Chapter 4 Managing Marketing Information

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					         Chapter 4
Managing Marketing Information
Coca-Cola’s Marketing Blunder
In 1985, marketers thought they were listening to
their target market. They noticed that they were
losing market share to Pepsi and they conducted
taste tests to develop their new formula.
On April 23, 1985, Coca-Cola stopped producing
old Coke and created a new Coke with a
sweeter taste.
Angry customers panicked, filling their
basements with old Coke and threatening
3 months later, Coca-Cola brought back the old
formula calling it Coca-Cola Clasic.
Coca-Cola fouled up their research. They
focused only on Taste. The company
ignored consumers’ feeling about the old

Luckily, Coca-Cola had quick reaction
The Importance of Marketing
 Companies need information about
– Customer needs
– Marketing environment
– Competition
 Marketing managers do not need
 more information, they need better
Marketing Information System
  An MIS consists of people,
  equipment, and procedures to
  gather, sort, analyze, evaluate, and
  distribute needed, timely, and
  accurate information to marketing
  decision makers.
  The MIS helps managers to:
 1. Assess Information Needs
 2. Develop Needed Information
 3. Distribute Information
Assessing Information Needs
  A good MIS balances the information
  users would like against what they really
  need and what is feasible to offer.
  Sometimes the company cannot provide
  the needed information because it is not
  available or due to MIS limitations.
  Have to decide whether the benefits of
  more information are worth the costs.
Developing Marketing Information
      Internal Databases: Electronic collections of
      information obtained from data sources within the
  –     Information in a database can come from many sources.
        Operations tracks shipments and inventory, sales tracks
        competitor activities, marketing has customer
        demographics and buying behavior, customer service
        contains information on customer satisfaction.
      Marketing Intelligence: Systematic collection
      and analysis of publicly available information
      about competitors and developments in the
      marketing environment.
  –     Used to improve strategic decision making
      Marketing Research: Systematic design,
      collection, analysis, and reporting of data relevant
      to a specific marketing situation facing an
  –     Used to help understand customer purchase behavior
        Marketing Research Process
    Defining the          Developing the                                    Interpreting &
                                                  the research
     problem &            research plan                                      reporting the
                                                plan – collecting
      research             for collecting                                      findings
                                                & analyzing the
     objectives             information

Problem: Losing market share to Pepsi. We must research the taste preferences of

We should collect taste preference information through blind taste tests.

Conduct blind taste tests in various settings aimed at various consumers

Data finds that consumers prefer the sweeter taste of Pepsi.

Based on the findings, Coca-Cola decides to produce a sweeter New Coke,
and remove the old Coke from its product line.
     Step 1: Defining Problem &
    Exploratory Research:
–     Gather preliminary information that will help define
      the problem and suggest hypotheses.
    Descriptive Research:
–     Describes things (e.g., market potential for a
      product, demographics, and attitudes).
    Causal Research:
–     Tests hypotheses about cause-and-effect
      relationships. Example: Would a 10% decrease in
      tuition at a private college increase enrollment
      enough to offset the decrease in tuition?
       Step 2 : Developing the
           Research Plan
–     Determining the exact information needed
–     Developing a plan for gathering it efficiently
–     Presenting the written plan to management
–     Sources of existing data
–     Specific research approaches
–     Contact methods
–     Sampling plans
–     Instruments for data collection
    Developing the Research Plan:
           Campbell Soup
Campbell wants to conduct research on how soup consumers would
  react to the introduction of new bowl-shaped plastic containers
  which would allow consumer to heat soup in the microwave without
  adding anything and without a need for dishes.

They need to research the following information:
  Demographic, economic and lifestyles of current soup consumers
  Consumer usage patterns for soup (where, when, how much)
  Retailer reactions to new packaging
  Consumer attitudes toward new packaging
  Forecasts of sales for new and old packages
          Secondary Data
    Secondary data sources:
–     Government information
–     Internal, commercial, and online databases
–     Publications
–     Obtained quickly
–     Less expensive than primary data
–     Information may not exist or may not be usable
    Primary Data Collection
    Information collected for the specific
    purpose at hand.
    Must be relevant, accurate, current, and
    Plan for Primary Data Collection Must
–     Research approach
–     Contact methods
–     Sampling plan
–     Research instruments
   Developing the Research Plan:
          Campbell Soup
They need to research the following
  Demographic, economic and lifestyles of   Secondary Data
  current soup consumers
  Consumer usage patterns for soup
                                            Secondary Data
  (where, when, how much)
  Retailer reactions to new packaging       Primary Data

  Consumer attitudes toward new             Primary Data
  Forecasts of sales for new and old
                                            Secondary Data
         Research approach
Observational Research
      The gathering of primary data by observing
      relevant people, actions, and situations.
      Ethnographic research:
  –     Observation in “natural environment”
      Mechanical observation:
  –     People meters – records tv shows watched
  –     Checkout scanners – record shoppers’ purchases
  –     Galvanometer – detects sweating
  –     Eye Cameras – study respondents’ eye movements
       Research approach
Survey Research
   Most widely used method for primary data
   Approach best suited for gathering
   descriptive information.
   Can gather information about people’s
   knowledge, attitudes, preferences, or
   buying behavior.
          Experimental Research
       Tries to explain cause-and-effect relationships.
   –      selecting matched groups of subjects,
   –      giving different treatments,
   –      controlling unrelated factors, and
   –      checking differences in group responses.

Example: before adding a new product, to its menu, Taco Bell might
use experiments to test the effect of sales on two different prices it
might charge.
                                            Personal can mean
                                            individual interviewing or
       Contact Methods                      focus groups (6-10 people
                                            who talk about product)

                      Mail      Telephone Personal Online
    Flexibility       Poor      Good        Excellent       Good

  Qty of data that    Good      Fair        Excellent       Good

 can be collected
     Control of       Excellent Fair        Poor            Fair

interviewer effects
Control of sample     Fair      Excellent   Fair            Poor

 Speed of data        Poor      Excellent   Good            Excellent

 Response Rate        Fair      Good        Good            Good

       Cost           Good      Fair        Poor            Excellent
     Choosing the Sample
    Sample – segment of the population
    selected to represent the population as a
    Requires 3 Decisions:
–     Who is to be surveyed?
        Sampling unit
–     How many people should be surveyed?
        Sample size
–     How should the people in the sample be
        Sampling procedure
          Types of Samples
Probability Sample
                        Every member of the population has a
Simple Random Sample    known and equal chance of selection.
                        Population is divided into groups (ex age
Stratified Random       groups) and random samples are drawn
Sample                  from each group.

                        Population is divided into groups based on
Cluster (area) Sample   location and samples are drawn from the

Nonprobability Sample
                        Researcher selects the easiest population
Convenience Sample      members from which to obtain information.
                        Researcher uses his or her judgment to
Judgment Sample         select population members who are good
                        Researcher finds a prescribed number of
Quota Sample            people in each of several categories.
      Primary Data Collection
–     What questions to ask?
–     Form of each question?
        Closed-ended – include all possible answers (multiple
        Open-ended – allow respondents to answer in own words
–     Wording?
–     Ordering?
                       Likert Scale
One of the most popular closed-ended formats, widely used in survey
  research, particularly in measuring attitudes, beliefs and opinions.

The basic idea here is to:
  write the item as a declarative sentence and;
  then provide a number of response options, or choices, that would
  indicate varying degrees of agreement with, or endorsement of, that

   Example:      Three meals a day is essential to a healthy lifestyle.

   1         2             3                4      5           6
Strongly Moderately      Mildly           Mildly Moderately Strongly
Disagree Disagree        Disagree         Agree Agree       Agree

Please note, in the above example, that the "item" to be evaluated
   consists of a declarative sentence. Thus, it already states a 'position'
   and 'direction' of attitude. The respondent is then asked to circle the
   direction and extent (intensity) of his/her agreement (or
   disagreement) with that "position" sentence.
    Step 3 : Implementing the
         Research Plan
–   Data is collected by the company or an
    outside firm
–   The data is then processed and checked for
    accuracy and completeness and coded for
–   Finally, the data is analyzed by a variety of
    statistical methods
       Analyzing the Data
Simple Tabulation – count the occurances
of each variable independently of other
Cross Tabulation – divide the sample into
sub-groups to show how the variable
varies from one subgroup to another
                                Simple Tabulation
  Answer Choice                              1       2      3      4       5       6                 Total Respondants
  Question 1                                 5       8     10     11      14      16                          64
  Question 2                                19       7      4      2      21      11                          64

                          PERCENTAGE OF TOTAL
  Question 1                       8% 13% 16% 17% 22% 25%
  Question 2                      30% 11% 6% 3% 33% 17%

                                                                Question 1


1 = Strongly Disagree, 2 = Moderately Disagree, 3 = Mildly Disagree, 4 = Mildly Agree, 5 = Moderately Agree, 6 = Strongly Agree
                       Cross Tabulation
                  QUESTION 1
 Answer Choice         1     2 3   4   5   6                 Total Respondants
 Men                   4     7 8   6   7   1                          33
 PERCENTAGE OF TOTAL 12% 21% 24% 18% 21% 3%
 Women                 1     1 2   5   7  15                              31
 PERCENTAGE OF TOTAL 3% 3% 6% 16% 23% 48%

              Question 1 - MEN                       Question 1 - WOMEN

                                      1                                          1
                                      2                                          2
                                      3                                          3
                                      4                                          4
                                      5                                          5
                                      6                                          6

1 = Strongly Disagree, 2 = Moderately Disagree,
3 = Mildly Disagree, 4 = Mildly Agree, 5 = Moderately Agree, 6 = Strongly Agree
Step 4 : Interpreting and Reporting
 –   The research interprets the findings, draws
     conclusions and reports to management

 –   Managers and researchers must work together to
     interpret results for useful decision making
Analyzing Marketing Information

 – Statistical analysis and analytical models are often
 – Customer relationship management (CRM) software
   helps manage information by integrating customer
   data from all sources within a company
 – CRM software offers many benefits and can help a
   firm gain a competitive advantage when used as part
   of a total CRM strategy
     Distributing and Using
     Marketing Information
– Routine reporting makes information available
  in a timely manner.
– User-friendly databases allow for special
– Intranets and extranets help distribute
  information to company employees and value-
  network members.
        Other Considerations
Marketing research in small businesses
and not-for-profit organizations
International marketing research
Public policy and ethics
– Consumer privacy issues
– Misuse of research findings

 Goal 5: Discuss Special Issues Facing Market Researchers
Customer Relationship Management
      Many companies utilize CRM
  –     Capture customer information from all sources
  –     Analyze it in depth
  –     Apply the results to build stronger
      Companies look for customer touch points
      (every contact between company and customer).
      CRM analysts develop data warehouses
      (centralized database) and use data
      mining (algorithms designed to detect
      patterns in the data) techniques to find
      information out about customers.
                       Study case
     Hypothesis Testing
      – Uses Regression Analysis to Interpret the
Example: Taco Bell might take the data from the experiments
designed to test the effect of sales on two different prices.
The company would run a regression on the data to determine if
the new price had a significant effect on sales.
Original Price               Taco Supreme Meal                        $4.98
New Price                    Taco Supreme Meal                        $5.48

     Day                     Sales at Old Price         Sales at New Price
      1          Monday                           200                    190
      2          Tuesday                          179                    170
      3          Wednesday                        154                    146
      4          Thursday                         320                    376
      5          Friday                           228                    217
      6          Saturday                         207                    197
      7          Sunday                           189                    180
      8          Monday                           289                    275
      9          Tuesday                          182                    173
     10          Wednesday                        221                    210
     11          Thursday                         198                    188
     12          Friday                           178                    169
     13          Saturday                         245                    233
     14          Sunday                           189                    180
     15          Monday                           167                    159
     16          Tuesday                          183                    174
     17          Wednesday                        200                    221
     18          Thursday                         196                    186
     19          Friday                           118                    112
     20          Saturday                         149                    142
                                  Regression Output

         Regression Statistics
Multiple R               0.967420566
R Square                 0.935902551
Adjusted R Square        0.932341582
Standard Error           14.39127822
Observations                      20

                            df            SS            MS            F      Significance F
Regression                        1      54432.857     54432.857 262.8224086    3.4894E-12
Residual                         18    3727.959999   207.1088888
Total                            19      58160.817

                       Coefficients Standard Error    t Stat     P-value       Lower 95%    Upper 95% Lower 95.0% Upper 95.0%
Intercept             -38.22687925    14.72791383 -2.595539307 0.018269864     -69.16910196 -7.28465654 -69.16910196 -7.28465654
Sales at Old Price     1.167319034     0.07200429 16.21179844 3.4894E-12        1.016043518 1.318594551 1.016043518 1.318594551

   Interpretation: we are 98% confident (1-p value) that there is a relationship between
   old sales (x) and new sales (y) data.
   To estimate new sales, we would formulate the following equation:
                                       -38.23 + (1.17 * Sales at the Old Price)
          If sales at the old price averaged 200, we would estimate new sales by:
                                             -38.23 + (1.17 * 200) = 195.24
      Making the Decision
Given Estimated Sales at the New Price,
is the price hike worth it?
Judging by our research estimates, we
would reduce sales by 5 if we implement
the new price.
We sold 200 at $4.98 = $996.00
The new price adds $0.50 per sale, so we
would sell: 195 at $5.48 = $1,069.90
      Making the Decision
Assuming there are no other costs (or that
the other costs don’t outweight the

We would increase revenue by: $73.90 if
we increase the price.

So – YES we should make Taco Supreme
Meals $5.48.
Can you name some new growing trends?
What products or services might be in high
demand to fit those trends?
What jobs will grow to suit those trends?

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