending levels, proximity, and loyalty to Bookends—stand out. The research has succeeded in segmenting the market into manageable targets. You and your uncle are definitely seeing some possibilities for making the bookstore a more prominent part of their lives. You capture these insights as “recommendations to be considered” while you evaluate the right marketing mix for each of the new segments you have now validated.

Step 5: Take Action

Once the report is complete, the presentation is delivered, and the recommendations are made, the marketing research project is over, right? Wrong.

What comes next is arguably the most important step of all: taking action based on your research results.

If your project has done a good job interpreting the findings and translating them into recommendations for the marketing team and other areas of the business, this step may seem relatively straightforward. When the research results validate a path the organization is already on, the “take action” step can galvanize the team to move further and faster in that same direction.

Things are not so simple when the research results indicate a new direction or a significant shift is advisable. In these cases, it’s worthwhile to spend time helping managers understand the research, explain why it is wise to shift course, and explain how the business will benefit from the new path. As with any important business decision, managers must think deeply about the new approach and carefully map strategies, tactics, and available resources to plan effectively. By making the results available and accessible to managers and their execution teams, the marketing research project can serve as an ongoing guide and touchstone to help the organization plan, execute, and adjust course as it works toward desired goals and outcomes.

It is worth mentioning that many marketing research projects are never translated into management action. Sometimes this is because the report is too technical and difficult to understand. In other cases, the research conclusions fail to provide useful insights or solutions to the problem, or the report writer fails to offer specific suggestions for translating the research findings into management strategy. These pitfalls can be avoided by paying due attention to the research objectives throughout the project and allocating sufficient time and resources to do a good job interpreting research results for those who will need to act on them.

Bookends’ New Customer Campaign

Your research findings and recommendations identified three segments for Bookends to focus on. Based on the demographics, lifestyle, and spending patterns found during your marketing research, you’re able to name them: 1) Bored Empty-Nesters, 2) Busy Families, and 3) Hipster Wannabes. Dan has a decent-sized clientele across all three groups, and they are pretty good spenders when they come in. But until now he hasn’t done much to purposely attract any of them.

With newly identified segments in focus, you and Dan begin brainstorming about a marketing mix to target each group. What types of books and other products would appeal to each one? What activities or events would bring them into the store? Are there promotions or particular messages that would induce them to buy at Bookends instead of Amazon or another bookseller? How will Dan reach and communicate with each group? And what can you do to bring more new customers into the store within these target groups?

Even though Bookends is a real-life project with serious consequences for your uncle Dan, it’s also a fun laboratory where you can test out some of the principles you’re learning in your marketing class. You’re figuring out quickly what it’s like to be a marketer.

Well done, rookie!

Practice Questions

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1.2 Who Does Marketing?

Learning objective.

• Describe how the various institutions and entities that engage in marketing use marketing to deliver value.

The short answer to the question of who does marketing is “everybody!” But that answer is a bit glib and not too useful. Let’s take a moment and consider how different types of organizations engage in marketing.

For-Profit Companies

The obvious answer to the question, “Who does marketing?” is for-profit companies like McDonald’s, Procter & Gamble (the makers of Tide detergent and Crest toothpaste), and Walmart. For example, McDonald’s creates a new breakfast chicken sandwich for $1.99 (the offering), launches a television campaign (communicating), makes the sandwiches available on certain dates (delivering), and then sells them in its stores (exchanging). When Procter & Gamble (or P&G for short) creates a new Crest tartar control toothpaste, it launches a direct mail campaign in which it sends information and samples to dentists to offer to their patients. P&G then sells the toothpaste through retailers like Walmart, which has a panel of consumers sample the product and provide feedback through an online community. These are all examples of marketing activities.

For-profit companies can be defined by the nature of their customers. A B2C (business-to-consumer) company like P&G sells products to be used by consumers like you, while a B2B (business-to-business) company sells products to be used within another company’s operations, as well as by government agencies and entities. To be sure, P&G sells toothpaste to other companies like Walmart (and probably to the army, prisons, and other government agencies), but the end user is an individual person.

Other ways to categorize companies that engage in marketing is by the functions they fulfill. P&G is a manufacturer, Walmart is a retailer, and Grocery Supply Company ( http://www.grocerysupply.com ) is a wholesaler of grocery items and buys from companies like P&G in order to sell to small convenience store chains. Though they have different functions, all these types of for-profit companies engage in marketing activities. Walmart, for example, advertises to consumers. Grocery Supply Company salespeople will call on convenience store owners and take orders, as well as build in-store displays. P&G might help Walmart or Grocery Supply Company with templates for advertising or special cartons to use in an in-store display, but all the companies are using marketing to help sell P&G’s toothpaste.

Similarly, all the companies engage in dialogues with their customers in order to understand what to sell. For Walmart and Grocery Supply, the dialogue may result in changing what they buy and sell; for P&G, such customer feedback may yield a new product or a change in pricing strategy.

Nonprofit Organizations

Nonprofit organizations also engage in marketing. When the American Heart Association (AHA) created a heart-healthy diet for people with high blood pressure, it bound the diet into a small book, along with access to a special Web site that people can use to plan their meals and record their health-related activities. The AHA then sent copies of the diet to doctors to give to patients. When does an exchange take place, you might be wondering? And what does the AHA get out of the transaction?

From a monetary standpoint, the AHA does not directly benefit. Nonetheless, the organization is meeting its mission, or purpose, of getting people to live heart-healthy lives and considers the campaign a success when doctors give the books to their patients. The point is that the AHA is engaged in the marketing activities of creating, communicating, delivering, and exchanging. This won’t involve the same kind of exchange as a for-profit company, but it is marketing. When a nonprofit organization engages in marketing activities, this is called nonprofit marketing . Some schools offer specific courses in nonprofit marketing, and many marketing majors begin their careers with nonprofit organizations.

Government entities also engage in marketing activities. For example, when the U.S. Army advertises to parents of prospective recruits, sends brochures to high schools, or brings a Bradley Fighting Vehicle to a state fair, the army is engaging in marketing. The U.S. Army also listens to its constituencies, as evidenced by recent research aimed at understanding how to serve military families more effectively. One result was advertising aimed at parents and improving their response to their children’s interest in joining the army; another was a program aimed at encouraging spouses of military personnel to access counseling services when their spouse is serving overseas.

Similarly, the Environmental Protection Agency (EPA) runs a number of advertising campaigns designed to promote environmentally friendly activities. One such campaign promoted the responsible disposal of motor oil instead of simply pouring it on the ground or into a storm sewer.

There is a difference between these two types of activities. When the army is promoting the benefits of enlisting, it hopes young men and women will join the army. By contrast, when the EPA runs commercials about how to properly dispose of motor oil, it hopes to change people’s attitudes and behaviors so that social change occurs. Marketing conducted in an effort to achieve certain social objectives can be done by government agencies, nonprofit institutions, religious organizations, and others and is called social marketing . Convincing people that global warming is a real threat via advertisements and commercials is social marketing, as is the example regarding the EPA’s campaign to promote responsible disposal of motor oil.

Individuals

If you create a résumé, are you using marketing to communicate the value you have to offer prospective employers? If you sell yourself in an interview, is that marketing? When you work for a wage, you are delivering value in exchange for pay. Is this marketing, too?

Some people argue that these are not marketing activities and that individuals do not necessarily engage in marketing. (Some people also argue that social marketing really isn’t marketing either.) Can individuals market themselves and their ideas?

In some respects, the question is a rhetorical one, designed for academics to argue about in class. Our point is that in the end, it may not matter. If, as a result of completing this book, you can learn how to more effectively create value, communicate and deliver that value to the receiver, and receive something in exchange, then we’ve achieved our purpose.

Key Takeaway

Marketing can be thought of as a set of business practices that for-profit organizations, nonprofit organizations, government entities, and individuals can utilize. When a nonprofit organization engages in marketing activities, this is called nonprofit marketing . Marketing conducted in an effort to achieve certain social objectives is called social marketing .

Review Questions

• What types of companies engage in marketing?
• What is the difference between nonprofit marketing and social marketing?
• What can individuals do for themselves that would be considered marketing?

Principles of Marketing Copyright © 2015 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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What decisions are made by marketing managers? How does marketing research help in making these decisions?

Posted By: MbaNotesWorld June 3, 2016

Marketing managers make strategic and tactical decisions in the process of identifying and satisfying customer needs. They make decisions about potential opportunities, target market selection, market segmentation, planning and implementing marketing programs, marketing performance, and control. Marketing research helps the marketing manager link the marketing variables with the environment and the customer groups. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers.

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