Chapter 4 MANAGING MARKETING INFORMATION TO GAIN CUSTOMER INSIGHTS

MARKETING STARTER: CHAPTER 4

Dominos Pizza: Listening to Consumers and Letting Them Know You Heard Them
Synopsis
After five years of stagnant or declining revenues, Dominos Pizza did something practically unheard of in the business world. It asked customers for honest feedback and reinvented its product from the crust up. The Dominos Pizza Turnaround campaign began with marketing research to understand what customers thought and wanted. Industry research showed that although Dominos was tops in service, convenience, and value for the money, it trailed far behind competitors in taste. To gain deeper insights into what consumers really thought, Dominos turned to research using social media channels and focus groups. Rather than hiding from these stinging results or waving them off, Dominos executives fessed up to the problems and faced them head on. The company began by completely reinventing its pizza recipes, and customers seemed to like it. To announce the changes and to turn around customer opinions, Dominos launched a daring $75 million Pizza Turnaround promotion campaign. The startlingly honest campaign was fully integrated into the brands Facebook and Twitter pages, where the company posted all the bad along with the good and asked for continuing feedback. Since the Pizza Turnaround campaign began, Dominos has seen revenues increase by 21 percent and p rofits increase by 31 percent, even as the pizza-delivery industry and restaurants in general of struggled. The lesson for marketers is that talking to customers, hearing what they have to say, and acting on the resulting insights can pay big dividends.

Discussion Objective
A focused 10-minute discussion of the Dominos Pizza Turnaround story will reveal just how far corporations can sometimes stray from the needs and opinions and needs of their customers. The chapter-opening Dominos story underscores the importance of recognizing ones problems, gaining customer insights (even when it is painful), and then taking bold steps to re-invent a product. This discussion should also illustrate how Dominos effectively used social media to research and monitor customer opinions, and then use those opinions as the basis for their entire marketing campaign to promote The Pizza Turnaround.

Starting the Discussion

Start this discussion by asking students whether they eat Dominos pizza. Do they prefer it to others? Why or why not? Ask what they know about the Dominos Pizza Turnaround. Some interesting opinions should emerge. Next, view the Dominos Pizza Turnaround documentary at www.pizzaturnaround.com Browse through the videos and blog postings to see how this campaign is still going strong three years after its inception. You can also explore the pizza turnaround from different perspectives by going to www.youtube.com and entering the keywords pizza turnaround. Ask for student ideas and keep the discussion moving. Focus on the big ideas behind this case: recognizing issues that emerge through marketing research, gaining customer insights, being totally honest with all stakeholders, and re-inventing ones product when necessary. Use the questions below to guide the discussion. Dont for

Discussion Questions
1. How is it possible that a large and successful corporation such as Dominos drifted so far from what its customers thought about them and how their pizzas tasted? (Consider how companies can weaken their market position and lose their competitive edge when they fail to conduct continual market research, revisiting customer preferences, checking out the competition, and double-checking their assumptions. It is

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also possible that Dominos had not yet developed a well -rounded strategy for monitoring social media channels, a key research avenue.) 2. How Dominos gain key customer insights into the underlying needs, emotions, and brand connections of its pizza customers? How did it apply these customer insights in The Pizza Turnaround campaign? (Heres a chance to dig into one of the main points of the Dominos story that companies must listen hard to their customers and be brutally honest in re-assessing their products and how they market them. Dominos took its honesty a step further when it launched a daring $75 million promotion campaign featuring highlights of company research and plenty of negative customer opinions. Some analysts predicted this approach would be brand suicide. Far from it, customers loved Dominos loved the companys transparency and gave th e new product a second chance.) How does The Dominos Pizza Turnaround relate to the major points made in the rest of the Managing Marketing Information chapter? (The chapter discusses sources and approaches for obtaining and managing marketing information. But perhaps the most important point is made early in the chapter and is emphasized in the Dominos story: The real value of marketing information lies in how it is usedin the customer insights that it provides. A great place to start in Chapter 4 is with the top box in Figure 4.1.)

3.

CHAPTER OVERVIEW
Use Power Point Slide 4-1 Here This chapter looks at how companies develop and manage information about important marketplace elements. This chapter is an examination of marketing information systems designed to assess the firms marketing information needs, develop the needed information, and help managers to use the information to gain actionable customer, and market insights.

CHAPTER OBJECTIVES
Use Power Point Slide 4-2 Here 1. Explain the importance of information in gaining insights about the marketplace and customers. 2. Define the marketing information system and discuss its parts. 3. Outline the steps in the marketing research process. 4. Explain how companies analyze and use marketing information. 5. Discuss the special issues some marketing researchers face, including public policy and ethics issues.

CHAPTER OUTLINE
p. 100 INTRODUCTION After five years of stagnant or declining revenues, Dominos Pizza asked its customers for honest feedback and reinvented its product. To gain deeper insights into what consumers really thought,
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p. 101 Photo: Dominos

Dominos turned to research using social media channels and focus groups. Rather than hiding from the stinging results or waving them off, Dominos executives fessed up to the problems and faced them head on. The company began by completely reinventing its pizza recipes. Next, it launched a daring $75 million Pizza Turnaround promotion campaign. Dominos has since increased revenues by 21 percent and profits by 31 percent. Talking to customers, hearing what they have to say, and acting on the resulting insights can pay big dividends. Opening Vignette Questions 1. In the beginning, how did Dominos stray so far from its customers and its commitment to quality? What should the company have been doing all along? 2. How did Dominos utilize social media to monitor customer opinions? Which channels were most effective in publicizing the turnaround? 3. If you were Dominos CEO, how might you have handled the initial quality challenge and the ensuing marketing campaign? As a CEO, what would have been most challenging about being so honest? Chapter Objective 1 p. 102 MARKETING INFORMATION AND CUSTOMER INSIGHTS Companies use customer insights to develop competitive p. 103 advantage. Apple iPod To gain good customer insights, marketers must effectively p. 103 manage marketing information from a wide range of sources. Key Terms: Customer Insights, The real value of marketing research and marketing Marketing information lies in how it is usedin the customer insights Information System that it provides. (MIS) Customer insights groups collect customer and market information from a wide variety of sources. A marketing information system (MIS) consists of people and procedures for assessing information needs, developing the needed information, and helping decision makers to use
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the information to generate and validate actionable customer p. 104 and market insights. Figure 4.1: The Marketing Information System Assignments, Resources Use Discussion Question 1 here Use Individual Assignments 1 here Use Web Resources 1 here

p. 103 PPT 4-7 PPT 4-8

ASSESSING MARKETING INFORMATION NEEDS A good marketing information system balances the information users would like to have against what they really need and what is feasible to offer. Sometimes the company cannot provide the needed information, either because it is not available or because of MIS limitations. The problem is not finding information. The real challenge is to find the right information and turn it into customer insights.

Chapter Objective 2

p. 104 PPT 4-9

DEVELOPING MARKETING INFORMATION Internal Data p. 104 Internal databases are electronic collections of consumer Key Term: Internal and market information obtained from data sources within Databases the company network. Information in the database can come from many sources. Problems with internal data: It may be incomplete or in the wrong form for making marketing decisions. Keeping the database current requires a major effort, because data ages quickly. Managing all of the information requires highly sophisticated equipment and techniques. p. 104 Ad: USAA

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Competitive Marketing Intelligence p. 105 Competitive marketing intelligence is the systematic Photo: Gatorade collection and analysis of publicly available information about consumers, competitors, and developments in the marketplace. Social media makes it easier than ever for people to converse, share opinions, needs, ideas, and complaints. Companies use specialized software to track trends and better respond to consumers. Competitive marketing intelligence gathering has grown dramatically. Firms use competitive intelligence to gain early warnings of competitor moves and strategies. Much competitor intelligence can be collected from people inside the company. Competitors often reveal intelligence information through their suppliers, resellers, key customers, and the Internet. The gathering of competitive marketing intelligence raises a number of ethical issues. Most companies are now taking steps to protect their own information. Assignments, Resources Use Discussion Question 2 here

p. 106 MARKETING RESEARCH PPT 4-12

Chapter Objective 3 p. 106 Marketing research is the systematic design, collection, Key Term: analysis, and reporting of data relevant to a specific Marketing Research marketing situation facing an organization. p. 107 Key Terms: Exploratory Research, Descriptive Research, Causal Research The marketing research process has four steps (see Figure 4.2): p. 107
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p. 107

Figure 4.2: The Marketing Research Defining the problem and research objectives is often the Process hardest step in the research process. Defining the Problem and Research Objectives A marketing research project might have one of three types of objectives. 1. Exploratory research: to gather preliminary information that will help define the problem and suggest hypotheses. p. 108 2. Descriptive research: to describe things, such as the Ad: Red Bull market potential for a product. 3. Causal research: to test hypotheses about cause-and-effect relationships. Start with exploratory research and later follow with descriptive or causal research.

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Developing the Research Plan

p. 108 Key Terms: The research plan outlines sources of existing data and spells Secondary Data, out the specific research approaches, contact methods, Primary Data sampling plans, and instruments that researchers will use to gather new data. Research objectives must be translated into specific p. 106 information needs. Key Term: Commercial Online The research plan should be presented in a written proposal. Databases Secondary data consist of information that already exists somewhere, having been collected for another purpose. Primary data consist of information collected for the specific purpose at hand. Gathering Secondary Data Researchers usually start by gathering secondary data. Using commercial online databases, marketing researchers p. 109 can conduct their own searches of secondary data sources. Ad: Experian Simmons Can usually be obtained more quickly and at a lower cost than primary data.

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Can provide data an individual company cannot collect on its own. Secondary data can present problems. The needed information may not exist. The data might not be very usable. o Relevant (fits research project needs) o Accurate (reliably collected and reported) o Current (up-to-date enough for current decisions) o Impartial (objectively collected and reported)

Assignments, Resources Use Discussion Question 3 here Use Critical Thinking Exercise 2 here Use Additional Projects 1 here Use Outside Example 1 here Troubleshooting Tip Although todays students have grown up with computers, the idea of an information system may be very new to them. They typically will not have had to do any research, and any jobs theyve held to this point in their lives will most likely have entailed very basic, entry-level type work. To get them past this, you could talk about the type of information the university will hold on each studenttheir major, the courses theyve taken, the grades theyve gotten, their current address, their home address, their parents names, whether they are paying full tuition or are on any kind of scholarship, what high school they attended and their grade point average there, what sports they play or activities they participate in, and so forth. Then talk about how the university might use that information to understand their current student population to help them figure out how to target future students while they are still in high school. This should help them grasp how data gets turned into information, and from that point to knowledge.

p. 109 PPT 4-19

Primary Data Collection Research Approaches

p. 109 Table 4.1: Planning Primary Data Collection

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Observational research involves gathering primary data by

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observing relevant people, actions, and situations. p. 109 Observational research can obtain information that people Key Term: are unwilling or unable to provide. Observational Research, Disadvantages: Some things cannot be observed. Long-term or infrequent behavior is also difficult to observe. p. 110 Observations can be very difficult to interpret. Key Term: Ethnographic research involves sending trained observers Ethnographic to watch and interact with consumers in their natural Research habitat. p. 110 Ethnographic research often yields the kinds of details that Photo: P&G dont emerge from traditional research questionnaires or focus groups. PPT 4-21 Survey research, the most widely used method for primary data collection, is the approach best suited for gathering descriptive information. The major advantage of survey research is its flexibility. Disadvantages: Sometimes people are unable to answer survey questions. People may be unwilling to respond to unknown interviewers or about things they consider private. Respondents may answer survey questions even when they do not know the answer. Busy people may not take the time, or they might resent the intrusion into their privacy. p. 110 Key Term: Survey Research

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Experimental research is best suited for gathering causal p. 111 Key Term: information. Experimental Research Contact Methods Mail, Telephone, and Personal Interviewing Mail questionnaires can be used to collect large amounts of p. 111 information at a low cost per respondent.
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Table 4.2: Strengths Respondents give more honest answers to more personal and Weaknesses of questions. Contact Methods No interviewer is involved to bias the respondents answers. Disadvantages: Not very flexible Take longer to complete The response rate is very low The researcher often has little control over the mail questionnaire sample As a result, more marketers are now shifting to e-mail and online surveys

Telephone interviewing is the one of the best methods for gathering information quickly, and it provides greater flexibility than mail questionnaires. Interviewers can explain difficult questions. Response rates are higher than with mail questionnaires. Disadvantages: Cost per respondent is higher than with mail questionnaires People may not want to discuss personal questions with an interviewer Introduces interviewer bias Different interviewers may interpret and record responses differently Increasingly high rates of hang-ups

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Personal interviewing takes two formsindividual and group interviewing. Individual interviewing involves talking with people one-on-one. Group interviewing (focus group interviewing) p. 112 consists of inviting six to ten people to meet with a Key Term: Focus trained moderator to talk about a product, service, or Group Interviewing organization. p. 111 Many companies are now moving away from traditional,
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formal research approaches, and employing new ways of Photo: Lexus Focus listening to consumers. Group PPT 4-25 Online Marketing Research p. 113 Increasingly, researchers are collecting primary data through Key Term: Online online marketing research. Marketing Research The Internet is well suited to quantitative research, but p. 114 researchers are also adopting qualitative approaches. Photo: Snap Surveys Online research usually costs much less than research conducted through mail, phone, or personal interviews. A primary qualitative Web-based research approach is p. 114 online focus groups. Key Term: Online Focus Groups Web-based research does have drawbacks, including control of who is in the online sample. In addition, consumer privacy p. 114 is a major ethical concern. Ad: FocusVision Assignments, Resources Use Real Marketing 4.1 here Use Discussion Question 4 here Use Critical Thinking Exercise 1 here Use Additional Projects 2, 3, and 4 here Use Individual Assignments 2 here PPT 4-27 Sampling Plan p. 115 A sample is a segment of the population selected for Key Term: Sample marketing research to represent the population as a whole. Designing the sample requires three decisions. 1. Who is to be studied (what sampling unit)? 2. How many people should be included (what sample size)? 3. How should the people in the sample be chosen (what sampling procedure)? PPT 4-28 The two types of samples are: 1. Probability samples 6. Nonprobability samples p. 115 Table 4.3: Types of Samples p. 116 Photo: Online

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Research Instruments PPT 4-29 The questionnaire is the most common data collection instrument. Closed-end questions include all the possible answers, and subjects make choices among them. Open-end questions allow respondents to answer in their own words. Care should be given to the wording and ordering of questions. PPT 4-31

Listening

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p. 117 Researchers also use mechanical instruments to monitor Photo: Time Warner consumer behavior. People meters and checkout scanners Medialab are examples. Neuromarketing techniques can measure consumer involvement and emotional responses, but these can be difficult to interpret.

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Implementing the Research Plan The data collection phase of the marketing research process must be carried out carefully to make sure the plan is implemented correctly. Researchers must process and analyze the collected data to isolate important information and findings. Interpreting and Reporting the Findings Researchers should present important findings and insights that are useful in the major decisions faced by management. However, interpretation should not be left only to researchers. Managers should work closely alongside them. Assignments, Resources Use Marketing Ethics here Use Marketing by the Numbers here Use Video Case here Use Think-Pair-Share 1-4 here Use Small Group Assignment 2 here
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Use Outside Example 2 here Troubleshooting Tip It is likely that no one in class will be familiar with the market research process. They have not had to worry about collecting information in any large-scale process, although they might have been involved with collecting information from members of a student organization as to what activities the members would like to participate in. One effective way of discussing this issue is to talk about the course evaluations that are completed at the end of the semester. Explaining that this is not to rate the instructors but to provide valuable feedback to the university, the department, and the instructor on course offerings, content within the courses, and only lastly to get an idea of the competence of instructors should help. Also, give examples of poorly designed surveys and shows how they lead the respondent to answer in a given way. Especially helpful are questionnaires that use leading or loaded questions, or double-barreled questions that are difficult to answer. p. 119 ANALYZING AND USING MARKETING INFORMATION Customer Relationship Management (CRM) Companies capture information at every possible customer touch point. PPT 4-34 p. 119 Customer relationship management (CRM) is used to Key Term: manage detailed information about individual customers and Customer carefully manage customer touch points in order to Relationship Management maximize customer loyalty. CRM integrates everything that a company knows about individual customers to provide a 360-degree view of the customer relationship. A data warehouse is a companywide electronic database of finely detailed customer information that needs to be sifted through for gems. Data mining is the use of high-powered techniques to sift through the mounds of data and dig out interesting findings
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Chapter Objective 4

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about customers. The most common CRM mistake is to view CRM as a technology and software solution only. Technology alone p. 120 cannot build profitable customer relationships. Ad: Macys CRM is just one part of an effective overall customer relationship management strategy. PPT 4-35 p. 120 Distributing and Using Marketing Information The marketing information system must make the information available to managers and others who make marketing decisions or deal with customers. p. 121 Many companies use a company intranet to facilitate Ad:Caesars information distribution. The intranet provides ready access Entertainment to data, stored reports, and so forth. Companies are increasingly allowing key customers and value-network members to access account and product information, along with other information, through extranets. Assignments, Resources Use Discussion Question 5 here Use Marketing Technology here Use Small Group Assignment 1 here p. 122 OTHER MARKETING INFORMATION CONSIDERATIONS Marketing Research in Small Businesses and Nonprofit Organizations Managers of small businesses and nonprofit organizations p. 123 can obtain marketing insights by observing things around Ad: Bibbentuckers them. Managers can conduct informal surveys using small convenience samples. Managers can glean a wealth of competitive data and information by turning to the Internet. Chapter Objective 5

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p. 124

International Marketing Research International marketing researchers follow the same steps as domestic researchers. The international researcher may have a difficult time finding good secondary data. International researchers frequently must collect their own primary data. Reaching respondents is often not easy in other parts of the world. Cultural differences from country to country cause additional problems for international researchers. Language is the most obvious obstacle. Even when respondents are willing to respond, they may not be able to because of high functional illiteracy rates.

p. 123 Ad: Nielsen

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Public Policy and Ethics in Marketing Research Intrusions on Consumer Privacy Many consumers strongly resent or even mistrust marketing research. Increasing consumer resentment has led to lower survey response rates in recent years. The best approach is for researchers to ask only for the information they need, to use it responsibly to provide customer value, and to avoid sharing information without the customers permission. Most major companies have now appointed a chief privacy officer (CPO).

p. 126

Misuse of Research Findings Many research studies appear to be little more than vehicles for pitching the sponsors products. Several associations have developed codes of research ethics
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p. 126 Ad: Kellogg

and standards of conduct. In the end, unethical actions cannot be regulated away. Each company must accept responsibility for its own conduct. Assignments, Resources Use Real Marketing 4.2 here Use Company Case here

END OF CHAPTER MATERIAL

Discussion Questions 1. What is a marketing information system and how is it used to create customer insights? (AACSB: Communication) Answer: A marketing information system (MIS) consists of people and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights. The MIS begins and ends with information usersmarketing managers, internal and external partners, and others who need marketing information. First, it interacts with these information users to assess information needs. Next, it interacts with the marketing environment to develop needed information through internal company databases, marketing intelligence activities, and marketing research. Finally, the MIS helps users to analyze and use the information to develop customer insights, make marketing decisions, and manage customer relationships. 2. Explain how marketing intelligence differs from marketing research. (AACSB: Communication) Answer: Competitive marketing intelligence is the systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketplace. The goal of competitive marketing intelligence is to improve strategic decision making by understanding the consumer environment, assessing and tracking competitors actions, and providing early warnings of opportunities and threats. Marketing intelligence techniques range from observing consumers firsthand to quizzing the companys own employees, benchmarking competitors products, researching the Internet, and monitoring Internet buzz. In addition to marketing intelligence information about general consumer, competitor, and marketplace happenings, marketers often need formal studies that provide customer and market insights for specific marketing situations and decisions. Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing
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situation facing an organization. Companies use marketing research in a wide variety of situations. For example, marketing research gives marketers insights into customer motivations, purchase behavior, and satisfaction. It can help them to assess market potential and market share or measure the effectiveness of pricing, product, distribution, and promotion activities. 3. Explain the role of secondary data in gaining customer insights. Where do marketers obtain secondary data and what are the potential problems in using it? (AACSB: Communication) Answer: Secondary data consist of information that already exists somewhere, having been collected for another purpose. Researchers usually start by gathering secondary data. The companys internal database provides a good starting point. However, the company can also tap into a wide assortment of external information sources, including commercial data services and government sources (see Table 4.1). Companies can buy secondary data reports from outside suppliers. Using commercial online databases, marketing researchers can conduct their own searches of secondary data sources. Beyond commercial Web sites offering information for a fee, almost every industry association, government agency, business publication, and news medium offers free information to those tenacious enough to find their Web sites. There are so many Web sites offering data that finding the right ones can become an almost overwhelming task. Web search engines can also be a big help in locating relevant secondary information sources. Secondary data can present problems. The needed information may not existresearchers can rarely obtain all the data they need from secondary sources. Even when data can be found, the information might not be very usable. The researcher must evaluate secondary information carefully to make certain it is relevant (fits research project needs), accurate (reliably collected and reported), current (up-to-date enough for current decisions), and impartial (objectively collected and reported). 4. What are the advantages of Internet-based survey research over traditional survey research? (AACSB: Communication) Answer: Internet-based survey research offers some real advantages over traditional phone and mail approaches. The most obvious advantages are speed and low costs. By going online, researchers can quickly and easily distribute Internet surveys to thousands of respondents simultaneously via e-mail or by posting them on selected Internet sites. Responses can be almost instantaneous, and because respondents themselves enter the information, researchers can tabulate, review, and share research data as they arrive. Online research usually costs much less than research conducted through mail, phone, or personal interviews. Using the Internet eliminates most of the postage, phone, interviewer, and data-handling costs associated with the other approaches. Moreover, sample size has little impact on costs. Once the questionnaire is set up, theres little difference in cost
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between 10 and 10,000 respondents on the Internet. Beyond their speed and cost advantages, Web-based surveys also tend to be more interactive and engaging, easier to complete, and less intrusive than traditional phone or mail surveys. As a result, they usually garner higher response rates. The Internet is an excellent medium for reaching the hard-to-reach audiences. 5. What is neuromarketing and how is it useful in marketing research? Why is this research approach usually used with other approaches? (AACSB: Communication) Answer: Neuromarketing is a way to measure brain activity to learn how consumers feel and respond. Marketing scientists using MRI scans and EEG devices have learned that tracking brain electrical activity and blood flow can provide companies with insights into what turns consumers on and off regarding their brands and marketing. Neuromarketing has been used to test commercials, product designs, and packaging. Although neuromarketing techniques can measure consumer involvement and emotional responses second by second, such brain responses can be difficult to interpret. Thus, neuromarketing is usually used in combination with other research approaches to gain a more complete picture of what goes on inside consumers heads. Critical Thinking Exercises 1. In a small group, identify a problem faced by a local business or charitable organization and propose a research project addressing that problem. Develop a research proposal that implements each step of the marketing research process. Discuss how the research results will help the business or organization. (AACSB: Communication; Reflective Thinking) Answer: The marketing research process has four steps: (1) defining the problem and research objectives, (2) developing the research plan, (3) implementing the research plan, and (4) interpreting and reporting the findings. Defining the problem and research objectives is often the hardest step in the research process. The manager may know that something is wrong, without knowing the specific causes. After the problem has been defined carefully, the manager and researcher must set the research objectives. A marketing research project might have one of three types of objectives: exploratory research, descriptive research, or causal research. The statement of the problem and research objectives guides the entire research process. Once the research problems and objectives have been defined, researchers must determine the exact information needed, develop a plan for gathering it efficiently, and present the plan to management. The research plan outlines sources of existing data and spells out the specific research approaches, contact methods, sampling plans, and instruments that researchers will use to gather new data. Research objectives must be translated into specific information needs. To meet the managers information needs, the research plan can call for gathering secondary data, primary data, or both. The researcher next puts the marketing research plan into action. This involves collecting, processing, and analyzing the information. Finally, the market researcher must now interpret the findings, draw
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conclusions, and report them to management. 2. Want to earn a little extra cash? Businesses that use focus groups and surveys to make better marketing decisions might pay for your participation. Visit www.FindFocusGroups.com and review the opportunities available for research participation. Find two more Web sites that recruit research participants. Write a brief report of what you found and discuss the pros and cons to companies of recruiting research participants this way. (AACSB: Communication; Use of IT; Reflective Thinking) Answer: Students responses will vary, but they should be able to find several sites offering research opportunities. Other Web sites include www.surveyclub.com, www.2020Research.com, and www.pineconeresearch.com. Many of these require a participant to set up a profile in the database, and if their profile matches researchers needs, they are offered an opportunity to participate. Some pay hundreds of dollars for participation. Many of the focus group opportunities are in major metropolitan areas, such as Boston, Chicago, and Atlanta. However, many of the opportunities are online, even for focus groups, which means researchers can gain access to a nationwide sample. One disadvantage of paying respondents to participate is the potential for professional participants who participate in many studies only for the compensation.

Marketing Technology: EWA Bespoke Communications In 1996, Marks & Spencer (M&S), the venerable British retailer, launched lunchtogoan online corporate catering service (see www.lunchtogo-e.com/). But M&S found it difficult to develop long-term relationships with corporate customers due to high personnel turnover within customer organizations, so it turned to EWA Bespoke Communications, a company that uses data mining to tell you more about your customers. EWA used propensity modeling to develop a critical lag formula, that identified customers whose last order fell outside of their expected behavior. EWA then developed an automated system to send communications to customers who have not reordered within the maximum allowed order lag determined by the formula. Whereas most customers received e-mails, the system flagged M&Ss best corporate catering customers that should receive more personalized phone calls because of their value and importance. EWA also implemented information systems to improve the companys service. Knowing more about its customers paid offwithin a short period of time, the EWA system generated more than 1 million, tripling the operations revenues, and delivered an almost perfect order accuracy rate. 1. Visit EWA Bespoke Communications at www.ewa.ltd.uk/ to learn more about its Customer Insight services and the types of analyses performed by this company. What is propensity modeling? Review other case studies from this Web site and write a brief report of how data mining technology was used to gain customer insights. (AACSB: Communication; Use of IT)
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Answer: Students responses will vary, but students should discuss the types of analyses performed in addition to propensity modeling, such as data study and audit, cross-sell analysis, critical lag, customers as assets (customer lifetime value), and impact assessment. Propensity modeling statistically predicts future behavior based on past behavior, allowing companies to focus on customers most likely to respond to marketing communications. All of the analysis techniques are described at www.ewa.ltd.uk/services/customer-insight. Additional case studies include Adidas, Nissan, Merial, TDA, Ford, Brintons Carpets, traveline, and Wilshire Farm Foods. 2. Describe how other organizations can benefit from these types of data mining analyses. Find examples of other companies that can offer such analysis to businesses. (AACSB: Communication; Reflective Thinking) Answer: Students responses will vary. An interesting application by MasterCard Advisors is described at www.mastercardadvisors.com/us/advisors/en/information_analytics/prop_models.html. This site describes how accurate assessment of cardholder behavior can help target marketing communications.

Marketing Ethics: Reading You E-book sales have now surpassed print book sales, resulting in lower margins for all companies in the publishing industry value chain. However, there is a silver lining to this trende-books can read the readers. Publishers and e-book retailers are gathering billions of bits of information from e-book readers. The publishing industry has been notorious for not conducting research, leaving authors to lament that they didnt know who their readers were or what they wanted. The only way to know if readers liked a book was from sales data after the fact. Not anymore. Now companies know how many hours readers spend reading a book and how far they get when they open it. Some publishers are even testing e-book manuscripts, revising them based on feedback, and then publishing the print version. Scholastic Inc. has set up online message boards and interactive games to learn what story lines and characters are connecting with readers. Coliloquy digital books let readers choose their own stories, which the company then aggregates and sends to the authors to shape future books. Amazon Kindle users sign an agreement giving the company permission to store their reading behavior data, and the company then highlights some of the data on its Web site. For example, the most highlighted passage in Catching Fire, the second book of the popular Hunger Games series, is Because sometimes things happen to people and theyre not equipped to deal with them. 1. Most e-books readers do not know that their reading behavior can be tracked. What ethical concerns might readers have? Are there any protections in place for consumers who may not want their reading behavior tracked? (AACSB: Communication; Ethical Reasoning)
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Answer: The main ethical issue is privacy. According to the Electronic Frontier Foundation (EFF), there is no way for readers to tell publishers or retailers of e-books that they do not want their reading behavior tracked. Some consumers may be concerned because they dont want others to know what they are reading. For example, because of the erotic content of the books, the popular Fifty Shades of Grey trilogy may not have been so popular if e-readers were not available. California enacted the Reader Privacy Act, which places restrictions on law enforcement groups access to consumers digital reading records. A court-order must be obtained to access this data. While most data are aggregated and not personallyidentifying, most digital reading platforms have considerable demographic information about their customers and share that information with publishers. 2. What would your textbook reading behavior data reveal to publishers? How would marketing textbooks change based on your behavior? (AACSB: Communication; Reflective Thinking) Answer: Students opinions will vary. Many will probably say they would like shorter chapters and more interactive media in e-textbooks.

Marketing by the Numbers: Sample Size Have you ever been disappointed because a television network cancelled one of your favorite television shows because of low ratings? The network didnt ask your opinion, did it? It probably didnt ask any of your friends, either. Thats because estimates of television audience sizes are based on research done by The Nielsen Company, which uses a sample of only 9,000 households out of the more than 113 million households in the United States to determine national ratings for television programs. That doesnt seem like enough, does it? As it turns out, statistically, its many more than enough. 1. Go to www.surveysystem.com/sscalc.htm to determine the appropriate sample size for a population of 113 million households. Assuming a confidence interval of 5, how large should the sample of households be if desiring a 95-percent confidence level? How large for a 99-percent confidence level? Briefly explain what is meant by confidence interval and confidence level. (AACSB: Communication; Use of IT; Analytical Reasoning) Answer: A confidence level of 95% requires a sample size of 384 households. A confidence level of 99% requires 666 households.

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The confidence interval is commonly called the margin of errorthe plus or minus figure that is usually reported with polling data. The confidence level indicates how sure one can be with the results. Thus, a 95% confidence level means one can be 95% sure that the response lies within the confidence interval, and a 99% confidence interval means 99% certain. Thats why the required sample size was larger at the higher confidence level. 2. What sample sizes are necessary at population sizes of 1 billion, 10,000, and 100 with a confidence interval of 5 and a 95-percent confidence level? Explain the effect population size has on sample size. (AACSB: Communication; Use of IT; Analytical Reasoning) Answer: The sample sizes are: 1 billion = 384 10,000 = 370 100 = 80 Population size only matters when dealing with a relatively small population. When the population is approximately 250,000 or more, the required sample size is 384. An important factor, however, is the representativeness of the sample. Truly random samples do not have to be large.

Company Case Notes

Meredith: Thanks to Good Marketing Information, Meredith Knows Women Synopsis Meredith Corporation was started by E.T. Meredith in 1902 with a single publication, Successful Farming, a publication that is still available today. Now, the company publishes 21 subscription magazines and over 150 special interest publications. But Meredith also owns television stations and 50 Web sites. But Merediths strength as a company is not rooted in its products. It is rooted in its expertise on managing marketing information. Specifically, Meredith has a massive database that allows it to intimately know women. Meredith knows them as a group, and as individuals. With 85 million individuals in its database, it has an average of over 700 unique pieces of information on each. This case shows how Meredith manages information in a way that allows them to deliver product, pricing, distribution, and promotional strategies in a way that truly appeal to individuals. It also outlines how Meredith is moving from a largely print media publisher to other growth media by employing its information management expertise.

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Teaching Objectives The teaching objectives for this case are to: 1. Expose students to the overall structure of a marketing information system. 2. To illustrate the complexity of gathering customer information in a way that leads to valuable customer insights. 3. To show how a successful CRM effort can emerge from a sound marketing information system. Discussion Questions 1. Analyze Merediths marketing information system. What are its strengths and weaknesses? For this, students should refer to Figure 4.1, The Marketing Information System. The case gives little information with respect to assessing information needs. However, we can make some pretty sound assumptions based on its information system. We might assume that Meredith is also expert at keeping its database and analytics up-to-date by assessing the need for new information. In the developing needed information section, it is clear that Meredith has not only a strength, but a core competency in its internal database. That is, Merediths database is a valuable asset that gives it a competitive advantage over other publishers as well as providing it with a revenue stream as a seller of marketing research and analytics. We know little with respect to Merediths efforts in the area of marketing intelligence. The case mentions some things about marketing research, but even that is limited. Meredith has a huge strength in analyzing and using information as well. Its passion points system is based on 20 predictive analytical models that are scored and ranked every week. That is a powerful analytical system that uses the information in the database on a consistent and ongoing basis. When it comes to using the information, the case describes how the analytical outcomes help to come up with new product ideas. That information also directs the type of promotional material that women see. Women are targeted based on their interests. And because Meredith has such a large portfolio of womens magazines, Meredith can keep a customer by graduating them from one title to another as their life stages change. One potential weakness of Merediths system is that even though it has an incredible system, it is limited by the box that is created by the parameters set. In other words, it knows women based on the information collected. This is the problem with a lot of marketing research. Companies may be very efficient at collecting and analyzing information. But what if they arent asking the right questions? The outcome of information is limited by the nature of the information collected. We dont have a lot of information on the type of information collected, nor do we know about how innovative Meredith is with respect to considering what kinds of information are added to the database. But huge market trends could be missed if they stay locked in to the same old
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system that they have always used. One example of this is how heavily dependent Meredith is on middle-aged and older women. A glimpse at all the titles Meredith has reveals that they have almost nothing that appeals to tweens, teens, and young adults today. If they dont bring those girls in, their customer base will age and disappear. If all the information that they are gathering is based on current customers, then they are missing a key set of data that would allow them to cater to a new set of customers. 2. Can impersonal data points really result in meaningful relationships? Explain. If you think about it, humans do everything based on processing bits of data or information. We make judgments and decisions every day based on data points. We get to know people and develop relationships based on such. One difference is that humans gather that data through five senses. As good as a database is, it can not really mimic the type of information that is gathered from all five senses that allow humans to form meaningful relationships. But the good news for companies like Meredith is they dont have to. Customer-brand relationships arent exactly the same as interpersonal relationships. Companies only need to replicate some of those relationship characteristics. And in that respect, data points can absolutely serve as the foundation for forming meaningful company-customer relationships. In the old days, the company-customer relationship was based more on the proprietor of a business. People formed relationships with a business based on the relationship with the person who ran the butcher shop, the insurance agency, or the bookstore. Today, the more successful businesses are those who can employ technology in a way that they can automate the collection, and processing of information in a way that the outcomes executed are personal to individuals. Netflix, Amazon, and Zappos are all great examples of companies that process massive amounts of information on individual customers in a way that provides a very custom customer experience. 3. Does Merediths marketing information expertise transfer into other media and products? Absolutely. The concept of understanding needs and wants of market segments and individuals is not bound to a particular medium. However, refer to the comments made for question 1. If the nature of the information is media-specific, then it is limited to that context. One thing that Meredith gathers and manages is information about which kinds of magazines women subscribe to as well as how they respond to different offers for subscriptions. That is print media information that has little bearing on other media. But, that is only one kind of information that Meredith gathers. They clearly gather information on life stages and personal interests. Thats the kind of information that transfers. 4. As a company still heavily rooted in print, what does Merediths future hold? Gloom and doom? Or future success? The bottom line is, Meredith is still a magazine company. The vast majority of its revenues come from magazine sales and advertising. Thats a dying industry. Meredith has actually done amazingly well in this area, keeping at least a steady level of readership and revenues from magazines. And they have made good
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strides into other media. But they are hardly considered to be innovative pioneers in online and mobile media. They need to have a replacement for each and every print title, and they dont. Additionally, even with really successful websites, the revenue models are not there. This is the same thing that most Web companies have struggled with. Even Facebook is just now coming in to profitability. You can have all the Web traffic in the universe, but there must be a way to make money off that traffic. The advertising model alone for Websites has not produced the kind of revenues that more traditional media (TV, radio, print) have. 5. What recommendations would you make to Merediths executives? Meredith cannot afford to wait for other companies to develop good revenue models for content distribution. They have got to blaze trails. If Better Homes & Gardens disappeared and all its readers started checking in to the BHG.com website, Meredith would lose money. Another recommendation would be to consider products that are not based on the distribution of content. Most magazines have turned websites into an online version of the magazine, something that is heavily rooted in the content itself. Can Meredith transition into other types of products that still draw from its knowledge of women? Teaching Suggestions This is an interesting case because most college students have little interest in the magazines that Meredith publishes. Care must be taken to challenge them to get in to analyzing the case of an old company from an old industry and moving it in to the next century. Students have the perspective of what they want and what they think will succeed in coming decades. After having students work on questions individually, have students get into groups to develop a set of recommendations as per question 5. This case also works well with the creating customer value chapter (Chapter 1) and the consumer behavior chapter (Chapter 5).

ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES

Projects
1. Secondary data consists of information that already exists, having been collected for another purpose. What are some secondary data sources you might take a look at if you were helping your college or university develop a recruitment strategy? (Objective 3) 2. Observational research involves gathering primary data by observing people. Do you see any potential ethical conflicts with its use? (Objective 5) 3. Why would you want to (or not want to) use a mail questionnaire to reach Generation Y individuals? Give both pros and cons. (Objective 3)

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4. Focus group interviewing can be a most effective interview technique. Under what situations does it make sense to use this technique? (Objective 3)

Small Group Assignments

1. Form students into groups of three to five. Each group should read the opening vignette to the chapter on Dominos. Each group should answer the following questions. (Objective 3) In this case, how did Dominos approach to marketing research differ from that of a traditional corporation? Discuss the key social media tools that Dominos utilized in researching customer insights. What other tools would you have used, and how would you use them? How has the Dominos Pizza Turnaround played out among your friends and roommates? Do you believe the new pizza is vastly improved over the old recipe? Why or why not? What are some other possible advertising themes you might develop based on Dominos discoveries regarding the taste and quality of its pizza?

2.

Form students into groups of three to five. Develop a short questionnaire (seven questions) designed to determine a respondents favorite social media site and the reason why. (Objective 3)

Individual Assignments
1. Take a look at Apples Web site (www.apple.com). Examine the pages that discuss the iPhone 4S. What customer insights do you believe Apple paid attention to in the redesign of its famous mobile device? (Objective 1) Construct two simple (5 question) surveys that examine students attitudes toward life at your university. One survey should contain open-ended questions only and the other only closed-ended questions. Be careful of your wording. Which of the two surveys do you believe would provide the greatest depth of information? Why? (Objective 3)

2.

Think-Pair-Share
Consider the following questions, formulate and answer, pair with the student on your right, share your thoughts with one another, and respond to questions from the instructor. 1. What are the four steps of the marketing research process? (Objective 3) 2. What are the differences between causal, exploratory, and descriptive research methods? (Objective 3) 3. Why does it make sense to use secondary data before you turn to primary data? (Objective 3) 4. What are some of the more substantial drawbacks of observational research? (Objective 3)
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Outside Examples
1. Secondary data consist of information that already exists somewhere, having been collected for another purpose. One of the main sources of secondary data is the U.S. Census. Take a look at the 2010 Census (http://2010.census.gov/2010census/) Find data that is relevant to your home state and/or community. How reliable or accurate do you believe that information to be? (Objective 3) Possible Solution: The interesting point of this exercise is for students to realize just how dated and unreliable much of the secondary data we use to make decisions may be. Although the information contained in this census was gathered in 2010, much of it will quickly change their individual home states/communities. This can be an eye-opening activity. 2. Using observational research, gather data on your roommates eating habits. What do your findings tell you? More importantly, what do your findings NOT tell you about his/her eating habits? (Objective 3) Possible Solution: Students will come up with a variety of observations. What is important is to pay attention to what the students believe they are discovering about their roommates eating habits. They will be able to discover WHAT those habits are; however, they cannot determine the driving force or motivation behind those habits.

Web Resources
1. http://247.prenhall.com This is the link to the Prentice Hall support link. 2. www.dominos.com Go to this Web site to learn more about the company and the campaign described at the beginning of this chapter. 3. www.radian6.com This Web site describes how Radian6 software is used to track important consumer trends. 4. www.redbull.com Discover how Red Bull develops new beverage lines based on consumer insights on their site. 5. www.kraftcanada.com Explore this Web site to see how Kraft utilizes key consumer insights in developing its food products.

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6. www.dunkindonuts.com Check out this Web site and discover the many social media vehicles Dunkin Donuts uses to gather information from its consumers. 7. www.apple.com This is Apples Web home and it provides you with a wealth of information.

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