Associate Professor of Marketing
FGCU
MAR 3613 / 6646
CHAPTER 1
MANAGEMENT DECISION MAKING
I. The Nature of Marketing
A. Marketing - is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.
B. Marketing Concept - A management (or business) philosophy that seeks to determine and satisfy customer wants or needs using integrated marketing programs to achieve organizational goals.
C. The Marketing Concept - is a business philosophy based upon consumer orientation, goal orientation, and systems orientation.
Thus, as with any "philosophy" of a group of people, the marketing concept refers to an integrated effort of all employees, not just those within the marketing department. All employees must practice the marketing concept in their everyday corporate behavior for a firm to be able to say that it is applying the marketing concept.
1. Consumer Orientation - Identification of and focus on the group of people or firms most likely to buy a product and production of a good or service that will meet their needs most effectively. The main idea is to find out what consumers want and give it to them.
2. Goal Orientation - A focus on the accomplishment of corporate goals. This sets a limit on consumer orientation, suggesting that we give the customer what s/he wants within the bounds of satisfying corporate goals, but not beyond.
3. Systems Orientation - Creation of systems to monitor the external environment and to deliver the marketing mix to the target market.
D. The Marketing Exchange Process - The process of planning and executing the conception, pricing, and distribution of ideas, goods, and services that satisfy individual and organizational objectives.
E. The Marketing Mix - The unique blend of pricing, promotion, product offerings, and distribution designed to meet the needs of a specific group of consumers.
These elements are Controllable Variables, since they are determined and can be changed by a firms management: Price, Product, Place (Distribution) & Promotion.
F. The External Marketing Environment - refers to four general classed of Uncontrollable Variables which are not within the direct control of a firm's management: Social environment, Legal environment, Economic environment & Political environment
II. The Role of Marketing Research In Decision Making
Marketing Research - The planning, collection, and analysis of data relevant to marketing decision making and the communication of the results of this analysis to management.
A. Three Functional Roles of Marketing Research:
1. Descriptive Function - the gathering and presentation of statements of fact.
2. Diagnostic Function - The explanation of data.
3. Predictive Function - Specification of how to use the descriptive and diagnostic research to predict the result of a planned marketing decision.
B. The Importance of Marketing Research to Management is highlighted by its Three Basic Uses: (represents Applied Research)
1. Improving the quality of decision making
2. Finding out what went wrong
3. Understanding the marketplace
C. The Proactive Role of Marketing - viewing the marketing environment as an opportunity.
D. Applied Research - (marketing research primarily conducted by practitioners, or for them by academicians) is research aimed at solving a specific, pragmatic problem
-- such as for better understanding of the marketplace, determination of why a strategy or tactic failed, and reduction of uncertainty in management decision making.
Basic Research - (marketing research conducted solely by academicians) is research aimed at expanding the frontiers of knowledge rather than solving a specific, pragmatic problem.
III. Deciding Whether or Not to Conduct Market Research
(see Table 1.2 on profit margin versus market size tradeoffs)
Criteria for the decision:
1. Lack of resources
2. Research results won't be useful
3. Poor timing in the marketplace
4. The decision has already been made
5. When managers can't agree on what they need to know to make a decision.
6. When decision-making information already exists.
7. When the costs of conducting research are greater than the benefits.
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CHAPTER 2
A. Problem Recognition - (asked in the form of a question)
1. Find out why the information is being sought.
2. Determine if the information already exists.
3. Determine if the question really can be answered.
B. Conduct Exploratory Research to Define the Problem.
(note: exploratory research is qualitative research, and it includes three types: secondary, expert knowledge and focus groups that we will study later.)
The purpose is to get a better handle on the problem.
However, because of time pressures to get things done, researchers often don't properly define the problem.
C. Define the Problem - in terms of exact statements of specific research objectives. So, to define a problem, you actually create a Definition of Research Objectives. You should remember that
1. All objectives cannot be answered in one research project.
2. Research objectives must avoid the nice-to-know syndrome;
3. Management Decisions and Research Objectives -
Research Objectives are basically a restatement of what management needs to know to make a decision, but stated in research terms.
D. Gain approval of the Research Request - (which is used as a basis for funding decisions) - A disciplined approach to identifying and communicating research problems to obtain the funding to solve them.
The Research Request explains:
- why the research is needed,
- what questions it will ask and to whom,
- at what cost in time and money,
- how the collected data will be used, and what action will be taken on the results.
E. Research Design - The plan to be followed to answer the research question; thus, it is the structure or framework used to solve a specific problem.
Independent Variable - The symbol or concept in an experiment (not necessarily true in non-experimental studies) over which the researcher has some control or can manipulate to some extent.
It is hypothesized to influence or cause the dependent variable.
Dependent Variable - A symbol or concept expected to be explained, influenced, or caused by the independent variable(s).
Terms To Know:
1. Descriptive Studies - Studies that answer the questions who, what, when, where, and how; they describe something.
2. Causal Studies - Studies that examine whether one variable causes or determines the value of another variable.
Terms to know concerning Causal Studies:
a) Concomitant Variation - The degree to which a cause and effect occur or vary together.
b) Temporal Sequence - The appropriate causal order of events.
c) Spurious Association - Two variables do correlate, but that correlation occurs by accident, rather than due to one variable influencing the other. (like short skirts spuriously correlate with rising stock markets; they statistically correlate, but are not otherwise related in any known way.)
G. Select the Sampling Procedure
Sample - a subset of a larger population of interest.
1. Probability Sample - A chosen subset of the population of interest that ensures a representative cross section by giving every element in the population a knn, nonzero chance of being selected. This is done by randomly selecting the sample from that population.
2. Nonprobability Sample - A chosen subset of the population of interest in which no attempt is made to ensure a representative cross section. This is done by selecting the sample from the population in a manner that is not random.
H. Collect the Data
I. Analyze the Data - beginning with simple frequency analysis and ultimately culminating in complex multivariate techniques such as multiple regression or discriminant analysis.
J. Prepare and Make the Report
K. Follow-up - to find out whether the recommendations were followed, and why or why not.
II. Management of Marketing Research
A. Manager-Researcher Conflict - is usually present because of differences in needs relating to the research project.
B. Types of Decision Making Information (These are types of Research, too; but looking at it from the view of the purpose of conducting the research)
1. Programmatic Research - Research done to develop marketing options through market segmentation, market opportunity analysis, or consumer attitude and product usage studies.
2. Selective Research - Research to choose among several viable alternatives identified by programmatic research.
3. Evaluative Research - Research to determine the effectiveness and efficiency of specific programs.
C. Factors Influencing A Manager's Decision To Actually Use The Research Data Generated By A Research Project:
1. Conformity to prior expectations;
2. Clarity of presentation;
3. Research quality (this is the most important determinant of managers' use of research findings);
4. Political acceptability within the firm;
5. Whether it challenges the status quo.
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CHAPTER 4
AND DECISION SUPPORT SYSTEMS
I. Primary Data - is data generated from a survey, observation, or experiment just to solve the particular problem under investigation.
- This is the third (and last) place to look for data to solve the problem at hand.
II. Secondary Data - is data that had been previously gathered for some other purpose, other than the current research problem under investigation.
- It only "may" be relevant to the problem at hand.
A. Internal - is secondary data that is already within the investigator's firm that is, or should be, contained in the firm's internal database.
- This is the first place to look for data to solve the problem at hand.
B. External - is secondary data that is already available from other organizations or persons (in what your firm refers to as external databases if such information is computerized).
This is the second place to look for data to solve the problem at hand.
C. Advantages (or Reasons to Use) Secondary Data:
1. It may help to clarify or redefine the definition of the problem as part of the exploratory research process.
2. It may actually provide a solution to the problem.
3. It may provide or identify primary data research method alternatives.
4. It may alert the marketing researcher to potential problems or difficulties that may be encountered in the research process (such as sample selection difficulties, response biases experienced by other researchers in the same area, and respondent hostilities or lack of cooperation).
5. It may provide necessary background and build creativity into the planning of the research report.
III. Limitations of Secondary Data:
A. Lack of Availability - the needed data may be unavailable.
B. Lack of Relevance - the available data may be expressed in units or measures that cannot be used by the researcher.
C. Inaccurate Data - previous researchers may have published data containing errors that may distort your research results.
They may have committed errors in sampling procedures, data collection, data coding, data analysis, or in the presentation (printing) of the data as printed for your use.
While the researcher can never be certain of total accuracy of published secondary data, its accuracy can be somewhat assessed by asking the following questions:
- Who gathered the data?
- What was the purpose of the study that generated the data?
- What information was collected and from who ("who" refers to the population)?
- When was the information collected
--- (from the times of day to the date of collection)?
- How was the information collected? (mail, survey, interview)
--- And what was the response rate? (look for biases).
- Is the information consistent with other, similar information?
D. Insufficient Data -- Even if the secondary data is available, relevant, and accurate, it may not be sufficient to make a decision or bring complete closure to a problem.
That is, there may be one or more important data items missing from previous research that makes the collection of primary data mandatory.
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CHAPTER 5
I. The Nature of Qualitative Research
A. Qualitative Research - uses words, rather than numbers, to explain research findings.
B. Quantitative Research - uses numbers in a form of mathematical analysis to explain research findings.
C. Qualitative Research versus Quantitative Research
(See Table 5-1, p. 103)
1. Popularity of Qualitative Research (reasons):
a) Cheaper to conduct than quantitative research (usually);
b) Understanding of in-depth motivations may be gained;
c) The results may improve the efficiency of subsequent empirical research;
d) Combining techniques usually improves overall research effectiveness.
2. Limitations of Qualitative Research:
a) Does not always detect small differences in a marketing mix (or in anything else).
b) The results are not necessarily representative of the population of interest (due to small sample size and/or using a nonprobability sample).
c) Researchers in the field without good formal training can seriously bias results, even if accidentally.
II. The Growing Role of Focus Groups
A. Focus Groups - Groups of 8 to 12 participants who are led by a moderator through in-depth discussions on one particular topic or concept. Their success centers on the concept of:
Group Dynamics - refers to the interaction among the members of a focus group where the expressed thoughts of members causes the other members to better see and express their own true thoughts on the subject.
That is, each expressed thought becomes a stimulus to the thoughts and expressions of the other members of the group. This interplay of responses yields greater amounts and depth of information than could be achieved by simple "group interviewing".
B. Popularity of Focus Groups - 81% of large corporations use them.
III. Types of Focus Groups:
A. Exploratory Groups - (problem development) -- Focus groups that:
1. aid in the precise definition of the problem,
2. are used in pilot testing of questionnaires or new products,
3. are used to generate hypotheses for testing, or
4. are used to develop concepts for future research.
B. Clinical Focus Groups - (probing with psychological techniques) -- Focus groups that explore subconscious motivations.
C. Experiencing Focus Groups - (observing consumers in action and hearing motivations for purchase) -- Focus groups that demonstrate or describe in detail the use of the product.
IV. Conducting Focus Groups (See Figure 5.1, page 108)
A. Preparation
1. The Setting -- refers to the Focus Group Facility, which is usually a conference or living room, in which focus groups meet. Usually, these facilities are set up to allow recording or videotaping the discussions and/or viewing them from behind one-way mirrors.
2. Participants - the 8 or so participants are usually recruited through mall intercept interviews or random telephone screening.
Researchers usually try to avoid repeat or "professional" respondents who tend to act rather than give candid answers.
People who frequently seek out participation in focus groups are usually lonely, and/or really need the respondent fee.
3. Length - FGs last about 90 minutes, with the first 10 minutes devoted to introductions and an explanation of procedures. That leaves about 80 minutes in the session, and about 25% of that time is used by the moderator. With 10 people in the group, each has just 6 minutes to speak, on average.
B. Select the Moderator - which is the person hired by the researcher to lead the focus group. This person may need a background in psychology, sociology, or marketing, especially if the research is Exploratory or Clinical, rather than just Experiencing. Then prepare a:
Discussion Guide - A written outline of topics to cover during a focus group discussion. It sets the framework for the moderator.
(see example in Table 5.3 on pages 112-113)
C. Conduct the Focus Group.
D. Focus Group Report - shows the moderator's recap of the results obtained from all of the focus group sessions.
The most common form of report by the moderator is the
Cut and Paste Technique - where the researcher has the sessions transcribed, reviews them looking for common threads or trends in response patterns, and cuts and sorts similar or matched patterns of responses into homogeneous groups.
The researcher then uses the folders (of homogeneous groups) containing relevant material by subject matter to write the:
Final Report - which begins with an introduction describing the purpose of the research, the major question the researcher sought to answer, the nature and characteristics of the group members, and how they were recruited.
Next is a two or three page summary of findings and recommendations on each topic (which is the main body of findings). This section of the final report first introduces the first major topic, summarizes the major points of the topic, and then drives home the conclusions drawn with liberal use of actual respondent's remarks (which are called verbatims).
Subsequent topics are then covered in similar fashion.
V. Trends in Focus Groups
A. Plush Settings - which are designed just for focus group sessions are becoming commonplace.
B. Telephone Focus Groups - group members meet via conference calling. (This technique may be only a fad).
C. Two-way Focus Groups - A large focus group observes another focus group, then discusses what it learned through observing.
D. NOMINAL GROUPING SESSIONS (NGS) - A qualitative research method in which consumers, brought together in small groups of 8 to 10, independently generate ideas about a subject (research problem) and then discuss the ideas. The ultimate goal is to discuss all aspects of the groups' ideas to reach a consensus on the rank order of their importance to the research problem.
The fact that this qualitative research technique produces more reliable results than Focus Groups is the reason NGSs can be confidently used for creating questionnaires and measurement scales for subsequent quantitative research. Since NGS is available as a superior replacement for the traditional Focus Groups (FGs), you may be wondering why anyone would use Focus Groups. There are two reasons: First, NGS is so new, few researchers and FG moderators know anything about the NGS technique. Second, the moderator likely would bias the results unintentionally unless s/he had the equivalent of a Masters degree in psychology because preparation for and conducting the sessions hinges on effectively using clinical nondirective techniques (like Depth Interviews discussed below) to uncover hidden motivations.You now may want to read the journal article that pages 114 & 115 in your textbook is based on. Then, use your browswer's back arrow to return here to continue your studies. The article is Langford, Barry E., "Nominal Grouping Sessions", Marketing Research, Summer, 1994.
VI. Other Qualitative Research Methodologies
A. Depth Interviews - (unstructured one-on-one interviews intended to discover deep seated motivations) -- One-on-one interviews that probe and elicit detailed answers to questions, often using clinical nondirective techniques to uncover hidden motivations. Thus, psychologists and people with Doctorates in Marketing (which is a combination of applied psychology and applied economics) are often called upon to conduct Depth Interviews, as well as Nominal Grouping Sessions.
Clinical Nondirective Techniques - refers to the interviewer following the subjects statements/responses with probing questions and statements that elicit deeper meanings and additional elaboration from the subject.
B. Projective Techniques - Ways of tapping respondents' deepest feelings by having them "project" their own feelings onto unstructured situations. Types include:
1. Word Association - Tests in which the interviewer says a word and the respondent must mention the first thing that comes to mind. This projective technique is practical and effective, and often used to select brand names, advertising campaign themes, and slogans.2. Sentence and Story Completion - Tests in which the respondents complete sentences or stories (i.e., structured scenarios) in their own words. They can be used in conjunction with word association tests, and they are most reliable.
3. Cartoon Tests - Tests in which the respondent fills in the dialogue of one character in a cartoon. They are very versatile, and can be used to determine differential attitudes toward two types of establishments and the congruity, or lack of congruity, between those establishments and a particular product. Sometimes they also are used to ascertain what function is being performed by a given attitude.
4. Third Person Techniques - Ways of learning respondents' feelings by asking them to answer for a third party; such as completing statements that begin with "your neighbor...," or "most people...." Often used to probe feelings about sensitive subjects that might be embarrassing or evoke hostility if answered directly by a respondent.
VII. Future of Qualitative Research
A. Negative Aspects - Small sample sizes, subjective interpretations, and the inability to validate and replicate qualitative research will continue to hamper its growth in usage.
B. Positive Aspects - The use of exploratory and experiencing focus groups will continue to grow because:
-- it provides data and insight that is unavailable through any other techniques;-- it is inexpensive and easy to conduct;
-- and the qualitative-quantitative split will begin to narrow as adaptations and innovations are made on both sides to allow researchers to enjoy the advantages of both approaches simultaneously.
[NOW IS A GREAT TIME TO READ THE ELEVEN PAGES OF THE SECOND SECTION (Guidelines For Writing A Research Report) FOR THE FIRST TIME. IT WILL HELP YOU UNDERSTAND THESE FIRST FEW CHAPTERS AS WELL AS SOME OF THE MATERIAL TO COME LATER.]
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CHAPTER 6
I. The Nature of Observation Research
A. Observation Research - Observing consumers without communicating with them.
It is the systematic process of recording the behavioral patterns (or events) of people, objects, and occurrences without questioning or communicating with them.
B. Conditions For Using "Observations" in Research: (all three must be present)
1. The desired information must be inferable from observation of subjects' behavior;
2. The behavior of interest must be frequent, repetitive, or predictable; and
3. The behavior of interest must be of relatively short duration.
C. Approaches to Observation Research:
1. Natural versus Contrived Observations - Natural refers to counting naturally occurring events.
Contrived refers to setting up an experiment, where most or all of the participants are at least aware of the specifics of the observations (such as when, where, and which products or services are involved in the exercise) that are being conducted.
2. Disguised versus Undisguised (Open) Observations - Disguised refers to the process of monitoring people, objects, or occurrences that do not even know they are being watched, much less why.
Undisguised refers to OPEN OBSERVATIONS which is the process of monitoring people who know they are being watched (whether contrived or not).
3. Structured versus Unstructured Observations - Structured refers to a study in which the observer fills out a questionnaire-like form, or counts the number of times an activity occurs.
Unstructured refers to a study in which the observer simply makes notes on the behavior being observed.
(It is usually used when the researcher doesn't know much about the behavior or subject of interest; used in this way, it is a preliminary study to be followed later by a structured study or observation.)
4. Human versus Machine Observer - The use of machines, such as cameras and traffic counting devices, are less expensive, more accurate, and can be deployed faster than humans.
Thus, they are used when the situation allows and when the machines are available.
5. Direct or Indirect Observations - Most marketing observations directly observe current behaviors.
However, past behavior can be indirectly observed by reviewing some record or evidence of past behaviors or lack thereof (such as how much of a product was "unused" over some period of time).
D. Advantages of "Observation" Research:
1) It avoids much of the biasing factors caused by the interviewer and/or the questionnaire structure in survey research.
2) The researcher sees what people actually do rather than having to rely on what they say (on the survey) that they did. This avoids various biases, as well as the lack of perfect memories which characterize all respondents in varying degrees.
3) The research is not plagued by the problems associated with lack of response by subjects who are unwilling or unable to respond.
4) Some forms of data can be gathered more quickly by observation, which saves time, and sometimes saves money.
E. Disadvantages of "Observation" Research:
1) Only behavior can be examined. Observation research cannot be used to learn about motives, attitudes, intentions, or feelings that underlie those and other behaviors.
In other words, individuals' motivations for their behaviors cannot be measured directly by observations alone.
2) The currently observed behavior may bear no relation to future behavior.
3) Observation research may be time-consuming and costly if the observed behavior is one that occurs infrequently.
II. Human Observations
- refers to people (rather than machines) watching other people. Types include:
A. Mystery Shoppers - people that are employed by a firm to pose as consumers and shop at competitors' stores to compare prices, displays, service performances, cleanliness, and the like.
B. One-Way Mirror Observations - The practice of watching unseen from behind a one-way mirror. Often used for product testing and with focus groups.
C. Shopper Patterns - refers to drawings that record the footsteps of a shopper through a store. They show the flow of a representative sample of shoppers through a store.
[Also used to study the effect of music on shopper behavior. For instance, we know that slow music makes them stay longer and buy more.]
D. Content Analysis - A technique used to study written material, usually advertising copy, by breaking it into meaningful units, using carefully applied rules.
Content Analysis attempts to determine what is being communicated to a target audience by objectively and systematically describing the communication's content.
E. Humanistic Inquiry - A method of inquiry in which the researcher is immersed in [becomes a part of] the system or group under study, rather than using the scientific method of standing apart from the system being studied.
Humanistic inquiry is a non-empirical method of recording and analyzing market phenomena using two diaries (or logs) supplemented by participant observations using audiotape or videotape recordings, artifacts (e.g., shopping lists or garbage), and supplemental documentation (e.g., magazine articles, health records, survey data, or census reports).
The THEORY-CONSTRUCTION DIARY is used to document in detail the thoughts, premises, hypotheses, and revisions in thinking developed by the researcher. It shows the process by which the researcher has come to understand the phenomenon being studied.
The METHODOLOGICAL LOG contains detailed and time-sequenced notes on the investigative techniques used during the inquiry, with special attention to biases or distortions a given technique may have introduced.
Outside auditors then judge whether interpretations are made in a logical and unprejudiced manner from the data gathered and the rationale employed. They review everything gathered and diaried in order to confirm or disconfirm that the conclusions reached do flow, in fact, from the information collected, and not by the biases of the Humanistic research.
F. Audits - are examinations and verifications of the sales of subject products.
There are two general categories: Retail audits measure sales to final consumers, and wholesale audits determine the amount of product movement from warehouses to retailers.
III. Machine Observation Types:
A. Traffic Counters - Machines used to measure vehicular flow over a particular stretch of roadway.
B. Physiological Measurement - refers to measuring the level of involuntary change in a person's activation based upon the stimuli of interest.
Activation - refers a person's feeling of arousal, inner tension, or alertness.
Activation is stimulated via a subcortical unit, called the reticular activation system (RAS), which is located in the human brainstem.
The sight of a product or advertisement can activate RAS [or provoke the arousal processes of the RAS], which increases the person's processing of information.
Devices used to measure the level of a person's Activation:
1) Electroencephalogram (EEG) -- is a machine that measures the rhythmic fluctuations in electrical potential of the brain.
It detects arousal levels that are created by outside stimuli such as advertisements.
2) Galvanic Skin Response (GSR) -- The measurement of changes in the electric resistance of the skin associated with activation responses.
GSR usually is used to measure stimulus response to advertisements.
It is the most popular device for measuring activations since it is portable and inexpensive.
3) Pupilometer - measures changes in pupil dilation. It is assumed that increased pupil size reflects positive attitudes, interest, and arousal in an advertisement or a package.
But, it really measures some unknown combination of arousal, mental effort, processing load, and anxiety. Therefore, pupilometer measurements have poor validity.
4) Voice Pitch Analysis - The study of changes in the relative vibration frequency of the human voice in order to measure emotion.
The greater the deviation from the person's normal (baseline) voice, the greater the emotional intensity of the person's reaction to a stimulus, such as a question.
Used in package research, to predict brand preference, and to determine predisposition to buy a product. Also now used to measure consumers' emotional responses to advertising.
However, the validity of Voice Pitch studies is questionable.
C. Opinion and Behavior Measurement - The above devices are used to measure involuntary changes in an individual's physiological makeup.
Arousal produces adrenaline, which enhances the activation process via a faster heart rate, increased blood flow, an increase in skin temperature and perspiration, pupil dilation, and an increase in brain wave frequency.
Researchers impute information about attitudes and feelings based upon such measurements, but these devices cannot directly measure motivations.
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