Chapter 3 – Analyzing Marketing

Opportunities
 Part 1

The Marketing
Information System
 Contents

The Marketing Information System

• What is marketing information?
• Importance of marketing information
• Marketing information system
• procedure of marketing research
 CHAPTER OBJECTIVES

After learning this chapter, you should be able to:

• Explain the importance of information to the company.

• Define the marketing information system and discuss its parts.

• Describe the four steps in the marketing research process.

• Compare the advantages and disadvantages of various methods

of collecting information.
• Discuss the main methods for estimating current market
demand.
• Explain specific techniques that companies use to forecast
future demand.
 The Importance of Marketing
Information

 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
 What is a Marketing Information
System (MIS)?

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.

 .
 Internal data is gathered
Sources
• . of Info via customer databases,
financial records, and
operations reports
 Internal data  Advantages include
quick/easy access to
 Marketing intelligence information
 Marketing research  Disadvantages stem from the
incompleteness or
inappropriateness of data to a
particular situation
MIS
 The MIS begins and ends with marketing managers .
• First, it interacts with these managers to assess their information
needs.
• Next, it develops the needed information from internal company
records, marketing intelligence activities and the marketing
research process.
• Information analysis processes the information to make it more
useful.
• Finally, the MIS distributes information to managers in the right
form at the right time to help them in marketing planning,
implementation and control
 Developing Information

• The information needed by marketing managers comes from

internal company records, marketing intelligence and marketing
research.
• Internal records information consists of information gathered
from sources within the company to evaluate marketing
performance and to detect marketing problems and
opportunities.
• Marketing intelligence is everyday information about
developments in the marketing environment that helps managers
prepare and adjust marketing plans.
• Information analysis processes the information to make it more useful
 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

• Provide early warning of opportunities and

threats
 Sources of Competitive Intelligence

 Competitor’s
• . employees
 Trade shows
 Company employees  Benchmarking
 Internet  Channel members and
 Garbage key customers
 Published information
 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
o Marketing research reduces uncertainty or error in decision-
making.
o The information collected by conducting marketing research is
used for problem solving and decision making in various areas
 Marketing Research ...

Can help the marketing manager to: Is important because of

• Rapid changing
(1) Identify and define marketing problems and marketing
opportunities accurately; environment;
(2) Understand markets and customers and offer • Need for up-to-date
reliable prediction about them; information for
(3) Develop marketing strategies and actions to strategically
provide a competitive edge; and refine and important areas;
evaluate them; • Importance of
(4) Facilitate efficient expenditure of funds; research as an
(5) Monitor marketing performance; and integral part of
better operation.
(6)Improve the understanding of marketing as a
process.
 THE MARKETING INFORMATION SYSTEM AND
MARKETING RESEARCH

• Marketing research is not the only source of

information that marketing managers need in making
decisions.
• Information may also be generated by various
components of the Marketing Information System
(MIS) consisting of a series of interactive components
• There are four subsystems of the MIS: internal reports,
marketing intelligence, marketing research, and
marketing decision support.
 When Marketing Research may not be necessary
• Marketing research is almost always problem-oriented.
• Whether to conduct marketing research depends on
the manager’s experience and wisdom; nature of
decision situation [repetitive or atypical]; degree of
uncertainty; and the value and importance of the
research.
• 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.
 MAIN DIVISIONS OF
MARKETING RESEARCH

1. Market and Sales Research

2. Product Research
3. Price Research
4. Distribution (Place) Research
5. Promotion Research.
 Types of research
• Applied(action ) vs. Fundamental(basic/pure)

Applied research aims at finding a solution for an immediate

problem an industrial/business organization, whereas
fundamental research is mainly concerned with generalizations
and with the formulation of a theory.
• “Gathering knowledge for knowledge’s sake is termed ‘pure’ or
‘basic’ research.”
• Research studies, concerning human behavior carried on with a
view to make generalizations about human behavior, fundamental
research, but research aimed at certain conclusions (say, a solution)
facing business problem is an example of applied research
 .

• A sample of questions commonly answered by

conducting applied research include:
– What price should we charge for our product?

– What distribution channels should be used?

– How well does the product match up with the competitor’s

product?
– How effective is the company’s advertising?

– How will the consumers receive this new product?

– What percentage of market penetration does Product X have?

– What is Product X’s image in the consumer’s mind?

 Qualitative Vs Quantitative Research

• Qualitative research involves collecting, analyzing,

and interpreting data by observing what people say or
do.

• Quantitative research
– It is also called “survey research”. Involves the use
of questions and large number of respondents
– Its purpose is very specific-
 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

 Step 1: Define the research problem I
• 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 and diagnose it.
– Conduct situation analysis. It provides the basic motivation
and momentum for further research.
 Step 1: Define the research problem II
• Get the right answer to the question:
– “What exactly does the firm want (or need) to know?”
• The basic question to address is:
– “How to know that there is a problem?”
• Problems may become apparent from:
– deviation from the business plan, company records and reports,
customer complaints and grievances, conversations with company
employees, and observation of inappropriate behavior or
conditions in the firm;
– the success of the firm’s competitors, and published materials
reporting issues such as, changes in market or environmental
trends, new government regulations, anticipated changes in the
economy, etc.)
 Step 1: Define the research problem III
• Once the symptoms of a problem are detected..
– Conduct some initial fact finding to determine the nature of the
true problem.
– Talk to others about the problem and conducting a preliminary
literature search on the topic.
• In the initial stage, a problem may be recognized in a very
broad and general form only. This may restrict the research
program from being comprehensively designed.
• 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.
 Step 2: Establish Research Objectives
• “If you do not know what you are looking for, you won’t find it”
• Research objectives are related to and determined by
the problem definition. In establishing research
objectives, the researcher must answer the following
questions:
i) What specific information should the project provide?
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.
• When achieved, objectives provide the necessary
information to solve the problem.
 Step 3: Research Design
3.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 RESEARCH

QUALITATIVE RESEARCH QUANTITATIVE RESEARCH

EXPLORATORY DESCRIPTIVE CAUSAL

F ocu s G rou p ; S u rvey research L ab oratory E xp erim en t
O b servation ; F ield E xp erim en t
O th ers.
 .
••Sheds
Shedslight
lightononproblem
problem--suggest
suggest
• . solutions
solutionsor or new
new ideas.
ideas.
••Gathers
Gatherspreliminary
preliminaryinformation
information
Exploratory that
thatwill
will help
helpdefine
definethe
theproblem
problem
Research and
andsuggest
suggesthypotheses
hypotheses

••Ascertain
Ascertainmagnitudes
magnitudes
Descriptive ••Describes
Research Describesthings
thingsas asmarket
market
potential
potential for
foraaproduct
productor
orthe
the
demographics
demographicsand andconsumers’
consumers’
attitudes.
attitudes.
Causal ••Test
Testcause-
cause-and-effect
and-effect
Research relationships.
relationships.
••Tests
Testshypotheses
hypothesesabout aboutcause-
cause-
and-effect
and-effectrelationships.
relationships.
 Step 4: Specify the information required.

Step 5: Design the method of collecting the needed information.

4. After defining the 5. Marketing research information

problem the may be collected in many
ways:
researcher must
– via mail, telephone, fax,
determine what kind Internet, or personal
of information will interview.
best meet the research – using consumer panels,
objectives. consisting of individuals
– Secondary who have agreed to provide
purchasing and media
information viewing behavior.
– Primary information
 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 analyse
Closed questions:
These questions force respondents to choose from a
range of predetermined responses, and are generally
easy to code and statistically analyse
Closed-end questions. .
• Dichotomous, A question offering two answer choices.
• Multiple choice--- A question offering three or more choices

• Likert scale ---- A statement with which the respondent shows the
amount of agreement or disagreement.

• Semantic differential --- A scale is inscribed between two bipolar

words, and the respondent selects the point that represents the direction
and intensity of his or her feelings. ( Large----------------------Small)
• Importance scale ---- A scale that rates the importance of some
attribute from 'not at all important' to 'extremely important'.
• Campus café service to me is : (Extremely important, very important
somewhat important, Not important Not at all important )
 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.

 Sampling plan.
Probability or Who is to be
Non-probability surveyed?
sampling? (Sampling
Sample - Unit)
representative
segment of the
population
How should the How many
sample be should be
chosen? surveyed?
(Sampl.procedure) (Sample size)
•
.
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.
3. How are the people in the sample to be chosen (what sampling
procedure)?
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.
 .
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.
, 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.
 .

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.

• 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. ]
 Step 9:Analyze and interpret the results.

Step 10: Communicate the findings and implications.

• 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.
• 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.
 Marketing Problems

• Not all marketing problems are researchable.

To clearly define a researchable problem,
the researcher must define the scope of the problem
during the initial investigation, and try to determine
probable cause-and-effect relationships between the
variables by answering the following questions:
• What is (are) the symptom(s) that indicate(s) that
there is (are) a problem (s)?
• What is (are) the likely cause(s) of the problem?
• What information will be needed to find a solution to
the problem?
• What possible course(s) of action may be taken if
information is available?
 Phrasing a Researchable Problem I
• A marketing problem that can be researched, must
be ‘translated’ or written into a form that includes:
– A relationship between two (or among several) variables.
– Each variable is operationally defined,
– A population for the research is implied or identified.
• Consider the observation, “We need to find why our store’s
image seem to be have gone down?”
– This “problem” is not researchable because it does not clarify
(I) the relationships that are described;
(ii) how the conclusion seems to be have gone down? is reached, and
(iii) ‘gone down’ compared to what?
 Phrasing a Researchable Problem II
• This research problem suffers because the terms are
not specifically defined.
– When “image” is referred to, what does it mean? The number of
customer that frequent the store? The number of complaints
lodged by customers? The store’s market share? Or what?
– Similarly, what does “gone down” actually mean? Is it referring
to reduction in the number of people frequenting the store? Or
what?
– Finally, what population is being implied? Does it refer to all
sales to all customers or particular types of customers?
 Operational Definitions of a Variable
• It is a definition that is determined by the operations
needed to measure the variable in question.
• A term may not have only one, universal meaning.
– In the statement, “I want to buy a car”, the variable
‘car’ is not operationally defined.
• A car may mean, among others, a sedan, a sports car, a pick-up
or a mini van; it may also refer to an American, or a Japanese
built car. Hence just saying car could be misleading.
• One must be specific as to what it exactly means. Operational

definitions reduce ambiguity.

 Variables

• A “variable” is a factor that:

– (i) causes some other factor(s) to vary, and

– (ii) may assume different numerical values.

• Price is a variable since it can cause sales levels to vary and may
assume different numerical values.

• In statistical analysis, a variable is generally identified by a

symbol, such as X or Y. If a researcher is using SPSS, or other
computer packages, he or she may use the name of the variable
itself or its abbreviated form e.g., ‘age’ ‘marstat’ (for marital

status), ‘occupn’ (for occupation), etc.

 Classification of Variables
1.Categorical Variables:
– have a limited number of values, e.g., gender (male or Female) ,
marital status (married, single, widowed/ widower) etc.
2.Continuous variables:
– have an infinite number of values, e.g., temperature, sales in $
or number, profit in $.
3. Dependent Variables:
– Variables expected to be predicted or explained.
4. Independent Variables:
– Variables that are expected to influence, predict or explain
another. For example, in the following relationship:
Income (I) = F (Age, Level of education),
Income is a dependent variable; Age and Level of education are
independent variables.
 Research proposal I
– a plan showing step by step description of how a proposed
research project will be undertaken.
– reflects the researcher’s understanding of the problem and ability
to conduct the research.

• If the research is to be conducted through a research

agency, the research proposal acts as an important
selection criterion.
– Upon its acceptance, the research proposal becomes the basis for
the contract or agreement between the research agency and the
client, and serves as a record of what was agreed on.
 Research proposal II
• There is no fixed or standard format for a research proposal as it
is dependent on the nature of the specific research project.
However, most research proposals contain the following items.
1. Introduction
2. Statement of the Marketing Problem
3. Specification of the Research Objectives
4. Methodology
5. Details of the Proposed Research Plan
6. Time schedule
 Project work
• Choose one research title from the following lists
and undertake a marketing research following the
procedures listed below. You need to make analysis
using SPSS. In order to perform better , borrow
marketing research book or Principle of marketing
book from university library.
• This project work is mandatory.

• Form a team of three and try to outperform.

• Cut-off date after 15 days

 Marketing research procedures
1. Title
2. Table of content
3. Executive summary
4. Introduction / back ground
5. Problems
6. Objectives and Hypothesis
7. Operational definition
7. Research Methodology( Research design, source of data, Methods of Data
Collection, Sample Plan and Sample Size ,Field work plan, Collect Data,
questionnaires copy as annexure
8. Analysis using spss : Respondents profile analysis, simple tabulation , use
descriptive and inferential statistics .
9. Findings
10. Limitations
11. Recommendation for action
12. Bibliography
Appendix
 Marketing Research Title
1. Demand in different segments of Casual clothing preferences of
youth
2. Demand for detergent in Dessie
3. Customer satisfaction in ELP
4. Customer satisfaction in CBE
5. The impact of different discount schemes on edible oil.
6. Impact of price reduction on sales
7. The effect of AD spend, number of products introduced,
number of sales personnel.
8. Customer Motives for buying
9. Customer Satisfaction with existing products
10. Customer Unsatisfied needs
11. students feelings on university café service and prices.
12. Image of wollo university on students and community mind.
13. Assess the relationship between marketing stimuli and consumer
response.