CHAPTER 4 Marketing Research and Information System for Decision Making

MARKETING RESEARCH
-is a systematic, objective and exhaustive gathering, recording and analyzing of data relevant to a specific marketing situation or problem in order to facilitate decision making. It is scientific because scientific process is used to obtain relevant information. It follows a scientific process or step in order to arrive to a good decision. It is objective because logical reasoning is used, not bias and prejudices, to obtain data and to draw conclusions based on evidence presented. It is exhaustive because only through a comprehensive study and efforts can the research be successful.

USES OF MARKETING RESEARCH 1. To assist management in making sound decisions 2. To conceive and develop new products 3. To uncover new uses of products already in the market 4. To improve the operations for existing products

SCOPE OF MARKETING RESEARCH Four Major areas:

1. Market measurement studies is used to obtain quantitative data on potential demand. It involves determining the sales potential for a particular market segment open to a specified company selling a good or service during a specified future time. 2. Studies of influence of controllables the widest variety of marketing research focus on it, the marketing mix: 4Ps, production, workers or its work force and receivables. Marketing managers can manipulate controllables to guide them in decision-making. 3. Studies of competitive situation emphasize studies of the competitive situation of the companies own products rather than the nature and impact of the companys competitors activities. This scope give emphasize on how to improve the companys own product and in formulating marketing strategies rather than studying its competitors strength and weaknesses. 4. Studies of influences of uncontrollables e.g. , business credit, business expansion plans, ageand-income distribution trends, competition, etc.

TYPICAL APPLICATIONS OF MARKETING RESEARCH

1. Advertising Research Motivation research Copy research Media research Studies of ad effectiveness 2. Corporate Responsibility Research Consumers right to know studies Ecological impact studies Studies on legal constraints on advertising and promotion 3. Product Research New product acceptance and potential Competitive product studies Testing of existing products Packaging research design or physical characteristics 4. Business Economics and Corporate Research Short-range forecasting (up to 1 year) Long-range forecasting (over to 1 year) Studies of business trends Pricing studies Plant and warehouse location studies Product mix studies Acquisition studies Export and internal studies 5. Sales and Market Research Measurement of market potentials Market share analysis Determination of market characteristics Sales analysis Distribution channels studies Consumer panel and operations Promotional studies of premiums, coupons, deal, etc. Test Markets, store audit

Reprinted from Dik Warren Twedt ed., 1973 Survey of Marketing Research: Organization, Functions, Budget Compensation (Chicago: American Marketing Organization, 1973), p.41.

Another way of studying the scope of marketing research is by investigating five areas: 1. market 2. consumer 3. product 4. sales policies 5. functions of advertising and sales promotion

Research tools, Techniques, Methods, Data and Information

Research tools devices and instruments used in collecting and analyzing data, for example, questionnaires and other statistical procedure. Research techniques basic procedures by which the research tools are put to use. Research methods the basic approaches involved in obtaining information, such as survey, observation and experimentation. Data the facts or the raw material of any information gathering process Data are the input for an information gathering process, while information is the output.

MARKETING RESEARCH PROCEDURE

-research that gathers, analyzes and interprets facts. Steps in Marketing Research I Identification of the problem and objectives of the study II Conducting a Situation analysis III Development of a Research Design A. Determining types of information needed 1. Primary Data 2. Secondary Data B. Deciding on information sources 1. Internal sources 2. External sources C. Deciding on Methods of Gathering Data 1. Historical Method 2. Survey Method a) Questionnaire 3. Experimental method 4. Observation method D. Analysis and Evaluation of Data IV Presentation and Execution of Research Findings V Follow up Study

Step 1 Problem and Objectives Definition It needs a clear definition of what problem, management is trying to solve or study. It will pinpoint the area of investigation, and the reasons why the study be made. It is helpful to specify the objectives of the study, which are useful in (1) determining the type of information needed, (2) providing direction to the study, and (3) anticipating and predicting the possible uses of the study. Step 2 Preliminary Investigation and Situation Analysis The researcher studies the company, its market, its products, and its competition and business environment in general. The development of hypotheses is an important step to problem solving. The situation analysis involves getting background information from within the company while the informal investigation consists of getting information outside of the company. Step 3 The Research Design It is the heart of marketing research. It is the overall plan of action for a research project and specifies in detail how data are to be collected, analyzed and presented.

Three Classification of Research Design

1. Exploratory study is done when little knowledge is available on the subject or problem. It helps identify the problem and the type of information needed and the alternative sources from which information may obtained. 2. Conclusive refers to projects, which aid a manager in making a decision from a number of alternatives. It attempts to solve the proposed problem or test the hypothesis. 3. Causal study is conducted if data is to be used for predictions or for suggesting causes.

Two Types of Data

1. Primary data is original information specifically gathered for the project at hand. 2. Secondary data are those already available, having been collected and analyzed by someone else.

Sources of Data
1. Internal come from within the company 2. External come from outside the company

Primary Data
Advantages
1. Specific tailored made to a particular situation 2. Practical contact with real situations 1. Costly 2. Time consuming 3. May duplicate secondary information available

Secondary Data
1. Low cost 2. Easier to obtain 3. Obtained in less time 1. Outdated 2. Limited applicability not fit a firms needs 3. Could be inaccurate may

Disadvantages

Methods of Gathering Data

1. Survey 2. Observation 3. Experimentation Survey or questionnaire approach is consists of gathering data from interviewing people through mail, telephone or in person. Three Main Uses of Survey Method: 1. 2. 3. to gather facts from respondents (factual survey); to report their opinions (opinion survey); or to prove the interpretations they give on the subject (interpretative survey) Sampling - it is used in a marketing research or survey. It is a statistical technique which requires the selection of a portion of the entire group (called population or universe) being studied. All marketing research samples fall into one of two classes: a. Probability samples result from a process of random selection whereby each member of a universe has an equal chance of being selected from a sample. b. Nonprobability samples result from a process in which judges (and therefore bias) enters into the selection of the members of a universe included in the sample. Reliability refers to the consistency of test results. If the reading preferences survey were conducted among two sample groups taken from the same universe and resulted in identical findings, the research would be said to be reliable.

Questionnaire construction It is a part of the research design (survey) phase of the research process. Questionnaire is a paper and pencil instrument through which the researcher communicates information needs to a group of potential respondents, stimulates an accurate response, and renders data in a form, which is meaningful for analysis. Three types of questionnaire: 1. Structured questionnaire provides a multiple-choice format, as the researcher specifies the answers available to the respondent. 2. Semi-structured questionnaire provides specific questions but allows for openended responses, as in a fill in the blank or discussion question approach. 3. Unstructured questionnaire provides neither specific questions nor answers.

Observation Method: 1. Visual Means a human observer is introduced into the research environment to record peoples behavior in the market place 2. Mechanical Means: Illustrations: Closed Circuit television system used to study traffic flows. Psychogalvanometer attached to individuals in order to evaluate their reactions to a series of alternative advertisement. Experimental Method: it is used to examine cause and effect. This method is the least common used because the researcher cannot control all the variables in the market.

ANALYSIS AND EVALUATION OF DATA The processed data in a form using appropriate statistical methods, summarize the data, and determine relationships that help explain difference. Facts must be interpreted in the context of the research study. Step 4 Presentation and Execution of Research Findings The final report on the research should be organized and presented in a manner appropriate to the potential or end user and based with the informational needs of management.

Typical Outline for a Written Research Report

1. Statement of the problem 2. Significance/Limitation of the study

3. 4. 5. 6.

The Research Design The Findings Analysis and Evaluation Conclusions and Recommendations

Step 5 Follow up the Study Follow up study is essential to protect the marketing researchers own interest especially when the recommendations are contrary to the executives opinions. MARKETING INFORMATION SYSTEM MIS should be viewed as an interacting, continuing, future-oriented structure of people, equipment and procedures designed to generate and process an orderly flow of pertinent information to provide marketing management with immediate information helpful in making decisions. MARKETING INFORMATION SYSTEM Process Systems concept VS. MARKETING RESEARCH Technique Fragmented, unrelated research

MARKETNG INFORMATION SYSTEM (KOTLER 1980: 137)

Marketing Information Marketing Information

MARKETING INFORMATION SYSTEM

Internal report system MARKETING INFORMATION Marketing Intelligence system

Marketing research system MARKETING MANAGERS Analytical marketing system

Marketing Decisions and Communications

MIS and the Marketing Organization

The benefits of MIS can be derived at all levels of the marketing organization. At the lowest levels, the MIS perform the basic function of record keeping. At the middle levels of marketing management, the main function of MIS is to help in control function in making shortrun decisions, and implementing these decisions as programmed in the firms marketing plan. At the top level of management, MIS provides information used to evaluate the control activities of middle management.

Special Request

Policy Management Information (Planning) Operating Management Information (Control)

Support for Decisions

Information Request

Demand Reports

Transaction

Payroll Accounts Receivable Accounts Payable Inventory Control Production Scheduling Engineering R&D Marketing

Statistical Reports

A MODEL OF AN INFORMATION SYSTEM

Ways on Appraising MIS (Cox 1979:50)

1. 2. 3. 4. 5. 6. What are the decisions I am responsible for making? Is the information I require available through the MIS? Is the information I require for programmed decisions provided routinely? Is the timing and frequency of routine reports appropriate? Is the information in the report sufficiently current? Is there enough historical data, such as sales trends, available to make the current data meaningful? 7. Have the dates in the reports been analyzed so as to provide the most meaningful information? 8. Is the information presented in the most useful form, for example, charts, graphs, computer terminal displays? 9. Is the information obtained from the best sources? 10. Are the data being provided which I do not need? 11. Is the MIS capable of responding to my changing information requirements?

Characteristics of an Effective MIS

1. 2. 3. 4. 5. 6. Collects needed information. Processes data accurately, quickly and reduced it to useful information. Stores information as long as it is needed Provides for quick and easy retrieval Monitors automatically key events Operates continuously

Marketing Research Terminology

1. Bayesian analysis set of statistical procedures use in decision theory. a. Specifying alternative courses of action b. Identifying possible outcome of each action c. Making estimate judgments about likelihood of various outcomes d. Combining likelihood and outcome information to obtain a measure of work of each alternative actions 2. Correlation analysis statistical technique used to determined degree of linear association on independent and dependent variables. 3. Decision theory technique collections providing formal valuation of a set of alternatives that face a decision maker under conditions of uncertainty 4. Factor analysis statistical technique in which the researcher condensed large number of variables to a smaller one thru studying the correlations between the sets 5. Motivation research research designed to determine the why of human behavior. It is best use in creating, advertising programs and product and package designs.

6. Operations research also called management science. It is a set of techniques that utilizes mathematical, economic and statistical models of decision or control problems for managers to evaluate probable future consequences of alternative decisions choices. 7. Concepts symbols use for categorizing and describing phenomena comprising the world. 8. Proposition statement regarding relationships between concepts Theory set of prepositions incorporated as comprehensive system. 9. Panel fixed samples of consumers ask by marketers to furnish information continuously. 10. Statistical sampling theory effective and efficient means of providing measures of population without conducting census. 11. Law of large numbers as sample size is increased, standard error is decreased. 12. Sample representative portion of universe or population under study 13. Test marketing procedure of experimenting on a firms marketing plan on a relatively small area before implementing on a wide scale. 14. Psychometrics an area of psychology wherein the subjective, tentative and often times inconsistent evaluation of respondents are taken and transformed into more useful information. 15. Marketing intelligence system way of keeping company executives current and informed about the changing conditions in macroenvironment and tact environment. 16. Omnibus survey incorporates information requirements of several clients to a single study.

Product Planning and Standardization

Product planning and development is a systematic process for originating, developing and evaluating to strengthen the companys competitive and profit position while product development is concerned with product innovation or improvement. Both activities are vital bridge between the economic and technological capabilities of the firm and the aesthetic, social and economic perceptions of the consumers. new product ideas. Product planning ensures that the full complement of a firms products is designed

CHAPTER 5

What is a Product?
It is a perceived set of symbols, of tangible and intangible elements, including color, price,

manufacturers status, stores location and other meanings that a consumer or potential consumer may accept as offering satisfaction of wants or needs, or answering his problem. of benefit already in the market. New products are simply those that are basically different from the goods, services and bundles

Criteria for adding New Products The following guidelines should be considered by the manufacturers when facing a problem whether to market or not their new product:

1. There should be an adequate market demand.

Basic question: Are there enough people really wanting this product?

2. Consider the factor of societal and environment compatibility. Questions to ask: a. b. Will the use of the product be harmful to the user or the environment? c. After being used, will the product be harmful to the environment? d. Does the product have recycling potential? Do the manufacturing processes heavily pollute air or water?

Other Terms
Total product concept= the total product offerings of all the potentially want, satisfying attributes of desired benefits, not the physically good service, including both negative and positive aspects of the product.

Product line=a group of products with similar characteristics or uses manufactured by a single company.

Product mix= total number of the full assortment of products offered for sale by a company. Product width= the number of the product lines a manufacture may produce or a middleman may carry.

Product depth= number of items within a product line as measured by the assortment of sizes, colors, models and prices offered.

Product position= the image the product projects in relation to images projected by (1) competitive products, and (2) by other products in the product line.

Product policy= set of guidelines that helps in the planning of new products or in eliminating products of poor performance.

Product Planning and Development Process

Product planning and development is a systematic process. The process includes these stages;
1.) Exploration- search for new product ideas. The starting point in the search process for new ends with the customer; and (2) products must fill needs. ideas is the consumer. Two points should guide firms in their search: (1) marketing begins and

2.) Screening- ideas for new products are screened and then converted statement-a 2 or 3 paragraph description of the products idea and its proposed benefits.

Two Step Procedures:

1.) All new products concepts are examined and those that are unsuitable are rejected. 2.) Those precepts that might be feasible.

Screening for New Product Planning and Development Process maybe manage by:
1. New product managers/ product planners - who will work with product managers of existing products in an attempt to extend product lines, generate new ideas and make top management of a new product possibilities.

2. New product committees

- top management people from marketing, engineering, finance and other areas may activities the product planning and development process.

3. Product managers supervision.

- are called brand managers they are responsible for the success of the products in their

4. New product departments

5. Venture Team

development process, from the generation of ideas through concept and market testing. - are organization arrangement employing a synectics approach to creative problem

- these departments are frequently given complete control of the product planning

solving that utilized high trained people from different disciplines.

SYNECTICS- is based from the concept of synergetic. It means working together.

3.) Business Analysis

- This step involves the systematic, formal analysis of the economic and financial implications of the new product idea.

4.) Development and Testing 5.) Test Marketing

- At this stage, no product has been developed yet- only a product concept has been created a - The company observe consumer responses to the product and to the marketing strategy that written description of the product and its benefit. will guide through actual market conditions.

6.) Introduction and Evaluation

- With the final decision to introduce the product of distribution, the product planning and part of the firms existing line and total mix.

development process has virtually ended and the new product is ready to take its place as

PRODUCT PLANNING TOOLS

Common Reasons for Product Failures: 1. Inadequate market analysis 2. Product or service defects 4. Poor timings

3. Higher cost than anticipated 5. Stiff competition

6. Insufficient marketing efforts 7. Faculty packaging 8. Differentiation strategy ignored 10. Poor pricing

9. Not enough research and development 11. Poor management

Three (3) Areas which marketing people find most useful in their search for the right product mix: 1.) Product Offering Strategies
- Product differentiation and market segmentation are two related product strategies, which or monopolistic competition. to layers specifications. may be used by the companies in non-price competition in the market marks by imperfect

Segmenting Market- strategy used in the consumer market where products are made according Product Differentiation- developing and promoting an awareness of differences between the basis.

advertisers product and the products of competitors so that it can compete on the non price

FOUR STAGES OF PRODUCT LIFE CYCLE

production and marketing program.

1.) Introductory Stage- a stage when product is launched into the market in a full-scale

a. Attaching new product to an already established existing product.

Strategies a firm may use to gain foothold in the market (Luck and Prell)

b. Inducing trial of new product by using sales promotion tools such as coupon, sampling. Etc.

c. Employing abnormal promotion by heavy advertising or placing product with influential buyers. 2.) Growth or market acceptance stage- buy- my- brand rather than try- my- product 3.) Maturity Stage- sales continue to increase but at a declining stage. strategy

4.) Final Stage or decline- obsolescence of product as the new product gains importance and exerts influence in the total market strategies that a firm may use at this stage(Luck and Prell)

a. Spin off the product by selling or licensing it to the smaller firms that are best suited to b. Implement product line chances by making conspicuous, but rather superficial, design changes of minor cost, paring down the product line to best sellers or higher margin items. low volume items.

c. Selectively cut down marketing efforts by narrowing target markets and reducing d. Simplify distribution channels by being more selective and using less costly distribution e. Drop the line, or simply abandon the product. Fashion Theory- an appreciation of the importance of fashion and a knowledge of how fashion can Style- is characteristics or distinctive mode or method of expression, presentation or conception in the Fashion- is the currently accepted or popular style. field of art. contribute to new products. channels. promotion.

A fashion is always based on some particular style, but not every style is a fashion.

FASHION CYCLE
1. Introduction 2. Acceptance 3. Saturation

Trickle across theory of fashion- innovators are not found only in the upper classes, but in their own groups- at church, on the job, in the community.

1. Confirming the concept of market segmentation 2. Suggesting that fashion changer rapidly; and

Theories of Fashion relate to Product Planning by:

3. Suggesting that major fashion changes do not occur that rapidly.

Product Obsolescence- refers to the phasing out of old products and replacing them with new ones.

Style Obsolescence- the intention is to make a person feel out-of-date if he continues to use an old style. Quality Obsolescence- the quality of the product is purposely lowered so that the item wears out faster. Function Obsolescence- results from technological change.

Examples of Product Obsolescence

Packaging- is that part of product planning and development which is design of a products container or wrapper.

1. To protect the product 3. To stimulate sales

Purpose of Packaging

2. To enhance the products value to the customer

1. It permits protection of the product 3. Lower total costs

Benefits of Packaging to Seller

2. More efficient physical distribution 4. Relatively higher sales and profits

1. Helps in product recognition

Benefits of Packaging to Customer

2. Provides information concerning products use

3. Helps keep product fresh and undamaged until it is needed Brand- is a name or symbol that is used to identify the products of a manufacturer and to distinguish them from products of competitors.

National or manufacturers brand- when a brand is promoted and distributed by a manufacturer. Private or dealers brand- when a middleman such as a wholesaler or retailer sponsors a brand.

Branding Policies

1. The demand for the general product class or in the selected target markets should be large 2. The demand should be sufficiently strong so that the market price will offer a large enough 3. It is beat when there are economies of mass production. If the branding were really successful margin over additional promotion cost to make the effort worthwhile. enough to support a profitable marketing plan.

Conditions Favourable to Branding

4.

the cost of production would decline with additional volume, thereby increasing process. and the quality should be easily maintained.

The production quality being offered should be the best for the price in the market being served

Family Brand Strategy

Advantages
1. Easier and less expensive to introduce new products.

2. Prestige of a brand spreads faster with more than one product; and 3. Helpful with small sales volume of individual products.

Disadvantages

1. Weak products can hurt other products under the family one brand

2. Each product may have its own distinct advantages making it difficult to communicate under 3. Difficult to maintain consistent quality among all the products; and 4. Each individual product may receive less attention.

Characteristics of Good Brand Name

quality.

1.) It should be highly descriptive of the products attributes- its use, benefits, characteristics and 2.) The name should be easily vocalized, remembered and recognized, thus, simple, short, crisp 3.) A brand name should also be distinctive. one-syllable names are helpful.

Reasons why branding is important to the customer:

1. Easier identification of product or service desired. 2. Assurance of consistent quality. 3. Identify the firm behind the product.

4. A specific brand name may be matched to a need that must be fulfilled.

Branding is used by manufacturers and middleman to carry out the following marketing objective:
1. To aid advertising and display programs. 2. To help increase control and share of the market. 3. A branded product can be assured of some control over the market. 4. To reduce price comparisons and help stabilize prices. 5. To facilitate expansion of product mix.

Degrees of Brand Loyalty

1. Brand Recognition- this is the most superficial stage in that consumers are aware of the brand 2. Brand Preference- consumers have preference of the brand as long as it is available. If 3. Brand insistence- the consumer has developed a degree of brand loyalty that will go to considerable trouble to obtain the desired brand. unavailable, the consumer may purchase another brand. and are simply able to recognize it.

Other Brand Related terms

- Brand name- is that part of the brand consisting of words or letters comprising a name to

identify and distinguish a companys offerings from the competition. - Trademark- any brand or part of the brand that provides legal protection to the seller. Pictorial designs are known as brand marks. - Labels- carry the descriptive information about a product. Brands and Trademarks in Pilipino The following is a partial list of brands and trademarks written in Pilipino with their respective products and owners from the files of the PPO ALA-ALA NG PAGMAMAHAL/ love memorial park- Peoples Park Development, Inc. ANAHAW/ Handicraft items= Manuel Ylanan APLAYA/ patis- Consumer Brand, Inc. ARAW/ kerosene- Filoil Refinery Corporation Baraco/ pure coffee- Rosita David

STANDARDIZATION AND GRADING

Standardization and grading are important to efficient marketing. Both activities involve establishment of basic measurers or limits to which products must conform, it make possible for such customer to buy by description instead of by inspection, it make also possible to sell products to what customers want.

Standard- specifies what basic qualities and product must have to be designated consistent with establishment characteristics. It is based on quality desired by buyers. Standardization- the application of standards relates mainly to manufacture products. Quality control- refers to standardization. It was defined as a technique of governing the manufacturing process in such a way as to remove assignable causes of variations in quality and to develop products with relatively uniform characteristics. Grading- is the process of comparing, separating or inspecting products according to established specification such as size, colour, weight, performance or quality.

Advantages of Standardization

The major aims of standardization to produce reasonably uniform goods and improve the quality and performance of such products. It helps manufacturers reduce waste production, increase uniformity of products, and improve products quality.

Standardization to Distributors:

1. Simplifies buying and selling functions.

2. Provides for convenience and economies in transportation and storage. 3. Assist in the financing operations of buyers and sellers. 4. Assist in mass selling.

Systems of Grades

3 Major systems to designate grades, classes and ratings of product Numerical system- uses numbers in classifying and grading. Alphabetical system- utilizes the alphabet such as A, B, C, etc. System using adjectives- may be qualitative words.

Types and Bases of Standards

General standard- relates to all similar products no matter who produces them. Private standard- is set by individual manufacturers or merchants. Industry standard- is set by the trade association or a group of companies

Government standard- is set by government agency such as Bureau of Standard. It is not related

to any specific product of a business concern.