"Bankruptcy Means Test Powerpoint"
Introduction to Marketing Research: Part 2 Slide 1 [Introductory comments again] Slide 2 So, what types of activities are entailed by marketing research? The next several slides will give you an indication of what those activities might be. Slide 3 This slide indicates the range of topics that a marketing researcher might be asked to study. Here, research is divided into two basic domains: problem identification research and problem solving research. Clearly, you need to be able to both identify a problem and then once identified, solve it. Without proper identification, you‟re solving the wrong problem, so clearly researchers will need to be able to accomplish both tasks. You can see the list under problem identification: market potential, market share, image research, market characteristics, sales analysis, forecasting, and business trends. These are all the domains that would help a marketer to understand what his or her problem might be. Once identified, then under problem solving you‟re looking at marketing mix issues and segmentation. Slide 4 This slide lists the types of problem-solving research. Under segmentation are things such as the basis for segmentation. Under product research are things like concept tests for possible new products, looking for ways to modify existing products (by changing the packaging of more mature products or brand repositioning for newer products), and test marketing of both the traditional and in-store kind. (There‟s more on this later in the semester.) Under pricing research are things for new products, for modifying prices of existing products, and adjusting for the price mix of products within a product line. Price elasticity may seem more like an economic issue; nonetheless, proper pricing would require examining what the market is willing to bear, and price elasticity gives you a sense for likely changes in demand due to changes in price. Promotional research is all the things you think about when you think about ad research, copy decisions, where to place ads, and other promotional research unrelated to advertising. Finally, distribution research addresses how to distribute your product and what channels or stores might carry your brand. All these things would be under problem-solving research. Slide 5 This slide shows another way to think of what was depicted in the previous slide. Instead of thinking in terms of topic areas, you might think in terms of marketing mix decisions that managers must make. Basically, it provides similar information but a more accessible way to think about what value research would have to marketing managers. Slide 6 These next two slides indicate the kinds of research activities that companies are involved in. The percentages reported on the right are somewhat dated, but I believe they are still fairly indicative of the percent of companies that conduct this kind of research, both in total and in- house. The last column is the in-house column. Page | 1 Slide 7 (No audio) Slide 8 I‟ve found the last slide in this series of several slides especially useful in illustrating the different kinds of research that are most appropriate at different stages of the product life cycle. For example, even before a product is launched in that pre-commercialization stage, you can see that there is a set of research studies that are more typical of that stage. Many of these studies are qualitative, as opposed to quantitative. Looking at the subsequent four columns—the introductory, growth, maturity, and decline stage—you can see that the concerns at the introduction stage entail issues related to launching a product. Concerns at the maturity stage entail maintaining or growing market share for a product, because at this stage you‟re unlikely to grow industry sales, so increasing your sales means taking competitors‟ sales. Things like segmentation and lifestyle research are also possibilities of repositioning your product so that it becomes more attractive to a different or larger share of the market. All of these are appropriate in the maturity stage. In the decline stage, you are basically trying to milk the product. It would be good to know something about people‟s sensitivities to price, the change in demand related to changes in price or things that you might be able to do to value engineer and reduce the cost of your product making it more affordable to those people who are buying in that last stage of the product life cycle. Slide 9 You can see from this slide that the planning and research necessary for product development and launch is somewhat different from the types of research necessary for ongoing products. This expands the pre-commercialization and introduction stages from the previous slide. Slide 10 As an informed consumer of marketing research, it would be helpful to understand the surrogate indicators of a good researcher. The next several slides will be spent on this particular topic. Slide 11 As this cartoon illustrates, the manager—the man pacing with his hands clasped behind his back—is concerned that the ads he‟s running aren‟t effective; therefore, his market share with the college segment is inadequate. In fact, this manager may be far too close to the problem to recognize it. This often happens when managers are so involved and so close to the problem that they can‟t see the forest from the trees. The researcher‟s job, in this case, is to help structure the manager‟s problem or to help the manager understand his „true‟ problem. Recognizing the true problem always will help the manager select among viable alternative courses of action. Slide 12 In addition to helping the manager to understand the problem he or she faces, a good researcher also will conduct the appropriate analysis—the appropriate research needed to address the manager‟s problem—and provide that manager with the information needed to make the most informed decision. Page | 2 Slide 13 Sadly, many self-proclaimed marketing researchers are ill qualified to conduct marketing research. Although the American Marketing Association has considered accreditation, the processes for marketing researchers are not in place. There is no certificate that one can acquire, like a CPA, that clearly indicates a marketing researcher understands the field and is sufficiently competent to provide sound research for managers. When you‟re dealing with a marketing researcher who is inadequately trained, often that researcher will try to fit a technique that he or she is well versed in to whatever problem that marketing manager faces. I worked with a „so called‟ marketing researcher in the hospitality industry who was knowledgeable about only one marketing research technique: conjoint analysis. No matter how many hospitality clients he met with, the solution to their problem was always, “We need to run a conjoint study for you.” Clearly, this particular researcher—an advertising person who decided to chase more profits and visibility for himself—offered marketing research to hospitality firms. Sadly, he was unqualified to conduct marketing research properly; as a result, his clients did not get the research results they needed to make the best possible decision. Slide 14 Good researchers understand their field so well that they can effectively communicate to any manager—regardless of that manager‟s level of expertise in marketing research and statistics— the results of the marketing research study and that manager‟s need for additional information to make a sound decision. A good researcher will not resort to excessive jargon, and never will utter the phrase „that‟s too complicated for you to know or to figure out‟. A good researcher will understand that anything worth communicating to a manager can be communicated effectively. Slide 15 As this cartoon reinforces, good marketing researchers will avoid needless jargon and will communicate to managers in a way that they can understand. Slide 16 Other qualities of a good marketing researcher include the following. A good researcher will be careful and conscientious. Often, consultants will overbook themselves and, as a result, the rush to satisfy your deadline will produce inadequately conducted research. A good marketing researcher will not over-schedule him or herself and will be able to provide sound research in a timely fashion. A good researcher understands that managers‟ expertise about the business environment often far exceeds the researcher‟s expertise. A good researcher will talk with managers, regarding the environment, to acquire a sound background and to inform the entire research process. A good researcher also will understand that research may have overt and covert purposes, and he or she will avoid research with covert purposes. For example, managers often solicit research with the idea of acquiring evidence for their already-made decisions. As I mentioned earlier, it‟s a waste of time and money to conduct research under such circumstances, and no ethical researcher will do so. Therefore, a good researcher will try to understand if there are any covert purposes and avoid research for which those purposes exist. A good researcher will try to assess three things: the manager‟s decision rule, the decision time horizon, and the impact to the company on making a wrong decision. The researcher must know the manager‟s time horizon for a decision—when is the data needed to make a sound decision—because that information will help the researcher choose the appropriate research Page | 3 approach. In addition, the researcher must understand the manager‟s decision rule because the researcher is trying to provide useful information to the manager for making the best possible decision. If the researcher provides information that the manager will ignore, then the researcher is wasting time and the manager is wasting money. Finally, a good researcher will understand the impact of a wrong decision. In the case of a corporation like IBM, a $10 million mistake is chump change, but in the case of a small firm in a town like Las Cruces, a $10 million mistake could cause bankruptcy. Therefore, a researcher may do different kinds of research if the impact of a wrong decision is a little less pocket money for managers rather than driving a company into bankruptcy. Research can be one of three things: (1) It can be fast, in the sense that it can be done quickly. (2) It can be good, in the sense that the results can accurately reflect reality. (3) It can be cheap, in the sense that the researcher can choose a less costly design among possible research designs. Unfortunately, all research projects can be two of those three things only. So, research can be good and fast, but then it won‟t be inexpensive. It can be good and inexpensive, but then it would be impossible to do quickly. Slide 17 As an informed consumer of marketing research, here are some additional things you should insist upon from your research supplier or marketing research department. You should insist that the research supplier maintains your confidentiality. If he or she goes on to work for a competitor, then you must agree in advance that nothing learned as a result of working with you is shared with that competitor. You want the supplier to be honest and tell you the strengths and weaknesses of any research results. You want that supplier to meet deadlines, both final and intermediate. You want that supplier to be flexible, because unexpected things arise during a research study and a successful study will have to account for those surprises. You want to ensure that supplier delivers exactly what he or she has agreed to deliver, that what is delivered is of high quality and responsive to your needs, that appropriate quality controls were used, and any collected data was collected properly. You want that supplier to be customer oriented and to try to understand your needs and to address them as best as possible. Finally, you want that supplier to provide frequent progress reports. Slide 18 These next two slides summarize the results of surveys about the qualities that managers seek in researchers. You can see that both slides clearly indicate that communication skills, both written and oral, are important. Technical competence is fairly far down the list of critical qualities. This is not to suggest that technical competence is trivial; rather, it‟s got its place as far as the qualities you should seek in a marketing researcher. Slide 19 (No audio) Slide 20 The next two slides indicate the types of conflict that exist between marketing researchers and managers and the reasons for those types of conflicts. Slide 22 Consider the following personal example. Several years ago, I worked on the ad-tracking study for Ramada. I discovered that despite John Madden‟s (then spokesperson for the Ramada) best efforts, many people didn‟t understanding the point of Ramada ads with Madden frantically Page | 4 waving his arms, jumping up and down, and scribbling X‟s and O‟s on a chalkboard. Basically, Ramada wasn‟t getting its message across; instead, it was getting John Madden‟s arm flapping across. The results of that study were very clear about one important thing: Ramada‟s major competitor was Holiday Inn, which had a large market share. Nonetheless, respondents‟ attitudes about Holiday Inn indicated it was vulnerable. Specifically, customers were highly aware of Holiday Inn, had likely stayed at one in the past year or two, but were dissatisfied with their experience. So what Ramada should‟ve done, rather than having Madden jump up and down proclaiming the virtues of Ramada, was to take on Holiday Inn head-to-head in its ads and explain why Ramada was a better place to stay. The manager I conducted that study for, I believe, was replaced. Shortly thereafter, Ramada was taken over in a merger and I saw little of Ramada‟s ads and heard little about Ramada‟s marketing strategy for several years. Then, I started seeing ads on television and in newspapers, and even hearing them on the radio, pitting Ramada against Holiday Inn. I don‟t know if this ad campaign was inspired by my research or if my results were confirmed by subsequent research. Regardless, Holiday Inn‟s large market share was seemingly strong but also showed weakness because many people knew about Holiday Inn but also knew there were things about it that they didn‟t like. If Ramada‟s ads could address those areas about which customers were concerned, then Ramada would be able to steal customers from Holiday Inn. In fact, I suspect that‟s what happened. Slide 23 (No audio) Possible Jobs in Marketing Research Slide 24 This slide suggests the many different entities that are involved in marketing research. One entity is a local field service; its mandate is to collect the data for a survey designed by someone like you or me. Alternatively, a local field service may collect data for a larger corporation conducting a large-scale study. Ad agencies need to conduct research, if for no other reason than to fine tune their ad copy and convinces their clients about the efficacy of their ads. I, however, strongly urge you not to use the same agency for both purposes. Clearly, there is a conflict of interest if the agency doing your advertising also conducts the research to show you that its ads are effective. Syndicated data companies collect data on a continual basis and provide standardized reports that help consumer companies to track the progress of their different products. Calculation houses analyze data often collected by a local field service. A research consultant would be someone like me, who would be hired by a company to design and oversee a study. There may be other suppliers who offer their services to larger companies interested in marketing research. This brief overview indicates the many different entities that are involved in research. Clearly, there are other entities than those listed here. Slide 25 The next three slides suggest positions in marketing research that could be filled by someone with an undergraduate degree in marketing. The first slide indicates positions at the corporate level inside a marketing research department. The second slide suggests a position for a marketing research supplier, which is a small marketing research firm, perhaps in a larger city. The third slide suggests the possibility of working in a research department for an ad agency. Typically, someone with an undergraduate degree in marketing would begin in sales. Often, Page | 5 sales positions require extensive traveling, and many of you may prefer a position that requires far less traveling. If so, then it‟s possible you‟d prefer a position like the ones described in the next three slides. Slide 26 (No audio) Slide 27 (No audio) Slide 28 Again, this is a theme that I will repeat; you should never assume that marketing research will be perfect. It can‟t be. In fact, for any given decision confronting a marketing manager, he or she may be better off flipping a coin or throwing a dart. However, over the course of a hundred decisions, if the manager works with marketing researchers to help them understand the basic business environment and gives them ample time and resources to conduct appropriate studies, then on average that manager will make better decisions if he or she includes research as part of the resources to be used to make decisions. Any given study is unlikely to be perfect and it‟s quite possible that a given study will be very far from perfect. Think of the situation that Coca- Cola encountered, with all the research it did prior to introducing New Coke. Slide 29 So, let‟s recap what I covered in this lecture. First, I covered a basic definition of marketing research, what it‟s in general, and how it differs from and relates to marketing information systems. Second, I covered the circumstances under which it‟s wise to conduct and wise to avoid marketing research. Third, I provided a brief overview of basic marketing research activities, especially those related to research on marketing mix variables. Fourth, I discussed the indicators of a good researcher. Fifth, I talked briefly about the inherent conflict between managers and marketing researchers. Finally, I talked about possible jobs, even for students with undergraduate degrees in marketing, in the marketing research industry. Page | 6