Contemporary Marketing Research e Book

Contemporary Marketing Research (CMR) IMSCD&R, Ahmednagar.
CMR UNIT 1: INTRODUCTION TO MARKETING RESEARCH

AND APPLICATIONS OF RESEARCH DESIGNS
1.1. MEANING OF MARKETING RESEARCH:
“The secret of success is to know something nobody else knows.”

– Aristotle Onassis
Marketing Research is an objective and systematic search for knowledge in the

functional area of marketing.
1) Marketing Research is search for knowledge: Marketing Research is a process of

gaining new knowledge in the functional area of marketing. For gaining knowledge
researcher needs to collect data, analyse it and interpret its meaning.
2) Marketing Research should be carried out objectively: Marketing Researcher

needs to carry out research using neutral or unbiased or impartial approach. It means
researcher needs to use logical mind to collect and analyse data in order to draw
inferences.
3) Marketing Research uses scientific, systematic or logical way: Marketing

Researcher needs to use scientific, systematic, structured or organized way to do
research. The process, methods, techniques and tools used in research should be well
justified.
Marketing Research is,

 Pursuit of Truth
 Voyage of Discovery
 Movement from Known to Unknown
 Scientific Investigation
 Organised Enquiry
 In-depth Analysis
 Tool to establish Cause and Effect Relationship
Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 1

 Fact Finding Exercise

 Problem Solving Tool
 Tool which supports Decision Making
1.2. DEFINITIONS OF MARKETING RESEARCH:
1) Marketing Research is a systematic design, collection, analysis and reporting of data

and findings related to a particular marketing situation facing the company.
- Philip Kotler
2) Marketing Research is an objective and systematic search for and analysis of
information relevant to identification and solution of marketing problem faced by the
company.
- Green and Tull
3) Marketing Research is the systematic and objective process of gathering, recording
and analyzing data for marketing decision making.
- Zikmund
4) Marketing Research is the systematic and objective process of identification,
collection, analysis, dissemination and use of information for the purpose of
improving decision making related to identification and solution of problems and
opportunities in marketing.
- Malhotra
5) Marketing Research is the function that links the consumer, customer and public to
the marketer through information – information used to identify and define marketing
opportunities and problems; generate, refine and evaluate marketing actions; monitor
marketing performance; and improve understanding of marketing as a process.
Marketing Research specifies the information required to address these issues, designs
the method for collecting information, manages and implements the data collection
process, analyses the results and communicates the findings and their implications.
- American Marketing Association (AMA)

1.3. ROLE OF INFORMATION IN MARKETING DECISIONS:
Marketing management is a process of satisfying needs and wants of customers better

than competition in order to achieve objectives (Profit in case of business organisations).
Marketing management is a process of winning and retaining customers in order to
achieve objectives.
Marketing management is an organizational function and consists of set of processes for

creating, communicating and delivering value to customers and for managing customer
relationships in ways that benefit organization and its stake holders.
- American Marketing Association (AMA)
The emphasis of marketing is on identification and satisfaction of customer need and

want at profit. Further, marketer needs to outperform competition to win the customer. In
order to determine customer needs and design and execute marketing strategies and
programs aimed at satisfying those needs, marketing managers need information.
Marketing decisions are based on sound information about marketing environment.
Marketing environment is the external environment of the company and consists of both
macro and micro environment. Marketing environment is dynamic, uncontrollable and
spins both opportunities and challenges. Marketers need to monitor the developments in
the marketing environment on a continuous basis to be successful. Therefore, marketers
need information about developments in both macro and micro environments.
Macro environment is general or broad environment. It consists of forces which are

general in nature and interrelated. It affects micro environmental forces and the
company’s ability to achieve sales and profit. It has indirect and delayed effect on the
company. It consists of following forces.
1) Economic Environment
2) Political Environment
3) Legal Environment
4) Social and Cultural Environment
5) Demographic Environment

6) Technological Environment
7) Natural Environment
Micro environment is specific or task environment. It consists of forces which are specific
in nature and with whom company interacts on day-to-day basis. It affects the company’s
ability to achieve sales and profit. It has direct and immediate effect on the company. It
consists of following forces.
1) Customers
2) Competitors
3) Suppliers
4) Intermediatories
5) Facilitators
Marketers need information about developments in both macro and micro environment to
take marketing decisions. The following major marketing decisions related to marketing
strategy are based on sound information about marketing environment.
 Market Segmentation and Targeting
 Differentiation and Positioning
 Competitive Strategy
 Marketing Mix Strategy
The following major marketing decisions related to marketing program are based on
sound information about marketing environment.
 Product
 Price
 Promotion
 Place
Therefore, the information required about marketing environment for taking right
marketing decisions should be,
 Relevant  Correct/Accurate/Reliable
 Complete  Current/Latest/Updated
 Valid  Timely
 Cost-effective  Actionable

1.4. ROLE OF MARKETING RESEARCH:

(Scope/Importance/Significance/Applications/Utility)
Research has pervasive role in marketing management. It can be applied in all the areas in
marketing management. Its basic role is to provide sound information which can support
major marketing decisions and help marketer to identify and arrive at solutions of the
major marketing problems and opportunities. It also helps to design and evaluate
marketing strategies and programs. Research helps the marketing manager to smoothly
perform all the stages in the marketing planning process. It is truly a back-bone of the
marketing management system.
Marketing Planning Process:

The marketing planning process involves following stages.
1) Identification of Opportunities
2) Set Marketing Objectives
3) Design Marketing Strategy
4) Develop Marketing Mix Program
5) Marketing Implementation
6) Marketing Control
Role of Research in Marketing Planning Process:

For execution of all the stages of the marketing planning process research can be helpful.
The areas where research can be conducted and helpful in each stage of the marketing
planning process is listed below.
1) Research related to Identification of Opportunities: Research helps the marketer in
identifying opportunities and challenges by analyzing marketing environment through
variety of following research works.
 Marketing Environment related Research
 Macro Environment related Research
 Micro Environment related Research
 Industry related Research
 Customer related Research (Pre-purchase & Post-purchase buying behavior)
 Competition related Research

2) Research related to Setting Marketing Objectives: Research helps the marketer in

setting feasible and challenging objectives through variety of following research
work.
 Sales Forecast
3) Research related to Designing Marketing Strategy: Research helps the marketer in

designing right marketing strategies through variety of following research works.
 Market Segmentation related Research
 Target Market related Research
 Positioning related Research
 Competition related Research
 International Marketing Research
4) Research related to Developing Marketing Mix Program: Research helps the

marketer in developing fruitful marketing mix program through variety of following
research works.
a) Product related Research:

 Research related to customer expectations and preferences
 Concept Development and Testing
 Research related to Product Testing
 Branding related Research
 Packaging related Research
 Research related to Services
 Competitor Product related Research
b) Pricing related Research:

 Costing related Research
 Competitor Price related Research
 Research related to Customer Income and Purchasing Power
 Profitability related Research
 Price Elasticity of Demand

c) Promotion related Research:

 Advertising related Research:
o Advertising Effectiveness Study (Before and After)
o Media Effectiveness related Research
o Research related to Advertisement of Competition
 Sales Promotion related Research:
o Research related to Effectiveness of Sales Promotion Tools
o Sales Promotion Effectiveness Research
o Research related to Sales Promotion Campaign of Competitors
 Public Relations related Research:
o Research related to Effectiveness of Public Relations Tools
o Public Relation Effectiveness Research
o Research related to Public Relation Campaign of Competitors
 Selling related Research:
o Research related to Design of Sales Territories
o Research for Evaluation Sales Force Performance
o Research related to Compensation Package for Sales Force
o Research related to Selling Activity of Competition
 Direct Marketing related Research:
o Research related to Effectiveness of Direct Marketing Tools
o Direct Marketing Effectiveness Research
o Research related to Direct Marketing Campaign of Competitors
d) Place related Research:
 Research related to Design of Distribution Channel
 Research related to Warehousing
 Research related to Inventory
 Research related to Transportation
 Research related to Distribution Channel of Competition
5) Research related to Marketing Implementation: Research helps the marketer in
execution of marketing mix program through variety of research works like design of
marketing organization.
6) Research related to Marketing Control: Research helps the marketer in control of
marketing activities through variety of research works like marketing audit.

The role of research in marketing management can be shown diagrammatically as

follows.
Stakeholders
 Customers
 Employees
 Suppliers
 Intermediatories
 Shareholders
Controllable Uncontrollable
Marketing Variables Marketing Variables
 Product  Economic Env.
Marketing
 Price Research  Political Env.
 Promotion  Legal Env.
 Place  Social and Cultural
Env.
Assess Provide  Demographic Env.
Information Accurate  Technological Env.
Need Information  Natural Env.
 Competition
Marketing Manager
 Marketing Strategy
 Marketing Program
 Marketing Decisions
 Marketing Problems
 Performance and Control

1.5. SEQUENCE OF STEPS IN MARKETING RESEARCH PROCESS:

Marketing Research is a systematic process and is conducted using following steps.
1) Define Marketing Problem

2) Marketing Research Proposal
3) Marketing Research Design
4) Data Collection
5) Data Analysis and Interpretation
6) Marketing Research Reporting
1) Define Marketing Problem:

Marketing Research is conducted by business organizations when the organizations face
major marketing problem/s. Thus, problem triggers marketing research. Marketing
problem can exist in any functional area of marketing management i.e. product, price,
promotion, place etc. Problem definition is the first step to solve it. Therefore, researcher
needs to identify, understand and define problem in crystal clear words. It will lead to
understanding of purpose and objectives of marketing research.
2) Marketing Research Proposal:

Once problem is defined by the researcher he/she needs to draft marketing research
proposal. Marketing Research proposal is a plan of research submitted to the management
for approval. Management evaluates the research proposal based on certain criteria and
then takes decision regarding its approval. Once management accepts or approves
marketing research proposal the resources in terms of time, money and manpower are
allocated for research.
3) Marketing Research Design:

Once the management approves marketing research proposal, the researcher needs to
prepare research design. Research design is the blueprint or action plan of research. It
contains detailed course of action to do research and solve problem. It primarily throws
light on plan for data collection and plan for data analysis keeping in mind the purpose
and objectives of research.

4) Data Collection:
Once research design is finalized the researcher needs to implement the same. In this step
researcher collects or gathers data. This step consumes more resources.
5) Data Analysis and Interpretation:

In this step researcher analyses the collected data using appropriate statistical,
mathematical or financial tools. After data analysis researcher interprets or understands
the meaning of the data. This step leads to research result in the form of findings and
conclusions.
6) Marketing Research Reporting:

This is the last step of the marketing research process. Once researcher completes
research activity and reached findings and conclusions he/she needs to draft marketing
research report. Research report primarily contains problem, methodology, findings,
conclusions and recommendations. Research report is the feedback to the management
about the research activity. Based on the marketing research report, management takes
decision to solve problem.
1.6. DEFINE MARKETING PROBLEM:

 Marketing Research is a potent tool to solve problems faced by the business
organizations in the functional area of marketing.
 Problem can be
o obstacle,
o hurdle,
o barrier,
o difficulty,
o doubt,
o query,
o crisis,
o challenge,
o opportunity or
o decision dilemma.

 Problem exists when there is negative gap between what is expected and what is
achieved.
 Problem exists when there is a knowledge gap.
 Business organizations may face problem in any functional area of marketing i.e.
product, price, promotion, place etc.
 Therefore, the first step in marketing research is to define problem in crystal clear
words.
 The researcher needs to identify, understand and define problem well.
 All the resources and efforts would be wasted if the problem is misunderstood or ill-
defined.
 It is said that the ‘Problem well defined is half solved’.
 “Formulation of problem is often more essential than its solution.” – Albert Einstein
 Managers are required to find right answers to the right questions.
 Therefore, the most vital step of marketing research process is problem formulation.
Tasks Involved in Problem Formulation:

 Marketing Research provides information to the problems faced by the business
organizations in the functional area of marketing.
 The result of research should help marketing decision maker to take right decisions.
 The tasks involved in problem formulation are as follows.
a) Understand the Marketing Decision Maker and the Environment
b) Understand Objectives of the Marketing Decision Maker
c) Understand Alternative Courses of Action
d) Understand Consequences of Alternative Courses of Action
e) Define Management Decision Problem
f) Translate Management Decision Problem into Research Problem
1.6.1. Understand the Marketing Decision Maker and the Environment:

 Researcher needs to do problem audit to understand the marketing problem.
 A problem audit is a comprehensive examination of the marketing problem to
understand the origin and nature of the problem.
 For the purpose of understanding problem the researcher needs to understand the
decision maker and the environment in which he/she operates.

 First the researcher should understand who is/are the decision makers?
 Researcher should interact with the decision maker/s in order to identify and
understand the problem.
 Researcher should get clarity about ‘real problem’ rather than symptom of problem.
 Researcher needs to understand the business organization and its both external and
internal environment in order to understand the background of the problem.
 Researcher needs to use following ways to understand the background of the problem.
o Discussion with the Decision Maker
o Interviews with Experts
o Secondary Data Analysis
o Qualitative Research
 Second, Researcher needs to understand business organization and its environment.
o Business Organisation and its Internal Environment:
 Nature and History of Business Organisation
 Products
 Resources
 Capabilities and Constraints
 Past Information about sales, profits, market share etc.
o Business Organisation and its External Environment:
 Macro Environment:
 Economic Environment
 Political Environment
 Legal Environment
 Social and Cultural Environment
 Demographic Environment
 Technological Environment
 Natural Environment
 Micro Environment
 Customers
 Competitors
 Suppliers
 Intermediatories
 Facilitators

 Once researcher understands the business organization and its both internal and
external environment he/she can identify the environmental factors which have led to
the present situation.
 Further, researcher also understands what information is required by the decision
maker to deal with the situation.
1.6.2. Understand Objectives of the Decision Maker:

 Decision maker/s is/are the user/s of the users of the research result.
 Decisions are made by the Decision Maker to achieve objectives.
 The research would be successful if it provides information which helps decision
maker to take right decision in order to fulfill objectives.
 Therefore, formulation of problem should be based on the
o Organisational Objectives
o Personal Objectives of the Decision Maker
 Researcher should know both the organizational objectives and personal objectives of
the decision maker accurately.
 Once the researcher knows the objectives of the decision maker he/she understand the
purpose of research.
 Sometimes the objectives are not clearly stated and therefore lose its operational
significance. In such case the researcher should uncover the hidden things and
precisely know the objectives.
 Sometimes the decision maker has overt and covert objectives. In such case the
researcher should uncover the hidden purpose and precisely know the objectives.
1.6.3. Understand Alternative Courses of Action:

 Research should aid the marketer to take decision.
 Many times marketer faces a situation in a particular environment which demands
decision. There would be more than one decision alternatives which marketers can
chose. But, there exist a state of doubt or dilemma in the mind of the marketer about
which is a better decision under circumstances. Research is conducted in such
decision dilemma.
 Researcher should understand the timing and the importance of the decision.

 Research can be properly designed only when the alternative courses of action being
considered by the decision maker are known.
 The decision maker should explicitly tell the researcher the alternative courses of
action being considered without hiding anyone.
 The researcher and the decision maker should discuss and come out with a complete
list of decision alternatives.
 Researcher should also discuss with the decision maker about the criteria which will
be used to evaluate the decision alternatives for comparison.
1.6.4. Understand Consequences of Alternative Courses of Action:

 Marketing decision makers are always interested to manipulate the marketing mix
elements so that they meet customer expectation in a better way and satisfy them.
 Therefore, marketing decision makers are interested to know outcomes of past and
future contemplated marketing decisions and actions.
 Researcher should ask ‘what if’ questions to the marketing decision maker in order
understand the consequences of the alternative courses of action.
1.6.5. Define Management Decision Problem:

 It is the problem faced by the management in the functional area of marketing.
 It is the problem which initiates or triggers research.
 It is an action or decision which needs to be taken by the management.
 Therefore, once the researcher defines management problem, the researcher
understands the purpose or reason (why?) of conducting research.
 In other words, management problem is the purpose of research written in question
form.
 The management problem is the concern of the management.
 The responsibility of solving the management problem is of the management.
Management uses research outcomes to solve management decision problem.
 Example: What should be done to prevent Sales decline?

1.6.6. Translate Management Decision Problem into Research Problem:

 Role of research is to equip management with the knowledge so that the management
can solve their problem.
 Research Problem is derived from the management problem.
 It is information oriented and specifies information required to solve management
problem.
 Technically speaking research problem is aimed at bridging the knowledge gap
because of which management is not able to solve management problem.
 Therefore, once the researcher defines research problem, the researcher understands
the objective or aim (what?) of conducting research.
 In other words, research problem is the objective of research written in question form.
 It is concern of researcher.
 It is the problem for which researcher will provide solution.
 Example:
o Management Decision Problem: What should be done to prevent Sales decline?
o Research Problem: What are the reasons behind Sales decline?
 Research problem is further broken down into several areas for investigation called as
Investigation Problems.
1.7. MARKETING RESEARCH PROPOSAL:

 A marketing research proposal is the plan of marketing research proposed to the
management for getting their approval.
 A marketing research proposal is the blueprint or roadmap of marketing research.
 It is known as work plan, prospectus, research outline, statement of intent, draft plan.
 A research proposal throws light on, 5 Ws and 1 H of research –
o Why?
o What?
o Who?
o Where?
o When?
o How?
 It also points out the benefit of research.

1.7.1. Types of Research Proposals:

There are two types of research proposals.
a) Internal Research Proposal: It is prepared by the internal staff of research department
or cell of the company for getting approval from the management.
b) External Research Proposal: It is prepared by the external research agency for getting
an order of the research project.
1.7.2. Drafting a Marketing Research Proposal:

Marketing Research proposal is drafted in such a way to include following elements.
1) Executive Summary
2) Problem Statements/ Purpose and Objectives of Research
3) Review of Literature
4) Benefits of Research
5) Research Design or Plan
6) Layout of Research Report specifying nature and form of results
7) Budget/Price
8) Time Duration and Schedule of Activities
9) Manpower Required
10) Facilities and Special Resources Required
11) Project Management
12) Appendices
13) Bibliography
1.7.3. Evaluating a Marketing Research Proposal:

The marketing research proposal is evaluated and then final decision is taken regarding
approval. The evaluation process is as follows.
 Development of review criteria
 Assignment of points to each criterion based on importance of each criterion
 Generation of total score for each proposal
 Selection of proposal

Some of the criteria used for evaluation are as follows.

 General attitude and responsiveness
 Cost-effectiveness
 Justified Research Methodology
 Delivery time schedule
 Marketing insight
 Neatness of proposal
 Organisation or Structure of proposal
 Appropriateness of writing style
 Quality of manpower
 Reputation of research agency
 Research facilities offered by the research agency
1.8. RESEARCH DESIGN:

 Research design is the action plan for solving research problems.
 It is also called as blueprint, roadmap or plan of research.
 It is research plan for implementation.
 It necessarily throws light on how a particular research will be conducted to find
answer to the research problem.
 It is a plan for collection and analysis of data for solving research problems.
 A research design throws light on, 5 Ws and 1 H of research –
o Why?
o What?
o Who?
o Where?
o When?
o How?
 “A research design is the plan for collection and analysis of data in a manner which
aims to combine relevance to research purpose with economy in procedure.”
- Pauline Young

 A good research design primarily contains following things.

1) Problem Statements
2) Hypothesis
3) Type of Data
4) Sources of Data
5) Data Collection Method
6) Data Collection Instrument
7) Sampling Plan/Design
8) Plan for Data Analysis/Tools for Data Analysis/Statistical Design
9) Layout of Research Report
10) Operational Design/Resources Required
1.9. TYPES OF RESEARCH DESIGNS:

There are three types of research designs.
1) Exploratory Research Design
2) Descriptive Research Design
3) Experimental Research Design
1.9.1. Exploratory Research Design:

 It is used for Exploratory Research.
 Exploratory Research is the research which explores and searches information to
provide insights and understanding of the problem situation or phenomena.
 Characteristics:
o Problem and hypothesis are not framed or not specific
o Information needed is defined loosely
o Data type generally is qualitative
o Data collection instrument is unstructured
o Sampling design is non-probability
o Sample size is small
o Data analysis is subjective and less statistical tools are used
o Flexible design
o Findings are tentative
o Generally followed by descriptive or causal research

 Examples:
o Interviews of retailing experts to understand trends in retailing
o Exploration of foreign market
 Uses:
o Gain insight of a particular situation or phenomenon
o Formulate a problem or define a problem more precisely
o Develop hypothesis
o Identify alternate courses of action
o Identify variables for further examination
1.9.2. Descriptive Research Design:

 It is used for Descriptive Research.
 Descriptive Research is a type of conclusive research.
 Descriptive Research is the research which describes an object.
o Problem is clearly defined
o Hypothesis are framed
o Information needed is clearly defined
o Data type generally is quantitative
o Data collection instrument is structured
o Sampling design is probability
o Sample size is large
o Data analysis is objective and advance statistical tools are used
o Rigid design
o Findings are conclusive
 Examples:
o Research to find out characteristics of consumers.
o Research to forecast sales.
o Research to find out relation between shopping and eating out.
 Uses:
o To describe characteristics of groups like consumers, employees etc.
o To estimate a percentage of units in a population exhibiting a certain behaviour.

o To determine perception of objects (generally company, product or brand) in the

mind of people.
o To determine degree to which the variables are associated.
o To make specific predictions.
 Types:
o Cross-Sectional Research
o Longitudinal Research
1.9.3. Experimental Research Design:

 It is used for Causal Research.
 Causal Research is a type of conclusive research.
 Causal Research tries to establish cause-and-effect relationship between variables.
o Hypothesis is framed
o Variables are clearly defined
o Structured design
o One or more independent variables are manipulated to check their effect on
dependent variable/s. If dependent variable changes according to the changes in
the independent variable, there exists causal relationship between them.
 Example: Research to establish relationship between price of the product and sales.
 Uses:
o To understand which variables are causes (independent variables) and which
variables are effects (dependent variables) of a phenomenon
o To determine the nature of relationship between the causal variables and the effect
to be predicted
1.10. TYPES OF RESEARCH BASED ON RESEARCH APPROACHES:

 There are two types of research based on two approaches to research.
o Quantitative Research
o Qualitative Research

1.10.1. Quantitative Research:

 Quantitative Research is based on quantitative approach to research.
 It generates data in quantitative form.
 It deals with data which can be captured in numbers.
 Quantitative research attempts to precisely measure something.
 Quantitative data is measured objectively.
 Quantitative data is easy to measure and analyse.
 It can be subjected to rigorous statistical analysis.
 Examples:
o How many? How much? How often? When? of something
o Sales, Profit, Inventory etc.
1.10.2. Qualitative Research:

 Qualitative Research is based on qualitative approach to research.
 It generates data in qualitative form.
 It deals with data which is difficult to measure and analyse.
 Qualitative data is measured subjectively.
 It can be subjected to rigorous qualitative analysis.
 It includes array of interpretative techniques which seek to describe, decode, translate
and understand meaning and insight about phenomena.
 It aims to achieve in-depth understanding of phenomena.
 Judith Langer said that qualitative data includes data about perception, attitude,
opinion, emotions, motivations of people etc.
 Examples:
o Why a thing has occurred? How things happen?
o Data about satisfaction, preference, liking etc.
 Qualitative Research Techniques:
o Observation
o Focus Group
o Experience Survey
o Depth Interviews
o Projective Techniques etc.

1.11. CONCEPT AND APPLICATIONS OF QUALITATIVE RESEARCH

TECHNIQUES:
1.11.1. Focus Group:

 The term Focus Group was first coined by R.K. Merton in his book in 1956. He used
a term Focused Interview.
 Focus Groups became widely used in research during the 1980’s.
 Focus Group is a process of obtaining information from respondents about a topic by
using focused group discussion.
 Process:
o Group of people (Group size 6-10) are selected.
o Focus Group is a group of people, led by a trained moderator.
o Generally researcher is moderator/facilitator who leads the group and plays a key
role.
o Moderator should possess communication skill, interpersonal skill, leadership skill
and knowledge about psychology, sociology and group dynamics.
o Often focus groups are conducted in isolated/relaxed/informal/pleasant
environment to avoid distractions.
o Moderator conducts two or three sessions with the group.
o In the session, each participant in a group is encouraged to express freely his/her
views on the topic and to react to the views of the other participants.
o A moderator uses group dynamics principles to focus or guide the group in an
exchange of ideas, feelings, opinions and experiences on a specific topic.
o A session is conducted for 1-3 hours.
o In case a session is long then some activities are conducted which include
projective techniques and other creative activities.
o Audio/Video recording of focus group discussion is done.
o Light refreshments are served throughout.
o Sometimes incentives are given in the end to the respondents.
o Output of focus group is behavioural observation along with recommendations of
moderator.

 Applications:
Today, focus groups are widely used for diverse marketing research applications. Most
common application of focus group is in consumer related research. Focus groups are
used generally for,
o Generating perception, attitude or images regarding company, product or brands
o Obtaining preliminary consumer reaction to the new marketing program
o Obtaining general background about the topic
o Diagnosing problem
o Stimulating new ideas for product and programs
o Highlighting areas of marketing opportunity
 Types:
Focus groups can use several variations.
o Face-to-face Focus Group
o Telephone Focus Group
o Online Focus Group
o Videoconferencing Focus Group
o Two-way Focus Group
o Dual-Moderator Focus Group
 Advantages: 10 S’s
o Synergism
o Snowballing
o Stimulation
o Security
o Spontaneity
o Serendipity
o Specialisation
o Scientific Scrutiny
o Structure
o Speed
 Disadvantages: 5M’s
o Misuse
o Misjudge
o Moderation

o Messy
o Misrepresentation
1.11.2. Depth Interviews:

Depth Interview is an unstructured, direct, personal interview in which a single
respondent is probed by a highly skilled interviewer to uncover underlying motivations,
beliefs, attitudes and feelings about the topic.
 Process:
o Decide the rough outline of questions to be asked related to the topic. But the
structure and wording of questions change according to the answer given by the
respondent.
o Fix appointment: Date, Time and Venue
o Meet the respondent as per the schedule and ask questions to seek information.
o There is flexibility in depth interview as respondents may raise new issues and
throw light on new dimension.
o Probing is of critical importance in depth interview to uncover hidden issues and
obtain meaningful information.
o Generally depth interviews can go on for 1-3 hours.
o Sometimes depth interviews are conducted in sessions to avoid fatigue.
o Audio or video recording is done.
 Techniques:
Three techniques are used in depth interview for probing.
o Laddering: The line of questions proceed from product characteristics to user
characteristics. It uncovers underlying psychological and emotional information.
o Hidden Issue Questioning: The focus is not on socially shared values but rather on
personal ‘sore spots’; not on general lifestyles but on deeply felt personal
concerns.
o Symbolic Analysis: It attempts to analyse the symbolic meaning of objects by
comparing them with their opposites.
o Projective Techniques: Projective Techniques also can be used during depth
interview like Association, Completion, Construction and Expressive Techniques.

 Applications:
Primary use of depth interview is to gain insight and understanding of the topic. Depth
interviews are used infrequently in marketing research. Depth interviews are used in
special problem situations in specially consumer research.
o Detailed probing of the customer.
o Discussion of confidential, sensitive or embarrassing topics.
o Situations where strong social norms exist and customer may be influenced by the
group response.
o Detailed understanding of complicated consumer buying behavior.
o Interviews with professional people especially in industrial marketing research.
o Interviews with competitors who are unlikely to reveal the information in a group
setting.
o Situations where the product consumption experience is sensory in nature,
affecting mood states and emotions.
o During depth interview projection techniques can be used to uncover underlying
motivations, beliefs, attitudes and other aspect of the personality.
 Advantages:
o Depth Interviews can uncover greater depth of insights about a topic.
o Depth interview attribute the responses directly to the respondent.
o Depth interviews result in free exchange of information that may not be possible
in groups because of social pressure.
 Disadvantages:
o Depth Interviews are unstructured and hence are susceptible to the interviewer’s
influence. Therefore the quality and completeness of result depend heavily on
interviewer.
o Only skilled interviewer can conduct depth interview and hence they are
expensive.
o The data obtained is difficult to analyse and interpret and hence services of skilled
psychologist are required.
o Required more time.
o Requires more cost.

1.12. SPECIALISED RESEARCH APPLICATIONS IN MARKETING:

The specialized research applications in marketing are discussed below. Such kinds of
research works are conducted by professional research agencies and they sell the outcome
of it to their clients. Such service provided by the research agency to the client is called as
‘Syndicated’ service. Syndicated service is the information service offered by the research
agency that provides information from a common pool of database to different firms that
subscribe to their service. The data is not collected for the purpose of marketing research
problem specific to individual client, but the data and reports supplied to clients can be
customized to fit their particular need. Apart from ‘syndicated’ service research agencies
provide services as per the need of the client.
a) Consumer Panels
b) Retail Shop Audit
c) Media Audience Tracking Study
d) Brand Tracking Study
1.12.1. Consumer Panels:

 Consumer panel is a classic example of longitudinal research.
 Longitudinal research is a type of descriptive research.
 Longitudinal Research involves collection of information from fixed group of
respondent/s (sample/s) regarding same variable/s repeatedly over a period of time.
 In consumer panels information is collected from a sample of respondents (panel) at
regular intervals over an extended period of time.
 The respondents can be organisations, households or individual consumers.
 The household panels are most popular.
 The consumer panels are also called as consumer purchase panels or continuous
panels.
 Uses:
The use of consumer panel is to study consumer buying behaviour especially
consumer purchase and consumption patterns. It also helps the marketer to track the
changes in consumer buying behaviour. It can be used for experimental research.
Specifically, consumer panels provide information useful for following things.
o Sales Forecasting
o Estimating Market Shares

o Brand Loyalty
o Brand Switching Behaviour
o Profiling specific Customer Groups
o Promotional Effectiveness
o Controlled Store Tests
 Process:
o Generally, consumer panel study is done by professional research agencies or
advertising agencies having research cell. Sometimes companies also maintain
panel or create ‘ad-hoc’ panels depending on their need.
o For creating consumer panel a sample of respondents are chosen who agrees to
participate in the research for a long period of time.
o There are two ways of collecting information.
o Home Audit: In this method the panel member agrees to permit a researcher
(auditor) to check the household stocks of certain product categories at regular
intervals. Further, panel members save all the used cartons, wrappers and so on for
the auditor to record them.
o Mail Diary Method: In this method the panel members records the details of
purchases in certain product categories and returns the completed diary by mail at
regular intervals – weekly, fortnightly or monthly. Paper diaries have been
gradually replaced by electronic diaries. Now, most of the panels are electronic
and the behavior is recorded electronically, either entered online by the
respondents or recorded by electronic devices.
o Panel members are compensated for their participation with gifts, coupons or
cash.
 Advantages:
o Consumer panels provide longitudinal data which can be analysed in depth for
tracking the buying behaviour.
o Panel members are willing to participate in the study and therefore, provide higher
quality data.
o Information is recorded at the time of purchase which eliminates recall errors.
o Information recorded by electronic devices is accurate because it eliminates
human errors.

 Disadvantages:
o Consumer panels suffer from selection bias. Therefore, panels may not represent
population.
o Over a period of time maturation sets in and the panel members refuse to respond.
This problem of panel attrition is also called as mortality effect and can be tackled
using replacement.
o Panel conditioning (consciousness about testing) may lead to response bias which
in turn affects validity of research.
o Panel members may not record all the purchases leading to incomplete data.
1.12.2. Retail Shop Audit:

 Retail Shop Audit is a comprehensive and in-depth study of sales of the retail shops.
 It is formal examination and verification of the product movement.
 It is carried out by the auditor (researcher) by visiting personally the retail shop.
 Auditors examine physical records or analyse inventory.
 Process:
o Select the retail shops which agree to participate in the audit. Retails shops of all
the categories are selected.
o Data is collected by the auditor by visiting the shop personally in two phases.
 On first day of the month, the auditor visits the retail shops along with ‘Data
Sheet’ and collects ‘Opening Stock’ of the shop w.r.t. each ‘Stock Keeping
Unit (SKU)’.
 On the last day of the month, the auditor visits the retail shops along with
‘Data Sheet’ and collects ‘Closing Stock’ of the shop w.r.t. each ‘Stock
Keeping Unit (SKU)’. Further the auditor also collects data about the
‘Purchases’ made by the shop during the month.
o Data is analysed w.r.t. each ‘Stock Keeping Unit (SKU)’ in the following way to
find out its sales during the month.
Sales = Opening Stock + Purchases – Closing Stock
o The sales data is analysed in-depth further to provide useful information.

 Uses:
o Sales of product categories, products, company, brands, brand variant. Each can
be further subdivided based on region, type of shop etc.
o Market Shares of product categories, products, company, brands, brand variant.
Each can be further subdivided based on region, type of shop etc.
o Percentage of Retailers carrying products of each company, brand or brand
variant.
o ‘Retailer Development Index’ which shows percentage of retailers carrying
company’s products as against the market leader.
o Retail Inventories
o Percentage of ‘Out of Stock’ retailers.
o Stock Cover (Stock Turnover Ratio)
o Retailer support in terms of shelf spacing, special displays, in-store
advertising etc.
o Distribution Problems
o Competition Activity
o Developing Sales Forecasts
 Advantages:
o It provides accurate information about movement of many different products at
the retail level
o The information can be broken down by a number of important variables such as
product category, product, company, brand and brand variant.
 Disadvantages:
o It has limited coverage
o Audit data cannot be linked to consumer characteristics.
o With advent of electronic scanners the scanner data is available and more
accurate. This has resulted in decrease in the need to perform audit.
1.12.3. Media Audience Tracking Studies:

 It is study of audiences of various media like television, radio, print, internet etc.
 It reveals information about volume, profile and habits of the media audiences.
 Professional research agencies conduct variety of media audience tracking studies.

 It is useful to companies, advertisers for selection of appropriate cost-effective media

mix for advertisement.
 It is also useful for media owners for promotion.
 ‘National Readership Survey’ is conducted by professional research agencies. It
includes comprehensive and in-depth survey of readers of various print media,
listeners of radio and viewers of television across nation. It leads to following
information
o Circulation and market shares of various print media like dailies, weeklies,
fortnightlies and monthlies in different regions and across nation.
o Volume of audiences of various radio programs and television channels and
programs.
o Geographic, demographic and sociographic profile of the audiences of various
media.
o Reading, listening or Viewing habits of the audiences of various media.
 A study of Television Audience is conducted by professional research agencies.
Based on the study ‘Television Rating Points (TRP)’ is calculated for various
television channels and programs. TRP indicates popularity of the respective
television channel or program.
o Process:
 A representative sample of households is selected across nation called as
media panel.
 An electronic data collection instrument namely audiometer or people meter is
fitted in the television sets of the households.
 The audiometer starts recording following things as soon as the television is
switched on.
 When the television set was turned on?
 What channels were viewed?
 How long channels were views?
 Who in the household was watching that channel?
 The information collected by the audiometer reaches the central computer at
the head office electronically.
 The information is analysed in-depth to track the viewer’s behavior.

o Outcomes:
 Based on the audience volume ‘Television Rating Points (TRP)’ is calculated
for various television channels and programs.
 The viewers profile of various television channels and programs.
o Uses:
 It is useful to companies, advertisers for selection of appropriate cost-effective
television media mix for advertisement.
 It is also useful for television media owners for promotion.
 Some of the professional research agencies use ‘Diary Panel’ for studying radio
listenership and local television viewership. In such case, the panel members are
asked to record their listening and viewing behavior over a period of time and give the
diary to the agency.
 Some of the professional research agencies measures readership of advertisements in
print media especially in newspapers and magazines. These agencies use recognition
method to asses a particular ad’s effectiveness. Four degrees of reading are recorded –
nonreader, noted, associated and read most. Further, cost effectiveness of various
media is calculated using ‘readers per rupee’.
 Some of the professional research agencies collect information about multimedia
exposure and product usage. Four different media are considered – newspapers,
magazine, radio and television.
 Some of the professional research agencies like tracks internet usage. It reports
website surfed, e-commerce activity and behavior related to banner advertisement.
1.12.4. Brand Tracking Studies:

 Over a period of time marketers make changes in the marketing programs including
brand extensions. Therefore, marketers need to monitor health and equity of the brand
over a period of time
 Brand Tracking Studies are conducted to collect brand related information from
consumers on a routine basis over time.
 The information is collected through qualitative measures of brand performance on
the basis of many key dimensions.
 They apply the brand value chain in understanding where, how much and in what
ways brand value is created.

 They provide valuable information about how well the brand has achieved its
positioning.
 A good brand tracking system also provides useful information regarding consumer
behaviour, competition, opportunities, problems, marketing effectiveness and
efficiency.
 Based on brand tracking studies, tactical decisions related to the branding are taken.
 It includes three important decisions.
o What to Track?
o How to Conduct Tracking Study?
o How to Interpret Results of the Tracking Study?
a) What to Track?
 Each brand is unique and therefore, faces specific issues. It is necessary that the
tracking studies should be designed to address these specific issues.
 Amongst the brand elements, marketers generally use brand name for tracking
studies. But sometimes logo or symbol is also used.
 Companies can conduct tracking study for two kinds.
i. Product-Brand Tracking:
o In this case individual product-brand is tracked.
o In this tracking brand awareness and image is measured.
o The measures used are recall and recognition moving from general questions
to specific questions.
o Brand perceptions and associations are studied in the tracking study.
Researcher should assess key brand associations which are influencing brand
equity on the basis of their strength, favourability and uniqueness.
o It also tracks attitude, feeling related to brand and the intensions and behaviour
of the consumer.
ii. Corporate or Family Brand Tracking:
o Marketers track corporate of family brand separately or concurrently with
individual product-brand.
o It measures brand associations, credibility and image.
o If the brand is associated with multiple products, it also measures which
product is most influential in affecting consumer perception about brand.

b) How to Conduct Tracking Studies?

In designing Tracking Studies marketer should decide three things.
i. Whom to Track?
 Marketers generally concentrate on current customers.
 But sometimes it is useful to track non-users of the brand or of the product
category.
 Marketers can track those customers loyal to the brand as against those loyal
to other brand or as against those who switch brands.
 Among current customers marketers can distinguish between heavy and light
users of the brand.
 It is also useful to track other stakeholders such as channel members,
employees especially sales executives etc.
ii. When to Track?
 Brand tracking is a continuous exercise and the marketers should monitor the
brand over a period of time.
 The frequency of tracking depends on the frequency of product purchase,
consumer behaviour, marketing activity in the product category.
iii. Where to Track?
Generally tracking studies are conducted in the entire market in which
company operates. If the company is having global presence, then tracking is
conducted in diverse geographic markets. In such case the background of the
market should be considered in interpreting results.
c) How to Interpret Results?
 To yield actionable insights and recommendations, tracking measures must be as
reliable as sensitive as possible.
 The challenge in tracking studies is to set appropriate benchmarks for the analysis.
The benchmarks can be set keeping in mind nature of product category and
competitive considerations.
 Brand tracking studies throw light on the brand image.
 It reveals the brand associations which influence consumer attitude and behaviour
and create value for the brand.
 It provides the information about brand equity and determinants of the same.

 It identifies value drivers of the brand which influence mind and heart of the
consumer in selecting product or brand.
 It also provides useful information regarding consumer behaviour, competition,
opportunities, problems, marketing effectiveness and efficiency.
1.13. HYPOTHESIS:
1.13.1. Meaning of Hypothesis:
 Hypothesis is an assumption, supposition or proposition formulated by researcher in
order to test its validity.
 Hypothesis is the proposed most possible solution of the research problem.
 Hypothesis is Assumed Truth.
 Hypothesis needs testing to prove its validity.
 Testing of hypothesis can lead to acceptance of it if it is proved right and rejection of
it if it is proved wrong.
 Formulation of hypothesis is not essential but it is certainly desirable because it
directs/guides research.
1.13.2. Qualities of a Good Hypothesis:

1) Relevant and adequate for its purpose
2) Empirically Testable
3) Simple and easy to understand
4) Clear
5) Precise
6) Specific
7) Consistent with known facts
8) Describes the state or states relationship between variables
9) Explanation for occurrence of phenomena
1.13.3. Formulation of Hypothesis:

Researcher can use exploratory research to formulate hypothesis. Researcher can use
following exploratory techniques to generate hypothesis.
a) Review of Literature
b) Experience Survey

c) Focus Group
d) Analysis of Selected Cases
a) Review of Literature:
 Researcher can review literature in order to get insights into the problem and
formulate hypothesis.
 Review of literature includes both conceptual literature and empirical literature.
 Conceptual literature review includes understanding the concepts and theories related
to the topic.
 Empirical literature includes study of research works carried out previously which is
related to the similar topic and problem. Academic Institutions, Government
Organisations, Research Agencies etc. carry out research on regular basis. Researcher
can review the research works carried out by such organisations. Researcher should
study objectives, scope, methodology and findings of past research work.
 Researcher can review books, research journals, conference proceedings, articles in
magazines etc.
 Literature review also includes review and analysis of the secondary data especially
internal data.
b) Experience Survey:
 Researcher can conduct experience survey in order to formulate hypothesis.
 It is also called as pilot survey or key informant survey.
 Experience Survey is a way of seeking information by interviewing persons having
practical experience related to the topic or problem.
 It is collecting information from experts relying on their knowledge, opinion and
experience.
 Expert can be company executives as well as persons outside the company.
 The objective of experience survey is to gain insight into the topic and identify new
ideas, dimensions, variables etc.
 Process:
o Select experienced and competent persons having relevant experience. These
experts are interviewees.
o Researcher is Interviewer.

o Decide information to be collected and questions to be asked.

o Sometimes set of questions are given before the interview to the experts. This will
give opportunity to the experts to think and prepare before the interview so that
they can contribute effectively.
o Fix appointment: Date, Time and Venue
o Meet the expert as per the schedule and ask questions to seek information.
o There is flexibility in experience survey as respondents may raise new issues and
throw light on new dimension.
o Generally experience collecting interviews tend to be long and may last for few
hours.
o Experience surveys are discovery oriented.
c) Focus Group:
Researcher can use focus group method to generate hypothesis. (Refer 1.11.1)
d) Analysis of Selected Cases:

 Case is a situation in which company faces a problem or decision dilemma.
 Cases are developed by the Academic Institutions, Government Organisations,
Research Agencies, Companies etc. which throw light on the case history, problem or
issue, solution or decision taken etc.
 Cases are also called as ‘Insight Stimulating Examples’.
 Researcher can review such cases which are analogous to the present situation.
 The following three types of cases are particularly useful for hypothesis formulation.
o Cases reflecting changes particularly abrupt changes.
o Cases reflecting extremes of behavior.
o Cases reflecting the order in which events occurred over time.
 Intense Analysis of such case histories will clarify nature of the problem, reveal
variables that are relevant and suggest the nature of relationship between variables.
 The investigation of the case histories is always to be considered as suggestive rather
than conclusive. Therefore, care has to be taken in interpreting relevancy and
relationship between variables.

1.14. QUESTIONS FOR PRACTICE:
Q1) Explain the concept and role of marketing research.

Q2) Explain the marketing research process.
Q3) Discuss the tasks involved in defining marketing problem.
Q4) What is research proposal? What are the types of research proposal? Describe the
elements of research proposal.
Q5) Explain the concept of research design and point out features of a good research
design.
Q6) Explain qualitative and quantitative research approaches.
Q7) Explain the concept, characteristics and uses of exploratory research designs.
Q8) Explain the concept, characteristics and uses of descriptive research designs.
Q9) Explain the concept, characteristics and uses of experimental research design.
Q10) What is hypothesis? Point out qualities of a good hypothesis. How hypothesis is
formulated?
Q11) Write short notes on,
a) Role of information in marketing decisions.
b) Focus Group
c) Depth Interviews
d) Consumer Panel
e) Retail Shop Audit
f) Media Audience Tracking Study
g) Brand Tracking Study
Note: Questions can be asked on formulation of marketing problem and drafting of

research proposal in the form of a caselet.

CMR UNIT 2: RESEARCH DESIGN II:

DATA COLLECTION – QUESTIONNAIRES AND SCALING
Once hypothesis is formulated, researcher needs to make data collection plan as a part of
the research design.
2.1. TYPE OF DATA:

 There are two types of data.
1) Primary Data
2) Secondary Data
 Researcher needs to decide which type of data is to be used for research and needs to
mention the same in the research design. Researcher has three decision alternatives:
1) Only Primary Data
2) Only Secondary Data
3) Both Primary and Secondary Data
2.2. SOURCES OF DATA:

 Researcher needs to decide what will be the source of data and needs to mention the
same in the research design.
 If researcher is going to use both primary and secondary type of data he/she should
decide and mention separately,
o Sources of Primary Data
o Sources of Secondary Data
2.3. DATA COLLECTION METHOD:

 In case of primary data researcher needs to decide which method/s will be used for
data collection and mention the same in the research design.
 The important primary data collection methods are as follows.
1) Observation Method
2) Focus Group
3) Experiment
4) Survey etc.

2.4. DATA COLLECTION INSTRUMENT:

 These are instruments used for data collection.
 The questionnaire is the most popular data collection instrument in research.
 Researcher can also use electromechanical devices for data collection.
 Researcher needs to decide which instrument he/she is going to use in research and
mention the same in the research design.
2.5. QUESTIONNAIRE:
 Questionnaire consists of set of questions related to the topic of research.
 Questionnaire is generally used as data collection instrument in surveys.
 Questionnaire is popular data collection instrument in descriptive type of research.
 Quality of questionnaire determines the quality of information and hence
questionnaire should be scientifically designed or constructed.
2.5.1. Steps in Designing/Constructing a Questionnaire:

The questionnaire is designed using following process.
1) Understand Research Purpose and Objectives (Problem)
2) List the Required Information
3) Understand Data Collection Method
4) Frame/Formulate Questions
5) Wording of Questions
6) Sequencing of Questions
7) Physical Appearance
8) Preliminary Questionnaire
9) Pilot Testing
10) Rectify Preliminary Questionnaire
11) Final Questionnaire
1) Understand Research Purpose and Objectives:

Questionnaire should collect data to fulfill purpose and objectives. Therefore, researcher
should clearly understand the management problem (purpose), research problem
(objectives) and investigation problem before designing the questionnaire. This step will
ensure relevancy of questionnaire to the purpose and objective of research.

2) List the Required Information:

Researcher needs to specify clearly the information which is required to fulfill the
purpose and objective of research. This list of required information should be
meticulously made. This list of information should be relevant and complete. This step
links the questionnaire to the purpose and objectives of research.
3) Understand Data Collection Method:

Before designing the questionnaire researcher needs to understand which data collection
method will be used to collect the primary data. Generally questionnaire is used for
survey method. Researcher should take a note of the way in which questionnaire would
be administered in the survey. Questionnaire for personal and telephonic interview differ
in the design. Similarly, questionnaire for mail survey or e-mail survey differ in the
design.
4) Frame or Formulate Questions:

As per the list of information the researcher should frame questions. Questions are framed
so as to get all the information in the information list. While framing questions researcher
needs to decide following things.
a) Determine Content of Question
b) Decide Type/Format of Question
a) Determine Content of Question:

Researcher needs to decide what to include in the question i.e. content of question.
Researcher needs to check following things before finalizing the content.
 Is the question necessary?
The question is necessary only if it is related to the purpose and objectives of
research.
 Are several questions needed instead of one?
Sometimes single question may not suffice to get information about an item in the
information list. In such case several questions are required to get adequate
information.

 Whether respondents would be able to answer?

o Researcher should not presume that respondents can provide accurate and
reasonable answers to all questions. Researcher should make an attempt to
overcome respondents’ inability to answer.
o Respondent would be able to answer the question only if, he/she is informed.
In order to check whether the respondent is informed or not filter questions are
asked. Filter questions are initial questions that screen potential respondents to
ensure they meet the requirements of the sample.
o Respondent would be able to answer the question only if, he/she remembers
the thing about which question is asked. The inability to remember leads to
errors of omission, telescoping and creation. Omission (Recall Loss) is
inability to recall an event which actually took place. Telescoping takes place
when an individual telescopes or compresses time by remembering an event as
occurring more recently than it actually occurred. Creation error takes place
when a respondent remembers an event that did not actually occur. Question
should be frames to avoid these errors.
o Respondent would be able to answer the question only if, he/she can articulate
the response. If the respondents are unable to articulate then aid should be
provided.
 Will the respondent willingly answer the question?
o Sometimes respondents know the answer but they are unwilling to answer.
o In such cases researcher should explicitly mention the context and legitimate
purpose of the question being asked.
o Further, question should be asked in such a way to reduce effort and time of
the respondent.
o In case of sensitive questions, respondent either does not answer or have
tendency to give answer that are socially desirable. In such case researcher can
use any one approach like – everybody approach, other people approach,
numbered card approach, sealed ballot approach or randomized response
technique. Randomized response technique is a technique in which respondent
is asked to answer one of the two randomly selected questions without
revealing which of the question is answered. In the pair of the questions, one
of the questions is sensitive and the other one is innocuous.

b) Decide Type/Format of Question:

While framing questions researcher can use any of the following type/format of
questions.
 Close End Question: Objective Type Question: Structured Question:
o The response options are provided.
o It saves time and effort of the respondent.
o It saves time and effort of the researcher in data collection and processing and
analysis.
o A close end question can be dichotomous (2 response options) or multiple
choice (more than 2 options).
o It should be framed so as to reduce order or position bias. It is tendency of the
respondent to select and alternative merely because it occupies a certain
position or is listed in a certain order.
o A closed end question is framed using a scale.
 Open End Question: Subjective Type Question: Unstructured Question: Free-
Response Question: Free-Answer Question
o The response options are not provided. Respondents answer in their own
words.
o It consumes time and effort of the respondent.
o It consumes time and effort of the researcher in data collection and processing
and analysis.
5) Wording of Questions:
Researcher needs to do the wording of question so that respondent can easily understand.
The following guidelines should be followed.
 Use Simple, Familiar, Ordinary Words.
 Avoid Technical Words.
 Avoid Ambiguous/ Vague words.
 Avoid Leading/Loaded Questions.
 Avoid implicit alternatives and assumptions.
 Avoid Double Barreled Questions.
 Avoid generalization and estimates.
 Appropriate instructions should be provided.

6) Sequencing of Questions:
Researcher need to decide proper order or sequence of questions using following aspects.
 Logical order
 Beginning: Easy and Interesting Questions, End: Difficult Questions
 Funnel Approach: Beginning: General Questions, End: Specific Questions
 Beginning: Questions related to Basic Information
 End: Questions related to Classification Information followed by Identification
Information
 Sensitive questions should be asked late.
 Questions should be sequenced so as to reduce order or position bias.
 Skip Formats to be provided for branching questions
7) Physical Appearance:
Physical appearance can influence the respondent’s co-operation. Questionnaire should be
presentable. So, researcher should make the physical appearance and layout of the
questionnaire neat. Researcher should consider following aspects.
 Quality of Paper
 Size of Paper
 Formatting: Margins, spacing, font style, size, colour
 Quality of Printing
8) Preliminary Questionnaire:
After completing above six stages the first draft of the questionnaire is ready that is called
as preliminary questionnaire. It needs testing and refinement. Therefore it is not
administered on mass scale.
9) Pilot Testing:
Pretesting or Pilot Testing refers to testing of questionnaire on a small sample of
respondents to identify and eliminate potential errors. Preliminary questionnaire is
administered to 10-20 respondents during pilot testing. Testing of questionnaire ensures
accuracy.

10) Rectify Preliminary Questionnaire:

During pilot testing researcher may come across errors (bugs) in the questionnaire. The
questionnaire may contain errors regarding question content, type of question, wording,
sequencing, physical appearance and layout. The questionnaire is refined by rectifying
(debugging) errors.
11) Final Questionnaire:

After testing and refining the questionnaire the final copy of the questionnaire is ready
which is administered on a mass scale for data collection.
2.5.2. Characteristics of a Good Questionnaire:

Good questionnaire possesses following characteristics.
1) Relevant to the purpose and objectives of research.
2) Should cover complete information.
3) Appropriate Length.
4) More Close End Questions.
5) Use of Simple, Familiar Words.
6) No use of Technical Words.
7) No use of Ambiguous/ Vague words.
8) No use of Leading/Loaded Questions.
9) No use of implicit alternatives or assumptions.
10) No use of Double Barreled Questions.
11) No use of generalizations and estimates.
12) Appropriate instructions should be provided.
13) Logical order of questions.
14) Order: Beginning: Easy Questions, End: Difficult Questions.
15) Order: Beginning: General Questions, End: Specific Questions.
16) Skip Formats should be provided in case of branching question.
17) Personal Questions should be there in the End.
18) Good quality of paper.
19) Good formatting.
20) Good quality of printing.

2.6. OSERVATION FORMS:

 Observation is one of the powerful methods of the data collection generally used for
exploratory research.
 Researcher can use mechanical devices for observation or in case of human
observation use observational forms.
 Observation forms are data collection instruments used for recording observations in
case of human observation.
 The process of designing observation forms is more or less similar to the
questionnaire design but is comparatively easy.
 The process of designing observation forms is as follows.
1) Understand Research Purpose and Objectives (Problem)
2) List the Required Information
3) Design Observation Form
4) Physical Appearance
5) Preliminary Observation Form
6) Pilot Testing
7) Rectify Preliminary Observation Form
8) Final Observation Form
1) Understand Research Purpose and Objectives (Problem):

Observation form should collect data to fulfill purpose and objectives. Therefore,
researcher should clearly understand the management problem (purpose), research
problem (objectives) and investigation problem before designing the Observation Form.
This step will ensure relevancy of observation form to the purpose and objective of
research.
2) List the Required Information:

Researcher needs to specify clearly the information which is required to fulfill the
purpose and objective of research. This list of required information should be
meticulously made. This list of information should be relevant and complete. This step
links the observation form to the purpose and objectives of research.

3) Design Observation Form:

Observation form should get the information which is desired. While designing
observation form researcher should have clarity about following things.
 Who is to be observed?
 What is to be observed?
 When it is to be observed?
 Where it is to be observed?
 Why it is to be observed?
 How it is to be observed?
Keeping in mind above things observation items should be decided. It is better to have
simple check marks rather than descriptive text matter. It saves time of the observer. The
observation items should be sequenced properly and logically. Generally sequencing is
done in the chronological order in which things would happen.
4) Physical Appearance:
Observations Form should be presentable. So, researcher should make the physical
appearance and layout of the observations form neat. Researcher should consider
following aspects.
 Quality of Paper
 Size of Paper
 Formatting: Margins, spacing, font style, size, colour
 Quality of Printing
5) Preliminary Observation Form:

After completing above stages the first draft of the observation form is ready that is called
as observation form. It needs testing and refinement. Therefore it is not administered on
mass scale.
6) Pilot Testing:
Pretesting or Pilot Testing refers to testing of observation form on a small sample of
respondents to identify and eliminate potential errors. Preliminary observation form is
used to observe behavior of 10-20 respondents during pilot testing. Testing of
observations form ensures accuracy.

7) Rectify Preliminary Observation Form:

During pilot testing researcher may come across errors (bugs) in the Observation Form.
The observations form is refined by rectifying (debugging) errors.
8) Final Observation Form:

After testing and refining the observation form the final copy of the observations form is
ready which is used on a mass scale for data collection.
2.7. DESIGNING QUESTIONNAIRE AND OBSERVATION FORMS FOR

DIFFERENT MARKETING RESEARCH SITUATIONS:
Questionnaire is used as a popular data collection instrument in marketing research. It is
used to collect data in following kinds of marketing research situations.
a) Study of Consumer Buying Behaviour
b) Advertising Copy Research
c) Readership Survey
d) Opinion Poll
e) Retail Survey
f) Mystery Shopping
a) Study of Consumer Buying Behaviour:

Marketers need to understand consumer buying behavior in order to develop marketing
strategy and marketing program which can satisfy their need and want. Therefore,
research is conducted to study consumer buying behavior. This study includes both
pre-purchase and post-purchase buying behavior. It includes information about how
consumers buy, use and disposes the products.
b) Advertising Copy Research:

Advertisement is one of the powerful promotional tool which influences mind and heart
of the consumers. Advertisement is one of the costly promotional tools. Therefore,
advertisers are interested in evaluating effectiveness of the advertisements. The
advertising effectiveness is measured both before and after the release of the
advertisement. In the before studies, advertisers are interested to choose the most
effective advertising copy which can influence the mind and heart of the consumer. In the

after study, advertisers are interested to measure effectiveness of the advertisement after
releasing it on the mass scale. A research to test the effectiveness of the advertising copy
is called as advertising copy testing research.
c) Readership Survey:
It includes comprehensive and in-depth survey of readers of various print media, listeners
of radio and viewers of television across nation. ‘National Readership Survey’ is
conducted by professional research agencies. It leads to following information
 Circulation and market shares of various print media like dailies, weeklies,
fortnightlies and monthlies in different regions and across nation.
 Volume of audiences of various radio programs and television channels and
programs.
 Geographic, demographic and sociographic profile of the audiences of various media.
 Reading, listening or Viewing habits of the audiences of various media.
d) Opinion Poll:
Opinion polls are conducted by professional research agencies, media or government
organizations to study the opinion of the public about elections, major government
decisions and actions, government performance or any other public issues. Generally
opinion polls are conducted before the parliamentary or assembly elections to adjudge the
mood of the voters. Sometimes exit polls are also conducted on the day of polling. It
includes recording the responses of the voters after they exit from the polling booth. Both
opinion and exit polls are used to predict the result of the elections or polls. It is used by
the political parties to design poll strategies.
e) Retail Survey:
Distribution plays a significant role in making the right product available to the
consumers at right quantity, right time, right place, right condition and at reasonable cost.
Retailers occupy important position in the distribution channel as they sell the products to
the end users. Therefore, retail surveys are conducted by the marketers to understand the
retailer behavior, retailer satisfaction, trade-relation mix, competition activity, consumer
behavior, sales, market potential and problems in the distribution etc.

f) Mystery Shopping:
Marketers are interested in understanding the customer’s point of view in shopping the
products. They are keen to understand the customers experience in buying. This helps
marketer to identify areas of improvement in selling and serving the customers.
Consumer surveys may not reveal the reality. Therefore, mystery shopping is used.
Mystery shopping is a technique in which researcher hides his identity and enact a role of
the shopper and do shopping for company’s products and services. Since researcher hides
his/her identity it is called as mystery shopping or ghost shopping. In such research
observation method is used to record shopping experiences.
2.8. MEASUREMENT:
 Measurement is the process of assigning number or symbol to a characteristic of an
object according to certain predetermined rule.
 Scale is an instrument or continuum used for Measurement.
 Scaling is process of construction of a Scale.
 Researcher measures characteristics or properties of objects.
 There are four levels of measurement.
o Nominal Scale
o Ordinal Scale
o Interval Scale
o Ratio Scale
2.9. SCALE:
 Scale is an instrument or continuum used for Measurement.
 Scaling is process of construction of a Scale.
 Management research is social research. In management research information is
gathered from people about their psychological or social properties and behaviour.
Attitude influences human behaviour. Therefore, in management research attitudes of
people are measured. Many scales have been developed to measure attitude of people.
These are also called as attitude scales.
 The commonly used attitude scales are as follows.
1) Rating Scale: Non-Comparative Scale
2) Ranking Scale: Comparative Scale

2.9.1. Likert Scale:

 It as a rating scale or non-comparative scale.
 It is developed by Rensis Likert.
 It is the most frequently used scale.
 It is a type of itemized rating scale. It is a multi-item rating scale.
 Likert Scale consists of statements that express either a favourable or unfavourable
attitude towards the object of interest. The respondent is asked to indicate the level of
agreement or disagreement with each statement.
 Likert Scale has two parts.
o Item Part: It is a statement that expresses either the most favourable or most
unfavourable attitude towards the object of interest. While framing this item part
researcher needs to carefully check whether the statement is relevant to the topic
of research.
o Evaluative Part: It consists of levels of agreement. Respondent is required to
choose one of the levels of agreement.
 Sample Question: IMS is an excellent Management Institute.
o Strongly Agree
o Agree
o Neutral/Undecided/ Neither Agree nor Disagree
o Disagree
o Strongly Disagree
 Each response is given a numerical score (– 2 to + 2 or 1 to 5) to reflect its degree of
attitudinal favourableness.
 The analysis can be done on item-by-item basis i.e. profile analysis or total i.e.
summated score can be calculated.
 Profile analysis would involve comparing the average rating score for each item.
 In summated approach the scores are summated (totaled) to measure respondent’s
overall attitude to towards object. Therefore, Likert scale is also called as summated
rating scale. But, in such case, all the items should be either favourable or
unfavourable. If the favourable and unfavourable items are intermixed, then scoring
method should be properly designed.

 Likert scale is popular in marketing research because it is,

o Easy to construct a scale
o Requires less time to construct
o Reliable scale
 Likert scale has a disadvantage that it takes longer time for the respondent to give
response as he/she has to read all the statements.
 Likert scale is used in marketing research frequently for studying many things like -
consumer behaviour studies, consumer satisfaction studies, studying company,
product and brand images for positioning research etc.
2.9.2. Semantic Differential Scale (S.D.):

 It is developed by Charles Osgood and his team.
 It is one of the frequently used scales.
 It is a type of summated rating scale.
 It is also called as differential scale or bipolar scale.
 It is a scale with end points associated with bipolar labels that have semantic meaning.
 It measures an attitude of people about object using bipolar adjectives.
 It is based on the proposition that an object can have several dimensions of
connotative meanings. The meanings are located on a multidimensional property
space called semantic space.
 Negative adjective is generally on the left hand side.
 Sample Question: Indicate level of success of Nano car in the market.
-3 -2 -1 0 +1 +2 +3
Most Unsuccessful Most Successful
 Each response is given a numerical score (-3 to +3 or 1-7) to reflect its degree of
attitudinal favourableness. It is a seven point scale.
 Profile analysis would involve comparing the average rating scores for each item. If
plotted diagrammatically it leads to a snake diagram.


overall attitude to towards object.
 Semantic Differential scale is popular in marketing research because it is,
o Easy to construct a scale
o Requires less time to construct
o Versatile scale
 Semantic Differential scale is used in marketing research frequently for studying
many things like - consumer behaviour studies, consumer satisfaction studies,
studying company, product and brand images for positioning research etc.
2.9.3. Stapel Scale:

 It is developed by Jan Stapel.
 It is a type of summated rating scale.
 It is also called as unipolar scale.
 It is a scale with single adjective (one pole) and the response categories ranging from
-5 to +5. It is a 10 point scale.
 It is a scale without neutral point. As the neutral point is an adjective which describes
the object to be studied.
 Respondents indicate how accurately each term describes the object by selecting
appropriate numerical category. Higher the number, the more accurately the term
describes the object.
 The scale is usually presented vertically.
 The analysis is done in the same way as that of semantic differential scale.

 Sample Question: Indicate quality of IMS.

+5
+4
+3
+2
+1
High Quality
-1
-2
-3
-4
-5
 Profile analysis would involve comparing the average rating score for each item.
overall attitude to towards object.
 Even though it reduces the pains of coming out with bipolar adjectives as in the
semantic differential scale, it is less popular in marketing research.
2.10. SCALE CONSTRUCTION:

 It is a process of construction or generation of scale.
 Scale should accurately measure what you want to measure.
 It requires technical expertise to develop a scale.
2.10.1. Scale Construction Process:

The process of designing scale is as follows.
1) Determine clearly what you are going to measure:
The characteristic to be measured is called construct. Scale development begins with
an underlying theory of the construct being measured. The scale should be well
grounded in the theory. This requires specification domain and understanding of the
relevant theory. Theory is necessary for construction of theory and interpretation of
the results.

2) Generate initial pool of scale items:

Develop initial pool of scale items. This is done based on the theory, secondary data
and qualitative research.
3) Select pool of scale items:
Initial scale items are evaluated with the help of the experts and pool of scale items
are selected.
4) Determine type of scale and develop initial scale:
Decide appropriate scale type to be used - Likert, Semantic Differential etc. Using the
selected type develop scale.
5) Pretest scale:
Administer the scale to a sample of respondents for pretesting.
6) Purify or refine scale :
The collected data is statistically analysed. The scale is evaluated to check reliability,
validity and generalisability. The scale items are purified and refined based on the
analysis.
7) Develop final scale :
Final scale is developed based on the scale purification.
2.10.2. Issues in Designing Scales:

While designing attitude scales researcher needs to think about following issues and take
appropriate decision.
1) Number of Points or Categories:
 Researcher should decide how many number of response categories to be given.
 Deciding the number of scale categories involve two conflicting considerations. First
is preciseness and second is ability of the respondent in interpreting and
understanding them. Larger the response categories, precise is the measurement but it
poses difficulty to respondent in interpreting and understanding them.
 There if no single optimal number of categories and technically there can be
categories ranging from 2 to infinity.
 Traditional guidelines suggest that number of categories should be seven plus or
minus two i.e. between five and nine.

 The following factors are considered while deciding the number of response
categories.
o Knowledge of the respondents
o Nature of object
o Method of data collection
o Method of data analysis
2) Balance Vs. Unbalance Scale:
 The scale is balanced if the number of favourable and unfavourable categories is
equal; in an unbalanced scale it is not.
 Generally balance scale is used to obtain objective data.
 If distribution of responses is likely to be skewed, either positively or negatively, an
unbalance scale with more categories in the direction of skewness is appropriate. In
such scale care should be taken in data analysis.
3) Odd Vs. Even Number of Categories:
 The number of response categories could be odd or even.
 When the number of categories is odd, generally the middle scale position is neutral
or impartial. In case of even number of categories the neutral or impartial category is
not there.
 If researcher thinks that some of the respondents would be neutral towards the object
he/she should use odd number of categories.
 If researcher wants to force the respondents to take either favourable or unfavourable
inclination towards object he/she should use even number of categories.
 This decision is related to the decision on whether the scale would be forced or
unforced.
 Generally odd number of categories is preferred.
4) Forced or Unforced Scale:
 In forced scale respondents are forced to express their opinion by choosing either
favourable or unfavourable inclination towards object. Therefore, in forced scale
neutral, impartial or no opinion option is not provided.
 In unforced scale respondents are not forced to express their opinion by choosing
either favourable or unfavourable inclination towards object. Therefore, in unforced
scale neutral, impartial or no opinion, no knowledge option is provided.

 In case of unforced scale freedom is given to the respondents but data analysis
becomes a challenge as respondents may choose middle path or would be reluctant to
disclose opinion.
 Generally unforced scale is used.
5) Verbal Vs. Pictorial Description of Categories:
 The scale categories may have verbal, numerical or pictorial descriptions.
 Researcher need to consider the knowledge of the respondents in deciding description
of categories.
 In case of knowledgeable respondents verbal categories are preferred over numerical
to avoid ambiguity. But in such case strength of the adjectives used to anchor the
scale may influence the response. Therefore, care should be taken.
 In case of illiterate or less knowledgeable respondents pictorial categories are
preferred.
6) Physical Form or Configuration:
 Scale may be presented vertically or horizontally.
 Categories are expressed by boxes, discreet lines or units on continuum and may or
may not have numbers assigned to them.
 If numerical values are used they may be positive or negative or both.
2.11. SCALE PURIFICATION:

 It is a process of evaluation and improvement of scale so as to make it accurate and
applicable.
 Scales are used for measurement.
 Measurement is a number which reflects some characteristics of an object.
 Measurement is not the true value of the characteristic but rather an observation of it.
 Measurement error is the difference between true score and observed score of the
characteristic being observed. In other words, measurement error is the variation
between information sought by the researcher and the information generated by the
measurement process. A variety of factors can cause measurement error.
 The true score model is a mathematical model that provides a framework for
understanding the accuracy of measurement. According to this model,
XO = XT + XS + XR

Where,
XO = the observed score of measurement
XT = the true score of measurement
XS = systematic error
XR = random error
 The total measurement error includes systematic error and random error.
 Systematic error affects the measurement ion the constant way and represents stable
factors that affect the observed score in the same way each time the measurement is
taken.
 Random error is not constant and represents transient personal and situational factors
that affect the observed score in different ways each time measurement is taken. This
error varies randomly.
 Since scales can lead to measurement error it needs to be evaluated. Scale evaluation
involves assessment of reliability, validity and generalisability of scale.
2.11.1. Reliability of Scale:

 Reliability is the extent to which scale produces consistent results, if repeated
measurements are made.
 Systematic error does not affect reliability of measurement adversely as it affects
measurement in a constant way.
 Random error affect reliability of measurement adversely as it affects measurement in
a random or inconsistent way.
 More is the random error lower is the reliability of the scale.
 Reliability of the scale is extent to which measurement is free from random error. If,
XR = 0, scale is perfectly reliable.
 Reliability is assessed by determining the proportion of systematic variation in a
scale. This is done by determining the association between scores obtained from
different administration of scale. If, association of scores is high, scale is reliable.
 Reliability of scale is assessed using three methods.
i) Test-Retest Reliability:
o In this approach, same respondents are administered identical sets of scale items at
two different times under as nearly equivalent conditions as possible.

o The time interval between two tests or administrations is typically two to four
weeks.
o The degree of similarity or association between two measurements is determined
by correlation coefficient. Higher the correlation coefficient greater is the
reliability.
o This approach suffers from following problems.
 It is sensitive to time interval between testing.
 Initial measurement may alter the characteristic being measured.
 It may be impossible to make repeated measurements.
 The first measurement may have carryover effect on subsequent measurement.
 The characteristic being measured may change between measurements.
 Correlation coefficient can be inflated by the correlation between different
scale items.
o Because of these problems this approach is used in conjunction with others.
ii) Alternative-Forms Reliability:
o In this approach, same respondents are administered two equivalent forms of scale
at two different times. Since two equivalent forms of scale are constructed, it is
called alternative-forms reliability.
o The time interval between two tests or administrations is typically two to four
weeks.
o The degree of similarity or association between two measurements is determined
by correlation coefficient. Higher the correlation coefficient greater is the
reliability.
o This approach suffers from following problems.
 The two forms should be equivalent with respect to content.
 It is expensive and time consuming to construct two equivalent forms.
iii) Internal Consistency Reliability:
o This approach is used to assess the reliability of summated scale (e.g. Likert)
where several items are summated to form a total score.
o In summated scale each item measures some aspect of construct measured by the
entire scale.

o In summated scale the items should be consistent in what they indicate about the
characteristic. This approach of evaluating reliability focuses on internal
consistency of the set of scale items forming the scale.
o There are two measures of checking internal consistency.
 Split Half Reliability:
o In this approach, the items on the scale are divided into two halves and the
resulting half scores are correlated.
o High correlations between half scores indicate high internal consistency.
o The scale items can be split into two halves based on odd and even
numbered items or randomly.
o This approach suffers from a problem that the result depends on how the
scale items are split.
 Coefficient Alpha or Cronbach’s Alpha:
o Coefficient Alpha or Cronbach’s Alpha is the average of all the possible
split half coefficients resulting from different ways of splitting the scale
items.
o This coefficient varies from 0 to 1. If the value of Coefficient Alpha or
Cronbach’s Alpha is more than 0.6 it indicates high internal consistency.
o This approach suffers from one problem - The value of the Coefficient
Alpha or Cronbach’s Alpha tends to increase with the number of scale
items. Therefore, Coefficient Alpha may be artificially and inappropriately
inflated by including several redundant scale items. In order to overcome
this problem, it is used in conjunction with coefficient beta. Coefficient
beta assist in determining whether an averaging process used in calculating
coefficient alpha is masking any inconsistent items.
o Sometimes multi-item scales include several sets of items designed to measure
different dimensions of a multidimensional construct. Since these dimensions are
interdependent, a measure of internal consistency calculated across dimensions
would be inappropriate. However, if several items are to be used for each
dimension, internal consistency reliability can be calculated for each dimension
separately.

2.11.2. Validity of Scale:

 Validity of scale is the extent to which true score and observed score of the
characteristic being observed match.
 Validity of scale refer to extent to which differences in the observed scale scores
reflect true differences among objects on the characteristic being measured.
 Perfect validity means there is no measurement error i.e. both systematic error and
random error are zero.
XO = XT (XS = 0, XR =0)
 Validity of scale is assessed using three methods.
i) Content Validity:
o It is also called face validity.
o It is subjective but systematic evaluation of the representativeness of the content
of scale for the measurement task at hand.
o Researcher or experts examines content validity of scale.
o It is examined whether the scale items adequately cover the entire domain of the
construct being measured.
o Because of its subjective nature, it is not sufficient measure of validity of scale. It
is to be used in conjunction with other measures.
ii) Criterion Validity:
o It examines whether a scale performs as expected in relation to other variables
selected as meaningful criteria.
o The other selected variables are called as criterion variables.
o Criterion variables can include demographic and psychographic characteristics,
attitudinal and behavioural measures or scores obtained from other scales.
o Based on the time period criterion validity can be of two types – concurrent
validity and predictive validity.
 Concurrent Validity:
o It is assessed when data on the scale being evaluated and on the criterion
variables are collected at the same time.
o For this purpose, researcher develops short forms of the standard
personality instruments. (criterion variables)

o The original scale and short forms of the standard personality instruments
are administered simultaneously to a group of respondents and the results
are compared.
 Predictive Validity:
o It is assessed when data on the scale is collected at one point in time and
data on criterion variable sat a future time.
o It is used during consumer panel study. In this case, attitudinal data is
obtained from panel members and their future purchases are tracked. The
predicted and actual purchases are compared to assess predictive validity.
iii) Construct Validity:
o Construct validity addresses the question of what construct or characteristic the
scale is, in fact measuring.
o It requires sound theory of the construct being measured and how it relates to
other construct.
o It is most sophisticated and difficult type of validity to establish.
o There are three measures of checking construct validity.
 Convergent Validity: It is the extent to which the scale correlates positively
with other measures of the same construct.
 Discriminant Validity: It is the extent to which a measure does not correlate
with other construct from which it supposed to differ.
 Nomological Validity: It is the extent to which the scale correlates in the
theoretically predicted ways with measures of different but related constructs.
It assesses relationship between theoretical constructs. It seeks to confirm
significant correlations between the constructs as predicted by theory.
 Relationship between Reliability and Validity:

o If the measure is perfectly valid, it is also perfectly reliable. Thus, perfect validity
implies perfect reliability.
o If the measure is perfectly reliable, it may not imply perfect validity. Thus, perfect
reliability is a necessary but not sufficient condition for validity.

2.11.3. Generalisability of Scale:

 It is an extent to which a study based on a sample applies to a universe of
generalization.
 In generalisability studies, measurement procedures are designed to investigate the
universes of interest by sampling conditions of measurement from each of them. For
each universe of interest, an aspect of measurement is called facet is included in the
study
 Traditional reliability methods can be viewed as a single-facet generalisability studies.

Q1) What is a questionnaire? Explain the process of questionnaire construction.

Q2) Point out the characteristics of a good questionnaire.
Q3) How observation forms are designed?
Q4) Explain Likert, semantic differential and Stapel scale with suitable examples.
Q5) Explain scale construction process.
Q6) How scale can be purified?
a) Issues in designing scales
b) Reliability of a scale
c) Validity of a scale
Note: Questions can be asked on designing of a questionnaire, observation form and

scale construction in the form of a caselet.

CMR UNIT 3: RESEARCH DESIGN III:

EXPERIMENTAL DESIGNS AND SAMPLING
3.1. CONCEPT OF SAMPLING:

Management research is a social research. The data is collected from people. Many times
researcher is supposed to collect data from many numbers of persons. If researcher
collects data from all such persons from whom he/she can collect data, it is called as
census method. If researcher collects data from some of such persons it is called as
sampling. In management research many times sampling is inevitable. In such case the
researcher needs to mention the sampling plan in the research design.
3.1.1. Census vs. Sampling:

1) Census:
 In this method data is collected from all the units of the Population/Universe
 Population consists of all the items/units/objects/elements in any field of enquiry that
possesses information sought by the researcher and about which inferences are to be
made. These units share common set of characteristics.
 Population consists of total set.
 Advantage: It gives Accurate/Correct/Reliable results.
 Disadvantages:
o It requires more time for data collection.
o It requires more money for data collection.
o It requires more manpower for data collection.
2) Sampling:
 In this case data is collected from few units of Population/Universe.
 Sample is Part (Sub Set) of Population.
 Advantages:
o It requires less time for data collection.
o It requires less money for data collection.
o It requires less manpower for data collection.
o It gives fairly accurate results if sample represents population.
 Disadvantage: It leads to some error (sampling error) in research findings.

 In management research because of the resource constraints many times sampling is

inevitable. But since sampling leads to sampling error, researcher should scientifically
and meticulously draw sample from population.
3.1.2. Characteristics of a Good Sample Design:

A good sample design possess following characteristics.
1) Sample design should be such that sample should truly represent population.
2) Sample size should be adequate; otherwise it may not represent the characteristics of
the population.
3) Sample design should result in a small sampling error.
4) Sample design should be viable in the context of resources (time, money and
manpower) available for research.
5) Sample design should be such that the systematic bias should be controlled. In other
words, it means that all items of the sample should be selected independently of one
another and all items of the population should have the same chance of being selected
in the sample.
6) Sample design should be such that the result of the sample study can be applied, in
general, for the population with reasonable level of confidence.
3.2. SAMPLING PROCESS/ STEPS IN SAMPLE DESIGN/ PROCESS OF

DESIGNING SAMPLING PLAN:
In order to draw a sample which will give fairly accurate results, the researcher needs to
design sampling plan scientifically using following process.
1) Define Population/Universe
2) Get Sampling Frame/Source List
3) Decide Census or Sampling
4) Decide Sample Size
5) Decide Sampling Method/Procedure

3.2.1. Define Population/Universe:

 Researcher needs to define Population/Universe in crystal clear words.
 Population consists of all the items/objects/elements in any field of enquiry that
possesses information sought by the researcher and about which inferences are to be
made. These units share common set of characteristics.
 Researcher needs to understand the total set to know which objects are included and
which are excluded from population.
 For this purpose the researcher needs to specify the sampling element, sampling unit,
extent and time.
 Sampling element is an object about which or from which information is desired.
 Sampling element is generally a respondent.
 Sampling unit is a unit which contain sampling element of population.
 Sampling unit may be an Organization, Households etc.
 In some cases, sampling unit and element is one and the same.
 The extent refers to the geographical boundaries.
 The time refers to the time period.
 The researcher needs to define common characteristics of sampling elements so as to
define population.
 Example: In order to study satisfaction of students towards services provided by IMS,
the sampling unit and their common characteristics are as follows.
Sampling Unit: Students
o Of IMS
o Studying in any of the University affiliated Programme
o Studying in academic year 2014-15
Population includes students of IMS studying in any of the University affiliated
programme in the academic year 2014-15.
 Population can be finite or infinite.
 If researcher knows the number of units in the population it is called as finite
population. In such case the size of population is denoted by N.
 If researcher does not know the number of units in the population it is called as
infinite population. In such case the size of population is unknown.

3.2.2. Get Sampling Frame/Source List:

 Sampling frame is list of all the sampling elements in the population.
 It is also called as source list or working population.
 Source list should be correct and valid.
 If the sampling frame is not correct, it will lead to frame error.
 Practically it is difficult to get the source list. The following ways are used to generate
sampling frame.
o Telephone Directory
o Reverse Directory
o Mailing lists of organizations
o Databases created by various agencies
o Customer lists
o Voters List
o Census data
o Research Agencies etc.
3.2.3. Decide Census or Sampling:

 This is a decision step. Researcher needs to decide whether he/she will go for census
or sampling.
 This decision is taken based on following parameters.
o Size of population: Large size favours sampling and small size favours census.
o Geographic spread of sampling units in population: Wider geographic spread
favours sampling and narrower spread favours census.
o Homogeneity in the population: Homogeneity favours sampling and heterogeneity
favours census.
o Resource (time, money and manpower) availability: Non availability of resources
favours sampling and availability of resources favours census.
 If researcher decides to go for census then this process ends here and researcher is
required to collect data from all the elements in the population.
 If researcher decides to go for sampling then researcher needs to decide sample size
and sampling method.

3.2.4. Decide Sample Size:

 Sample size means the number of units/elements to be selected from population as
sample for study.
 The size of the sample is denoted by n.
 The sample size should not be too large or too small.
 Statistically if the sample size is more than 30, it is called as large sample and if it is
less than equal to 30 it is called as small sample.
 The size of the sample should be optimum so as to fulfill requirements of efficiency,
representativeness, reliability and flexibility.
 Researcher needs to consider following factors while deciding the sample size.
o Size of Population
o Availability of Resources
o Degree of accuracy or precision desired
o Homogeneity of population
o Nature of study
o Sampling method
o Nature of Respondents
 The sample size can be decided using any of the following methods.
3.2.4.1. Ad Hoc Methods:
Generally ad hoc methods are used in case of non-probability sampling to decide the
sample size.
i. Rule of Thumb: Sample size is decided based on the some rules of thumb. It is
subjective in nature. Some experts suggest that sample size should be at least 5%
or 10% of population. Sudman suggest that the sample size should be large
enough so that when it is divided into groups each group will have a minimum
sample size of 100. Other experts suggest that the sample size should be large
enough so that when it is divided into groups each group will have sample size
more than 30.
ii. Comparable Previous Research Work: Sample size is decided based on the
comparable research work done previously by some researcher in the past.
iii. Practical Considerations: Sample size is governed by the practical considerations.
In this case a researcher takes into account the availability/allocation/constraint of
the resources in terms of time and money/ budget and decides the sample size.

o Time Constraint: In this case researcher takes into account the

availability/allocation of the resources in terms of time and decides the sample
size. The following formula is used.
Total time available for data collection

Sample Size = ------------------------------------------------------------
Time required to collect data from one sample
o Budget Constraint: In this case researcher takes into account the

availability/allocation of the resources in terms of budget/money and decides
the sample size. The following formula is used.
Total budget available/allotted for data collection

Sample Size = ---------------------------------------------------------------
Cost required to collect data from one sample
3.2.4.2. Scientific/Statistical Method:

In this method the sample size is decided scientifically using a statistical formula. It is
used in case of probability sampling method. This is accurate/reliable method for
deciding sample size.
i) Sample Size Determination in case of Simple Random Sampling and Systematic
Sampling:
In case, the researcher is going to use simple random sampling or systematic sampling
and statistic of interest is mean or proportion, the sample size is determined as below.
a) Sample Size Determination: Mean
If the statistic of interest is mean the sample size is determined as follows.
1) Specify Precision (D): It is maximum permissible difference between sample
statistic and population parameter.
2) Specify Level of Confidence: It is the probability that a confidence interval
will include the population parameter. The confidence interval is the range
into which the true population parameter will fall, assuming a given level of
confidence.

3) Specify Value of the Standard Variate (z): It is the value of z associated with
the confidence level.
4) Determine the Standard Deviation of Population (σ): It is a measure of
variability in the population. It is determined on the basis of secondary data or
pilot study or judgement of the researcher. If it is unknown, then Sample
Standard Deviation (S) is used as its estimate.
5) Determine Sample Size (n): It is determined using following formula.
σ 2 z2
n = ---------------
D2
6) Apply Finite Population Correction, if required (fpc): If the size of the
population (N) is known and the resulting sample size is 10% or more of the
population size, finite population correction is required to be applied. The
required sample size then becomes,
nN
nc = --------------
(N + n -1)
Where,
n = sample size without fpc
nc = sample size with fpc
7) Formula if the Precision is specified in relative terms: Sometimes precision
(D) is specified in relative rather than absolute terms. In such case it may be
specified as plus minus R percentage of points of the mean (µ). Then,
Precision will become, D = R µ and the formula for sample size becomes,
C 2 z2
n = ---------------
R2
Where, coefficient of variation C = σ / µ.

8) From the formula it is observed that it is based on following parameters.

o Size of population (N): Sample size is directly proportional to the size of
population
2
o Variance in the population (σ ): Sample size is directly proportional to
the variance in the population
o Confidence level (z associated with a particular level): Sample size is
directly proportional to the confidence level.
o Precision or degree of accuracy desired (D): Sample size is inversely
proportional to the precision or degree of accuracy required. It means that
researcher will have control over error in research and he/she can pre-
decide acceptable level of error to decide the sample size.
b) Sample Size Determination: Proportion
If the statistic of interest is proportion the sample size is determined as follows.
1) Specify Precision (D): It is maximum permissible difference between sample
statistic and population parameter.
2) Specify Level of Confidence: It is the probability that a confidence interval
will include the population parameter. The confidence interval is the range
into which the true population parameter will fall, assuming a given level of
confidence.
3) Specify Value of the Standard Variate (z): It is the value of z associated with
the confidence level.
4) Determine the Population Proportion ( ): It is a population proportion and is
determined on the basis of secondary data or pilot study or judgement of the
researcher. If it is unknown, then Sample Proportion (p) is used as its estimate.
5) Determine Sample Size (n): It is determined using following formula.
z2
n = ------------------
D2
6) Apply Finite Population Correction, if required (fpc): If the size of the
population (N) is known and the resulting sample size is 10% or more of the
population size, finite population correction is required to be applied. The
required sample size then becomes,

nN
nc = ---------------
(N + n -1)
Where,
n = sample size without fpc
nc = sample size with fpc
7) Formula if the Precision is specified in relative terms: Sometimes precision
(D) is specified in relative rather than absolute terms. In such case it may be
specified as plus minus R percentage of points of the proportion ( ). Then,
Precision will become, D = R and the formula for sample size becomes,
z2
n = ------------------
R2
8) From the formula it is observed that it is based on following parameters.
o Size of population (N): Sample size is directly proportional to the size of
population
o Confidence level (z associated with a particular level): Sample size is
directly proportional to the confidence level.
o Precision or degree of accuracy desired (D): Sample size is inversely
proportional to the precision or degree of accuracy required. It means that
researcher will have control over error in research and he/she can pre-
decide acceptable level of error to decide the sample size.
ii) Sample Size Determination in case of Other Probability Sampling Methods:
o The determination of sample size for other probability sampling methods is based
on the same principles. The researcher should specify the precision level and the
confidence level to determine the sample size.
o In stratified and cluster sampling cost of observation influences size of sample.
o Cost per observation varies by strata or cluster and researcher needs some initial
estimates of cost.
o Further, researcher should take into consideration within strata variability and
within and between cluster variability.

o Once overall sample size is determined it is apportioned among strata or cluster.

o In general, in order to provide same reliability sample sizes in case of simple
random and systematic sampling are same, smaller for stratified sampling and larger
for cluster sampling.
σi / √ Ci
ni = ------------------ n
∑ ( σi / √ Ci )
Where,
n = Total Sample Size
= Proportion of Population in Stratum i
σi = Population Standard Deviation in Stratum i

Ci = Cost of One Observation/Interview in Stratum i
ni = Sample Size for Stratum i
iii) Adjustment of Statistically Determined Sample Size:

 The sample size determined statistically represents final or net sample size that should
be achieved in order to arrive at accurate results.
 In order to achieve final sample size, a much greater number of potential respondents
are to be contacted. In other words, initial sample size has to be much larger than final
sample size.
 Initial sample size is larger because typically the incidence rates and completion rates
are less than 100%.
 Incidence rate refers to the percentage of persons eligible or qualified to participate in
the study.
 Completion rate denotes the percentage of qualified respondents who provide
complete information. It is affected by nonresponse.
 Once, researcher estimates the incidence and completion rates he/she can determine
initial sample size by using following formula.
Final Sample Size
Initial Sample Size = ----------------------------------------------
Incidence Rate X Completion Rate

3.2.5. Decide Sampling Method/Technique:

 Sampling Method is the technique used by researcher to select sample from
population.
 Sampling method will affect the representativeness of the sample and will also have
effect on the accuracy of the results.
 Researcher should use appropriate sampling method or procedure for selection of
sample.
 Researcher needs to decide both approach and method used for sampling.
 There are two approaches to sampling.
a) Bayesian Approach: In this approach sampling units or elements are selected
sequentially. After each unit or element is added to the sample, data is collected,
analysis is done and sampling costs are determined. The final sample size depends
on trade-off between cost effectiveness.
b) Traditional Approach: In this approach entire sample is selected before data
collection begins. In this case either sampling with replacement or without
replacement is followed. In sampling with replacement, an unit or element
selected from sampling frame as sample is placed once again in the frame and
therefore can be selected again. In sampling without replacement, a unit or
element selected from sampling frame as sample is not placed again in the frame
and therefore can not be selected again.
 Sampling Methods/Techniques are categorized into two categories.
1) Probability Sampling Methods
2) Non-probability Sampling Methods
3.2.5.1. Probability Sampling Methods:

 In case of these methods one can determine the probability (chance) of selecting
sampling units/elements from population into sample.
 It means the probability of selection of sampling units/elements from population is
known.
 The probability (chance) of selection of all sampling units/elements from population
is non zero.
 Generally the probability (chance) of selection of all sampling units/elements from
population is equal. This equality of chance in selection makes these methods as fair.

 These methods are scientific in nature as they are based on concepts of statistics.
 These methods use randomness in selection of sampling units/elements.
 These methods lead to less margin of error. If researcher uses any of the probability
sampling methods he/she can calculate margin of error.
 These methods give accurate results.
 The conditions favouring probability sampling methods are as follows.
o It is suitable for conclusive research.
o It is used when magnitude of sampling errors is larger.
o It is used when population is heterogeneous.
o It requires sound knowledge of statistics or help from statistician. Therefore, if
these are available, probability sampling is favoured.
o It is used when operational considerations like resources are availability.
 It is used when precise results are expected. It is generally used for demographic and
psychographic profiling of consumers, product/brand usage rate, tracking studies etc.
 The Probability Sampling Methods are as follows.
1) Simple Random Sampling Method
2) Stratified Sampling Method
3) Cluster Sampling Method
4) Area Sampling Method
5) Systematic Sampling Method
6) Multistage Sampling Method
1) Simple Random Sampling Method:

 In this method samples are selected randomly from the population.
 Randomness means without any logic, system or pattern.
 In this method all the sampling units/elements have known and equal probability
(chance) of selection.
 In order to select sample randomly researcher can use any of the following ways.
a) Lottery Method: Each sampling unit/element in the population is given a unique
identification number. Researcher prepares different chits each having a specific
number. Therefore, total number of chits will be equal to total number of sampling
units/elements in the population. These chits are folded individually, put in a jar,
mixed properly. As per the sample size the number of chits are randomly selected.

The unique identification numbers written on the selected chits constitute the
number of the selected sampling unit/element.
b) Random Number Table: Researcher can make use of the Random Number Table
prepared by the statisticians like Fisher or Tippet.
c) Random Number Generating Software: Researcher can make use of the Random
Number generating Software.
 It has following advantages:
o Easy to understand.
o Easy to project result for population.
 It has following disadvantages:
o Sometimes difficult to get sampling frame.
o If selected sample is spread over large geographic area more resources are
required.
o It often results in more error and less precision.
o It may not result in representative sample.
2) Stratified Sampling Method:

 It is two-step process.
 In this method population is divided (stratified) into homogeneous groups called as
strata (singular – stratum) or sub-populations.
 Stratification means a process of classifying population into homogeneous groups.
 The variables used for stratification are referred as stratification variables.
 Generally demographic variables are used as stratification variables.
 One can use more than one stratification variable. But generally at the max two
variables are used making it cross-stratification because of cost consideration.
 The number of strata to be used is a matter of judgement but generally at the max. six
strata are used.
 The stratification should lead to homogeneity within group (strata).
 The stratification should lead to heterogeneity amongst groups (strata).
 Researcher decides number of sampling units/elements to be selected from each
stratum called as stratum sample size based on total sample size.
 Samples are selected from all the strata randomly.

 Depending upon how many sampling units/elements are to be chosen from each
stratum, Stratified Random Sampling Method has following types:
a) Proportionate Method: In this case the number of sampling units/elements to be
chosen from each stratum is decided based on the proportion of the respective
stratum in the population. There are two varieties of this method.
o Directly Proportional: In this case the proportion of the stratum in the
population and sample remains equal. It means the number of sampling
units/elements to be chosen from population are directly proportional to the
size of the stratum in the population. The number of sampling units/elements
to be chosen from each stratum (stratum sample size) is calculated as follows.
Size of the Stratum in Population
Stratum Sample Size = --------------------------------------------- x Sample Size
Population Size
o Inversely Proportional: This is applicable in case the population is divided
into two strata. It means the number of sampling units/elements to be chosen
from population is inversely proportional to the size of the stratum in the
population. The number of sampling units/elements to be chosen from each
stratum (stratum sample size) is calculated as follows.
Size of the other Stratum in Population
Stratum Sample Size = ------------------------------------------------- x Sample Size
Population Size
b) Disproportionate Method: In this case the number of sampling units/elements to
be chosen from each stratum is not decided based on the proportion of the
respective stratum in the population. In this case the proportion of the stratum in
the population and sample are unequal.
 Stratified sampling has following advantages:
o This method leads to drawing a representative sample from population as the
composition of population and sample remains same.
o It is most accurate sampling method as it increases precision.
 Stratified sampling has following disadvantage:
o This method requires more resources

3) Cluster Sampling Method:

 In this method the population is divided into groups called as clusters or
subpopulations..
 The clusters are made so that there would be heterogeneity within group.
 The clusters are made so that there would be homogeneity amongst groups.
 Ideally each cluster should be a representation of the population.
 Researcher needs to select clusters randomly.
 If a cluster is selected then all or some of the sampling units/elements from that
cluster are selected as sample.
 If all the sampling units/elements from selected cluster are selected then cluster
sampling is called one stage cluster sampling.
 If some of the sampling units/elements from selected cluster are to be selected they
are selected randomly as sample. In this case cluster sampling is called two stage
cluster sampling.
 If a cluster is not selected then not a single sampling unit/element from that cluster is
selected as sample.
 Clusters are generally made equal in size. Sometimes the clusters can be made equal
by combining clusters. If clusters are unequal in size, the in case of two-stage
sampling probability proportionate to size sampling is used. In this case clusters are
sampled with probability proportional to size.
 It is most cost effective method.
o It is more feasible as sampling frame of only selected clusters is required.
 It has following disadvantage:
o This method reduces accuracy of the results.
4) Area Sampling Method:

 It is a variety or version of Cluster Sampling Method.
 The sampling procedure followed in Cluster Sampling Method is followed in Area
Sampling Method with the only difference that clusters are made based on the basis of
geographical area.
 It is more widely used method.

5) Systematic Sampling Method:

 In this method both System and Randomness exist together.
 First, the researcher gives one unique identification number to each sampling
unit/element and arranges them in order.
 Second, the researcher calculates Sampling Interval or Skip Interval (SI) using
following formula.
SI= Population Size/Sample Size = ‘k’
 Third, researcher selects any one sampling unit/element randomly from first ‘k’ units
from the population. In this way randomness creeps into sample selection because of
the random starting point.
 Fourth, researcher goes on adding sampling interval ‘k’ to the previously selected
sampling units/elements in the population to find out next units. In this way samples
are systematically selected.
o Easy to understand.
o Save resources as random sampling is done only once.
o It can be used without knowledge of sampling frame.
o If ordering of sampling units/elements is related to the characteristic of interest,
systematic sampling leads to representative sample.
o If ordering of sampling units/elements is unrelated to the characteristic of interest,
systematic sampling leads to unrepresentative sample.
o If ordering of sampling units/elements is in cyclical pattern, systematic sampling
decreases representativeness of sample.
 It is widely used in consumer mail, telephone, mall intercept and internet interviews.
6) Multistage Sampling Method:

 It is used when sample is drawn for Large Population.
 In this method sample is drawn from population in multiple stages.
 For different stages researcher can use different Sampling Method.
 This method may leads to combination of various Probability Sampling Methods.

3.2.5.2. Non-Probability Sampling Methods:

 In case of these methods one can’t determine the probability (chance) of selecting
sampling units/elements from population into sample.
 It means the probability of selection of sampling unit/element from population is
unknown.
 These methods are non-scientific in nature as they are not based on statistics.
 These methods do not use randomness in selection of sampling units/elements. These
methods use convenience or judgement in selection.
 These methods are subjective in nature.
 These methods may lead to more margin of error. If researcher uses any of the
probability sampling methods he/she can’t calculate margin of error.
 These methods may lead to inaccurate results. But in some cases researcher may
require to use such methods.
 The conditions favouring non-probability sampling methods are as follows.
o It is suitable for exploratory research.
o It is used when magnitude of non-sampling errors is larger.
o It is used when population is homogeneous.
o It does not require sound knowledge of statistics or help from statistician.
Therefore, if these are not available, non-probability sampling is favoured.
o It is used when operational considerations like resources are not available.
 It is used for concept tests, product tests, package teats, copy tests etc.
 The Non-Probability Sampling Methods are as follows.
1) Convenience Sampling Method
2) Judgemental Sampling Method
3) Quota Sampling Method
4) Snowball Sampling Method
1) Convenience Sampling Method:

 It is also called as haphazard or accidental sampling.
 In this method researcher selects sample based on his/her convenience.
 Convenience can be of nearness (distance), timing, familiarity with respondent etc.
o Easy to use.

o Save resources.
o The sampling units/elements are co-operative and accessible.
o It is subjective in nature.
o Because of selection bias, it does not lead to representative sample.
o It is not theoretically meaningful to generalize the results.
 It is not recommended for conclusive research but can be used for exploratory
research. It is used for focus groups, pilot study etc.
2) Judgemental Sampling Method:

 In this method researcher selects sample based on his/her Judgement.
 It also means that there is some purpose or reason behind selection of sample.
Therefore, it is also called as purposive sampling method.
 Researcher needs to have knowledge, experience and expertise to exercise judgement.
o Easy to use.
o Save resources.
o Because of selection bias, it does not lead to representative sample.
o It does not allow direct generalizations to specific population.
3) Quota Sampling Method:

 It is a version or variety of Judgemental or Purposive Sampling Method.
 Similar to Stratified Random Sampling Method with the only difference that instead
of randomness, researcher uses his/her judgement for selection of sample.
 In this method population is divided into homogeneous groups.
 The groups are made such that there is homogeneity within group.
 The groups are made such that there is heterogeneity amongst groups.
 Researcher decides number of sampling units/elements to be selected from each
stratum called as quota for that group.
 The quota (number of samples to be chosen) from each group can be decided using
proportionate or disproportionate methods as used in stratified sampling method.

 Samples are selected from all the groups based on the purpose or judgement of the
researcher.
o More representative sample is drawn.
o It leads to more accurate results than other non-probability sampling methods.
o It is subjective in nature..
4) Snowball Sampling Method:

 This method uses characteristics of the snowball.
 If a snowball is thrown from higher altitude to a lower altitude along with the snow, it
rolls down and gathers snow along with it and its size goes on increasing.
 It is generally used when sampling frame is not available.
 Initially researcher selects those sampling units/elements with whom he/she is
familiar.
 Researcher meets the initially selected sample respondents and collect data from
them. Researcher also gets referrals from them.
 The referrals given by the previously selected sampling units/elements become part of
the sample. Every time researcher collets data from selected sampling units/elements
and gets referrals and these referrals go on becoming a part of the sample.
 Since sample size goes on increasing as and when researcher meets selected sample it
is called as snowball sampling method.
o Easy to use.
o Save resources.
o It can be used when sampling frame is not available.

3.3. ERRORS IN RESEARCH:

Research may lead to erroneous findings. Errors in research lead to inaccurate/unreliable
results. The errors in research are classified into two categories.
1) Sampling Errors
2) Non-Sampling Errors
Total error in research is the summation of sampling errors and non-sampling errors.
Total Errors in Research = Sampling Errors + Non-Sampling Errors
3.3.1. Sampling Errors:

 Sampling errors are those errors which arise on account of sampling.
 Sampling errors are further divided into
a) Sampling Frame Error
b) Chance Error
3.3.2. Non-Sampling Errors:

 Non-Sampling Errors are the errors which are caused due to reasons other than
sampling.
 These errors can’t be measured.
 Non-Sampling Errors can occur due to any one or more reasons of the following.
o Ill-defined or poorly defined research problem
o Wrongly formulated hypothesis
o Wrong selection of type of data
o Invalid source of data
o Inappropriate data collection method
o Wrong selection or poorly designed data collection instrument
o Non-Response of the respondents leads to incomplete data collection
o Inaccurate responses by the respondents
o Errors in measurement
o Improper selection, training and supervision of manpower involved in research
o Errors in data processing
o Errors in data analysis
o Errors in data interpretations
o Constraints of resources

3.4. OTHER ELEMENTS OF RESEARCH DESIGN:

The other elements of research design are as follows.
3.4.1. Plan for Data Analysis/Tools for Data Analysis/Statistical Design:
 Researcher needs to decide which tools he/she will use for data analysis and specify
the same in the research design.
 Researcher can use any of the mathematical or statistical or financial tools for data
analysis.
 Researcher needs to use appropriate tool for data analysis.
 Researcher needs to decide which charts/diagrams he/she will use for data
presentation and specify the same in the research design.
 Researcher can use any of the following charts/diagrams for data presentation.
o Bar Chart
o Pie Chart
o Line Chart
o Histogram etc.
 Researcher needs to use appropriate charts/diagrams for data presentation.
3.4.2. Layout of Research Report:
 Researcher needs to decide layout or format of research report and specify the same in
the research design.
 Researcher needs to think about the chapters to be included and their structure in the
research report.
 Researcher needs to use logical layout for research report.
3.4.3. Operational Design/Resources required for Research:
 Researcher needs to decide how many resources are required for research and specify
the same in the research design.
 Researcher needs to decide quantum of following resources for research.
o Time
o Money (Budget)
o Manpower
o Special Facilities etc.
 Researcher needs specify resource requirement and its utilization in the research
design.

3.5. EXPERIMENTAL DESIGN:

3.5.1. Concept of Experimental Research Design:
 It is used for Causal Research.
 Causal Research is a type of conclusive research.
 Causal Research tries to establish cause-and-effect relationship between variables.
 Causal research possesses following characteristics.
o Hypothesis is framed
o Variables are clearly defined
o Structured design
o One or more independent variables are manipulated to check their effect on
dependent variable/s. If dependent variable changes according to the changes in
the independent variable, there exists causal relationship between them.
 Example: Research to establish relationship between price of the product and sales
3.5.2. Use of Experimental Research Design:

Causal Research is appropriate for following purposes.
 To understand which variables are causes (independent variables) and which variables
are effects (dependent variables) of a phenomenon
 To determine the nature of relationship between the causal and the effect variables.
3.5.3. Important Concepts in Experimental Research:

The important concepts in experimental research are as follows.
i) Variable:
 It is a characteristic, property, trait or an attribute which can be measured.
 Examples: Marks, attendance, sales, profit etc.
ii) Independent Variable (IV):
 It is also called as predictor variable or input variable or causal variable.
 It is the variable which is manipulated and the manipulation causes an effect on the
dependent variable.
 The effects caused by independent variable can be measured and compared.
 Examples: Attendance, IQ, price etc.

iii) Dependent Variable (DV):

 It is also called as criterion variable or output variable or effect variable.
 It is the variable which is measured, predicted or monitored and is expected to be
affected by manipulation of an independent variable.
 Examples: Marks, sales, profits, market shares etc.
iv) Extraneous Variable:
 It is an independent variable which can affect dependent variable but presently not
included in the scope of the study.
 Since extraneous variables affect the result of the causal relationship researcher needs
to control them in order to minimize their effect.
 Example: In case researcher is studying relationship between attendance (independent
variable) and marks (dependent variable) then extraneous variables is IQ
v) Test Units:
 Test units are individuals, organizations or other entities/subjects whose response to
the independent variables are examined.
 Test units are exposed to treatments in independent variable.
vi) Treatment:
 In an experiment, researcher manipulates independent variable to check its effect on
dependent variable. The levels on which independent variable is manipulated is called
as treatments or treatment levels.
 Examples: Price variation on three treatment levels as Rs. 5, Rs. 10, Rs. 15 etc.
vii) Control Group:
 Control group provide base level for comparison. Control Group is composed of
individuals, organizations or other entities/subjects which are not exposed to
treatments in independent variable but they participate in the experimental study.
 Generally control group has matching characteristics as that of test units.
viii) Concomitant Variables:
Concomitant variables require that there must be agreement between independent and
dependent variable. It means presence or absence of one is associated with the presence
or absence of other. In other words it means that there is correlation between the
variables.

3.5.4. Process of Experimental Research:

1) Select relevant independent and dependent variables
2) Identify extraneous variables
3) Specify treatment levels
4) Decide whether to conduct experiment in laboratory or field
5) Chose experimental design
6) Select test units
7) Select control group if required
8) Control the experimental environment if required
9) Conduct experiment
10) Take Observations
11) Analyse data
12) Draw inference/conclusion
3.5.5. Basic Symbols and Notations:

 O denotes a formal observation or measurement of the dependent variable that is
made as part of the experimental study. Symbols O1, O2 and so on, are used when two
or more measurements of the dependent variable are taken.
 X denotes exposure of test units participating in the study to the experimental
manipulation or treatment. Symbols X1, X2 and so on, are used when the test units are
exposed to two or more experimental treatments.
 EG denotes an experimental group of test units that are exposed to experimental
treatments. EG1, EG2 and so on, are used in experiments which involve more than one
experimental group.
 CG denotes an control group of test units that participate in the experiment but are not
exposed to experimental treatments. CG1, CG2 and so on, are used in experiments
which involve more than one control group.
 R denotes random assignment of the test units and experimental treatments to groups.
Randomisation ensures control over extraneous variables and increases reliability of
the experiment.
 M denotes both experimental and control groups are matched on the basis of some
relevant characteristics. Matching helps to reduce experimental error.

3.5.6. Types of Experimental Designs:

Experimental designs are broadly categorized into two categories.
1) Classical Experimental Designs
2) Statistical Experimental Designs
3.5.6.1. Classical Experimental Designs:

The classical experimental designs are used to study impact of one treatment level of one
independent variable at a time. These are further categorized into three categories.
1) Pre-experimental Designs
2) True-experimental Designs
3) Quasi-experimental Designs
a) Pre-experimental Designs:
These are exploratory in nature as there is no control over the impact of extraneous
variable over the result of experiment. Thus these designs are characterized by an absence
of randomization. The following are commonly used pre-experimental designs.
1) One Group After Only Design (One-Shot Case Study): The experimental group is
exposed to treatment and observations are taken afterwards to measure the results.
EG X O
2) Non Matched Control Group Design: The experimental group is exposed to treatment
and observations are taken afterwards to measure the results. The results are
compared with observations about non matched control group. Treatment Effect is
measured as O1 – O2.
EG X O1
-----------------
CG O2
3) Matched Control Group Design: The experimental group is exposed to treatment and
observations are taken afterwards to measure the results. The results are compared
with observations about matched control group. Treatment Effect is measured as
O1 – O2.
EG M X O1
----------------------
CG M O2

4) One Group Before-After Design (One-Group Pretest-Posttest Design): The

experimental group is exposed to treatment and observations are taken before and
after the treatment. Treatment Effect is measured as O2 – O1.
EG O1 X O2
b) True-experimental Designs:
These are such designs in which there is random assignment of the test units to
experimental groups and treatments to experimental groups to reduce the effect of
extraneous variable. The following are commonly used true experimental designs.
1) Two Groups After Only Design (Posttest-Only Control Group Design): The randomly
selected experimental group is exposed to treatment and observations are taken
afterwards to measure the results. The results are compared with the observations
about the randomly selected control group. Treatment Effect is measured as O1 – O2.
EG R X O1
----------------------
CG R O2
2) Two Groups Before-After Design (Pretest-Posttest Control Group Design): The
randomly selected experimental group is exposed to treatment and observations are
taken before and after the treatment. The results are compared with the before and
after observations about the randomly selected control group. Treatment Effect is
measured as (O2 – O1) – (O4 – O3).
EG R O1 X O2
---------------------------
CG R O3 O4
3) Solomon Four Group Design: It is combination of two groups before-after design and
two groups after only design. It overcomes limitations of both the designs and
controls the interactive testing effect in addition to the effect of extraneous variables.
It provides several measures of Treatment Effect as [(O2 – O4), (O2 – O1) - (O4 – O3),
(O6 – O5), (O2 – O4) - (O5 – O6)]. This design requires more resources.

EG R O1 X O2
---------------------------
CG R O3 O4
---------------------------
EG R X O5
---------------------------
CG R O6
c) Quasi-experimental Designs:
These are also called as semi-experimental designs. These are such designs in which there
is some degree of control but there is no random assignment of the test units to the
treatments. The researcher can control when measurements are taken and whom they are
taken. The following is the commonly used quasi experimental designs.
1) Time Series Design: These are similar to one group, before-after design except that a
series of periodic measurements is employed before and after the treatment. There are
two variants of this design, depending on whether the measurements are all from the
same sample or from separate samples.
EG O1 O2 O3 O4 X O5 O6 O7 O8
The multiple time series design is similar to time series design except that another
group of test units is added to serve as a control group.
EG O1 O2 O3 O4 X O5 O6 O7 O8
---------------------------------------------------------
CG O9 O10 O11 O12 O13 O14 O15 O16
2) Continuous Panel Design: In this design researcher collects series of measurements
on the same sample of test units, over an extended period of time. This design helps to
track the behavioural changes in the test units over a period of time. It is used in
consumer panel study in marketing (1.12.1.).

3.5.6.2. Statistical Experimental Designs:

The statistical experimental designs are used to study impact of more than one treatment
levels of one or more independent variables at a time. Further, specific extraneous
variables can be statistically controlled. These are further categorized into four types.
1) Completely Randomised Design
2) Randomised Block Design
3) Latin Square Design
4) Factorial Design
a) Completely Randomised Design:

 It is the simplest type of statistical design.
 In this design treatments are randomly assigned to the randomly selected experimental
groups and observation is taken afterwards to measure the results.
 Any number of experimental groups and treatments can be selected.
 It might or might not have control group.
EG1 R X1 O1
-----------------------
EG2 R X2 O2
------------------------
EG3 R X3 O3
 A variant of this design combines the treatment and the observation in the same
observation.
EG1 R (X1, O1)
------------------------
EG2 R (X2, O2)
------------------------
EG3 R (X3, O3)
b) Randomised Block Design:

 It is used when there is only one major extraneous variable that might influence the
dependent variable.
 The test units are grouped or blocked on the basis of extraneous variable. Such
variable is also called as blocking variable.

 This design ensures that various experimental and control groups are randomly
selected and matched closely on extraneous variable.
 It might or might not have control group.
EG1 R X O1
-----------------------
CG1 R O2
_________________
EG2 R X O3
------------------------
CG2 R O4
A solid line separates two experiments.
 A variant of this design is shown as below. In this case there is no control group. The
experiment is repeated for two blocks of experimental groups.
EG1 R X1 O1
------------------------
EG2 R X2 O2
------------------------
EG3 R X3 O3
_________________
EG1 R X1 O1
------------------------
EG2 R X2 O2
------------------------
EG3 R X3 O3
A solid line separates two experiments.
c) Latin Square Design:

 It is used when there are two non interacting extraneous variables that might influence
the dependent variable.
 Each extraneous variable is divided into an equal number of blocks or levels.
 The independent variable is also manipulated on same number of treatment levels.
 It is represented as a table with rows and columns representing the blocks in the two
extraneous variables.

 The levels of the independent variable are then assigned to the cells in the table. The
assignment rule is that each level of independent variable should appear only once in
each row and each column.
Variable 2
Variable 1
Level 1 Level 2 Level 3
Level 1 IV Level 1 IV Level 2 IV Level 3
Note: IV stands for independent variable.

 An expansion of this design is possible using Graeco-Latin Square Design.
d) Factorial Design:
 It is used to measure the effects of two or more independent variables at different
treatment levels.
 It allows for interaction between variables. An interaction occurs when simultaneous
effect of two or more variables is different from the sum of their separate effects.
 Each treatment level is a combination of levels of two or more independent variables.
 Each combination of treatment levels is applied to randomly selected experimental
groups.
EG1 R X1 (Var. 1 Level 1, Var. 2 Level 1) O1
--------------------------------------------------------------
--------------------------------------------------------------
-------------------------------------------------------------
 In one experiment effect of two or more variables is determined. Further, this design
provides the ability to determine interactive effects of two or more variables.
 It can be expanded to include block effect.
 If researcher is interested to study effect of few main and interaction effect, fractional
factorial designs are used.

3.5.7. Advantages of Experimental Design:

The advantages of experimental designs are as follows.
 Accurate, reliable and valid results.
 Possibility of replication.
 Only way to establish or examine causal relationship.
3.5.8. Disadvantages of Experimental Design:

The disadvantages of experimental designs are as follows.
 Sometimes experiments require more time.
 Sometimes experiments require more cost.
 Difficult to administer.
3.5.9. Applications of Experimental Designs in Marketing:

Experimental designs are used in marketing for many purposes few of which are -
1) Test Marketing
2) Effectiveness of Advertising Campaigns
3) Effectiveness of Sales Promotional Campaigns
3.5.9.1.Test Marketing:
 It is also called market testing.
 It is one of the stages in new product development process.
 The three major objectives of the test marketing are,
o To determine market acceptance of the product based on trial, first repeat,
adoption and purchase frequency.
o To forecast sales and market shares and
o To test effect of alternative levels of marketing mix variables.
 Test marketing procedures/methods are classified as follows.
1) Sales Wave Approach
2) Simulated Test Markets
3) Controlled Test Markets
4) Standard Test Markets

a) Sales Wave Approach:

 In this method consumers are approached three to five times in order to test the
product.
 In the first approach consumers are offered new product free.
 In the second approach consumers are offered new product or competitor’s product at
slightly reduced price.
 In the third approach consumers are offered new product or competitor’s product at
regular price.
 In the fourth and fifth approach consumer feedback is collected about product and
price.
b) Simulated Test Markets:
 It is also called laboratory test or test market simulation.
 First, the respondents are intercepted in high traffic locations like shopping malls and
prescreened for product usage.
 Second, the selected respondents are questioned about brand familiarity and
preference.
 Third, the selected respondents are exposed to the new product concept and given
money to buy new product in a real life or laboratory environment.
 Sometimes advertisements of new product along with old one and that of competitors
are also shown before giving them opportunity to buy.
 Fourth, those who purchase new product are interviewed about their evaluation of the
product attitude, usage, satisfaction and repeat-purchase intentions.
 Fifth, the consumers who do not buy the products are interviewed to understand
reasons for non-purchase. Thereafter, new product is offered to them free of charge
and interviewed later to evaluate product attitude, usage, satisfaction and repeat-
purchase intentions.
 Sixth, the trial and repeat-purchase estimates so generated are combined with other
proposed marketing mix elements to project market share.
 This method leads to understanding of product acceptance, opinion about pricing and
effectiveness of advertising (if shown prior).
c) Controlled Test Markets:
 Generally, it is conducted by an outside research agency.
 First, the predetermined percentage of retail outlets is selected.

 Second, the products are kept for sales in these selected retail outlets.
 Third, the Point of Purchase (POP) material is given to the retail stores for promotion.
 Sometimes, advertisements are also given locally.
 Fourth, operational things about distribution like warehousing, inventory
management, shelf space, number of facings, displays etc. are managed.
 Fifth, interviews of retailers and consumers who have purchased the product are
taken.
 This method leads to understanding of opinion of consumers and retailers about new
product, price, effectiveness of POP material, local advertisements and their intention
about repeat-purchase.
d) Standard Test Markets:
 It involves launching of planned national marketing mix programme in the test
markets. It constitutes one shot case study.
 Sometimes marketing mix variables (independent variables) are varied and their effect
on sales (dependent variable) is monitored so as to develop more effective marketing
mix programme at national level.
 Since it is a full fledge test, it reveals the information about,
o market acceptance of the product based on trial, first repeat, adoption and
purchase frequency.
o forecast of sales and market shares and
o effectiveness of all marketing mix variables.
 First, the test markets are selected. The test market should represent the total market
of the company so as to increase the validity of the findings. Further, data availability,
media isolation and costs are other elements which are taken into consideration for
selection of test markets.
 The number of test markets to be selected depends on the cost considerations. The
more the test markets better would be the validity of the result. If resources are limited
at least two test markets are chosen for each marketing programme variation.
 The duration of test depends on the repurchase cycle of the product, probability of
competitive response, cost considerations etc.
 The company then launches new product in the selected test markets for the pre-
decided duration with full fledged marketing mix programme.

 After the test, retail sales are measured. Further, the distribution channel partners and
consumers are interviewed to understand their opinion about brand awareness,
attitude, trial, repurchase, product acceptance and effectiveness of other marketing
mix elements. Consumer panels also can be set up to understand brand loyalty and
brand switching rates.
 The information is analysed to generate estimates about total market regarding sales,
market share etc.
 One way to interpret the result based on analysis of trail and repeat purchase rate – is
shown below.
Trial Rate Repeat Purchase Rate Interpretation
High High Good Product and Promotion
Low High Good Product and Poor Promotion
High Low Poor Product and good Promotion
Low Low Poor Product and Promotion
 This method is effective as it helps to understand effect of full fledged marketing mix
elements on the market.
 This method has two drawbacks – high cost and competitive risk.
 The competitors may increase promotional efforts in the test market to distort the
results or may launch similar new product in the national market first.
3.5.9.2.Effectiveness of Advertising Campaigns:

 Advertising is a powerful promotional tool to influence mind and heart of customer.
 Advertising is a costly promotional tool.
 Therefore, marketers are interested to know the effectiveness of the advertising
campaigns as regards to advertising objectives.
 Advertising research is used to assess effectiveness of the advertising campaigns.
 Advertising research is carried out before and after the release of the advertising
campaign.
o Before studies are conducted to evaluate effectiveness of advertising before
release of the advertisement. It is used to generally evaluate communication effect
of the advertisement. It is generally used to select the most effective advertising
copy with regards to objectives. Therefore, this research is also called as copy
testing or advertising pretesting research.

o After studies are conducted to evaluate effectiveness of advertising after release of

the advertisement. It is used to understand the effectiveness of advertising with
regards to objectives. It is used to evaluate both communication and sales effect of
the advertisement. It is also called as advertising post-testing research
 Two basic categories of responses are collected in advertising effectiveness research.
o Communication Effect
o Sales Effect
a) Communication Effect:
The marketers measure communication effect of advertisement – awareness, knowledge
and preference. For this purpose following measures are used.
 Recognition:
o It measures whether the customer can recognize the advertisement as seen or read
or listen before.
o Noted score indicates how much percentage of people has noted the
advertisement.
o Brand-association score indicates how much percentage of people has associated
the advertisement with the brand.
 Recall:
o It measures whether the customer can recall the content of the advertisement.
o The customers are asked whether they can recall brand name, punch line, caption,
jingle, message, picture or image, music or any other audio visual element etc. of
the advertisement.
 Persuasion:
o It measures persuasion ability of the advertisement.
o It measures brand preference change, brand attitude shift, brand beliefs, brand
image amongst customer about the advertised brand.
i) Advertising Pretesting Research:

In this case following methods are used to evaluate communication effect of the
advertisements.

 Consumer Feedback Method:

o In this method consumer feedback is collected to understand their reactions to the
proposed advertisement.
o The questions are related to message, thinking, belief, feeling, influence of the Ad.
 Portfolio Method:
o In this method portfolio of advertisements are shown to the consumers.
o Thereafter, they are asked to recall the advertisements.
o Recall level indicates advertisement’s ability to stand out and have its message
understood and remembered.
 Laboratory Test:
o In this method electromechanical instruments are used to measure physiological
reactions – heartbeat, blood pressure, pupil dilation, perspiration, interest etc. to
the advertisements
o These tests measure attention getting power of the advertisement.
 Print Advertisement Test:
o In this method test print advertisements are placed in magazines and then
circulated amongst consumers.
o Recall and recognition tests are used to measure advertisement’s effectiveness.
 In Home Test:
o In this method test television advertisements are shown to the consumers in their
home.
o Consumer feedback is used to measure advertisement’s effectiveness.
 Trailer Test:
o In this method advertisements are shown to consumers in the shopping mall.
o Thereafter, coupons are given to the consumers to purchase the products.
Redemption rates indicate advertisements effectiveness.
 Theatre Test:
o In this method advertisements are shown to consumers in the theatre.
o Before and after viewing the advertisements consumers are asked about their
brand preference. Preference changes measure the persuasive power of the
advertisement.

 On-Air Test:
o In this method consumers are recruited to watch a particular program on a
television channel. Advertisement is shown during the program.
o Consumer feedback is used to measure advertisement’s effectiveness.
ii) Advertising Post-testing Research:

In this case consumer survey is conducted to understand recognition, recall and
persuasion ability of the advertisement and to evaluate communication effect of the
advertisements.
b) Sales Effect:
The marketers measure sales effect of advertisement.
i) Advertising Pretesting Research:
 In this case Experimental Design is used to measure sales effect of the advertisement.
 Marketers launch different advertisements in different markets and measure
effectiveness of the advertisements based on their sales effect.
 This method is used in advertising pretest to select most effective advertisement.
ii) Advertising Post testing Research:
In this case following methods are used to evaluate sales effect of the advertisement.
 Share of Advertising Expenditure and Share of Market:
o The share of advertising expenditure produces share of voice that earns a share of
consumer’s mind and heart and ultimately share of market.
o The company compares share of advertising expenditure and share of market with
competitors to understand whether they are overspending or under spending.
 Historical Approach:
o It involves correlating past sales to past advertising expenditure using advance
statistical techniques.
Apart from above studies, marketers conduct tracking studies during the advertising
campaign. Periodic study of the target audience provides time trend of measures of
interest. The purpose is to evaluate and reassess the advertising campaign and also to
understand why it is working or not working. The measures traced are advertising
awareness, brand awareness, brand attitude, brand belief, brand image, brand preference
and brand usage.
3.5.9.3.Effectiveness of Sales Promotion Campaigns:

 Sales promotion is a promotional tool to influence sales.
 Sales promotion consist of diverse collection of incentive tools, mostly short term,
designed to stimulate quicker or greater purchase of particular products or services by
consumers or trade.
 There are three types of sales promotion – consumer promotion, trade promotion and
business and sales force promotion.
 Therefore, marketers are interested to know the effectiveness of the sales promotion
campaigns.
 Sales promotion research is used to assess effectiveness of the sales promotion
campaigns.
 Three methods are used to evaluate effectiveness of sales promotion campaigns.
o Sales Data
o Consumer Surveys
o Experimental Research
a) Sales Data: In this method effect of sales promotion campaign on the sales generated
and market share during the campaign period is analysed.
b) Consumer Surveys: In this method consumer surveys are carried out in order to
understand how many consumers recall the campaign, what they thought about it,
how many took advantage of it and how the campaign affected their subsequent
brand-choice behavior.
c) Experimental Research: In this method, sales promotion tool, incentive value,
duration and distribution media is varied across different markets and their effect on
sales is evaluated. It is used to design the ingredients of the most effective sales
promotion campaign across national market.
Q1) Differentiate between census and sample. Point out characteristics of a good sample
design.
Q2) Briefly explain the process of designing sampling plan.
Q3) What is sample size? How sample size is decided?
Q4) Explain various probability sampling methods.
Q5) Explain various non-probability sampling methods.
a) Stratified Random Sampling
b) Cluster Sampling
c) Systematic Sampling
Q7) Explain various concepts in experimental research design.
Q8) Explain various classical experimental research designs.
Q9) Explain various statistical experimental research designs.
Q10) Explain various pre-experimental research designs.
Q11) Explain various true-experimental research designs.
Q12) Explain various quasi-experimental research designs.
a) Completely Randomised Design
b) Randomised Block Design
c) Latin Square Design
d) Factorial Design
Q14) Explain the concept and methods of test marketing.
Q15) How the effectiveness of advertising campaign is evaluated?
Q16) How the effectiveness of sales promotion campaign is evaluated?
Note: Questions can be asked on designing of a sampling plan in the form of a caselet
and sample size decision in the form of a problem.
CMR UNIT 4: DATA ANALYSIS I
4.0. DATA ANALYSIS AND INTERPRETATION:

 After data collection in this stage researcher uses appropriate statistical or
mathematical or financial tools for data analysis and interprets meaning out of it to
generate new knowledge.
 This is an execution stage of research.
 This stage is carried out in following three sub-steps.
1) Data Processing
2) Graphical Representation of Data
3) Data Analysis
4) Data Interpretation
4.1. DATA PROCESSING:

 Data Processing is a step in which ‘raw data’ is converted into ‘organised data’.
 This step transforms raw data into ready to analyse form.
 This step prepares foundation for data analysis.
 This step includes following activities.
o Editing
o Coding
o Classification
o Tabulation
4.2. GRAPHICAL REPRESENTATION OF THE DATA:

 Researcher needs to represent the data graphically.
 A Chart is a graphical representation of the data.
 A Chart gives visual representation of data.
 A Chart helps to easily understand the data.
 A Chart helps to get insight into the data.
 Researcher can use following types of charts for graphical representation.
o Bar Chart
o Pie Chart
o Line Chart
o Histogram
o Stem-and-Leaf
o Boxplot
o Candlestick Chart etc.
4.3. DATA ANALYSIS:

 In this stage researcher uses appropriate tools for data analysis.
 Researcher can use any statistical or mathematical or financial tools for data analysis.
 Based on data analysis researcher interprets the meaning to generate knowledge.
 Interpretation is a process of drawing inferences on the basis of analysis of data.
 It is a step which leads to reaching findings or conclusions of research.
 Tools for data analysis are classified into following two categories.
1) Descriptive Analysis
2) Inferential Analysis
1) Descriptive Analysis:
 It is used for describing the data.
 It is used to develop different indices from the raw data.
 Depending upon the number of variables the researcher wants to analyse at a time the
Descriptive Analysis is divided into following types.
a) Univariate Analysis
b) Bivariate Analysis
c) Multivariate Analysis
a) Univariate Analysis:
 Meaning: Uni-One, Variate-Variable.
 When researcher wants to analyse one variable data he/she needs to use univariate
analysis.
 Example: Annual Sales (variable) of company in last 10 years.
 The following are the univariate analytical tools.
o Measures of Central Tendency
o Measures of Dispersion
o Measures of Shape
o Index Numbers
o Time-Series Analysis
o One-way ANOVA (Analysis of Variance) etc.
b) Bivariate Analysis:
 Meaning: Bi-Two, Variate-Variable
 When researcher wants to analyse two variable data he/she needs to use bivariate
analysis.
 Bivariate analysis is used to find out relationship or association between variables or
attributes.
 Example: Annual Sales (variable) and price of product of company in last 10 years.
 The following are the bivariate analytical tools.
o Simple Correlation
o Simple Regression
o Association of Attributes
o Two-way ANOVA (Analysis of Variance) etc.
c) Multivariate Analysis:
 Meaning: Multi-More Than Two, Variate-Variable
 When researcher wants to analyse more than two variable data he/she needs to use
multivariate analysis.
 Example: Annual sales, price of product and advertising budget of company in last 10
years.
 The following are the multivariate analytical tools.
o Multiple Correlation
o Multiple Regression
o Multi-Way ANOVA (Analysis of Variance)
o MANOVA (Multivariate Analysis of Variance)
o Conjoint Analysis
o Factor Analysis
o Cluster Analysis
o Multi-Dimensional Scaling
o Discriminant Analysis etc.
2) INFERENTIAL ANALYSIS:
 Inferential analysis is used when researcher wants to draw inferences or conclusions.
 It is used for
1) Hypothesis Testing (Tests of Significance)
2) Estimating Population Parameter from Sample Statistic
4.4. HYPOTHESIS TESTING (TESTS OF SIGNIFICANCE):

 Hypothesis is an assumption formulated by the researcher in the beginning of research
in order to test its validity.
 Researcher needs to test hypothesis during data analysis in order to check its validity.
 Hypothesis testing is based on classical statistics.
 Using classical statistics researcher analyses sample information and draw inference
or conclusion whether to accept or reject hypothesis.
Hypothesis Testing Procedure:

1) Formulate Null and Alternate Hypothesis
2) Choose Statistical Test
3) Obtain Critical or Table Value of Test Statistic based on
a) Choice of Significance Level
b) Degrees of Freedom
c) One or Two – Tailed Test
4) Compute Test Statistic on the basis of Sample Data
5) Compare Computed Value with Critical Value of Test Statistic
6) Interpret the Result and take Decision
4.4.1.Formulate Null and Alternate Hypothesis:

Null and Alternate Hypothesis are logically opposite hypothesis.
a) Null Hypothesis:
 Null hypothesis shows equality or no relationship or no association.
 When researcher is comparing two things and frames the hypothesis that the two
things are equal or at par then that hypothesis is called null hypothesis.
 When researcher states the hypothesis that parameter (characteristic of population)

and statistic (characteristic of sample) are equal then that hypothesis is called null
hypothesis. It means there is no statistical difference between the two.
 When researcher states the hypothesis that there is no relationship or association
between two variables or attributes then that hypothesis is called null hypothesis.
 It is denoted by Ho.
 It is also called statistical hypothesis or void hypothesis.
 It is neutral or unbiased or impartial in nature.
 Example:
The average Intelligent Quotient (IQ) of MBA II B and Beta division are equal.
Ho: Avg. IQ of MBA II B Division = Avg. IQ of MBA II Beta Division
b) Alternate Hypothesis:
 Alternate hypothesis shows inequality or presence of relationship or association.
 When researcher is comparing two things and frames the hypothesis that the first
thing is superior or inferior to second or they are not equal then that hypothesis is
called alternate hypothesis.
 When researcher states that parameter (characteristic of population) and statistic
(characteristic of sample) are unequal then that hypothesis is called alternate
hypothesis. It means there is no statistical difference between the two.
 In case of above two situations depending upon the logic of researcher, alternate
hypothesis may be formed in any of the three ways – not equal to, greater than and
less than.
 When researcher states the hypothesis that there is relationship or association between
two variables or attributes then that hypothesis is called alternate hypothesis.
 It is denoted by Ha.
 It is biased or partial in nature.
 Example:
The average Intelligent Quotient (IQ) of MBA II B and Beta division are not equal.
Ha: Avg. IQ of MBA II B Division ≠ Avg. IQ of MBA II Beta Division
c) Logic and Importance of Hypothesis Testing:

 Null and Alternate Hypothesis are logically opposite.
 Null and Alternate Hypothesis are mutually exclusive.
 Either of null and alternate hypothesis is true.
 Only null hypothesis is tested.
 If null hypothesis is proved true then it is accepted.
 If null hypothesis is proved false then it is rejected and alternate hypothesis is
accepted.
 Researcher needs to use statistical tests to prove validity of the hypothesis.
 Hypothesis testing is based on sampling theory or sampling fundamentals.
 In many situations researcher needs to go for sampling because of constraints of
resources. In case of sampling, there is always a difference between population
parameter and sample statistic. While testing the hypothesis researcher checks
whether this difference is statistically significant. A difference is statistically
significant, if there is good reason to believe the difference does not represent random
sampling fluctuations only. Therefore, hypothesis tests are nothing but the tests of
significance of difference.
4.4.2. Choose Statistical Test:

There are several statistical tests for testing the hypothesis, each having a specific purpose
and application. The statistical tests are divided into two categories.
1) Parametric Tests
2) Non-Parametric Tests
a) Parametric Tests:
 These are standard tests.
 These tests are applicable when the data is metric i.e. interval or ratio.
 The following are the commonly used parametric tests.
o z – test
o t – test
o F – test
o ANOVA (Analysis of Variance)
o Chi-square Test: χ2 – test (Can be used as both parametric & non-parametric test)
 The test statistic follows a particular sampling distribution.

 Sampling distribution is the distribution of the values of sample statistic computed for
each possible sample that could be drawn from population under a specified sampling
plan.
 The probability distributions of commonly used parametric tests are as follows.
o z – test is based on normal distribution (bell shape and symmetrical)
o t – test is based on t-distribution (more area in tails as compared to normal
distribution)
o F – test and ANOVA is based on F-distribution
o Chi-square Test: χ2 – test is based on χ2 distribution
b) Non-Parametric Tests:
 These tests are applicable when the data is non-metric i.e. nominal or ordinal.
 These tests are distribution free tests as these tests do not assume anything regarding
distribution of data.
 The following are the non-parametric tests
o Chi-square Test: χ2 – Test (Can be used as both parametric as well as
non-parametric test)
o Binomial Test of Proportion
o McNemar Test
o Fisher-Irwin Test
o Kolmogorov-Smirnov Test
o Test of Randomness or Runs Test
o Sign Test
o Wilcoxon Matched Pair Test
o Median Test
o Mann-Whitney Test
o Wald-Wolfowitz Test
o Spearman’s Rank Correlation Procedure
o Kendall’s Coefficient of Concordance
o Kruskal-Wallis Test etc.
The following table provides guidelines for the selection of commonly used appropriate
statistical test. Three conditions guide the selection of test.
 Characteristic of interest like mean, proportion, variance etc.
 Size of the sample i.e. n. If n is greater than 30 it is large sample and if it is less than
or equal to 30 it is small sample.
 Population Standard Deviation (σ) is known or unknown.
Guidelines for Selection of Statistical Test:
Characteristic No. of Samples Purpose Condition Statistical Test
Comparing Sample and Hypothesized Population Mean If σ is known & n>30 z

One
Comparing Sample and Hypothesized Population Mean If σ is unknown & t
Comparing Two Sample Means n<=30& n>30

If σ is known z
Two
Mean (Independent) If σ is unknown & t
Comparing Two Sample Means
Two n<=30
Comparing Two Sets of Observations of Same Sample Paired t
(Dependent)
More than Two Comparing Multiple Sample Means ANOVA (F)
Comparing Sample and Hypothesized Population Proportion If n>30 z
One
Comparing Sample and Hypothesized Population If n<=30 t
Proportion
Proportions
Comparing Two Sample Proportions If n>30 z
Two
Comparing Two Sample Proportions If n<=30 t
Frequency One Goodness of Fit χ2

Distribution Two Test of Independence χ2
One Comparing Sample and Hypothesized Population Variance χ2
Variance
Two Comparing Two Sample Variances F
4.4.3.Obtain Critical or Table Value of Test Statistic:

The critical value of the test statistic is obtained from probability distribution table of the
relevant statistic based on,
a) Choice of Significance Level
b) Degrees of Freedom
c) One or Two – Tailed Test
a) Choose Significance Level:

 Hypothesis testing may lead to two types of errors as follows.
Decision
Ho is Accepted Ho is Rejected
Ho is True Correct Decision Type I Error
State of Nature
Ho is false Type II Error Correct Decision
o Type I error is committed when true null hypothesis is rejected. The probability of
making Type I error is called the level of significance (α). In other words it means
the probability of rejecting true null hypothesis.
o Type II error is committed when false null hypothesis is accepted. The probability
of making Type II error is called β. In other words it means the probability of
accepting false null hypothesis. The complement (1 – β) of the probability of

Type II error is called the power of statistical test.
 Researcher needs to choose a particular level of significance i.e. α which is close to 0.
 Generally α is chosen as 0.01 (1%) or 0.05 (5%) or 0.10 (10%).
 Although β is unknown it is related to α.

 There is a need to balance two types of errors.
 The risk of both errors can be controlled by increasing the sample size.
b) Degrees of Freedom (df):

 The Degrees of Freedom (df) refers to the number or bits of ‘free’ or unconstrained
data used in calculating sample statistic or test statistic.
 It is generally represented as df = n – k
 Where,
n is the total number of information bits available,
k is the number of linear constraints or restrictions while calculating test statistic.
c) One or Two Tailed Test:

 Researcher needs to decide whether to use one or two tailed test for testing null
hypothesis depending upon the way the alternate hypothesis is framed.
 If the alternate hypothesis is directional or one –sided, one tailed test is used. In such
case, if the alternate hypothesis is less than type then left tail test is used and if the
alternate hypothesis is greater than type then right tail test is used.
 If the alternate hypothesis is not directional or two –sided, two tailed test is used.
 In determining critical value for one tailed test significance level is considered as α
 In determining critical value for two tailed test significance level is considered as α/2.
4.4.4.Compute Test Statistic on the basis of Sample Data:

 In this stage researcher calculates Test Statistic based on the analysis of the sample
data.
 The formulae for calculation of test statistic in case of commonly used purposes are
given below.
a) Hypothesis Testing in case of Mean
b) Hypothesis Testing in case of Proportion
c) Hypothesis Testing in case of Variance
d) Hypothesis Testing in case of Frequency Distribution
4.4.4.1. Hypothesis Testing in case of Mean:

The formulae are divided based on number of samples or groups involved.
i) One Sample:
 In this case researcher is interested to compare sample mean with hypothesized
population mean.
 The formulae are subdivided on the basis of whether population standard deviation
(σ) is known and size of sample.
 Population Standard Deviation (σ) is Known and Large Sample:

In this case, z test is used and the test statistic is computed as follows.
X–µ
z = -----------------
σx
Where,
z = Test Statistic
X = Sample Mean
µ = Hypothesized Population Mean
σx = Standard Error of Mean = σ /√ n
Where,
σ = Population Standard Deviation

n = Sample Size
 Population Standard Deviation (σ) is Unknown and Small Sample:

In this case t-test is used. It is called as student’s t – test. It is developed by W.S. Gosset
who was working in Guinness and Son, Dublin Bravery, Ireland. The company did not
permit employees to publish their research findings under their own names therefore,
Gosset adopted pen name ‘student’. The test statistic is computed as follows.
X–µ
t = -------------------
sx
Where,
t = Test Statistic
X = Sample Mean
µ = Hypothesized Population Mean
sx = Standard Error of Mean = s / √ n
Where, s = Sample Standard Deviation
n = Sample Size
 If sample standard deviation (s) is not given, it is calculated as follows.
n
∑ (Xi– X) 2
i=1
s= -------------------
n–1
Where,
s = Sample Standard Deviation
Xi = ith Data Item

X = Sample Mean
n = Sample Size
 If the size of the population (N) is known and the resulting sample size is 10% or
more of the population size, finite population correction factor is required to be
applied to the standard error of mean formula as follows. The finite population
correction factor is multiplied as follows.
N–n
------------
N–1
Where,
N = Population Size
n = Sample Size
For example, standard error of mean will then become,
σ N–n
σx = -------- -----------
√n N–1
ii) Two Independent Samples:

 In this case researcher is interested to compare means of two independent samples.
 The formulae are subdivided on the basis of whether population standard deviation
(σ) is known and size of sample.

In this case, z test is used and the test statistic is calculated as follows.
( X1 – X2) – (µ1 – µ2)

z = ---------------------------------
σx1 – x2
Where,
z = Test Statistic
X1 = Mean of Sample 1
µ1 = Mean of Population 1
σx1 – x2 = Standard Error of Difference of Mean
σ12 σ22
σx1 – x2 = ------- + -------
n1 n2
Where,
σ1 = Standard Deviation of Population 1
σ2 = Standard Deviation of Population 2
n1= Size of Sample 1
 Population Standard Deviation (σ) is Unknown and Small Sample:

In this case t-test is used. The test statistic is computed as follows.
( X1 – X2) – (µ1 – µ2)

t = ---------------------------------
sx1 – x2
Where,
t = Test Statistic
sx1 – x2 = Standard Error of Difference of Mean
 If population variances are assumed to be equal then standard error of difference

of means is calculated as follows.
1 1
2
sx1 – x2 = sp ------- + -------
n1 n2
Where, Pooled Variance (Sp) is estimated as follows.
(n1 – 1) s12 + (n2 – 1) s22

sp2 = ------------------------------------------
n1 + n2 – 2
Where,
s1 = Standard Deviation of Sample 1
df= Degrees of Freedom = n1 + n2 – 2
 If population variances are not assumed to be equal then standard error of

difference of means is calculated as follows.
s12 s 22
sx1 – sx2 = ------- + -------
n1 n2
Where,
Where, degree of freedom (df) is calculated as,
(n1 – 1) (n2 – 1)
df = ----------------------------------------------
(n2 – 1) g2 + (1 – g)2 (n1 – 1)
Where,
s12 / n1
g = --------------------------------------
2 2
(s1 / n1) + (s2 / n1)
iii) Two Related (Dependent) Samples:

 In this case researcher is interested to compare two sets of observation related to same
sample.
 In this case, Paired t test is used.

In this case t-test is used and the test statistic is calculated as follows.
(D – µD)
t = --------------------
SD/√ n
Where,
t = Test Statistic
D = Mean of Paired Difference Variable
n
∑ Di
i=1
D = ------------------
n
µD= Hypothesized Paired Difference
n = Sample Size or Number of Matched Pairs
SD = Standard Deviation of Paired Difference Variable
n
∑ (Di– D) 2
i=1
sD = --------------------
n–1
4.4.4.2. Hypothesis Testing in case of Proportion:

The formulae are divided based on number of samples or groups involved.
i) One Sample:
 In this case researcher is interested to compare sample proportion with hypothesized
population proportion.
 The formulae are subdivided on the basis of size of sample.
 Large Sample:
In this case z test is used and the test statistic is calculated as follows.
p–
z = -----------------
σp
Where,
z = Test Statistic
p = Sample Proportion
= Hypothesized Population Proportion
σp = Standard Error of Proportion

(1–
σp = ------------------
n
Where, n = Sample Size
If the population is finite then finite population correction is applied as follows.

(1– (N – n)
σp = ----------------------------
nN
Where,
N = Population Size
n = Sample Size
 Small Sample:
p–
t = -------------------
σp
Where,
t = Test Statistic
p = Sample Proportion
= Hypothesized Population Proportion

(1–
σp = -------------------
n
Where, n = Sample Size
If the population is finite then finite population correction is applied as follows.

(1– (N – n)
σp = ----------------------------
nN
Where,
N = Population Size
n = Sample Size
ii) Two Samples:

 In this case researcher is interested to compare two sample proportions.
 The formulae are subdivided on the basis of size of sample.
 Large Sample:
In this case z test is used and the test statistic is calculated as follows.
( p1 – p2) – ( 1 – 2)
Z = ---------------------------------
Sp1 – p2
Where,
Z = Test Statistic
p1 = Proportion of Sample 1
1 = Proportion of Population 1
Sp1 – p2 = Standard Error of Difference of Proportion

 If both the samples are drawn from heterogeneous populations then standard error
of difference of proportion is calculated as follows.
p1 (1 – p1) p2 (1– p2)
Sp1 – p2 = ---------------- + ----------------
n1 n2
Where,
 If both the samples are drawn from homogeneous populations with regard to the
attribute of interest, then standard error of difference of proportion is calculated as
follows.
1 1
Sp1 – p2 = P (1 – P) ------ + ------
n1 n2
Where,
Total number of successes in the two samples
P = ----------------------------------------------------------------- or
Total number of observations in the two samples
n1p1 + n2p2
P = ------------------------------
n1+ n2
 Small Sample:
( p1 – p2) – ( 1 – 2)
t = ----------------------------------
Sp1 – p2
Where,
t = Test Statistic
Sp1 – p2 = Standard Error of Difference of Proportion

 If both the samples are drawn from heterogeneous populations then standard error
of difference of proportion is calculated as follows.
p1 (1 – p1) p2 (1 – p2)
Sp1 – p2 = ----------------- + ----------------
n1 n2
Where,
 If both the samples are drawn from homogeneous populations with regard to the
attribute of interest, then standard error of difference of proportion is calculated as
follows.
1 1
Sp1 – p2 = P (1 – P) ------ + ------
n1 n2
Where,
Total number of successes in the two samples
P = ----------------------------------------------------------------- or
Total number of observations in the two samples
n1p1 + n2p2
P = ------------------------------
n1+ n2
4.4.4.3. Hypothesis Testing in case of Frequency Distribution:

If the data is in the form of frequency distribution Chi-square test (χ2) is used as a non-
parametric test. It can be used as,
 Test of Goodness of Fit: To test how well the assumed theoretical distribution fit to
the observed data.
 Test of Independence: To test whether there is association between two attributes. If
there is no association then the two attributes are called independent. In this test, since
two attributes are involved, the frequency distribution is arranged in cross-table.
It assumes following conditions.
o The samples are randomly selected from population.
o All the items in the sample are independent.
o Each group should contain at least 10 items. If items in some groups are less then
adjoining groups are combined to form new groups.
o The overall number of items should be at least 50.
o The constraints must be linear.
In both the above tests, the value of χ2 is calculated as follows.
2
(fo – fe)
χ2 = ∑ ---------------
All fe
Cells
Where,
χ2 = Test Statistic
fo = Observed Frequency of the respective cell (Given Data)
fe = Expected Frequency of the respective cell and is calculated as follows.

nr nc
fe = ----------
n
Where,
nr = Respective Row Total

nc = Respective Column Total
n = Sample Size
df = (r – 1) (c – 1)
Where,
r = Number of Rows
c = Number of Columns
4.4.4.4. Hypothesis Testing in case of Variance:

 The analysis of variance technique is developed by Prof. R.A. Fisher.
 It is used to test statistical significance of mean. It is used when more than two
independent samples are involved. It is used to test statistical significance of more
than two sample means.
 It assumes following conditions.
o The samples are randomly selected from normal populations.
o The populations have equal variances i.e. homogeneous.
o The independence of error.
 It consists of classifying and cross-classifying statistical results and testing whether
the means of a specified classification differ significantly.
 In ANOVA model each group has its own mean and the values that deviate from the
mean. Similarly all the data points from all the groups produce grand mean. The total
deviation is the sum of the squared differences between each data point and the
overall grand mean.
 The essence of ANOVA is that the total amount of variation in the set of data is
broken down into two components, that amount which can be attributed to chance and
that amount which can be attributed to specific causes.
 Thus total deviation from any particular data point is broken into two components –
between - groups variance and within – groups variance.
 The test statistic used for ANOVA is F-statistic or ratio.
 It is based on F-distribution.
 ANOVA Techniques:
o One-Way Classification Model: In this case data is classified according to only
one criterion or factor. It is called One-Way ANOVA.
o Two-Way Classification Model: In this case data is classified according to two
criterions or factors. It is called Two-Way ANOVA.
 F-Statistic in case of ANOVA is calculated as follows.
a) One-Way ANOVA:
The technique involves following steps.
 Obtain the Mean of each Sample i.e. obtain
X1, X2, X3,…,Xk
when there are k samples.
 Obtain the Grand Mean i.e. Mean of Sample Means as follows.
X1 + X2 + X3 +…+ Xk
X = ------------------------------
No. of Samples (k)
 Take the deviations of the sample means from the grand mean and calculate the
square of such deviations which may be multiplied by the number of items in the
corresponding sample and then obtain their total. This is known as the Sum of
Squares for variance between samples (SS Between).
SS Between = n1 (X1 – X)2 + n2 (X2 – X)2 + ....... + nk (Xk – X)2
 Divide the SS Between calculated in the above step by the degrees of freedom
between the samples (k-1) in order to obtain Variance or Mean Square (MS) Between
Samples.
SS Between
MS Between = --------------------
(k – 1)
 Obtain the deviations of the values of the sample items for all the samples from
corresponding means of the samples and calculate the squares of such deviations and
then obtain their total. This total is known as the Sum of Squares for Variance within
Samples (SS Within).
SS Within = ∑ (X1i – X1)2 + ∑ (X2i – X2)2 + …… + ∑ (Xki – Xk)2
Where, i = 1,2,3,…
 Divide the SS Within calculated in the above step by the degrees of freedom within
samples (n-k) in order to obtain Variance or Mean Square (MS) Within Samples.
SS Within
MS Within = ---------------------
(n – k)
Where, n = total number of items in all the samples i.e. n1 + n2 +…+ nk
 For a check, the Sum of the Deviations for Total Variance can also be worked out by
adding the squares of deviations when the deviations for the individual items in all the
samples have been taken from the grand mean.
SS for Total Variance = ∑ (Xij – X)2
Where, i=1,2,3,… (Items in Samples)
j=1,2,3,…(Different Samples)
The SS for Total Variance should be equal to the addition of SS Between and SS
Within calculated in the above steps.
SS for Total Variance = SS Between + SS Within
The degrees of freedom for Total Variance is equal to the number of items in all
samples minus 1 i.e. n-1. Further, it is also equal to the addition of degrees of freedom
for between and within. This explains the additive property of ANOVA Technique.
n – 1 = (k – 1) + (n – k)
 Finally, F-ratio is calculated as follows.
Between-Samples Variance
F = ------------------------------------
Within-Samples Variance
i.e.
MS Between
F = --------------------------------
MS Within
 For convenience, the information obtained through above steps can be represented in
the form of a table called as ANOVA Table as follows.
ANOVA Table for One-Way Design:
Source of Sum of Squares Degrees of Mean Square

F-ratio
Variation (SS) Freedom (d.f.) (MS)
SS Between
Between Samples 2 2
n1 (X1 – X) + n2 (X2 – X) + ....... + nk (Xk – X) 2
(k – 1) ----------------
(k – 1)
SS Within MS Between
2 2 2
Within Samples ∑ (X1i – X1) + ∑ (X2i – X2) + …… + ∑ (Xki – Xk) (n – k) ---------------- -----------------
(n – k) MS Within
Total ∑ (Xij – X)2 (n – 1)
Alternate short-cut method of ANOVA Technique is as follows.

 Take the total of values of individual items in all the samples which is called as T.
T = ∑ Xij
 Find out the correction factor as follows.
(T) 2
Correction Factor = ------------
n
 Find out the square of all item values one by one and then take its total. Subtract the
correction factor from this total and the result is the Sum of Squares for Total
Variance.
(T) 2
2
SS for Total Variance = ∑ Xij – ------
n
n= total number of items in all the samples i.e. n1 + n2 +…+ nk
 Obtain the square of each sample total (Tj)2 and divide such square value of each
sample by the number of items in the concerning sample and take the total of the
result thus obtained. Subtract the correction factor from this total and the result is the
Sum of Squares for Variance Between the Samples.
(Tj) 2 (T) 2
SS Between = ∑ ----------- – ---------
nj n
Where, j=1,2,3,…(Different Samples)
 Divide the SS Between calculated in the above step by the degrees of freedom
between the samples (k-1) in order to obtain Variance or Mean Square (MS) Between
Samples.
SS Between
MS Between = --------------------
(k – 1)
 The Sum of Squares Within the Samples can be found out by subtracting the SS
Between from SS for Total Variance.
SS Within = SS for Total Variance – SS Between
(T) 2 (Tj) 2 (T) 2

SS Within = ∑ Xij2 – ------ – --------- – ---------
n nj n
(Tj) 2
SS Within = ∑ Xij2 – --------
nj
 Divide the SS Within calculated in the above step by the degrees of freedom within
samples (n-k) in order to obtain Variance or Mean Square (MS) Within Samples.
SS Within
MS Within = --------------------
(n – k)
 Finally, F-ratio is calculated as follows.
Between-Samples Variance
F = ------------------------------------
Within-Samples Variance
i.e.
MS Between
F = --------------------------------
MS Within
 For convenience, the information obtained through above steps can be represented in
the form of a table called as ANOVA Table as follows.
ANOVA Table for One-Way Design:

F-ratio
(Tj)2 (T)2
SS Between
Between Samples ∑ ---------- – --------- (k – 1) ----------------
nj n (k – 1)
MS Between
(Tj)2 SS Within -----------------
Within Samples ∑ Xij2 – ------- (n – k) ---------------- MS Within
nj (n – k)
(T)2
∑ Xij2 – ------ (n – 1)
Total
n
b) Two-way ANOVA:
In this case two-way design may have repeated measurements of each factor or may not
have repeated values.
ANOVA technique in the context of two-way design when repeated values are not
there involves following steps.
 Take the total of values of individual items in all the samples which is called as T.
T = ∑ Xij
 Find out the correction factor as follows.
(T) 2
Correction Factor = ------------
n
 Find out the square of all item values one by one and then take its total. Subtract the
correction factor from this total and the result is the Sum of Squares for Total
Variance.
(T) 2
SS for Total Variance = ∑ Xij2 – ------
n
n= total number of items in all the samples i.e. n1 + n2 +…+ nk
 Take the total of different columns and then obtain the square of each column total
and divide such squared values of each column by the number of items in the
concerning column and take the total of the result thus obtained. Subtract the
correction factor from this total and the result is the Sum of Squares of Deviations for
Variance Between Columns.
(Tj) 2 (T) 2
SS Between Columns = ∑ ------------ – ---------
nj n
 Take the total of different rows and then obtain the square of each row total and
divide such squared values of each row by the number of items in the corresponding
row and take the total of the result thus obtained. Subtract the correction factor from
this total and the result is the Sum of Squares of Deviations for Variance Between
Rows.
(Ti) 2 (T) 2
SS Between Rows = ∑ ----------- – ---------
ni n
 The Sum of Squares of Deviations for Residual or Error Variance can be worked out
by subtracting the sum of SS Between Columns and SS Between Rows from SS for
Total Variance.
SS for Residual or Error Variance
= SS for Total Variance – (SS Between Columns + SS Between Rows)
 The Degrees of Freedom (d.f.) can be worked out as follows.
d.f. for Total Variance = (c x r – 1)
d.f. for Variance Between Columns = (c – 1)
d.f. for Variance Between Rows = (r – 1)
d.f. for Residual Variance = (c – 1) (r – 1)
where, c = number of columns
r = number of rows
 The ANOVA Table is then set up as follows.
ANOVA Table for Two-Way Design without Repeated Values:

Sum of Squares Degrees of Mean Square
Source of Variation F-ratio
(SS) Freedom (d.f.) (MS)
(Tj)2 (T)2 SS Between Columns MS Between Columns

Between Columns (c – 1) ----------------------------
∑ ---------- – --------- ----------------------------
(c – 1) MS Residual
nj n
(Ti)2 (T)2 SS Between Columns MS Between Rows

(r – 1) ----------------------------
Between Rows ∑ ---------- – --------- --------------------------
(r – 1) MS Residual
ni n
SS for Total Variance – (SS Between SS Residual

Residual or Error (c – 1) (r – 1)
Columns + SS Between Rows) ----------------------------
(c – 1) (r – 1)
(T)2
∑ Xij2 – ------ (c x r – 1)
Total n
ANOVA technique in the context of two-way design when repeated values are there
involves following steps.
 In this case of two-way design with repeated measurements for all the categories, it is
required to obtain a separate independent measure of inherent or smallest variations.
 For this measure, calculate the sum of squares and degrees of freedom in the same
way as that of sum of squares for variance within samples in case of one-way
ANOVA.
 SS for Total Variance, SS for Between Columns and SS for Between Rows is
calculated as discussed in case of two-way ANOVA without repeated values.
 Find out left-over sums of squares and left-over degrees of freedom which are used to
calculate SS for Interaction Variation. It is a measure of inter-relationship among the
two different classifications.
SS for Interaction Variation
= SS for Total Variance –
(SS Between Columns + SS Between Rows + SS Within Samples)
 The ANOVA Table is then set up as follows.
ANOVA Table for Two-Way Design with Repeated Values:

F-ratio
Between (Tj)2 (T)2 SS Between Columns MS Between Columns

∑ ---------- – --------- (c – 1) ----------------------------
Columns ----------------------------
nj n (c – 1) MS Within Samples
Between (Ti)2 (T)2 SS Between Columns MS Between Rows

∑ ---------- – --------- (r – 1) ----------------------------
Rows --------------------------
ni n (r – 1) MS Within Samples
(n – 1) – SS Interaction
SS for Total Variance – (SS Between Columns + MS Interaction
Interaction (c – 1) + (r – 1) ----------------------------
SS Between Rows + SS Within Samples) (n – 1) – --------------------------
+ (n – k) MS Within Samples
(c – 1) + (r – 1) + (n – k)
Within SS Within
2 2 2
(X1i – X1) + ∑ (X2i – X2) + …… + ∑ (Xki – Xk) (n – k) ----------------
Samples
(n – k)
Total (T)2 (n – 1)
∑ Xij2 – ------
n
4.4.5.Compare Computed Value with Critical Value of Test Statistic:

In this stage computed value and critical value of the test statistic are compared to find
out which one is greater or lesser.
4.4.6.Interpret the Result and take Decision:

In this stage based on the comparison between computed value and critical value of the
test statistic and the following rejection rules for null hypothesis decision is taken.
a) Interpretation of Results for z test:
The results of z-test are interpreted using following rejection rules for null hypothesis.
 Left Tail Test (Less Than Type Test): Reject null hypothesis if the calculated or
computed value of z is less than critical or table value of z.
R: z (Calculated Value) < z (Critical / Table Value)
 Right Tail Test (Greater Than Type Test): Reject null hypothesis if the calculated or
computed value of z is greater than critical or table value of z.
R: z (Calculated Value) > z (Critical / Table Value)
 Two Tail Test (Not Equal to Type Test): Reject null hypothesis if the mod of
calculated or computed value of z is greater than critical or table value of z.
R: z (Calculated Value) > z (Critical / Table Value)
b) Interpretation of Results for t-test:

The results of t-test are interpreted using following rejection rules for null hypothesis.
 Left Tail Test (Less Than Type Test): Reject null hypothesis if the calculated or
computed value of t is less than critical or table value of t.
R: t (Calculated Value) < t (Critical / Table Value)
 Right Tail Test (Greater Than Type Test): Reject null hypothesis if the calculated or
computed value of t is greater than critical or table value of t.
R: t (Calculated Value) > t (Critical / Table Value)
 Two Tail Test (Not Equal to Type Test): Reject null hypothesis if the mod of
calculated or computed value of t is greater than critical or table value of t.
R: t (Calculated Value) > t (Critical / Table Value)
c) Interpretation of Results for Chi-square Test (χ2 – test):

The results of χ2 test are interpreted using following rejection rule for null hypothesis.
Reject null hypothesis if the calculated or computed value of χ2 is greater than critical or
table value of χ2.
R: χ2 (Calculated Value) > χ2 (Critical / Table Value)
d) Interpretation of Results for ANOVA:
The results of ANOVA (F-ratio) are interpreted using following rejection rule for null
hypothesis.
Reject null hypothesis if the calculated or computed value of F is greater than critical or
table value of F.
R: F (Calculated Value) > F (Critical / Table Value)
In the modern method statistical software is used. In the software based on the value of
the test statistic probability value (p-value) is given as the result. In such case the result is
interpreted using following rejection rule about null hypothesis. This rule is common for
all tests.
Reject null hypothesis if the probability value (p-value) is less than significance level.
R: p-value < Significance level
4.5. CONJOINT ANALYSIS:

4.5.1.Basic Concept:
 It is a multi-variate tool for data analysis.
 Conjoint Analysis attempts to determine the relative importance consumers attach to
the salient attributes and their utilities they attach to the levels of the attributes of
product.
 The output of conjoint analysis is derived from consumers’ evaluations of brands or
brand profiles composed of the attributes and their levels.
 The underlying assumption is that the consumers evaluate product, brand etc. as a
bundle of attributes.
 It relies on respondent’s subjective evaluations.
 It is complementary with Multi Dimensional Scaling (MDS).
 It is used in case of dependency analysis and when there is one dependent variable.
4.5.2.Applications:
Conjoint analysis can be used in marketing in various areas as follows.
 New Product/ Concept Development and Testing
 Competitive Analysis
 Market Segmentation
 Pricing
 Advertising
 Distribution etc.
Conjoint analysis is used in marketing for following purposes.

 Determine the relative importance of attributes in consumer choice process.
 Estimate market share of brands that differ in attribute levels.
 Determining the composition of most preferred brand.
 Determining the composition of marketing mix plan.
 Segmenting the market based on similarity of preferences for attribute levels. For this
purpose it is used in conjunction with cluster analysis.
4.5.3.Procedure for Conducting Conjoint Analysis:

The steps involved in conjoint analysis are as follows.
1) Formulate the Problem
2) Construct the Stimuli
3) Decide on the Form of Input Data
4) Select the Conjoint Analysis Procedure
5) Interpret the Result
6) Assess Reliability and Validity
1) Formulate the Problem:

 In this stage attributes and attribute levels in constructing the stimuli are identified.
 Attributes can be identified through discussions with management and industry
experts, analysis of secondary data, pilot survey or qualitative research.
 Generally six to seven attributes are identified.
 While determining attribute levels one should take into account attribute levels
prevalent in the market place.
 In order to minimize respondent evaluation task, the number of attribute levels are
restricted.
2) Construct the Stimuli:

There are two approaches for constructing conjoint analysis stimuli.
a) Pairwise Approach: It is also called two-factor evaluations. In this case respondents
evaluate two attributes at a time until all possible pairs of attributes have been
evaluated. For each pair, respondents evaluate all the combinations of levels of both
the attributes, which are presented in a matrix. This approach is easier for respondents
but requires more evaluations.
b) Full Profile Approach: It is also called multiple-factor evaluations. In this case
respondents evaluate full or complete profile of the brand for all the attributes. This
approach is difficult to respondents but requires less evaluations. Each profile is
described on a separate index card. This approach is commonly followed.
3) Decide on the Form of Input Data:

Input data can be nonmetric or metric.
a) Nonmetric Data: In this case respondents are required to provide rank order
evaluations. For pairwise approach, the respondents rank all the cells of each matrix
in terms of their desirability. For full profile approach, respondents rank all the
stimulus profiles. Rankings involve relative evaluations of the attribute levels.
Proponents of ranking data believe that such data accurately reflect the behavior of
consumers in marketplace.
b) Metric Data: In this case respondents are required to provide ratings independently
Advocates of rating data believe that they are more convenient for the respondents
and easier to analyse than rankings. In recent years use of rating data is increasing.
In conjoint analysis the dependent variable is preference or intention to buy. But conjoint
methodology is flexible and can accommodate other dependent variables like – actual
purchase or choice.
4) Select Conjoint Analysis Procedure:

 Conjoint analysis model is a mathematical model expressing the fundamental
relationship between attributes and utility.
 Several different procedures are available for estimating basic model.

 The simplest and popular procedure is dummy variable regression.
 Other procedures for nonmetric data include LINMAP, MONANOVA and LOGIT.
 The researcher should also decide whether to analyse data at individual respondent or
aggregate level.
 The output of the conjoint analysis is the estimation of part-worth or utility functions
and relative importance weights of the attributes.
5) Interpret the Result:

 For interpreting results, it is helpful to plot part-worth or utility functions on graph.
Based on utility function, one can understand consumer preferences for attribute
levels.
 Based on the relative importance weights, importance of various attributes is
interpreted.
6) Assessing Reliability and Validity:

The methods to assess reliability and validity of the conjoint analysis are as follows.
 The Goodness of Fit of the estimated model can be evaluated.
 Test-retest reliability can be assessed.
 Internal validity can be determined.
 Stability of the analysis can be determined.
4.5.4. Assumptions:
 It assumes that the important attributes of a product can be identified.
 It assumes that consumers evaluate the choice alternatives in terms of these attributes
and make trade-offs. The trade-off model may not be a good representation of choice
process.
 Data collection is complex.
4.6. FACTOR ANALYSIS:

4.6.1.Basic Concept:
 It is an interdependence technique in which whole set of interdependent relationship
between variables is to be examined.
 It is used when focus is on attributes or variables.
 It is used for data reduction and summarization.
 When there are many variables which are correlated, factor analysis is used to reduce
them to a manageable level.
 In factor analysis, relationship between sets of many interrelated variables are
examined and represented in terms of few underlying factors.
 Factor is an underlying dimension that explains correlations among a set of variables.
 A factor is a linear combination of a set of variables.
 It is used in case of interdependency analysis and when there is focus on attributes.
4.6.2.Applications:
Factor analysis can be used in marketing in various areas as follows.
 It is used in market segmentation for identifying the underlying variables on which to
group the customers.
 In product research, factor analysis is used to determine the brand attributes that
influence consumer choice.
 In advertising studies, factor analysis is used to understand the media consumption
habits of the target market.
 In pricing studies, factor analysis is used to identify the characteristics of price-
sensitive consumers.
Factor analysis used in marketing for following purposes.

 To identify underlying dimensions or factors that explains the correlations among a
set of variables.
 To identify a new, smaller set of uncorrelated variables to replace the original set of
correlated variables in subsequent multivariate analysis.
 To identify a smaller set of salient variables from a larger set for use in subsequent
multivariate analysis.
4.6.3.Procedure for Conducting Factor Analysis:

The steps involved in factor analysis are as follows.
2) Construct the Correlation Matrix
3) Determine the Method of Factor Analysis
4) Determine the Number of Factors
5) Rotate the Factors
6) Interpret the Factors
7) Calculate the Factor Scores or Select the Surrogate Variables
8) Determine the Model Fit

 In this stage the objective of the factor analysis is identified.
 The variables to be included in the factor analysis are identified.
 The variables are identified on the basis of theory, past research and judgement of the
researcher.
 The variables should be measured on interval or ratio scale to generate metric data.
 One rough guideline is that the sample size should be four to five times the number of
variables.
2) Construct the Correlation Matrix:

 Factor analysis is appropriate when the variables are highly correlated with each
other.
 In this stage correlation amongst all the variables is calculated and represented in the
matrix form.
 For testing appropriateness of the factor model one can use formal statistics like
Barlett’s test of sphericity or Kaiser-Meyer-Olkin (KMO) measure.
 If the result of the above test indicates that factor analysis is appropriate then it is
used.
3) Determine the Method of Factor Analysis:

 There are primarily two methods of factor analysis – principal component analysis
and common factor analysis.
a) Principal Component Analysis: In this approach total variance in the data is

considered. It is used when the primary concern is to determine the minimum number
of factors that will account for maximum variance in the data for use in subsequent
analysis. The factors are called principal components.
b) Common Factor Analysis: In this approach only common variance is considered. It is
used when the primary concern is to identify the underlying dimensions and the
common variance is of interest. It is also called as principal axis factoring.
 The other methods of factor analysis are complex and are – unweighted least squares,
generalized least squares, maximum likelihood, alpha method and image factoring.
 Using a suitable method factors are computed.
4) Determine the Number of Factors:

 The number of factors computed is as many as number of variables.
 As the objective of factor analysis is data reduction, smaller number of factors should
be extracted.
 There are several ways to determine number of factors as follows.
a) A Priori Determination:
In this method based on the prior knowledge, researcher can specify number of factors
to be extracted beforehand. Many computer programs allows user to specify the
number of factors. But this method is subjective in nature.
b) Determination based on Eigenvalues:
In this method based on the eigenvalue, researcher decides number of factors to be
selected. Eigenvalue represents amount of variance associated with the factor. Factors
are arranged in decreasing order of their eigenvalues. The total variance accounted for
by all the factors is equal to number of factors. In this method, only factors with
eigenvalues greater than 1.0 are selected.
c) Determination based on Scree Plot:
Scree Plot is a plot of the eigenvalues against the number of factors in order of
extraction. The shape of the plot is used to determine number of factors to be selected.
Typically, the plot has a distinct break between the steep slope of factors, with large
eigenvalues and a gradual trailing off associated with the rest of the factors. This
gradual trailing off is referred as the scree. The point at which scree begins denotes
the true number of factors.
d) Determination based on Percentage of Variance:

In this method number of factors extracted is determined so that the cumulative
percentage of variance extracted by the factors reaches a satisfactory level (at least
60%).
e) Determination based on Split-Half Reliability:
The sample is split in half and factor analysis is performed on each half. Only factors
with high correspondence of factor loadings across the two subsamples are retained.
f) Determination based on Significance Level:
In this method statistical significance of the separate eigenvalues is determined and
factors having eigenvalues which are statistically significant are retained.
5) Rotate the Factors:

 An important output of factor analysis is factor matrix or factor pattern matrix.
 Factor matrix contains correlation coefficients or factor loadings.
 The correlation coefficients are called factor loadings and represent the correlation
between the factors and the variables.
 The coefficients with large absolute value indicate that the factor and the variable are
closely related.
 Using initial or unrotated factor matrix it is difficult to interpret relationship between
factor and variables. Therefore, through rotation, the factor matrix is transformed into
simpler one that is easy to interpret.
 There are various methods of rotation like orthogonal rotation, oblique rotation.

 The rotated factor matrix forms the basis for interpretation of results.
 The factor is interpreted in terms of the variables that load high on it.
 Researcher can also plot variables using factor loadings as co-ordinates. Variables
which are at the end of an axis are those having high loadings on only that factor and
hence describe the factor. Variables near to origin have small loadings on both the
factors. Variables that are not near to any axis are related to both factors.
 If a factor cannot be defined in terms of the original variables it should be labeled as
general factor or undefined factor.
7) Calculate Factor Scores or Select Surrogate Variables:

 Factor score is calculated for each factor.
 The factor is a linear combination of the original variables.
 The factor score coefficients used to combine variables are obtained from factor score
coefficient matrix.
 The variable values would be multiplied by the corresponding factor score
coefficients to obtain factor scores.
 Only in case of principal factor method it is possible to calculate exact factor scores.
 Factor scores are used in subsequent multivariate analysis.
 Sometimes instead of computing factor scores, the researcher wishes to select
surrogate variables or substitute variables.
 Selection of surrogate variables involves identifying some of the original variables for
use in subsequent analysis.
 This helps the researcher to interpret result in terms of the variables rather than
factors.
8) Determine the Model Fit:

 In this stage whether factor model is a good fit to the data is determined.
 The basic assumption underlying factor analysis is that the observed correlation
between variables can be attributed to common factors. Hence, the correlations
between the variables can be deduced or reproduced from the estimated correlations
between the variables and the factors.
 The differences between observed correlations (as given in input correlation matrix)
and the reproduced correlations (as estimated from factor matrix) are called residuals.
 If the residuals are smaller then it is considered that the factor model is a good fit for
the data.
Q1) What is hypothesis? Explain the concept of null and alternate hypothesis.
Q2) Explain in brief the procedure for testing hypothesis.
Q3) Explain in brief various parametric tests for testing hypothesis and point out
conditions under which each one is suitable.
a) z – test
b) t– test
c) ANOVA
d) Chi-square (χ2) test
Q5) Explain the concept, applications and procedure for conducting conjoint analysis.
Q6) Explain the concept, applications and procedure for conducting factor analysis.
Note: Questions can be asked on statistical tests in the form of a problem and conjoint
analysis and factor analysis in the form of a caselet.
CMR UNIT 5: DATA ANALYSIS II
5.1. CLUSTER ANALYSIS:

5.1.1. Basic Concept:
 Cluster analysis is a technique which is used to classify objects into homogeneous
groups called as clusters.
 It is also called classification analysis or numerical taxonomy.
 Objects in each cluster are similar to each other and dissimilar to objects in the other
clusters.
 There is homogeneity within clusters and heterogeneity amongst clusters.
 Clusters are suggested by the data and not defined priori as in case of discriminant
analysis.
 It is used in case of interdependency analysis and when there is focus on objects.
5.1.2. Applications:
Cluster analysis is used in marketing for variety of purposes.
 Segmenting the Market: Cluster analysis is used to divide the customers into
homogeneous groups called as market segments.
 Understanding Buyer Behaviour: Cluster analysis is used to identify homogenous
groups of buyers. Thereafter buyer behavior is examined separately in order to design
marketing strategies.
 Identifying New Product Opportunities: By clustering products, brands competitive
sets within the market can be determined. Brands in same cluster compete more
fiercely. A company can examine current offerings compared to those of its
competitors to identify new product opportunities.
 Selecting Test Markets: By grouping cities into homogeneous clusters, it is possible
to select comparable cities to select various marketing strategies.
 Reducing Data: Cluster analysis can be used as a data reduction tool to develop
clusters of data that are more manageable than individual observations. Subsequent
multivariate analysis is conducted on clusters rather than individual observations.
5.1.3. Procedure for Conducting Cluster Analysis:

The steps involved in cluster analysis are as follows.
2) Select a Distance Measure
3) Select a Clustering Procedure
4) Decide on Number of Clusters
5) Interpret and Profile Clusters
6) Assess the Validity of Clustering

 In this stage variables are selected on the basis of which clustering would be done.
 The set of variables selected should describe the similarity between objects in terms
that are relevant to the marketing research problem.
 The variables are selected based on theory, past research, judgement of the researcher.
2) Select a Distance or Similarity Measure:

 Since the objective of the clustering is to group the similar objects together, some
measure is to be selected to assess how similar of different the objects are.
 The most common approach is to measure similarity in terms of the distance between
pairs of objects. Objects with smaller distances are more similar than objects with
larger distances.
 There are various methods to measure similarity like Euclidean distance, city-block or
Manhattan distance and Chebychev distance.
 It is advisable to measure variables using uniform rating scales.
3) Select Clustering Procedure:

 In this stage researcher needs to select clustering procedure.
 There are many clustering procedures like hierarchical, nonhierarchical and others
like two step clustering.
a) Hierarchical Clustering:
 Hierarchical methods are characterized by the development of hierarchy or tree-like
structure.
 Hierarchical methods can be agglomerative or divisive clustering.
 Agglomerative clustering starts with each object in separate cluster. Clusters are
formed by grouping objects into bigger and bigger clusters. This process is continued
until all objects are members of a single cluster. These methods are commonly used in
marketing research. Agglomerative clustering is further subdivided into linkage
methods, variance methods and centroid methods.
 Linkage methods include single linkage, complete linkage and average linkage
methods. Single linkage method is based on minimum distance or nearest neighbor
rule. Complete linkage is based on maximum distance or farthest neighbor rule.
Average linkage method is based on average distance between all pairs of objects
where one member of the pair is from each of the cluster.
 Variance methods try to minimize within variance. The commonly used variance
method is Ward’s procedure.
 In centroid method distance between two clusters is the distance between their
centroids.
 Divisive clustering starts with all objects grouped in single cluster. Clusters are
divided until each object is in a separate cluster.
b) Non-hierarchical Clustering:
 Nonhierarchical methods are also referred as k-means clustering.
 Nonhierarchical methods can be sequential threshold method, parallel threshold
method and optimizing partitioning method.
4) Decide on the Number of Clusters:

There are no hard and fast rules to decide number of clusters. But the guidelines are as
follows.
 Researcher can use theoretical or practical considerations to decide number of
clusters.
 In hierarchical clustering, distances at which clusters are combined can be used as
criteria to decide number of clusters.
 In nonhierarchical clustering, a graph of ratio of within-group variance to between-
group variance plotted against number of clusters is used as a basis to decide number
of clusters.
 The relative sizes of the clusters should be meaningful.
5) Interpret and Profile the Clusters:

 Interpreting and profiling clusters requires examining the cluster centroids.
 The cluster centroids represent the mean value of the objects contained in the cluster
on each of the variables.
 The cluster centroids enable the researcher to describe each cluster by assigning a
name or label.
 After naming the clusters, profiling is done.
 Profiling of clusters is done for better understanding of the objects.
 Profiling is done on the basis of variables which may not have been used for
clustering.
 The variables used for profiling are demographic, psychographic, geographic, product
usage, media usage or other variables.
 The variables that significantly differentiate between objects can be identified via
discriminant analysis.
6) Assess Reliability and Validity:

The following procedure is generally used to assess validity and reliability.
 Perform cluster analysis on the same data using different distance measures. Compare
the results across measures to determine the stability of the solutions.
 Use different methods of clustering and compare results.
 Split the data randomly into halves. Perform clustering separately on each half.
Compare cluster centroids across the two subsamples.
 Delete variables randomly. Perform cluster analysis and compare results.
 In nonhierarchical clustering use multiple runs using different order of objects until
the solution stabilizes.
5.2. MULTIDIMENSIONAL SCALING (MDS):

 Multidimensional Scaling (MDS) is a technique for representing perceptions and
preferences of respondents spatially by means of a visual display.
 Perceived or psychological relationships among stimuli are represented as geometric
relationships among points in a multidimensional space.
 The geometric representations are called spatial maps or perceptual maps.
 The axes of spatial maps are assumed to denote the psychological bases or underlying
dimensions respondents use to form perceptions and preferences for stimuli.
 It is used in case of interdependency analysis and when there is focus on objects.
Multidimensional scaling is used in marketing for variety of purposes.
 The number and nature of dimensions consumers use to perceive different brands in
the marketplace.
 The positioning of current brands on these dimensions.
 The positioning of consumers’ ideal brand on these dimensions.
Information provided by MDS can be used for variety of marketing applications.

 Image Measurement: Compare customers’ perceptions of the firm and the firm’s
perceptions of itself and thus identify the perceptual map.
 Positioning: Compare customers’ perceptions of the brand and the desired positioning
of brand and thus identify the perceptual map.
 Market Segmentation: Position brands and consumers in the same space and thus
identify groups of consumers with relatively homogeneous perceptions.
 Identifying New Product Opportunities: To look for gaps in the spatial maps, which
indicate potential opportunities for developing and positioning new products.
 Pricing Analysis: Spatial maps developed with and without pricing information can
be compared to determine the impact of pricing.
 Assessing Advertising Effectiveness: Spatial maps can be used to determine whether
advertising has been successful in achieving the desired brand positioning.
 Channel Decisions: Judgements on comparability of brands with different retail

outlets could lead to spatial maps useful for making channel decisions.
 Attitude Scale Construction: MDS techniques can be used to develop the appropriate
dimensionality and configuration of the attitude space.
5.2.3. Procedure for Conducting Multidimensional Scaling:

The steps involved in multidimensional scaling are as follows.
2) Obtain Input Data
3) Select an MDS Procedure
4) Decide on the Number of Dimensions
5) Label the Dimensions and Interpret the Perceptual Map
6) Assess Reliability and Validity

 In this stage the purpose for which MDS would be used is decided.
 Further, researcher should select brands or stimuli to be included in the analysis.
 The number of brands selected generally varies from minimum 8 to maximum 25.
 The specific brands included determine the resulting dimensions and configurations.
 The brands are selected based on marketing research problem, theory, judgement of
the researcher.
2) Obtain Input Data:

 The input data obtained from respondents may be related to perceptions or
preferences.
a) Perception Data:
 Perception data may be direct or derived.
 Direct Approach:
o In this method respondents judge how similar or dissimilar the various brands are,
using their own criteria.
o Respondents are often asked to rate all the possible pairs of brands in terms of
similarity on a Likert Scale.
o The data is referred as similarity judgements.
o The number of pairs to be evaluated is n(n – 1)/2 where, n is number of brands.

o Alternate method is to ask the respondents to rank order all the possible pairs from
the most similar to the least similar.
o Alternate method is to ask the respondent to rank order the brands in terms of their
similarity to an anchor brand.
o It is more frequently used method to obtain perceptual maps.
 Derived Approach:
o In this method respondents rate the brands on identified attributes.
o The scale used is semantic differential scale or Likert scale.
o Sometimes ideal brand is also included in the set of brands.
o After obtaining attribute based rating, a similarity measure (such as euclidean
distance) can be derived for each pair of brands.
o This method is less popular but can be used for interpreting the dimensions of the
perceptual maps.
b) Preference Data:
 In this method respondents are asked to rank the brands from most preferred to the
least preferred.
 Alternatively respondents may be asked to make paired comparisons and indicate
which brand in a pair they prefer.
 When spatial maps are derived from preference data the distance between brands
implies difference in preference.
3) Select an MDS Procedure:

 In this stage researcher needs to select an MDS procedure.
 Selection of MDS procedure depends on nature of input data.
 Selection of MDS procedure also depends on whether the analysis is to be conducted
at an individual level or at an aggregate level.
 There are two MDS procedures nonmetric and metric and both produce similar
results.
a) Nonmetric MDS:
 It assume that input data is nonmetric (ordinal) but the result is metric output.
 It means the distances in the spatial maps may be assumed to be interval scaled.
b) Metric MDS:
 It assumes that input data is metric and the result is also metric output.
 In this method a stronger relationship between input and output data is maintained.
4) Decide on the Number of Dimensions:

 The objective in MDS is to obtain the spatial map that best fits the input data in the
smallest number of dimensions.
 But spatial maps are computed in such a way that the fit improves as the number of
dimensions increases.
 Therefore, researcher needs to select the number of dimensions which gives the best
possible fit.
 The following guidelines are suggested for determining the number of dimensions.
o A Priori Knowledge: Theory or past research may suggest a particular number of
dimensions.
o Ease of Use: It is easier to work with two dimensional maps.
o Interpretability of Spatial Maps: It is difficult to interpret the spatial maps with
more than 3 dimensions.
o Stress Measure: Stress is a lack of fit measure. Higher values of stress indicate
poor fit. A plot of stress versus dimensionality should be examined. A point at
which an elbow or a sharp bend occurs indicates appropriate number of
dimensions. Generally stress measure is used.
o Statistical Approaches: Statistical approaches can also be sued to determine
dimensions.
5) Label the Dimensions and Interpret the Perceptual Map:

 Once perceptual map is developed, the dimensions are labeled and the map is
interpreted.
 Labeling the dimensions requires subjective judgement of the researcher.
 Often dimensions represent more than one attribute.
 The following guidelines can be used for labeling.

o Even if direct similarity judgements are obtained, ratings of the brands on
attributes may still be collected. Using regression analysis attribute vectors may be
fitted in spatial maps. The axes may be labeled for the attributes with which they
are most closely aligned.
o After obtaining direct similarity or preference data, the respondents are further
asked to indicate the criteria they used in making their evaluations. These criteria
may then be subjectively related to the spatial maps to label dimensions.
o If possible respondents may be shown their spatial maps and asked to label the
dimensions.
o If objective characteristics of the brands are available, then these could be used as
aid to interpret the subjective dimensions of the map.
 The spatial maps may be interpreted by examining the coordinates and relative
positions of the brands.
o The brands located near each other compete more fiercely.
o Brands farther in the direction of a descriptor are stronger on that characteristic.
o An isolated brand has a unique image.
o The strength and weakness of each brand can be understood by examining spatial
map.
o Gaps in perceptual maps indicate potential opportunity for introducing new
products.
6) Assess Reliability and Validity:

The following guidelines are generally used to assess validity and reliability.
 The index of fit or R-Square should be examined. It indicates how well the MDS
model fits the input data. Although higher values of R-square are desirable, a value of
0.60 or more is considered as acceptable.
 Stress measure also indicates quality of MDS solution. Stress measure indicates
badness of fit. Lower values of stress measure are desirable.
 If aggregate level analysis has been done, the original data should be split into two or
more parts. MDS analysis should be conducted separately on each part and the results
are compared.
 Brands or stimuli can be selectively eliminated from, the input data and the solutions
determined for the remaining stimuli.
 A random error can be added to the input data. The resulting data are subjected to
MDS analysis and the results can be compared.
 The input data can be collected at two different points in time and the test-retest
reliability is determined.
5.2.4. Assumptions and Limitations:

 It assumes that similarity of stimulus A to B is the same as the similarity of stimulus
B to A.
 It assumes that the distance between two stimuli is some function of their partial
similarities on each of several perceptual dimensions.
 It assumes that when a perceptual map is obtained the interpoint distances are ratio
scaled and that the axes of the map are multidimensionally interval scaled.
5.3. DISCRIMINANT ANALYSIS:

 Discriminant analysis is used to classify the objects into priori defined groups.
 It is used to analyse data when the dependent (criterion) variable is nominal
(categorical) and independent (predictor) variable is interval in nature.
 The objects are classified based on the number of categories of the independent
variable.
 When dependent variable has two categories, the technique is called two-group
discriminant analysis. In this case it is possible to derive only one discriminant
function.
 When dependent variable has more than two categories, the technique is called
multiple-group discriminant analysis. In this case it is possible to derive more than
one discriminant function.
 It is used in case of dependency analysis and when there is one dependent variable.
Discriminant analysis is used in marketing for variety of purposes.
 Development of discriminant functions or linear combinations of the independent
variables which will best discriminate between the categories of the dependent
variable.
 Examination of whether significant differences exist among the groups, in terms of
the independent variables.
 Determination of which independent variable contributes to most of the intergroup
differences.
 Classification of the new object into priori defined groups based on the values of the
independent variables.
Information provided by Discriminant analysis can be used for variety of marketing

applications.
 To determine how market segments differ in their media usage habits.
 To determine how consumers differ in buying behavior based on their demographic
characteristics.
 To determine how consumers differ in buying behavior based on their psychographic
characteristics.
 To determine how consumers differ in demographic characteristics based on their
behavioral characteristics.
5.2.3. Procedure for Conducting Discriminant Analysis:

The steps involved in multidimensional scaling are as follows.
2) Estimate the Discriminant Function Coefficients
3) Determine the Significance of the Discriminant Function
4) Interpret the Results
5) Assess Validity

 In this stage the objectives of discriminant analysis is decided.
 Further, researcher should decide dependent and independent variables.
 Dependent variable should be categorical and should consist of two or more mutually
exclusive and collectively exhaustive categories.
 The independent variables are selected based on theory, past research or judgement of
the researcher.
2) Estimate the Discriminant Function Coefficients:

 Once the analysis sample is identified, one can estimate the discriminant function
coefficients.
 Two approaches are available for estimating discriminant function coefficients –
direct and stepwise.
a) Direct Method:
 In this method discriminant function is estimated so that all the independent variables
are included simultaneously.
 In this method each independent variable is included regardless of its discriminating
power.
 It is appropriate when researcher based on theory or past research wants to include all
the independent variables.
b) Stepwise Method:
 In this method the independent variables are included sequentially, based on their
discriminating power.
 In this method subset of independent variables is included.
3) Determine the Significance of Discriminant Function:

 The significance of the discriminant function needs to be determined before it is
interpreted.
 Significance of discriminant function means its ability to discriminate between
groups.
 In SPSS, Wilkinson’s λ is used to test the significance. The Wilkinson’s λ is
transformed into Chi-Square (χ2) value. Based on this value significance is judged.
 In SAS F statistic is used to judge the significance of discriminant function.

 Some clues can be obtained from examination of group means and standard
deviations. If difference between the group means on a particular independent
variable is more then it means that independent variable has more discriminating
power between groups.
 The pooled within groups correlation matrix indicates correlations between
independent variables.
 The F-ratios for various independent variables indicate their relative importance in
discriminating function.
 The relative importance of the independent variables is examined by absolute
magnitude of the standardized discriminant function coefficients. The independent
variables with large standardized discriminant function coefficient contribute more to
the discriminating power of the function and are therefore more important.
 Another way to interpret the importance of the independent variables is to examine
structure correlations or canonical loadings or discriminant loadings. The greater the
magnitude of the canonical loadings greater is the importance of the independent
variable.
 Another aid to interpret the result is to develop characteristic profile of the groups.
The characteristic profile of each group is describing each group in terms of group
means for the independent variables. The comparisons of group means on important
independent variables can assist in understanding intergroup differences.
5) Assess the Validity:

 One way of checking validity of discriminant function as offered by many computer
programs like SPSS is to use leave-one-out cross-validation option. In this option
discriminant model is re-estimated as many times as there are respondents. Each
re-estimated model leaves out one respondent and the model is used to predict for that
respondent.
 Another way is to divide the sample into two halves. One part of the sample is used
for estimation of the discriminant function and is called analysis sample. The other
part is reserved for validating the discriminant function and is called holdout or
validation sample. The composition of the analysis and validation sample should be
similar. The validation sample is used for developing classification matrix. The hit
ratio i.e. percentage of cases correctly classified by the discriminant function indicates
the validity of the function. It is desirable to have more hit ratio. Further generally the
hit ratio should be 25% more than percentage of chance classification. The chance
classification is calculated by one divided by number of groups. Sometimes by
interchanging the roles of these two samples double cross-validation is done.
5.4. RESEARCH REPORTING:

 Researcher needs to do the reporting of the research activity to the management.
 The research report serves following purposes.
o It is feedback given to management about the research activity.
o Based on the research report the management take decisions.
o It serves as a future reference.
 The research report primarily contains research problem, research design, data
analysis and interpretations, findings and conclusions and recommendations.
 The research reports are classified based on length, degree of formality and design as
follows.
o Short or Long Research Reports
o Formal or Informal Research Reports
o Technical (for researchers) or Management (for management) Research Reports
 A Research Report can be presented to management using following formats.
o Oral Presentation
o Written Presentation
o Oral and Written Presentation
Q1) Explain the concept, applications and procedure for conducting cluster analysis.
Q2) Explain the concept, applications and procedure for conducting multidimensional
scaling.
Q2) Explain the concept, applications and procedure for conducting discriminant analysis.
Note: Questions can be asked on cluster analysis, multidimensional scaling and

discriminant analysis in the form of a caselet.

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Contemporary Marketing Research (CMR) IMSCD&R, Ahmednagar.

CMR UNIT 1: INTRODUCTION TO MARKETING RESEARCH

1.1. MEANING OF MARKETING RESEARCH:

“The secret of success is to know something nobody else knows.”

Marketing Research is an objective and systematic search for knowledge in the

1) Marketing Research is search for knowledge: Marketing Research is a process of

2) Marketing Research should be carried out objectively: Marketing Researcher

3) Marketing Research uses scientific, systematic or logical way: Marketing

Marketing Research is,

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 1

 Fact Finding Exercise

1.2. DEFINITIONS OF MARKETING RESEARCH:

1) Marketing Research is a systematic design, collection, analysis and reporting of data

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 2

1.3. ROLE OF INFORMATION IN MARKETING DECISIONS:

Marketing management is a process of satisfying needs and wants of customers better

Marketing management is an organizational function and consists of set of processes for

The emphasis of marketing is on identification and satisfaction of customer need and

Macro environment is general or broad environment. It consists of forces which are

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 3

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 4

1.4. ROLE OF MARKETING RESEARCH:

Marketing Planning Process:

Role of Research in Marketing Planning Process:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 5

2) Research related to Setting Marketing Objectives: Research helps the marketer in

3) Research related to Designing Marketing Strategy: Research helps the marketer in

4) Research related to Developing Marketing Mix Program: Research helps the

a) Product related Research:

b) Pricing related Research:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 6

c) Promotion related Research:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 7

The role of research in marketing management can be shown diagrammatically as

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 8

1.5. SEQUENCE OF STEPS IN MARKETING RESEARCH PROCESS:

1) Define Marketing Problem

1) Define Marketing Problem:

2) Marketing Research Proposal:

3) Marketing Research Design:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 9

5) Data Analysis and Interpretation:

6) Marketing Research Reporting:

1.6. DEFINE MARKETING PROBLEM:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 10

Tasks Involved in Problem Formulation:

1.6.1. Understand the Marketing Decision Maker and the Environment:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 11

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 12

1.6.2. Understand Objectives of the Decision Maker:

1.6.3. Understand Alternative Courses of Action:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 13

1.6.4. Understand Consequences of Alternative Courses of Action:

1.6.5. Define Management Decision Problem:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 14

1.6.6. Translate Management Decision Problem into Research Problem:

1.7. MARKETING RESEARCH PROPOSAL:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 15

1.7.1. Types of Research Proposals:

1.7.2. Drafting a Marketing Research Proposal:

1.7.3. Evaluating a Marketing Research Proposal:

Dr. A. R. Mancharkar, Associate Professor & Co-ordinator – MBA Programme. Page 16

Some of the criteria used for evaluation are as follows.

1.8. RESEARCH DESIGN: