Chapter Three

Analysing Marketing Opportunities

3.1. Marketing Research & Marketing Information
System
• What is marketing information system?

– consists of people, equipment and procedures to

gather, sort, analyze, evaluate and distribute needed,

timely and accurate information to marketing

decision makers.
– Function: Assess, Develop and Distribute

Information.
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• to carry out their analysis, planning, implementation and
control responsibility, marketing managers need
information about developments in the marketing
environment
• The role of MIS is to assess the managers’ information
needs, develop the needed information and distribute the
information in a timely fashion to the marketing
managers.
• The needed information is developed through internal
company records, marketing intelligence activities,
marketing research and marketing decision support
analysis.

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Importance of Marketing Information System

 To identify customer needs and wants and to keep in

touch with the ever changing customer preferences and
tastes
 To know about the marketing environment so that the
company will keep track of the developments
 To keep track of competition and to remain relevant in
the market

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 Sources of
Information
 Internal data

 Marketing intelligence

 Marketing research

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• Internal data is gathered via customer databases,
financial records, and operations reports
• Internal records information consists of
information gathered from sources within the
company to evaluate marketing performance
and to detect marketing problems and
opportunities.
• Advantages include quick/easy access to
information
• Disadvantages stem from the incompleteness or
inappropriateness of data to a particular situation
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 Marketing Intelligence
• Marketing intelligence is the systematic collection and
analysis of publicly available information about
competitors and developments in the marketplace.
• The goal of marketing intelligence is to:
o Improve strategic decision making,

o Assess and track competitors’ actions, and

o Provide early warning of opportunities and threats

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 Sources of Competitive Intelligence

 Company employees  Competitor’s employees

 Internet  Trade shows
 Published information  Benchmarking
 Channel members and key
customers

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 Marketing Research: Definition and
Purpose
– Many definitions of Marketing Research:

– “Marketing research is the systematic design, collection,

analysis and reporting of data and findings relevant to a
specific marketing situation facing the company.”
[Philip Kotler]
• Basic Purpose of Marketing Research

– Marketing research reduces uncertainty or error in decision-making.

– The information collected by conducting marketing research is used for

problem solving and decision making in various areas of marketing.
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• Can help the marketing manager to:

– Identify and define marketing problems and

opportunities accurately;
– Understand markets and customers and offer reliable
prediction about them;
– Develop marketing strategies and actions to provide a
competitive edge; and refine and evaluate them;
– Facilitate efficient expenditure of funds;
– Monitor marketing performance
 Marketing research is not the only source of information
that marketing managers need in making decisions.
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When Marketing Research may be necessary

• Whether to conduct marketing research depends

on:
– the manager’s experience and wisdom;
– nature of decision situation (repetitive or a
typical);
– degree of uncertainty; and
– the value and importance of the research.

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• Marketing research may not be necessary if:
o Information is available/outcomes known.

o Insufficient time for marketing research.

o Non-availability of resources.

o Cost Vs Value of the Research.

o Outcomes known.

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 Ten Steps in the Marketing Research
Process
1. Define the Problem
2. Establish Research Objective

3. Determine Research Design

4. Identify Information Needs and Sources

5. Determine Methods of Data Collection

6. Design Instrument for Data Collection

7. Determine Sample Plan and Sample Size

8. Collect Data

9. Analyze Data

10. Prepare and Present Final Report

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 Step 1: Define the research problem

• The very first, and the most important step in research:

– “A problem well-defined is half solved”
– Nature of the problem determines the type of study to
conduct.
• A research problem must be accurately and precisely defined,
otherwise the task of designing a good research difficult.
• Marketing problems may be difficulty-related or opportunity-
related. For both, the prerequisite of defining the problem is to
identify & diagnose it.
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• Both the researcher and the marketing manager
(or the research client ) need to work together to
formulate the problem into a precise and definite
statement.

• This fact-finding exercise helps the researcher to

refine his educated guess to a more accurate
problem statement.

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 Step 2: Establish Research Objectives

• “If you do not know what you are

looking for, you won’t find it”
• In establishing research objectives, the researcher
must answer the following questions:

i) What specific information should the project

provide?

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ii. If more than one type of information will be
developed from the study, which is the most
important? and finally,

iii) What are the priorities? When specifying

research objectives, development of hypotheses,
might be very helpful.

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 Step 3: Research Design
• Research Design step involves the development of a
research plan for carrying out the study.
– There are a number of alternative research designs.

– The choice will largely depend on the research purpose.

M ARKETING RE SEARC H

Q UALITATIVE RESEARCH Q UANTITATIV E RES EARCH

E XPLO RATO RY DES CRIPTIVE CAUSA L

F o cus G ro u p; S u rv ey re se a rch L a b ora tory E xp e rim e nt
O b se rv atio n; F ie ld E x p e rim e nt
O th e rs.
 Sheds light on problem - suggest solution
or new ideas.
Gathers preliminary information that will
Exploratory help define the problem and suggest
Research hypotheses

Descriptive Ascertain magnitudes

Research Describes things as market potential for
a product or the demographics and
consumers’ attitudes.

Causal  Test cause- and-effect relationships.

Research  Tests hypotheses about cause-
and-effect relationships.

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 Step 4: Specify the information required.

• After defining the problem the researcher

must determine what kind of information
will best meet the research objectives.
– Secondary information

– Primary information

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Step 5: Design the method of collecting the needed
information.
• Marketing research information may be
collected in many ways:
– via mail, telephone, fax, Internet, or
personal interview.
– using consumer panels, consisting of
individuals who have agreed to provide
purchasing and media viewing behavior.

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 Step 6: Design the questionnaire.
• A primary responsibilities of a marketing researcher is to design
the data collection instrument or questionnaire in a manner so that
it is easily understood by the respondent and administered to
them.
• Types of questions
Open questions:
• These questions ask respondents to construct answers using
their own words.
• Open questions can generate rich and candid data, but it can
be data that is difficult to code and analyze
Closed questions:
• These questions force respondents to choose from a range of
predetermined responses, and are generally easy to code and
statistically analyze
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 Step 7: Decide on the sampling design

• Marketing researchers usually draw conclusions about

large groups of consumers by studying a small sample
of the total consumer population.
• A sample is a segment of the population selected to
represent the population as a whole.
• Ideally, the sample should be representative, so that the
researcher can make accurate estimates of the thoughts
and behaviors of the larger population.
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 Sampling plan

Probability or Who is to be
Non-probability surveyed?
sampling? (Sampling
Sample - Unit)
representative
segment of the
population

How should the

sample be How many
chosen? should be
(Sampl.procedure) surveyed?
(Sample size)

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• Designing the sample calls for three decisions.
1. To be surveyed (what sampling unit)? The answer to
this question is not always obvious. For example, to
study the decision-making process for a family car
purchase, should the researcher interview the husband,
wife, other family members or all of these?
2. Many people are to be surveyed (what sample size)?
Large samples give more reliable results than small
samples.

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3. How are the people in the sample to be chosen (what
sampling procedure/technique)?
• Using probability samples, each population member has a
known chance of being included in the sample, and
researchers can calculate confidence limits for sampling
error.
• But when probability sampling costs too much or takes
too long, marketing researchers often take non-
probability samples, even though their sampling error is
not measurable.
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Probability sample

1. Simple random sample, Every member of the

population has a known and equal chance of selection.

2. Stratified random sample , The population is divided

into mutually exclusive groups (such as age groups),
and random samples are drawn from each group.

3. Cluster (area) sample , The population is divided into

mutually exclusive groups (such as blocks), and the
researcher draws a sample of the groups to interview.
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 Cont.
Non-probability sample ……
1. Convenience sample, The researcher selects the easiest
population members from which to obtain information

2. Judgment sample, The researcher uses his or her judgment

to select population members who are good prospects for
accurate information

3. Quota sample , The researcher finds and interviews a

prescribed number of people in each of several categories.

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 Step 8: Manage and implement the data
collection.

• The researcher must determine the criteria that

would enable a respondent to take part in a study.
• The sampling design must result in the proper
sample of respondents being selected. Different
sampling designs are available to researchers.

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 Cont.
……
• The researcher must properly manage and oversee the data
collection process.
– If interview method is used, the researcher must train
interviewers and develop procedures for controlling the
quality of the interviewing.
– (This is not necessary if survey methodology is used, where
the research instruments are completed by the respondents).

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Step 9: Analyze and interpret the results.

• The ‘raw’ research data needs to be edited, tabulated

and analyzed to find the results and to interpret them.
– the method used may be manual or computer based.

– The analysis plan follows from the research objective

of the study.
– Association and relationships of variables are identified
and discussed in the light of the specific marketing
problem.
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 Step 10: Communicate the findings and
implications

• The researcher has to submit a written report

and often make an oral presentation to
management or the client.
– In conducting all the marketing research
activities; the marketing researchers must
adhere to ethical standards.

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3.2. Consumer Markets & Consumer
Buying Behaviour
Consumer buying behavior
The buyers decision process
Major factors influencing buying behavior
Organizational buying behavior
Characteristics of Business Market
Buying situations in organizational buying

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 Consumer buying
behavior:
• Consumer buying behavior- refers to the buying
behavior of final consumers - individuals and
households that buy goods and services for
personal consumption.

• All of these final consumers combined make up

the consumer market.

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 Model of buyer behavior
Model of Consumer Behavior

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 Cont.
……
 The central question for marketers is;
 How do consumers respond to various marketing
stimuli that the company might use?
 The company that really understands how consumers
will respond to different product features, prices and
advertising appeals has a great advantage over its
competitors

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 Cont.
……
 Marketing stimuli consist of the four Ps: product, price,
place and promotion.
 Other stimuli include significant forces and events in the
buyer's environment; economic, technological, political
and cultural.
 All these stimuli enter the buyer's black box, where they
are turned into a set of observable buyer: product choice,
brand choice, dealer choice, purchase timing and
purchase amount. 37
 The marketer wants to understand how the stimuli are
changed into responses inside the consumer's black
box, which has two parts.
 First, the buyer's characteristics influence how s/he
perceives and reacts to the stimuli.
 Second, the buyer's decision process itself affects the
buyer's behavior

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Cultur
e
 The set of basic values, perceptions, wants and behaviors learned by a member of society from family and other important institutions

 Culture is the most basic cause of a person's wants and behavior.

 Human behavior is largely learned. Growing up in a society, a child learns basic values, perceptions,

 wants and behaviors from the family and other important institutions.

 , wants and behaviors

 Learned from family and important institutions

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Sub-culture
• Each culture contains smaller subcultures or groups of people with shared value
systems based on common life experiences & situations.

Social Class
 are society's relatively permanent & ordered divisions whose
members share similar values, interests and behaviors

Social Factors
• such as the consumer's small groups, family, & social roles and
status.
• Because these social factors affects consumer responses, companies
must take them into account when designing marketing strategies.
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 Factors Affecting Consumer Behavior: Social

Groups
• Membership
• Reference

Family
• Husband, wife, kids Social Factors
• Influencer, buyer,
user

Roles and Status

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Factors Affecting Consumer Behavior: Psychological

• A person's buying choices are further influenced by four

important psychological factors.

Motivation

Beliefs and Psychological

Factors Perception
Attitudes

Learning
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 Psychological Factors
 Perception
 is the process by which people select, organize, and
interpret information to form a meaningful picture of the
world from three perceptual processes;
Selective attention

Selective distortion

Selective retention

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 Cont.
……
 Selective attention is the tendency for people to screen
out most of the information to which they are exposed.
 Selective distortion is the tendency for people to
interpret information in a way that will support what
they already believe.
 Selective retention is the tendency to remember good
points made about a brand they favor and to forget good
points about competing brands.
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 Cont.
……
• Learning
• Learning is changes in an individual’s behavior arising
from experience and occurs through interplay of:
 Drives, Stimuli, Cues, Responses, Reinforcement
• Belief is a descriptive thought that a person has about
something based on: Knowledge, Opinion, Faith
– Attitudes describe a person’s relatively consistent
evaluations, feelings, and tendencies toward an object or
idea

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 Types of Buying Decisions behavior

High Low
Involvement Involvement

Significant Complex Variety-

differences
between Buying Seeking
brands Behavior Behavior

Few Dissonance- Habitual

differences Reducing Buying
between Buying
brands Behavior Behavior

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 Complex Buying
Behavior
• When consumers are highly motivated in a purchase
and perceive significant differences among brands.
Purchasers are highly motivated when:
Product is expensive

Product is risky

Product is purchased infrequently

Product is highly self-expressive

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 Cont.
 Dissonance- reducing buying behavior ……
 When consumers are highly involved with an expensive,
infrequent, or risky purchase, but see little difference among
brands.

 Habitual buying behavior

 Consumer buying behavior in situations characterized by low
consumer involvement and few significant perceived brand
differences.

 Variety-seeking buying
 Characterized by low consumer involvement, but significant
perceived brand differences.
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The Buyer Decision Process

Need Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Post-purchase Behavior
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 The Buyer Decision Process

Step 1. Need Recognition

 The buyer recognize problem or need
 The buyer sense a difference between
His actual state and desired state

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Step 2. Information Search

•Family, friends, neighbors

Personal Sources •Most influential source of
information

•Advertising, salespeople
Commercial Sources •Receives most information
from these sources

•Mass Media
Public Sources •Consumer-rating groups

•Handling the product

Experiential Sources •Examining the product
•Using the product

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Step 3. Evaluation of Alternatives

Product Attributes
Evaluation of Quality, Price, & Features

Degree of Importance
Which attributes matter most to me?

Brand Beliefs
What do I believe about each available brand?

Total Product Satisfaction

Based on what I’m looking for, how satisfied
would I be with each product?

Evaluation Procedures
Choosing a product (and brand) based on one
or more attributes.
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 Step 4. Purchase Decision

Purchase Intention
Desire to buy the most preferred brand

Attitudes Unexpected
of others situational
factors

Purchase Decision

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Step 5. Postpurchase Behavior

Consumer’s Expectations of
Product’s Performance

Product’s Perceived
Performance

Satisfied Dissatisfied
Customer! Customer

Cognitive Dissonance
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 The buyer decision process for new
products
Stages in the Adoption Process
• Consumers go through five stages in the process of adopting a new
product:
1. Awareness. The consumer becomes aware of the new product, but lacks
information about it.

2. Interest. The consumer seeks information about the new product.

3. Evaluation. The consumer considers whether trying the new product makes
sense.

4. Trial. The consumer tries the new product on a small scale to improve his or her
estimate of its value.

5. Adoption. The consumer decides to make full and regular use of the new Product

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 Business Markets

and

Business Buyer Behavior

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 What is a Business Market?

• The Business Market - all the organizations

that buy goods and services to use in the
production of other products and services
that are sold, rented, or supplied to others.

• Business markets involve many more dollars

and items than do consumer markets.

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 Characteristics of Business Markets
Market Structure and Demand
• Fewer, larger buyers
• Geographically concentrated
• Demand derived from consumers
• Inelastic demand
• Fluctuating demand

Nature of the Buying Unit

• More buyers
• More professional purchasing
effort

Types of Decisions & the

Decision Process
• More complex decisions
• Process is more formalized
• Buyer and seller are more
dependent on each other
• Build close long-term relationships
with customers
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A model of business buyer behavior

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 Business Buying Situations
 Straight re-buy: A business buying situation in which
the buyer routinely reorders something without any
modifications.
 Modified re-buy: A business buying situation in which
the buyer wants to modify product specifications, prices,
terms, or suppliers.

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Participants in the Business Buying Process:
The Buying Center

Gatekeepers Users

Buying
Deciders Center Influencers

Buyers

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 Buying centre
• Buying centre:- All the individuals and units that play a role in
the purchase decision-making process.
• Users:- are members of the organization who will use the
product or service. In many cases, users initiate the buying
proposal and help define product specifications.
• Influencers:- People in an organization’s buying centre who
affect the buying decision; they often help define specifications
and also provide information for evaluating alternatives.
• Technical personnel are particularly important influencers.
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 ……
 Buyers:- have formal authority to select the supplier and arrange
terms of purchase. Buyers may help shape product specifications,
but their major role is in selecting vendors and negotiating.
 Deciders:- have formal or informal power to select or approve the
final suppliers. In routine buying, the buyers are often the deciders,
or at least the approvers.
 Gatekeepers: control the flow of information to others. For
example, purchasing agents often have authority to prevent
salespersons from seeing users or deciders. Other gatekeepers
include technical personnel and even personal secretaries.

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Stages in the Business Buying Process
Problem Recognition

General Need Description

Product Specification

Supplier Search

Proposal Solicitation

Supplier Selection

Order Routine Specification

Performance Review
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The end of the THIRD Chapter!

Thank You!
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