Marketing Research and Strategic Decision-Making

Posted on Mar 12, 2025 in Marketing

Chapter 1: Marketing Research Fundamentals

Marketing research is the application of the scientific method in searching for the truth about marketing phenomena. The process includes:

  • Idea and theory development
  • Problem definition
  • Information gathering
  • Analyzing data
  • Communicating the findings and their implications

Digital marketing is a term used to capture all the various electronic, communicative technologies through which marketing enterprises (suppliers, manufacturers, retailers, etc.) work together with customers toward enhancing value from interaction, including exchange and relationships.

Research can be:

  • Applied marketing research: Conducted to address a specific marketing decision for a specific firm or organization.
  • Basic marketing research: Conducted without a specific decision in mind and usually does not address the needs of a specific organization.
    • It attempts to expand the limits of marketing knowledge in general and is not aimed at solving a particular pragmatic problem.

All marketing research, whether basic or applied, involves the scientific method.

The scientific method is the way researchers go about using knowledge and evidence to reach objective conclusions about the real world. The method involves developing hypotheses and testing them against empirical evidence (facts from observation or experimentation).

In all of business strategy, there are only a few business orientations:

  • Product-oriented: The firm prioritizes decision-making in a way that emphasizes technical superiority in the product. Research is not a priority.
  • Production-oriented: The firm prioritizes efficiency and effectiveness of the production processes in making decisions (i.e., to drive costs down). Research is not a priority.
  • Marketing-oriented: The firm follows the marketing concept, which focuses on how the firm provides value to customers more than on the physical product or production process.

Developing a marketing orientation calls on management to:

  • Be customer-oriented:
    • The consumer should be the primary focus of attention.
    • The firm creates products and services with consumers’ needs in mind.
    • The creation of value for consumers is the justification for a firm’s existence.
    • Marketing research addressing consumer desires, beliefs, and attitudes is essential.
  • Emphasize long-run profitability rather than short-term profits or sales volume:
    • Implicit in the marketing concept is the assumption of the continuity of the firm.
    • One way to ensure long-run profitability is to utilize online sentiment analysis, which allows researchers to use data to indicate the total positive or negative mentions of a brand on the Internet.
    • Another aspect of long-run profitability argues against profitless volume or sales volume for the sake of volume alone.
  • Adopt a cross-functional perspective:
    • Marketing personnel do not work in a vacuum – actions of people in other areas (i.e., production, credit, and R&D) may affect marketing efforts, and the work of marketers will affect activities in other departments.
    • A stakeholder orientation recognizes that multiple parties are affected by a firm’s decisions.

Relationship marketing communicates the idea that a major goal of marketing is to build long-term relationships with customers contributing to a firm’s success.

  • A sale is not the end of a process; it is the start of the organization’s relationship with a customer.

The prime managerial value of marketing research is that it reduces uncertainty by providing information that facilitates decision-making about marketing strategies and the tactics used to achieve an organization’s strategic goals.

Developing and implementing a marketing strategy involves four stages:

  • Identifying and evaluating market opportunities
    • Marketing research can be used to monitor the competitive environment for signals indicating business opportunities or problems.
    • Market opportunities may be evaluated using many performance criteria.
    • Research may be used to develop objective forecasts of demand or changing environments.
  • Analyzing market segments and selecting target markets
    • Marketing research is a major source of information for determining which characteristics of market segments distinguish them from the overall market.
    • Geo-demographics refers to information describing the demographic profile of consumers in a particular geographic region.
  • Planning and implementing a marketing mix that will provide value to customers and meet organizational objectives
  • Analyzing firm performance

Planning and Implementing the Marketing Mix

  • Product Research
    • Concept testing—exposes potential customers to a new product idea to judge the acceptance and feasibility of the concept.
    • Product testing—reveals a product prototype’s strengths and weaknesses or determines whether a finished product performs better than competing brands or according to expectations.
    • Brand-name evaluation studies—investigate whether a name is appropriate for a product.
    • Packaging testing—assesses size, color, shape, ease of use, and other attributes of a package.
  • Pricing Research
    • Many test markets address the question of how consumers will respond to a product offering two different prices.
    • Pricing involves finding the amount of monetary sacrifice that best represents the value customers perceive in a product after considering various market constraints.
    • Pricing research addresses consumer quality perceptions by its very nature.
    • Research has shown that prices can actually be too low.
  • Distribution Research
    • A marketing channel (a.k.a. supply chain) is a network of interdependent institutions that perform the logistics necessary for consumption to occur.
    • Distribution research:
      • Is typified by studies aimed at selecting retail sites or warehouse locations.
      • Often is needed to gain knowledge about retailers’ and wholesalers’ operations and to learn their reactions to a manufacturer’s marketing policies.
      • May also be used to examine the effect of just-in-time ordering systems or exclusive distribution on product quality.
      • Example: Should we sell through the internet?
  • Promotion Research
    • Promotion is the communication function of the firm responsible for informing and persuading buyers.
    • Promotion research investigates the effectiveness of advertising, premiums, coupons, sampling, discounts, public relations and other sales promotions.
    • Media research helps businesses make decisions about whether television, newspaper, magazines, or other media alternatives are best suited to convey the intended message.

Integrated marketing communication means that all promotional efforts should be coordinated to communicate a consistent image.

  • Likewise, the elements of the marketing mix itself must work together.
  • From a research standpoint, the integrated marketing mix means that research studies often investigate effects of various combinations of marketing mix elements on important outcomes like sales and image.

When is Marketing Research Needed?

The determination of the need for marketing research centers on:

  • Time constraints.
    • Systematic research takes time.
    • Sometimes the urgency of a situation precludes the use of research
  • Availability of data.
  • The nature of the decision.
    • The more strategically or tactically important the decision, the more likely it is that research will be conducted.
  • The value of the research information in relation to costs.
    • Is the potential payoff worth the investment?
    • Will the information gained improve the quality of the marketing decision enough to warrant the expenditure?
    • Is the proposed research expenditure the best use of the available funds?

Chapter 2: Data and Market Intelligence

  • Big data, which is large quantities of data taken from multiple, varied sources, allows companies to make decisions with far more information than they had access to in the past.
  • Data are simply facts or recorded measures of certain phenomena (things or events).
  • Information is data formatted (structured) to support decision-making or define the relationship between two or more data points.
  • Market intelligence is the subset of data and information that actually has some explanatory power enabling effective decisions to be made.

The Characteristics of Valuable Information

  • Relevance
    • Relevance reflects how pertinent these particular facts are to the situation at hand.
    • Relevant data are facts about things that can be changed, and if they are changed, it will materially change the situation.
  • Completeness
    • Information completeness refers to having the right amount of information.
    • Often incomplete information leads decision makers to conduct marketing research.
  • Quality
    • Data quality is the degree to which data represent the true situation.
    • High quality data are accurate, valid, and reliable, and they represent reality faithfully.
    • Obtaining the same data from multiple sources is one check on its quality.
  • Timeliness
    • Timeliness means that the data are current enough to still be relevant.
    • Computer technology has redefined standards for timely information.
    • Market dynamism represents the rate of change in environmental and competitive factors.

Marketing research can be categorized on the four possible functions it serves in business:

  • Foundational – answers basic questions such as what consumer segments should be served and with what types of products
  • Testing – addresses things like new product concepts or promotional ideas
  • Issues – examines how specific issues impact the firm
  • Performance – monitors specific metrics including financial statistics like profitability and delivery times; this category is of most interest to decision support systems

A marketing decision support system (DSS) is a system that helps decision makers confront problems through direct interaction with computerized databases and analytical software programs.

Modern decision support systems greatly facilitate customer relationship management (CRM).

  • A CRM system brings together lots of pieces of information about customers including sales data, market trends, marketing promotions and the way consumers respond to them, customer preferences and more.

Database and Data Warehousing

  • A database is a collection of raw data arranged logically and organized in a form that can be stored and processed by a computer.
  • Data warehousing is the process allowing important day-to-day operational data to be stored and organized for simplified access.
  • Data warehouse is the multitiered computer storehouse of current and historical data.
  • Cloud storage is data that is stored on devices that make the files directly available via the Internet.

Input includes all the numerical, text, voice, and image data that enter the decision support system.

  • Six major sources of data input:
    • Internal Records – accounting reports of sales and inventory figures
    • Proprietary Marketing Research is the gathering of new data to investigate specific problems.
    • Salesperson Input – can alert managers to changes in competitors’ prices and new-product offerings as well as customer complaints
    • Behavioral Tracking – modern technology provides new ways of tracking human behavior
      • Global positioning satellite (GPS) systems allow management to track the whereabouts of delivery personnel at all times.
      • Tracking can log actual customer behavior on the Internet.
      • Scanner data refers to the accumulated records resulting from point of sale data recordings. The term single-source data refers to the ability of these systems to gather several types of interrelated data (i.e., purchase and promotional activity at the time).
      • Universal product codes, which are the bar codes that stores use to scan merchandise as it is being sold, allow companies to record data each time a sale is made
    • Web Tracking – performed by marketing researchers to monitor trends and information posted by consumers that pertains to the company’s brand or products
      • Search-engine optimizers give researchers the ability to mine Internet data to provide consulting to firms who wish to move up the listing of hits for terms related to their product or category.
      • Electronic data interchange (EDI) systems integrate one company’s computer system directly with another company’s system.
      • Open source information is a term that captures structured data openly shared between companies.

Networks and Electronic Data Interchange

  • Electronic data interchange (EDI) – type of exchange that occurs when one company’s computer system is integrated with another company’s system
  • Many firms share information in an effort to encourage more innovation.
  • Open source information is a term that captures structured data openly shared between companies

Database Sources and Vendors

  • Data Archives
    • Data Wholesalers put together consortia of data sources into packages offered to municipal, corporate, and university libraries for a fee.
    • Data Retailers sell data directly to the end consumer.
    • Statistical Databases contain numerical data for market analysis and forecasting.
    • Often demographic, sales, and other relevant marketing variables are recorded by geographical area. These are called geographical databases.
    • Financial Databases
      • CompuStat publishes an extensive financial database on thousands of companies, broken down by industry and other criteria.
    • Video Databases
      • Video databases and streaming media are having a major impact on the marketing of many goods and services.

The Internet and Research

  • Parties that furnish information on the World Wide Web are called content providers.
  • The Uniform Resource Locator (URL) is really just a Web site address that Web browsers recognize.
  • A keyword search takes place as the search engine searches through millions of Web pages for documents containing the keywords.
  • Environmental scanning entails all information gathering designed to detect changes in the external operating environment of the firm.

Information Technology

  • Smart agent software is capable of learning an Internet user’s preferences and automatically searching out information and distributing the information to a user’s computer.
  • Push or Pull? Data and information are delivered to consumers or other end users via either pull technology or push technology.
    • Pull technology: Consumers request information from a Web page and the browser then determines a response; the consumer is essentially asking for the data.
    • Push technology: Sends data to a user’s computer without a request being made; software is used to guess what information might be interesting to consumers based on the pattern of previous responses.
  • Near Field Communication (NFC) Devices
    • RFID stands for radio frequency identification. A tiny chip, which can be woven onto a fabric, placed in packaging, attached to a card, including credit cards, or otherwise affixed to virtually any product, sends a radio signal that identifies that particular entity uniquely.
    • NFC is the abbreviation for near-field-communication or Wi-Fi-like systems communicating with specific devices within a defined space like inside of a retail unit or near a poster billboard.
  • Cookies
    • Cookies, in computer terminology, are small data files that record a user’s Web usage history.
  • Intranets
    • The Intranet is a company’s private data network that uses Internet standards and technology.

Marketing analytics is a general term that refers to efforts to measure relevant data and apply analytical tools in an effort to better understand how a firm can enhance marketing performance.

Predictive analytics refers to linking computerized data mined from multiple sources to statistical tools that can search for predictive relationships and trends.

Chapter 3: Decision Making and Research Types

  • Decision making is the process of developing and deciding among alternative ways of resolving a problem or choosing from among alternative opportunities.
  • A market opportunity is a situation that makes some potential competitive advantage possible.
  • A market problem is a situation that makes some significant negative consequence more likely.
  • Problems are inferred from observable symptoms, which are observable cues that serve as a signal of a problem because they are caused by that problem.
  • Research may help identify what is causing this symptom so that decision makers can actually attack the problem, not just the symptom.
  • Marketing decisions generally involve uncertainty, particularly when seeking different opportunities.
  • Classifying marketing research on the basis of its purpose, it can be broken into three categories: (1) exploratory, (2) descriptive, and (3) causal.

Exploratory Research

  • Conducted to clarify ambiguous situations or discover ideas that may be potential business opportunities
  • Not intended to provide conclusive evidence from which to determine a particular course of action
  • Not an end unto itself – usually it is conducted with the expectation that more research will be needed to provide more conclusive evidence
  • Innovation and exploratory research
    • Exploratory research is particularly useful in new product development.
    • Exploratory research can be very profitable.

Descriptive Research

  • Describes characteristics of objects, people, groups, organizations or environments
  • Addresses who, what, when, where, and how questions
  • Often helps describe market segments
  • Accuracy is critically important.
  • Conducted with a considerable understanding of the situation being studied
  • Survey research typifies a descriptive study.
  • Diagnostic analysis seeks to diagnose reasons for market outcomes and focuses specifically on the beliefs and feelings consumers have about and toward competing products.
  • Sometimes provides an explanation by diagnosing differences among competitors, but it does not provide direct evidence of causality

Causal Research

  • Allows causal inferences to be made
  • Seeks to identify cause-and-effect relationships
  • When something causes an effect, it means it brings it about or makes it happen; the effect is the outcome.
  • Usually follows exploratory and descriptive research and, therefore, the researchers are quite knowledgeable about the subject
  • Can take a long time to implement and often involves intricate designs that can be very expensive

Causality

  • Causal research attempts to establish that when we do one thing, another thing will follow – a causal inference is just such a conclusion.
  • A causal inference can only be supported when very specific causal evidence exists, and the three critical pieces of causal evidence are:
    • Temporal Sequence – deals with the time order of events; having an appropriate causal order of events means the cause must occur before the effect
    • Concomitant Variation – occurs when two events “covary,” meaning they vary systematically and when a change in the cause occurs, a change in the outcome also is observed
      • Correlation is often used to represent this.
    • Nonspurious Association – any covariation between a cause and an effect is true and not simply due to some other variable
      • Even though the previous two conditions exist, a causal inference cannot be made because both the cause and effect have some common cause.
      • Establishing evidence of nonspuriousness can be difficult.
      • Researchers must use theory to identify the most likely “third” variables that would relate significantly to both the cause and effect.
      • Once identified, the researcher must control for these variables.

Degrees of Causality

  • Absolute causality means the cause is necessary and sufficient to bring about the effect. This is impractical to establish in the behavioral sciences.
  • Conditional causality means that a cause is necessary but not sufficient to bring about an effect.
  • Contributory causality may be the weakest form of causality and means a cause need not be necessary nor sufficient to bring about an effect.
    • There may be multiple causes.
    • As long as the introduction of the other possible causes does not eliminate the correlation between it and the effect, an event can be a contributory cause.

Experiments

  • A carefully controlled study in which the researcher manipulates a proposed cause and observes any corresponding change in the proposed effect.
  • An experimental variable represents the proposed cause and is controlled by the researcher by manipulating it.
  • Manipulation means that the researcher alters the level of the variable in specific increments.
  • A test market is an experiment that is conducted within actual market conditions.

Marketing research often follows a general pattern of stages:

  • Defining research objectives
  • Planning a research design
  • Planning a sample
  • Collecting data
  • Analyzing data
  • Formulating conclusions and preparing a report

Defining the Research Objectives

  • Beginning of the research process
  • Research objectives are the goals to be achieved by conducting research.
  • In consulting, the term deliverables is often used to describe the objectives to a research client.
  • A research proposal is a written statement of the research design, emphasizing what the research will accomplish.

Exploratory Research

  • Can be used to help identify the decisions that need to be made
  • Once done, the researcher should know exactly which data to collect during formal phases of the project and how to conduct the project.
  • Can employ techniques from four basic categories to obtain insights and gain a clearer idea of the problem: previous research, pilot studies, case studies, and experience surveys.
Previous Research
  • Should first investigate previous research to see whether or not others may have addressed the same research problems
Literature Review
  • A directed search of published works, including periodicals and books, that discusses theory and presents empirical results that are relevant to the topic at hand.
Pilot Studies
  • Small scale research projects that collect data from respondents similar to those that will be used in the full study.
  • Critical in refining measures and reducing the risk that the full study will be fatally flawed
  • Often useful in fine tuning research objectives
  • A pretest is a very descriptive term indicating that the results obtained in the study are only preliminary and intended to assist in design of a subsequent study.
  • A focus group interview brings together six to twelve people in a loosely structured format.

What is a Theory?

  • A theory is a formal, logical explanation of some events that includes predictions of how things relate to one another.
  • Built through a process of reviewing previous findings of similar studies, simple logical deduction and knowledge of applicable theoretical areas
  • Helps the researcher know what variables need to be included in the study and how they may relate to one another

What is a Hypothesis?

  • A hypothesis is a formal statement explaining some outcome.
  • Must be testable, so it must be written as a proposition
  • In its simplest form, it is a guess.
  • Often apply statistics to data to empirically test hypotheses
  • Empirical testing means that something has been examined against reality using data.
  • When the data are consistent with a hypothesis ► hypothesis is supported.
  • When the data are inconsistent with a hypothesis ►hypothesis is not supported.
  • From an absolute perspective, statistics cannot prove a hypothesis is true.

Planning the Research Design

  • A research design is a master plan that specifies the methods and procedures for collecting and analyzing the needed information; it is a framework for the research plan of action.
  • Selection of the Basic Research Method
  • Four basic design techniques for descriptive and causal research: surveys, experiments, secondary data, and observation.
  • Determination of which method should be chosen depends on:
    • Objectives of the study
    • Available data sources
    • Urgency of the decision
    • Cost of obtaining data
  • A survey is a research technique in which a sample is interviewed in some form or their behavior is observed and described in some way.
    • A researcher’s task is to find the most appropriate way to collect the needed information (i.e., by telephone, mail, Internet, or in person).
  • Observations can be mechanically recorded or observed by humans; use of the mystery shopper.
    • One advantage of the observation technique is that it records behavior without relying on reports from respondents.

Planning a Sample

  • Sampling involves any procedure that draws conclusions based on measurements of a portion of the population (i.e., a subset from a larger population).
  • Certain statistical procedures must be followed.
  • When errors are made (e.g., not using a representative sample), samples do not give reliable estimates of the population.
  • Sampling decisions include:
    • Who is to be sampled? ► identification of a target population
    • How big should the sample be? ► concerns sample size
    • How to select the sampling units? ► concerns procedure for selecting sample (i.e., simple random sampling, cluster sampling, etc.)

Collecting Data

  • The process of gathering or collecting information
  • May be gathered by human observers or interviewers or may be recorded by machines (e.g., scanner data)
  • An unobtrusive method is one in which the subjects do not have to be disturbed for data to be collected.
  • However the data are collected, it is important to minimize errors in the process.
  • Editing and Coding
    • The data must be converted into a format that will answer the marketing manager’s questions.

Analyzing Data

  • Data analysis is the application of reasoning to understand the data that have been gathered.
  • The appropriate analytical technique is determined by:
    • Management’s information requirements
    • Characteristics of the research design
    • Nature of the data gathered
  • Three general categories of statistical analysis (discussed in later chapters):
    • Univariate analysis
    • Bivariate analysis
    • Multivariate analysis

Drawing Conclusions

  • Consists of interpreting the research results, describing the implications and drawing the appropriate conclusions for managerial decisions

Research project – researcher has only one or a small number of research objectives that can be addressed in a single study

Research program – numerous related studies come together to address issues about a single company (e.g., an exploratory study may be followed by a survey)

Chapter 4: Organizational and Ethical Issues

Who Should Do the Research?

  • Research is sometimes performed in-house, meaning that employees of the company that will benefit from the research project actually perform the research.
    • Good for when:
      • The research project needs to be completed very quickly
      • Project will require the close collaboration of many other employees from diverse areas of the organization
      • In-house research can almost always be done more cheaply than using an outside firm
      • If secrecy is a major concern
  • If it is performed by an outside agency, that means that the company that will benefit from the research results hires an independent, outside firm to perform a research project.
    • Often can provide a fresh perspective
    • Often can be more objective
    • May have special expertise
    • Will have local knowledge and expertise and may specialize in research from its home area

Research Suppliers and Contractors

  • Research suppliers are commercial providers of research services.
  • Provide varied services which can be classified into several types

Syndicated Service

  • A marketing research supplier that provides standardized information for many clients for a fee (e.g., J.D. Power and Associates sells research about customers’ ratings of automobiles).
  • Can provide expensive information economically to numerous clients because the information is not specific to one client but interests many

Standardized Research Services

  • These companies develop a unique methodology for investigating a business specialty area (i.e., Retail Forward provides location services for retail firms).
  • Conduct studies for multiple individual clients using the same methods
  • May be able to conduct a research project at a lower cost, faster and relatively more objectively compared to in-house research

Limited Research Service Companies and Custom Research

  • Specialize in particular research activities (i.e., syndicated service, field interviewing, data warehousing or data processing)
  • Full-service research suppliers sometimes contract these companies.
  • Custom research projects are ones that are tailored specifically to a client’s unique needs.
Cross-Functional Teams
  • Cross-functional teams are composed of individuals from various functional areas (i.e., engineering, production, finance, marketing) who share a common purpose.
  • Help organizations focus on a core business process (i.e., customer service, new-product development)
  • Researchers can be members of cross-functional teams, acting as both consultants and as providers of technical services.
ETHICAL ISSUES IN MARKETING RESEARCH
  • Ethical Questions Are Philosophical Questions
    • Marketing ethics is the application of morals to behavior related to the exchange environment.
    • Moral standards are principles that reflect beliefs about what is ethical and what is unethical (e.g., the Golden Rule).
    • Ethical dilemma refers to a situation in which one chooses from alternative courses of actions, each with different ethical implications.
    • Relativism
      • A term that reflects the degree to which one rejects moral standards in favor of the acceptability of some action
      • Rejects absolute principles in favor of situation-based evaluations
    • Idealism
      • A term that reflects the degree to which one bases their morality on moral standards (i.e., the Golden Rule)
  • Rights and Obligations of the Research Participant
  • Most marketing research is conducted with the research participant’s consent (i.e., the participant is active).
  • Participants’ Right to Privacy
    • Informed consent means that the individual understands what the researcher wants him/her to do and agrees to in the research study.
  • Active Research
    • The issue involves the participant’s freedom to choose whether to comply.
    • Be considerate of participants’ time and identify yourself.
    • Adhere to the principles of the “Do Not Call” policy and respect consumers’ “Internet privacy.”
  • Passive Research
  • It is generally believed that unobtrusive observation of public behavior in which consumers are anonymous (i.e., are never identified by name) is not an invasion of privacy.
    • Recording behavior that is not conducted in public would be a violation of privacy, there is an expectation of implicit consent.
    • Technology allows the passive collection of data based on consumers’ on-line behavior, and researchers should gain consent before harvesting information.
    • A guarantee of anonymity assures respondents that they cannot be identified or linked to their response in any way.
  • Confidentiality means that information involved in the research will not be shared with others.
  • Deception and the Right to Be Informed
  • Experimental Designs
    • Manipulations often involve some degree of deception.
    • A placebo is a false experimental effect used to create the perception of a true effect, and experimental subjects often display some placebo effect in which the mere belief that some treatment has been applied causes some effect.
    • Every experiment should include a debriefing session in which research subjects are fully informed and provided a chance to ask any questions that they may have about the experiment.
  • Human subjects review committee – carefully reviews a proposed research design to try to make sure that no harm can come to any research participant (also review legal issues)
  • Sometimes called an Institutional Review Board (IRB)
Conflict of interest – when one researcher works for two competing companies