Chapter 4Chapter 4Managing Marketing InformationManaging Marketing Information

Professor MarshallProfessor Marshall

Queens CollegeQueens College

Coca-Cola’s Marketing BlunderCoca-Cola’s Marketing Blunder

In 1985, marketers thought they were listening to In 1985, marketers thought they were listening to their target market. They noticed that they were their target market. They noticed that they were losing market share to Pepsi and they conducted losing market share to Pepsi and they conducted taste tests to develop their new formula.taste tests to develop their new formula.On April 23, 1985, Coca-Cola stopped producing On April 23, 1985, Coca-Cola stopped producing old Coke and created a new Coke with a old Coke and created a new Coke with a sweeter taste. sweeter taste. Angry customers panicked, filling their Angry customers panicked, filling their basements with old Coke and threatening basements with old Coke and threatening lawsuits.lawsuits.3 months later, Coca-Cola brought back the old 3 months later, Coca-Cola brought back the old formula calling it Coca-Cola Clasic.formula calling it Coca-Cola Clasic.

Coca-Cola fouled up their research. They focused only on Taste. The company ignored consumers’ feeling about the old Coke.

Luckily, Coca-Cola had quick reaction time.

The Importance of Marketing The Importance of Marketing InformationInformation

Companies need information about Companies need information about their:their:

– Customer needsCustomer needs– Marketing environmentMarketing environment– CompetitionCompetition

Marketing managers do not need Marketing managers do not need moremore information, they need information, they need betterbetter information.information.

Marketing Information SystemMarketing Information System

An MIS consists of people, An MIS consists of people, equipment, and procedures to equipment, and procedures to gather, sort, analyze, evaluate, and gather, sort, analyze, evaluate, and distribute needed, timely, and distribute needed, timely, and accurate information to marketing accurate information to marketing decision makers.decision makers.The MIS helps managers to: The MIS helps managers to:

1.1. Assess Information NeedsAssess Information Needs2.2. Develop Needed InformationDevelop Needed Information3.3. Distribute InformationDistribute Information

Assessing Information NeedsAssessing Information Needs

A good MIS balances the information A good MIS balances the information users would users would likelike against what they really against what they really needneed and what is and what is feasiblefeasible to offer. to offer.Sometimes the company cannot provide Sometimes the company cannot provide the needed information because it is not the needed information because it is not available or due to MIS limitations.available or due to MIS limitations.Have to decide whether the benefits of Have to decide whether the benefits of more information are worth the costs.more information are worth the costs.

Developing Marketing InformationDeveloping Marketing InformationInternal DatabasesInternal Databases: Electronic collections of : Electronic collections of information obtained from data sources within the information obtained from data sources within the company.company.

– Information in a database can come from many sources. Information in a database can come from many sources. Operations tracks shipments and inventory, sales tracks Operations tracks shipments and inventory, sales tracks competitor activities, marketing has customer demographics competitor activities, marketing has customer demographics and buying behavior, customer service contains information and buying behavior, customer service contains information on customer satisfaction.on customer satisfaction.

Marketing IntelligenceMarketing Intelligence: Systematic collection and : Systematic collection and analysis of publicly available information about analysis of publicly available information about competitors and developments in the marketing competitors and developments in the marketing environment.environment.

– Used to improve strategic decision makingUsed to improve strategic decision making

Marketing ResearchMarketing Research: Systematic design, collection, : Systematic design, collection, analysis, and reporting of data relevant to a specific analysis, and reporting of data relevant to a specific marketing situation facing an organization.marketing situation facing an organization.

– Used to help understand customer purchase behaviorUsed to help understand customer purchase behavior

Customer Relationship ManagementCustomer Relationship ManagementMany companies utilize CRMMany companies utilize CRM

– Capture customer information from all sourcesCapture customer information from all sources– Analyze it in depthAnalyze it in depth– Apply the results to build stronger Apply the results to build stronger

relationships.relationships.Companies look for customer Companies look for customer touch points touch points (every contact between company and customer)(every contact between company and customer)..

CRM analysts develop CRM analysts develop data warehouses data warehouses (centralized database)(centralized database) and use and use data data miningmining (algorithms designed to detect (algorithms designed to detect patterns in the data) techniques to find patterns in the data) techniques to find information out about customers.information out about customers.

Marketing Research ProcessMarketing Research Process

Defining the problem & research objectives

Developing the research plan for collecting information

Implementing the research

plan – collecting & analyzing the

data

Interpreting & reporting the

findings

Problem: Losing market share to Pepsi. We must research the taste preferences of consumers.

We should collect taste preference information through blind taste tests.

Conduct blind taste tests in various settings aimed at various consumers

Data finds that consumers prefer the sweeter taste of Pepsi.

Based on the findings, Coca-Cola decides to produce a sweeter New Coke, and remove the old Coke from its product line.

Defining Problem & ObjectivesDefining Problem & ObjectivesExploratory Research:Exploratory Research:

– Gather preliminary information that will help define Gather preliminary information that will help define the problem and suggest hypotheses.the problem and suggest hypotheses.

Descriptive Research:Descriptive Research:– Describes things (e.g., market potential for a Describes things (e.g., market potential for a

product, demographics, and attitudes).product, demographics, and attitudes).

Causal Research:Causal Research:– Tests hypotheses about cause-and-effect Tests hypotheses about cause-and-effect

relationships. Example: Would a 10% decrease in relationships. Example: Would a 10% decrease in tuition at a private college increase enrollment tuition at a private college increase enrollment enough to offset the decrease in tuition?enough to offset the decrease in tuition?

Developing the Research PlanDeveloping the Research PlanIncludes:Includes:

– Determining the exact information neededDetermining the exact information needed– Developing a plan for gathering it efficientlyDeveloping a plan for gathering it efficiently– Presenting the written plan to managementPresenting the written plan to management

Outlines:Outlines:– Sources of existing dataSources of existing data– Specific research approachesSpecific research approaches– Contact methodsContact methods– Sampling plansSampling plans– Instruments for data collectionInstruments for data collection

Developing the Research Plan: Developing the Research Plan: Campbell SoupCampbell Soup

Campbell wants to conduct research on how soup consumers would Campbell wants to conduct research on how soup consumers would react to the introduction of new bowl-shaped plastic containers react to the introduction of new bowl-shaped plastic containers which would allow consumer to heat soup in the microwave without which would allow consumer to heat soup in the microwave without adding anything and without a need for dishes.adding anything and without a need for dishes.

They need to research the following information:They need to research the following information:

Demographic, economic and lifestyles of current soup consumersDemographic, economic and lifestyles of current soup consumers

Consumer usage patterns for soup (where, when, how much)Consumer usage patterns for soup (where, when, how much)

Retailer reactions to new packagingRetailer reactions to new packaging

Consumer attitudes toward new packagingConsumer attitudes toward new packaging

Forecasts of sales for new and old packagesForecasts of sales for new and old packages

Next Step: determine where/how to gather this information and all associated costs. Present this in a written proposal.

Gathering Secondary DataGathering Secondary DataInformation that already exists somewhereInformation that already exists somewhere

– Internal databasesInternal databases– Commercial data services: Commercial data services: www.acneilson.comwww.acneilson.com

(data on household purchasing), (data on household purchasing), www.dnb.comwww.dnb.com (information on companies)(information on companies)

– Government sources: Government sources: www.sec.govwww.sec.gov (financial (financial data on US corporations), data on US corporations), www.census.govwww.census.gov

Available more quickly and at a lower cost Available more quickly and at a lower cost than primary data.than primary data.Must be relevant, accurate, current, and Must be relevant, accurate, current, and impartial.impartial.

See page 116 for more external information sources.

Primary Data CollectionPrimary Data CollectionInformation collected for the specific Information collected for the specific purpose at hand.purpose at hand.Must be relevant, accurate, current, and Must be relevant, accurate, current, and unbiased.unbiased.Plan for Primary Data Collection Must Plan for Primary Data Collection Must determine:determine:

– Research approachResearch approach– Contact methodsContact methods– Sampling planSampling plan– Research instrumentsResearch instruments

Developing the Research Plan: Developing the Research Plan: Campbell SoupCampbell Soup

They need to research the following They need to research the following information:information:

Demographic, economic and lifestyles of Demographic, economic and lifestyles of current soup consumerscurrent soup consumers

Consumer usage patterns for soup Consumer usage patterns for soup (where, when, how much)(where, when, how much)

Retailer reactions to new packagingRetailer reactions to new packaging

Consumer attitudes toward new Consumer attitudes toward new packagingpackaging

Forecasts of sales for new and old Forecasts of sales for new and old packagespackages

Secondary Data

Secondary Data

Primary Data

Secondary Data

Primary Data

Observational ResearchObservational ResearchThe gathering of primary data by The gathering of primary data by observing relevant people, actions, and observing relevant people, actions, and situations.situations.Ethnographic research:Ethnographic research:

– Observation in “natural environment”Observation in “natural environment”

Mechanical observation:Mechanical observation:– People meters – records tv shows watchedPeople meters – records tv shows watched– Checkout scanners – record shoppers’ Checkout scanners – record shoppers’

purchasespurchases– Galvanometer – detects sweating– Eye Cameras – study respondents’ eye

movements

Survey ResearchSurvey ResearchMost widely used method for primary data Most widely used method for primary data collection.collection.

Approach best suited for gathering Approach best suited for gathering descriptive information.descriptive information.

Can gather information about people’s Can gather information about people’s knowledge, attitudes, preferences, or knowledge, attitudes, preferences, or buying behavior.buying behavior.

Survey Contact MethodsSurvey Contact Methods

MailMail TelephoneTelephone PersonalPersonal OnlineOnline

FlexibilityFlexibility PoorPoor GoodGood ExcellentExcellent GoodGood

Qty of data that Qty of data that can be collectedcan be collected

GoodGood FairFair ExcellentExcellent GoodGood

Control of Control of interviewer effectsinterviewer effects

ExcellentExcellent FairFair PoorPoor FairFair

Control of sampleControl of sample FairFair ExcellentExcellent FairFair PoorPoor

Speed of data Speed of data collectioncollection

PoorPoor ExcellentExcellent GoodGood ExcellentExcellent

Response RateResponse Rate FairFair GoodGood GoodGood GoodGood

CostCost GoodGood FairFair PoorPoor ExcellentExcellent

Personal can mean individual interviewing or focus groups (6-10 people who talk about product)

Choosing the SampleChoosing the SampleSampleSample – segment of the population – segment of the population selected to represent the population as a selected to represent the population as a whole.whole.Requires 3 Decisions:Requires 3 Decisions:

– Who is to be surveyed?Who is to be surveyed?Sampling unit Sampling unit

– How many people should be surveyed?How many people should be surveyed?Sample sizeSample size

– How should the people in the sample be How should the people in the sample be chosen?chosen?

Sampling procedureSampling procedure

Types of SamplesTypes of SamplesProbability SampleProbability Sample

Simple Random SampleSimple Random Sample Every member of the population has a Every member of the population has a known and equal chance of selection.known and equal chance of selection.

Stratified Random Stratified Random SampleSample

Population is divided into groups (ex age Population is divided into groups (ex age groups) and random samples are drawn groups) and random samples are drawn from each group.from each group.

Cluster (area) SampleCluster (area) Sample Population is divided into groups based on Population is divided into groups based on location and samples are drawn from the location and samples are drawn from the groups.groups.

Nonprobability SampleNonprobability Sample

Convenience SampleConvenience Sample Researcher selects the easiest population Researcher selects the easiest population members from which to obtain information.members from which to obtain information.

Judgment SampleJudgment Sample Researcher uses his or her judgment to Researcher uses his or her judgment to select population members who are good select population members who are good prospects.prospects.

Quota SampleQuota Sample Researcher finds a prescribed number of Researcher finds a prescribed number of people in each of several categories.people in each of several categories.

Primary Data CollectionPrimary Data Collection

Questionnaires:Questionnaires:– What questions to ask?– Form of each question?

Closed-ended – include all possible answers (multiple choice)

Open-ended – allow respondents to answer in own words

– Wording?– Ordering?

Likert ScaleLikert ScaleOne of the most popular closed-ended formats, widely used in survey One of the most popular closed-ended formats, widely used in survey

research, particularly in measuring attitudes, beliefs and opinions.  research, particularly in measuring attitudes, beliefs and opinions. 

The basic idea here is to:The basic idea here is to:write the item as a declarative sentence and;  write the item as a declarative sentence and;  then provide a number of response options, or choices, that would then provide a number of response options, or choices, that would indicate varying degrees of agreement with, or endorsement of, that indicate varying degrees of agreement with, or endorsement of, that sentence.  sentence. 

Example:Example: Three meals a day is essential to a healthy lifestyle. Three meals a day is essential to a healthy lifestyle.

11 2 2 3 3 4 4 5 6 5 6Strongly Moderately Mildly Strongly Moderately Mildly Mildly Moderately Strongly Mildly Moderately Strongly Disagree Disagree Disagree Agree Agree AgreeDisagree Disagree Disagree Agree Agree Agree

Please note, in the above example, that the "item" to be evaluated Please note, in the above example, that the "item" to be evaluated consists of consists of a declarative sentencea declarative sentence. Thus, it already states a 'position' . Thus, it already states a 'position' and 'direction' of attitude. The respondent is then asked to circle the and 'direction' of attitude. The respondent is then asked to circle the direction and extent (intensity) of his/her agreement (or disagreement) direction and extent (intensity) of his/her agreement (or disagreement) with that "position" sentence.  with that "position" sentence. 

Implementing the Research PlanImplementing the Research Plan

Collecting the dataCollecting the data– Most expensive and subject to errorMost expensive and subject to error

Processing the dataProcessing the data

Analyzing the dataAnalyzing the data

Analyzing the DataAnalyzing the Data

Simple Tabulation – count the occurances Simple Tabulation – count the occurances of each variable independently of other of each variable independently of other variablesvariables

Cross Tabulation – divide the sample into Cross Tabulation – divide the sample into sub-groups to show how the variable sub-groups to show how the variable varies from one subgroup to anothervaries from one subgroup to another

Simple TabulationSimple TabulationAnswer Choice 1 2 3 4 5 6 Total RespondantsQuestion 1 5 8 10 11 14 16 64Question 2 19 7 4 2 21 11 64

PERCENTAGE OF TOTALQuestion 1 8% 13% 16% 17% 22% 25%Question 2 30% 11% 6% 3% 33% 17%

Question 1

1

2

3

4

5

6

1 = Strongly Disagree, 2 = Moderately Disagree, 3 = Mildly Disagree, 4 = Mildly Agree, 5 = Moderately Agree, 6 = Strongly Agree

Cross TabulationCross TabulationQUESTION 1

Answer Choice 1 2 3 4 5 6 Total RespondantsMen 4 7 8 6 7 1 33PERCENTAGE OF TOTAL 12% 21% 24% 18% 21% 3%

Women 1 1 2 5 7 15 31PERCENTAGE OF TOTAL 3% 3% 6% 16% 23% 48%

Question 1 - WOMEN

1

2

3

4

5

6

Question 1 - MEN

1

2

3

4

5

6

1 = Strongly Disagree, 2 = Moderately Disagree,

3 = Mildly Disagree, 4 = Mildly Agree, 5 = Moderately Agree, 6 = Strongly Agree

Interpreting and Reporting FindingsInterpreting and Reporting Findings

Interpret the findingsInterpret the findings

Draw conclusionsDraw conclusions

Report to managementReport to management

Experimental ResearchExperimental Research

Tries to explain cause-and-effect relationships.Tries to explain cause-and-effect relationships.Involves:Involves:

– selecting matched groups of subjects, selecting matched groups of subjects, – giving different treatments, giving different treatments, – controlling unrelated factors, and controlling unrelated factors, and – checking differences in group responses.checking differences in group responses.

Example: before adding a new product, to its menu, Taco Bell might use experiments to test the effect of sales on two different prices it might charge.

Analyzing the DataAnalyzing the Data

Hypothesis TestingHypothesis Testing– Uses Regression Analysis to Interpret the Uses Regression Analysis to Interpret the

resultsresults

Exmaple: Taco Bell might take the data from the experiments designed to test the effect of sales on two different prices.

The company would run a regression on the data to determine if the new price had a significant effect on sales.

Original Price Taco Supreme Meal $4.98New Price Taco Supreme Meal $5.48

Day Sales at Old Price Sales at New Price1 Monday 200 1902 Tuesday 179 1703 Wednesday 154 1464 Thursday 320 3765 Friday 228 2176 Saturday 207 1977 Sunday 189 1808 Monday 289 2759 Tuesday 182 173

10 Wednesday 221 21011 Thursday 198 18812 Friday 178 16913 Saturday 245 23314 Sunday 189 18015 Monday 167 15916 Tuesday 183 17417 Wednesday 200 22118 Thursday 196 18619 Friday 118 11220 Saturday 149 142

Regression OutputRegression Output

Interpretation: we are 98% confident (1-p value) that there is a relationship between old sales (x) and new sales (y) data.

To estimate new sales, we would formulate the following equation:

-38.23 + (1.17 * Sales at the Old Price)

If sales at the old price averaged 200, we would estimate new sales by:

-38.23 + (1.17 * 200) = 195.24

SUMMARY OUTPUT

Regression StatisticsMultiple R 0.967420566R Square 0.935902551Adjusted R Square 0.932341582Standard Error 14.39127822Observations 20

ANOVAdf SS MS F Significance F

Regression 1 54432.857 54432.857 262.8224086 3.4894E-12Residual 18 3727.959999 207.1088888Total 19 58160.817

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%Intercept -38.22687925 14.72791383 -2.595539307 0.018269864 -69.16910196 -7.28465654 -69.16910196 -7.28465654Sales at Old Price 1.167319034 0.07200429 16.21179844 3.4894E-12 1.016043518 1.318594551 1.016043518 1.318594551

Making the DecisionMaking the Decision

Given Estimated Sales at the New Price, Given Estimated Sales at the New Price, is the price hike worth it?is the price hike worth it?

Judging by our research estimates, we Judging by our research estimates, we would reduce sales by 5 if we implement would reduce sales by 5 if we implement the new price. the new price.

We sold 200 at $4.98 = $996.00We sold 200 at $4.98 = $996.00

The new price adds $0.50 per sale, so we The new price adds $0.50 per sale, so we would sell: 195 at $5.48 = $1,069.90would sell: 195 at $5.48 = $1,069.90

Making the DecisionMaking the Decision

Assuming there are no other costs (or that Assuming there are no other costs (or that the other costs don’t outweight the profits)the other costs don’t outweight the profits)……

We would increase revenue by: $73.90 if We would increase revenue by: $73.90 if we increase the price.we increase the price.

So – YES we should make Taco Supreme So – YES we should make Taco Supreme Meals $5.48.Meals $5.48.

Video CaseVideo Case

Burke, Inc.Burke, Inc.(9 minutes)(9 minutes)

Applying Knowledge - Improving Decisions Burke is one of the premier international research and consulting firms in the world. For nearly seven decades, Burke has helped manufacturing and service companies understand and accurately predict marketplace behavior. Burke's employee owners add value to research and consulting assignments by applying superior thinking to help clients solve business problems.

http://www.burke.com/about/

ThoughtsThoughts

Can you name some new growing trends?Can you name some new growing trends?

What products or services might be in high What products or services might be in high demand to fit those trends?demand to fit those trends?

What jobs will grow to suit those trends?What jobs will grow to suit those trends?

Video CaseVideo Case

IntelIntel(15 minutes)(15 minutes)

http://www.capstonevideo.com/rpm_wvx/capstone_intel.wvx

ThoughtsThoughts

Marketing Research was used at every Marketing Research was used at every stage in developing the Intel brand.stage in developing the Intel brand.– Deciding on an advertising theme and jingleDeciding on an advertising theme and jingle– Developing a product nameDeveloping a product name– Developing products geared toward the uses Developing products geared toward the uses

of customers all over the globeof customers all over the globe