Marketing Research - 6 - 02may2010

Research methods in
Business
Subject code: MBA 500

Presented by: Pradeep Gangadharan
Marketing Research Session 1

What will this session cover?
1. Association between variables: Regression
2. Brief note on multivariate analysis
• Factor analysis
• Cluster analysis
• Conjoint analysis
3. Sample research report
4. Research proposal and costing for research

The research process
Basic decision to do MR
Identifying the problem,

clear indication of
research
requirements and action
stds.
Developing research
approach
to address the problem
Establishing a research
design
Collecting the data
Performing data
analysis
Reporting and
presentation
Marketing decision

1. Association between variables:
Regression
• Regression analysis measures the strength of a relationship
between a variable you try to explain (e.g. overall
customer satisfaction) and one or more explaining
variables (e.g. satisfaction with product quality and price)
•
• While correlation provides a single numeric summary of a relation
(called the correlation coefficient), regression analysis results in a
"prediction" equation. The equation describes the relation
between the variables. If the relationship is strong (expressed by
the R2 value), it can be used to predict values of one variable
given the other variables have known values. E.g. how will the
overall satisfaction score change if satisfaction with product
quality goes up from 6 to 7?

Regression
• Simple regression analysis generates a mathematical
relationship (called the regression equation) between one
variable designated as the dependent variable (Y) and
another designated as the independent variable (X)
• The independent variable is also called the predictor or
explanatory variable; the dependent variable is also called
criterion
• The independent variable is generally plotted on the x-axis
and the dependent variable on the y-axis
• The regression equation is represented mathematically as:
Y = a + bX (a and b are constants)
• a is the y-intercept and b is the coefficient of X (or slope)
• The slope (b) represents the change in the predicted value of
dependent variable per one-unit change in the
independent value, assuming all other variables likely to
influence the dependent variable remain the same
•
Regression
E x a m p le o f lin e a r re g re ssio n w ith o n e in d e p e n d e n t v a ria b le
n t v a ria b le -
X – In d e p e n d e n t v a ria b le – A d v e rtisin g e x p e n d itu re

Regression
• The regression equation is evaluated based on R2.
This is the coefficient of determination – a global
measure of how much better predictions of the
dependent variable made with the aid of the
regression equation are than those made
without it.
• The significance of R2 is determined using the F-
test
• R2 = Variance explained by the regression equation
/ total variance
• The significance of the slope in the equation is
determined using the t-test with (n-k-1) degrees
of freedom, where n is the sample size and k is
the number of independent variables included in
the equation Marketing Research Session 7
Regression
Some precautions to be taken when using
•
regression analysis
• Is not appropriate when the scatter diagram of the
two variables do not display a meaningful linear
trend
• Significant R2 value does not necessarily imply
cause-and-effect association between
independent and dependent variables
(researcher has to decide which is the dependent
and which is the independent variable on a case-
to-case basis)
• Regression equation with few data points cannot
be trusted – a rule of thumb is to have at least 10
sample units for every independent variable
included in the equation
Regression
Regression analysis is typically used for
•
• Customer/Employee Satisfaction studies to answer

questions such as "which product dimensions
contribute most to someone's overall satisfaction
or loyalty to the brand". This is often referred to
as Key Drivers Analysis.
• To simulate the outcome when actions are taken.
E.g. what will happen to the satisfaction score
when product availability is improved?

2. Brief note on Multivariate
analysis
• Factor analysis
– Is a reduction method – helps in reducing
factors / variables
– Used to analyze relationship among a large
number of variables and to explain these
variables in terms of their common
underlying dimensions (factors) with
minimum loss of information
– The factors themselves become a mutually
exclusive set of dimensions –each
dimension incorporating a set of variables
that are correlated
– Factor analysis will not be useful in situations
where the variables are poorly correlated
analysis
• Factor analysis
– Typical applications –
• Helps develop concise but comprehensive,
multi-item scales for measuring marketing
elements
Sample scenario: A public utility company
wants to develop a 15-item scale to measure
the attitudes of its customers towards nuclear
power. The company has already generated
an initial pool of 100 items concerning nuclear
power. Further, it has data on these items in
the form of ratings obtained through a pilot
survey of customers.
• Illuminate the nature of distinct dimensions
underlying an existing data set and hence
offer managerial insights – e.g. image
attributes
• Can reduce variables
Marketing to be used for multi-
Research Session 11
regression into fewer factors – one advantage
analysis
• Factor analysis
•

analysis
• Cluster analysis
– Is a method to segment objects (e.g., customers,
market areas, products) into groups so that objects
within each group are similar to one another on a
variety of characteristics)
– Potentially valuable in market segmentation studies in
which the objective is to identify distinct customer
groups
– Helps group objects on the basis of their values on a
number of variables without designating any of them
as a dependent variable
– Is an iterative process where objects that are closer to
each other on chosen dimensions are ‘clustered’
together
– Main advantage is that it can suggest, based on
complex input, groupings that would not otherwise
be apparent
– Refer pg. 529, Parasu for graphical
Marketing Research Session representation of 13
analysis
• Cluster analysis example

analysis
• Conjoint analysis
– Is a technique for deriving the utility values that
customers presumably attach to different levels of an
object’s attributes; requires respondents to compare
hypothetical profiles of products, brands and so on
– Used for measuring consumer preferences about the
attributes of a product or service. It is the ideal tool for
new/improved product development. The conjoint
analysis task asks the respondents to make choices in
the same fashion as consumers normally do, by trading
off features one against the other, either by ranking or
choosing one of several product combinations. E.g. a
task could be: do you prefer a “car that is cramped,
costs Rs. 450,000 and has 50 free services" or a “car
that is spacious, costs Rs. 500,000 and has not 20 free
services"?
– This will help determine both the relative importance of
each attribute (e.g. spaciousness, price, number of free
service) as wellMarketing
as which levels Rs. 450,000 more
Research Session 15
preferred than a price of Rs. 500,000)
A n y q u e stio n s?

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Research methods in

Subject code: MBA 500

Marketing Research Session 1

Marketing Research Session 2

Identifying the problem,

Marketing Research Session 3

Marketing Research Session 4

X – In d e p e n d e n t v a ria b le – A d v e rtisin g e x p e n d itu re

Marketing Research Session 6

• Customer/Employee Satisfaction studies to answer

Marketing Research Session 9

Marketing Research Session 12

Marketing Research Session 14

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