Marketing – Chapter 3: Gather, Analyze and Use Information
1. Knowledge Is Power
• To make good decisions, marketers must have information that is accurate, up to date and
• Several aspects of marketing research are fraught with the potential for ethics breaches.
- Marketers must be very clear when they work with research respondents about how
they will use the data and give respondents full disclosure on their options for
confidentiality and anonymity.
The Marketing Information System
• Many firms use marketing information systems to collect information.
- There are three important components:
o (1) Four types of data (internal company data, marketing intelligence,
marketing research and acquired databases).
o (2) Computer hardware and software to analyze the data and to create reports.
o (3) Output for marketing decision makers.
- Various sources “feed” the MIS with data and then the system’s software “digests” it.
- The MIS analysts use the output to generate a series of regular reports for various
Internal Company Data
• The internal company data system uses information from within the organization to produce
reports on the results of sales and marketing activities.
• Often an MIS allows salespeople and sales managers in the field to access internal records
through a company intranet.
- Intranets are secured so that only authorized employees have access.
- The reports can provide an important source of information to upper management on
changes in sales patterns or on new sales opportunities.
- Marketing managers can view monthly sales reports to measure progress toward sales
goals and market share objectives.
• Nearly all the information companies need about their environment is available by monitoring
- Salespeople can provide valuable information.
- Other information may come from speaking with organizational buyers.
• Marketing managers may use marketing intelligence data to predict fluctuations in sales so that
they will be on top of developing trends.
• Marketing research is called for when managers need unique information to help them make
- Virtually all companies rely on some form of marketing research though the amount
and type of research conducted varies dramatically. - Marketing research data available in an MIS include syndicated research reports and
custom research reports.
o Syndicated research doesn’t provide all the answers to marketing questions
because the information it collects is broad but shallow; it gives good insights
about general trends.
o Custom research is helpful for firms when they need to know more about why
certain trends have surfaced.
• Marketers may use marketing research to identify opportunities for new products, to promote
existing ones or to provide data about the quality of their products, who uses them and how.
• A large amount of information that can be useful in marketing decision making is available in
the form of external databases.
- The use of such databases for marketing purposes has come under increased
government scrutiny as some consumer advocates protest against the potential
invasion of privacy these may cause.
The Marketing Decision Support System
• Different managers may want different information and in some cases, the problem they must
address is too vague or unusual for the MIS process to easily answer.
- As a result, many firms improve their MIS with a marketing decision support system.
• Typically an MDSS includes sophisticated statistical and modelling software tools.
- Statistical software allows managers to examine complex relationships among factors
in the marketplace.
- Modelling software allows decision makers to examine possible or preconceived
ideas about relationships in the data.
2. Searching for Gold: Data Mining
• Data mining is a process in which analysts sift through data to identify unique patterns of
behaviour among different customer groups.
• Data mining uses computers that run sophisticated programs so that analysts can combine
different databases to understand relationships.
- These operations are so complex that often companies need to build a data warehouse
simply to store and process the data.
• Tracking consumers’ behaviour via cookies happens all the time.
- “Cookie” = a small piece of information sent by a Web server to store on a Web
browser so it can later be read back from that browser.
• Customer acquisition:
- The supermarket determines which of its current customers respond best to specific
offers and then sends the same offers to non-customers who share the same
• Customer retention and loyalty:
- The firm identifies big-spending customers and then targets them for special offers
and inducements other customers won’t receive.
• Customer abandonment: - Sometimes a firm wants customers to take their business elsewhere because servicing
them actually costs the firm too much.
• Market basket analysis:
- Focused promotional strategies are developed based on the records of which
customers have bought certain products.
3. Steps in the Marketing Research Process
Step 1: Define the Research Problem
• The first step in the marketing research process is to clearly understand what information
• Defining the problem points to three components:
- (1) Specify the research objectives.
- (2) Identify the consumer population of interest.
- (3) Place the problem in an environmental context.
• Often the focus of a research question comes from marketplace feedback that identifies a
• The research objective determines the consumer population the company will study.
Step 2: Determine the Research Design
• Research designs fall into two broad categories: secondary research and primary research.
- Marketers solve many problems most effectively with a combination of techniques.
• The first question marketers must ask when they determine their research design is whether the
information they require to make a decision already exists.
• If secondary data are available, it saves the firm time and money because the expense to design
and implement a study has already been incurred.
• When a company needs to make a specific decision, it often needs to collect primary data.
Exploratory (Qualitative) Research
• Because the studies are usually small scale and less costly than other techniques, marketers
may use exploratory research to test their hunches about what’s going on without too much risk.
- They often involve in-depth probing of a few consumers who fit the profile of the
- Exploratory research is referred to as qualitative because the results of the research
project tend to be non-numeric.
• The focus group is the technique that marketing researchers use most often for collecting
- Typically consist of five to nine consumers who have been recruited because they
share certain characteristics.
• The case study is often used in business-to-business marketing research in which the customers
are other firms.
• An ethnography is a different kind of in-depth report and uses a technique marketers borrow
from anthropologists. Descriptive (Quantitative) Research
• In quantitative research, researchers use tools such as questionnaires or equipment to collect
- These are usually modest studies of a small number of people, enough to get some
indication of what is going on but not enough for the marketer to feel confident about
generalizing what they observed to the rest of the population.
• The next step in marketing research is to conduct descriptive research.
- This research probes systematically into the marketing problem and bases its
conclusions on a large sample of participants.
- Results are typically expressed in quantitative terms.
- Marketing researchers who employ descriptive techniques most often use a cross-
- Market researchers sometimes create consumer panels to get information; a sample of
respondents that are representative of a larger market agrees to provide information
about purchases on a weekly or monthly basis.
• Marketers use causal research techniques when they want to know if a change in something is
responsible for a change in something else.
- The call the factors that might cause such a change independent variables and the
outcomes dependent variables.
o To rule out alternative explanations, researchers carefully design experiments.
Step 3: Choose the Method to Collect Primary Data
• When th