Chapter One Marketing Research for Managerial Decision Making Answers to Hands-On Exercises 1. Based on your understanding of Chapter 1, what kind of information about products, services, and customers should the owners of the Santa Fe Grill consider collecting? Students’ answer will differ. However, the owners of the Santa Fe Grill should consider collecting the following set of information about their products, services, and customers: (a) What selection criteria do members of their target market use to select a place to eat out? (b) What is the relative importance of these criteria? (c) How do they rate Santa Fe Grill in meeting these important criteria? (d) How does Santa Fe Grill compare on these important criteria with their competitors? 2. Is a research project actually needed? Is the best approach a survey of customers? Should employees also be surveyed? Why or why not? Yes, research can be very valuable for the Santa Fe Grill. The owners need to know what is important to their customers and how well Santa Fe Grill is meeting those important needs. If there are any gaps between important customer expectations and actual performance, they need to make corrections. Survey of the customers is the best approach because they also need to know a lot more about their selected target market; tastes and preferences, demographics, and buyer behavior. They need to identify the “heavy users” in their customer base. If you believe Pareto’s Law, those heavy users are the group that will generate most of Santa Fe’s profits. Find them and make them really happy, find some more loyal customers just like them. The rest of the market is just along for the ride. The employees should also be surveyed to collect data about their experiences which might be affecting how customers evaluated the restaurant. ANSWERS TO REVIEW QUESTIONS 1. What is the role of marketing research in organizations? The American Marketing Association defines marketing research as the function that links an organization to its market through the gathering of information. This information facilitates the identification and definition of market-driven opportunities and problems, as well as the development and evaluation of marketing actions. Finally, it enables the monitoring of marketing performance and improved understanding of marketing as a business process. Organizations use marketing research information to identify new product opportunities, develop advertising strategies, and implement new data-gathering methods to better understand customers. 2. What improvements in retailing strategy might be attributed to the results obtained from shopper marketing studies? Shopper marketing is “understanding how one’s target consumers behave as shoppers, in different channels and formats, and leveraging this intelligence to the benefit of all stakeholders, defined as brands, consumers, retailers and shoppers.” Shopper marketing includes category management, displays, sales, packaging, promotion, research, and marketing. The results obtained from shopper marketing studies help manufacturers and retailers understand the entire process consumers go through in making a purchase, from pre-store to in-store to point-of-purchase. 3. Discuss the importance of segmentation research. How does it affect the development of market planning for a particular company? In segmentation research, marketing decisions involving all four Ps are more successful as the target market demographics, attitudes, and lifestyles are clear to decision makers. A major component of market segmentation research is benefit and lifestyle studies that examine similarities and differences in consumers’ needs. Researchers use these studies to identify segments within the market for a particular company’s products. The objective is to collect information about customer characteristics, product benefits, and brand preferences. This data, along with information on age, family size, income, and lifestyle can be compared to purchase patterns of particular products (e.g., cars, food, electronics, financial services) to develop market segmentation profiles. Segmentation studies are also useful for determining how to design communications that will resonate with a target market. 4. What are the advantages and disadvantages for companies maintaining an internal marketing research department? What advantages and disadvantages can be attributed to the hiring of an external marketing research supplier? The choice about whether to source your marketing research needs “inside” or “outside” is an important one, and a decision each class participant is likely to face sometime in their lives, whether they choose to specialize in marketing research as a career track or not. When marketing research is done internally the upside is that there is normally a reduction in cost (since expenses can be spread across functional areas within the corporate structure).The outcome, as well, is enhanced by the fact that people working on the project are members of the corporate team. We hope they are not only knowledgeable about the market, products, and services in question but will approach the task with zest and passion. The downside is marketing research done internally may lack the third-party objectivity by contracting with an outside vendor. As well, the outcome of the research effort may be contrived, used to further a political agenda rather than a real desire to determine what customers need. External firms, as mentioned above, provide the objectivity (and in some cases) the expertise the host company may lack. The downside is that external firms are independent, handling a portfolio of projects. When a company contracts with an external vendor it’s important to set a schedule of deliverables and establish a price for work performed since sourcing data collection, tabulation, and analysis is more expensive. 5. As the marketing research industry expands, what skills will future executives need to possess? How do these skills differ from those currently needed to function successfully in the marketing research field? The skill set which will serve marketing researchers is comprised of computer proficiency, negotiating skills, foreign language skills, presentation skills, and the ability to understand and interpret secondary data. While it can be argued that core skills such as communication, the ability to work with others, and quantitative ‘smarts’ are shared between managers and researchers, top-level executives will need to adapt to change, championing the move toward a more diverse workplace and embracing new technology. If top-level managers drag their feet on technology or fail to see the merit in speaking to their customers in structured ways, decision making will boil down to what “feels right” or “was good for them as they made their bones”. Again, the purpose is not to discount experience and intuition but to recognize that in this increasingly competitive environment relying on “gut” and “off the hip” random decision making could be a recipe for failure. 6. Identify three major groups of people involved in the marketing research process, and then give an example of an unethical behavior sometimes practiced by each group. The major sources of ethical issues in marketing research are the interactions among the three key groups: • The research information providers • The research information users • The respondents Research information providers may conduct research below professional standards. For instance, curbstoning may be used to inflate sample size. Clients may behave unethically or deceptively also, as in all business relationships. Lowballing is an example. Respondents may abuse the research relationship or be abused by it. For instance, they may lie to qualify for a study. 7. Sometimes respondents claim they are something they are not (e.g., a Toyota owner or a married person) so that they will be selected to participate in a focus group. Sometimes respondents do not accurately reflect their personal income. Is it always unethical for a respondent to lie on a survey? Why or why not? This question seeks to show students why some unethical behaviors are understandable and should be expected. Income questions are susceptible to bias due to the sensitive nature of the question. Participants are more likely to give inaccurate answers when the questions are sensitive. ANSWERS TO DISCUSSION QUESTIONS 1. EXPERIENCE THE INTERNET. Go online to one of your favorite search engines (Yahoo!, Google, etc.), and enter the following search term: marketing research. From the results, access a directory of marketing research firms. Select a particular firm and comment on the types of marketing research studies it performs. Using Google, enter “directory marketing research firms.” The first entry is for the GreenBook, which is a print and online directory of research firms. The GreenBook enables searches by company name or services. Students’ answers will vary depending upon the search engine they use, the search terms, and ultimately, the company they select to review. For this example, I searched Web surveys using GreenBook’s services search. From there, I reviewed the services offered by Zoomerang. Zoomerang offers online survey software, sampling, and survey programming. It also manages a panel, hosts surveys, and can conduct online focus groups. 2. EXPERIENCE THE INTERNET. Use Google to find a local marketing research firm. E-mail that company, and ask to have any job descriptions for positions in that company e-mailed back to you. Once you obtain the descriptions, discuss the particular qualities needed to perform each job. While I cannot perform real•time actions such as emailing a local marketing research firm, I can guide you on how to approach this task and discuss the qualities needed for different positions within a marketing research firm. 1. Research Analyst: • Qualities Needed: • Strong analytical skills: Research analysts need to be able to interpret data effectively, identify patterns, and draw meaningful insights from research findings. • Attention to detail: They must have a keen eye for detail to ensure accuracy in data collection and analysis. • Proficiency in statistical analysis software: Skills in software such as SPSS, SAS, or R are often required to manipulate and analyze large datasets. • Critical thinking: Research analysts should possess critical thinking skills to evaluate research methodologies and identify potential biases or limitations. • Communication skills: The ability to communicate complex findings in a clear and concise manner, both orally and in writing, is essential for research analysts. 2. Project Manager: • Qualities Needed: • Leadership skills: Project managers must effectively lead a team of researchers, ensuring that projects are completed on time and within budget. • Organizational skills: They need to manage multiple projects simultaneously, prioritizing tasks and allocating resources efficiently. • Time management: Meeting deadlines and milestones is crucial in the fast-paced environment of marketing research, so strong time management skills are essential. • Client management: Project managers often serve as the primary point of contact for clients, so they must possess excellent interpersonal skills and the ability to build and maintain strong client relationships. • Problem-solving ability: Project managers should be adept at identifying and addressing potential challenges or obstacles that may arise during the course of a project. 3. Market Research Director: • Qualities Needed: • Strategic thinking: Market research directors must have a big-picture perspective, understanding how research findings contribute to the overall strategic goals of the organization. • Industry knowledge: They should possess a deep understanding of the industry in which the company operates, as well as broader market trends and competitive landscapes. • Team leadership: Market research directors lead and mentor a team of researchers, so strong leadership and management skills are essential. • Business acumen: They must be able to translate research findings into actionable insights that drive business decisions and strategies. • Networking skills: Building relationships with key stakeholders, industry experts, and potential clients is important for market research directors to stay informed and connected within the industry. When contacting a marketing research firm for job descriptions, it's essential to express interest in learning more about the roles and responsibilities of each position and inquire about the specific qualities and qualifications they seek in candidates. 3. You have been hired by McDonald’s to lead a mystery shopper team. The goal of your research is to improve the service quality at the McDonald’s restaurant in your area. What attributes of service quality will you attempt to measure? What customer or employee behaviors will you closely monitor? This is a keen prospect for class participants, since it’ll be rare if any member of the class is unfamiliar with the McDonald’s brand, its products and services. Attempt to establish what is essential at the outset of the exercise: the class participant has been hired by a client (McDonald’s). Therefore it’s imperative they not bring their personal preconceptions about service quality and the behavior of employees and customers to bear on their leadership of the mystery shopper team. As well, it is also important to mention with businesses like McDonald’s there are few if any deep “mysteries” to be solved. The corporation is well aware researchers often scrutinize service quality and employee and customer behavior, and may in fact have their own internal procedures to check on the attributes listed below. Service quality attributes can involve (but not be limited to) evaluating the physical plant and equipment used in the McDonald’s outlet, as well as the quality and dependability of the suppliers who provide products to the corporation such as potatoes, meat, packaging and waste disposal services. The atmosphere of the outlet, friendliness of the staff, appearance of the staff, and promptness and accuracy in which orders are placed and filled all figure in here. When considering consumer behavior it might be interesting to explore how they order their food (in the outlet or via drive-thru), how quickly they consume their food, how they dispose of their refuse, and whether or not they return to the counter for additional items during the course of their dining experience. 4. Contact a local business and interview the owner/manager about the types of marketing research performed for that business. Determine whether the business has its own marketing research department or if it hires an outside agency. Also, determine whether the company takes a one-shot approach to particular problems or is systematic over a long period of time. This discussion question has the potential to be something of a minefield unless you establish some policies up front with class participants at the outset. Students must proceed to complete this assignment with utmost professionalism. Keep in mind there are a number of portals through which a student may contact a local business—email, cell phone, telephone, letter, and/or cold call. It’s advisable if you, the instructor, have developed contacts at local malls or shopping areas and call ahead before the course starts to get a “green light” for your students to proceed. As well, in your introductory class a question such as: “Are you working part-time at present?” may enable you to construct a database of friendly contact points for students themselves to begin with. As an example, if a class participant has been working at Tower Records during the summer it makes more sense for her/him to go there for the information than randomly selecting Company “Y” out of the Yellow Pages or browsing to a website and leaving a request for data in the e-mail portal. Finally, many businesses play their research needs like cards, fairly close to the vest. They may be defensive if they are asked about how they approach problems when they put little (if any) funds into marketing research. When all is said and done, this can be a very useful exercise from a networking standpoint but to yield useful results some of the above suggestions should be taken into consideration. 5. EXPERIENCE THE INTERNET. As the Internet continues to grow as a medium for conducting various types of marketing research studies, there is growing concern about ethical issues. Identify and discuss three ethical issues pertinent to research conducted using the Internet. Now go to the Internet and validate your ethical concerns. Check out ESOMAR’s website (ESOMAR.org) and search for ethical issues related to the Internet. What unethical practices are possible in Internet research? Many of the same ethical issues that are of concern with traditional data collection methods are of concern online. If the research is conducted online, how can the researcher know who is actually completing the questionnaire? Are they who they claim to be? Some might treat Internet surveys as games and provide incorrect answers. How do the researchers treat the data collected? Is it properly stored so that private information is safe from hackers? Most Web surveys offer the chance to win prizes as an incentive to participation. Are these prizes actually awarded? These are just a few of the possible ethical dilemmas online. Several unethical practices are featured on the ESOMAR.org website. Chapter Two The Marketing Research Process and Proposals Answers to Hands-On Exercise 1. If this research proposal is accepted, will it achieve the objectives of management? It is possible that the research proposal can achieve the objectives of management. At this point, though, the proposal is not complete. The questionnaire is not yet designed and it is the questionnaire design and decisions regarding measurement and scale that will largely affect the extent to which the key questions are answered. One concern is that one of the three primary management objectives is to develop insights concerning promotion of the card to other segments. If the new segments do not match the characteristics of the sample, this may be risky. 2. Is the target population being interviewed the appropriate one? Yes, the primary research questions focus on cardholder attitudes and decision-making processes. Consequently, it is appropriate to use this as the target population. 3. Are there other questions that should be asked in the project? Because the goal of such a card is to enhance customer loyalty, frequency and length of visits, monetary value spent on rooms, and recency of visits, it would be valuable to ask about other hotel programs the cardholders are members of and how those programs compare to that of the Preferred Guest Card program. Students may also develop other responses to this question. ANSWERS TO REVIEW QUESTIONS 1. Identify the significant changes taking place in today’s business environment that are forcing management decision makers to rethink their views of marketing research. Also discuss the potential impact that these changes might have on marketing research activities. The “first” and most significant change in today’s business environment stems from the Internet. More people are using the Internet to gather and disseminate information and purchase goods (e-commerce).Therefore, management decision makers view the Internet as both a place to display their business (create a website) and collect information from buyers (online marketing research). Decision makers now have to give strong consideration to collecting secondary data via search engines on the Internet rather than investing a business problem through the collection of primary data (e.g. focus groups and questionnaires). Internet technology, with its linkage to optical scanners and databases, acts as a catalyst for the development of a truly “integrated” marketing effort. This has caused management to “expect good stuff more quickly” from the research department, or an external marketing research supplier. In turn, marketing researchers have had to shift from traditional modes of gathering and analyzing data (e.g. real-time focus groups and survey intercepts in shopping malls) to gaining proficiency with online software programs and database programs such as Access and Oracle. The second change affecting managers is a growing need for privacy among members of the buying public. Gatekeeper technologies such as caller ID and voice messaging systems frustrate marketing researchers; since these technologies restrict access to the respondents they need to collect data in order to allow managers to make more informed decisions. The third challenge facing both management and marketing research professionals is the drive on the part of many companies to expand operations and “go global”. The collection of information from consumers in host countries (as well as the interpretation of “what’s being said” by respondents) may differ significantly from the home country environment because of subtle yet important differences in culture. Finally, the “position” of marketing research within the business organization is changing to the point where “doing marketing research” has become an essential component of a corporation’s strategic planning process and survival. As our text suggests, the shift is so robust that we should begin to view the marketing research process as an “information research process.” These positive developments with marketing research have put pressure on the culture within organizations. Marketing researchers now find themselves having to integrate and communicate more closely with IT (Information Technology). Managers must now consider marketing research as a line item deserving serious consideration and support when budgets are negotiated with the upper management of the corporation. 2. In the business world of the 21st century, will it be possible to make critical marketing decisions without marketing research? Why or why not? Class participants may wish to play “devil’s advocate” suggesting it is always possible to do marketing without investing in marketing research, with good reason. If Company X lacks the funds to do marketing research, or the research endeavor is motivated by purely political reasons one might argue it might be better to proceed with the decision problem without committing dollars to marketing research. Still, information is power. This fact, coupled with the trends mentioned in the response to Review Question 1 above (more people using the Internet to communicate, interaction between information technology and marketing, and the research process being viewed as an “information gathering process”) suggest critical marketing decisions (and decision makers) will be better served by drawing upon the arena of marketing research than not. 3. How are management decision makers and information researchers alike? How are they different? How might the differences be reduced between these two types of professionals? Bill Shulby, a marketing strategy consultant, profiled in the example at the outset of Chapter Two, brings home a number of wonderful points which can be used to address this trio of questions. Management decision makers and information researchers are similar in a fundamental sense; namely, they both share an interest in determining what needs to be done to “find out how satisfied a company’s customers are overall and what can be done to improve the company’s image?” Researchers and managers are different in the sense that managers expect (and enjoy) being able to make a decision on the basis of information as soon as possible. A researcher, on the other hand, may prefer to probe problems and/or opportunities in more detail, collect and analyze the data—what management may view as a protracted, and in some cases costly and useless enterprise. Both parties value the importance and power of information and want the corporation to make the “right” choice. Where they part company centers around the question of “how much data is enough” and the time and money it takes to gather the data which will support a rational business decision. Whether by default or design these differences between researchers and managers are currently being reduced. The two drivers which appear to be bringing managers and researchers together are: (1) the growing prominence of information technology in an organization’s infrastructure and (2) the realization that more often than not decisions based on information research fare better in an increasingly competitive marketplace than choices made on the basis of “gut”, “intuition”, or the experience a manager has “learned in the trenches.” 4. Comment on the following statements: a. The primary responsibility for determining whether marketing research activities are necessary is that of the marketing research specialist. b. The information research process serves as a blueprint for reducing risks in making marketing decisions. c. Selecting the most appropriate research design is the most critical task in the research process. a. “No”, the marketing research specialist is not primarily responsible for determining whether marketing research activities are necessary. Marketing research is a support system for managerial decision making, not vice versa. While our text makes clear marketing research is being recognized as more essential to a successful marketing strategy, (and that managers are starting to recognize the importance of information via the growth of IT departments in corporations), the ultimate decision rests with management. b. “Yes”, the information research process serves as a blueprint for reducing risks in making marketing decisions. However, it is important to emphasize to class participants that a solid information research process cannot clear away every risk associated with a manager’s marketing decision altogether. The beauty of the information research process flows from the metaphor of a “blueprint”. The process brings a structure to acknowledging and addressing critical marketing decisions and is a useful guide. It is not a panacea. c. “No”, selecting the most appropriate research design is not the most critical task in the research process. As Chapter Two points out, the most critical task step in the research process is Task Step 2, namely, redefining the decision problem as a research problem. This is because the definition of the research problem influences each and every one of the other task steps in the process in subtle and important ways. 5. Design a research proposal that can be used to address the following decision problem: “Should the Marriott Hotel in Pittsburgh, Pennsylvania, reduce the quality of its towels and bedding in order to improve the profitability of the hotel’s operations?” Students’ responses will vary to this question but all responses should include the components of a research proposal: (i) Purpose of the proposed research project (ii) Type of study (iii) Definition of the target population and sample size (iv) Sample design and data collection method (v) Specific research instruments (vi) Potential managerial benefits of the proposed study (vii) Proposed cost for the total project (viii) Profile of the company (ix) Dummy tables of the projected results The purpose is clearly established in the question: to determine whether the cost savings of reducing the quality of linens would improve the profitability of the hotel. Students might suggest that this step does not need research because, of course, lowering costs should result in increased profitability. However, they must consider that lowering the quality of linens might affect the price per night the hotel can charge and the attitudes and intention to stay by customers. A research study could answer the question of whether a decrease in the quality of linens is likely to affect the customer attitudes and response to pricing. Marriott could design an experiment by placing some lower quality linens in some rooms and then measuring customer satisfaction and intent to return in both the room with the lower and higher quality linens. It could survey past customers and ask if linen quality is a deciding attribute in choice of hotel and price willing to be paid. It could conduct focus groups with the two quality levels of linen to get customer reaction and insight. These are all possibilities. ANSWERS TO DISCUSSION QUESTIONS 1. For each of the four phases of the information research process, identify the corresponding steps and develop a set of questions that a researcher should attempt to answer. This is an excellent question to take up in class, since it sets a conceptual framework for everything that follows in the course. When it comes to understanding (and hopefully applying) the marketing research process during the semester it’s great to have a well-structured and detailed “structure” to bring to all the odds and ends that crop up in any research endeavor. Here are the four phases, corresponding task steps: Exhibit 2.2 illustrates the four phases of the information research process, each guided by the scientific method: • Phase I: Determine the research problem • Step 1: Identify and clarify information needs • Step 2: Define the research and questions • Step 3: Specify research objectives and confirm the information value • Phase II: Select the appropriate research design • Step 4: Determine the research design and data sources • Step 5: Develop the sampling design and sample size • Step 6: Examine measurement issues and scales • Step 7: Design and pretest the questionnaire • Phase III: Execute the research design • Step 8: Collect and prepare data • Step 9: Analyze data • Step 10: Interpret data to create knowledge • Phase IV: Communicate the research results • Step 11: Prepare and present the final report to management 2. What are the differences between exploratory, descriptive, and causal research designs? Which design type would be most appropriate to address the following question: “How satisfied or dissatisfied are customers with the automobile repair service offerings of the dealership from which they purchased their new 2013 BMW?” The key difference between each of these three designs rests in their relationship to the information research problem at hand. Exploratory research is a solid choice when the decision-makers need clarity about the problem situation itself—that is when the decision problem or opportunity is still opaque. Descriptive and causal research designs are employed when the research and management team are very clear about the information problem at hand. The key difference between “descriptive” and “causal” designs can be conveyed as follows: descriptive studies seek to capture data pertaining to “who, what, when, and where” whereas causal designs look for relationships between variables seeking to investigate the questions “why?” Regarding the question on customer satisfaction, exploratory research may be used to learn about the dimensions of customer satisfaction in automotive maintenance and which factors are rated as most important to achieving customer satisfaction. Descriptive research could be used to define the needs and expectations of the population of interest, in this case customers who purchased a new 2013 BMW and who utilize the dealership’s maintenance services. Descriptive research might also be used to identify the specific maintenance services that the dealerships offer. Finally, a survey of the population of interest might seek to determine the relationship between the level of satisfaction with maintenance services and the amount of such services obtained. One additional objective of such a study would be to try to identify reasons that people use dealer’s maintenance services other than their degree of satisfaction with those services. It is possible that some customers might use a dealership’s maintenance service because there is no other service provider within a reasonable geographic distance. Or, the car’s warranty might specify that all maintenance service must be performed by an authorized dealer in order for the warranty to apply. A survey instrument could be configured in such a way to explore the relationships between customer satisfaction (and dissatisfaction) and a set of variables, e.g., free pick-up and drop off, use of a rental, FAQ on the dealership’s website and so on. 3. When should a researcher use a probability sampling method rather than a nonprobability method? A good rule of thumb when asking your class participants about a response to this question is to float a critical query out for their consideration, namely, “Can we get our hands on an up-to-date list of the population of interest?” One of the primary elements of the infrastructure for probability sampling is such a list (sample frame). It is from this list that a truly random selection of respondents can be extracted and reached. More often than not, (because of issues surrounding the cost of good list, as well as propriety) class participants will not be able to access lists from which they can draw random samples, and hence do probability sampling. Notwithstanding these challenges, it’s important to note that what separates a probability sample from a nonprobability sample is the reliability regarding the application of the information to other members of the target population. This is not possible with the results of a nonprobability sample—the outcomes only hold “true” for the respondents who were surveyed and cannot be viewed as attitudes, beliefs, and intentions held by other members of the target population. 4. EXPERIENCE THE INTERNET. Go to the Gallup poll organization’s home page at www.gallup.com. a. Several polls are reported on their home page. After reviewing one of the polls, outline the different phases and task steps of the information research process that might have been used in the Gallup Internet poll. b. Is the research reported by the poll exploratory, descriptive, or causal? Explain your choice. a. Essentially, the entire process is modified for Gallup’s online poll series. For instance, phase 1 does not apply. There is not a specific research problem or specific information need. Rather, there is a question of interest. The information value does not have to be large because the cost of running an online poll is small. The online poll does not consider how best to gather the information. It approaches each question with the assumption that it will be approached with the online poll format. The sample is not addressed on the website so it is unclear whether the sample is a probability or nonprobability sample or how sample size is determined. Because it is a poll, measurement is important but does not include several questions to address constructs. Polls are likely pretested but this is not clear from the information provided. b. Descriptive data analysis is provided on the site along with implications, but no formal report is available for non-subscribers. Solution Manual for Essentials of Marketing Research Joseph F. Hair, Mary Celsi, Robert P. Bush, David J. Ortinau 9780078028816, 9780078112119
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