Marketing Research: From Customer Insights to Actions (Roger Kerin, Steven Hartley, 2022) PDF

Chapter Marketing Research: 8 From Customer Insights to Actions Hollywood Loves Marketing Research! LEARNING OBJECTIVES Avatar, Avengers: Endgame, and Titanic are the top three blockbuster movies that After readin...

Chapter Marketing Research: 8 From Customer Insights to Actions Hollywood Loves Marketing Research! LEARNING OBJECTIVES Avatar, Avengers: Endgame, and Titanic are the top three blockbuster movies that After reading this chapter have attracted millions of moviegoers worldwide. The theater ticket revenues they you should be able to: generated each exceeded $2 billion, well above the $200+ VIDEO 8-1 million budgets needed to produce them. Similarly, Black Black Widow LO 8-1 Identify the reason for Widow generated $377 million in just the first two months Movie Trailer conducting marketing after its release. Unfortunately, not every movie has such kerin.tv/16e/v8-1 research. favorable results. Movies such as X-Men: Dark Phoenix, A LO 8-2 Describe the five-step Wrinkle in Time, and Mortal Engines, for example, each lost more than $100 million. So what can studios do to try to reduce the risk that a marketing research movie will be a box-office flop? Marketing research!1 approach that leads to marketing actions. LO 8-3 Explain how marketing A Film Industry Secret uses secondary and Bad titles, poor scripts, temperamental stars, costly special effects, competing primary data. movies, and ever-changing consumers are just a few of the risks studio executives LO 8-4 Discuss the uses face. They try to reduce their risk through a largely secretive process of marketing of observations, research that involves small sample audiences selected to be representative of the questionnaires, larger population. panels, experiments, Fixing bad movie names, for example, can turn potential disasters into success- and newer data ful blockbusters. Many studios use title testing—a form of marketing research—to choose a name. Here are a few examples: collection methods. LO 8-5 Explain how data analytics and data · Harley Quinn: Birds of Prey started as Birds of Prey and the Fantabulous Emanci- pation of One Harley Quinn, which was complex and confusing to audiences mining lead to who struggled to understand who the Birds of Prey actually were. marketing actions. LO 8-6 Describe three · Atomic Blonde originally went by the title Coldest City. The name was changed, though, to better match the performance of the movie’s star, Charlize Theron. approaches to developing a · Edge of Tomorrow, starring Tom Cruise and Emily Blunt, first used the name of the book on which it was based, All You Need Is Kill. The word kill, however, company’s sales was unpopular. forecast. · The Toy Story series began as Wind-Up Heroes, and studio executives also considered To Infinity and Beyond, Spurs & Rockets, and Bring Me the Arm of Buzz Lightyear before selecting the simpler title. Generally, filmmakers want movie titles that are short, memorable, appealing to consumers, and without legal restrictions—the same factors that make a good brand name.2  213 BFA/Alamy Stock Photo Studios also try to reduce their risks with additional forms of marketing research such as: · Concept testing and script assessment. These techniques are used to assess early ideas for proposed new films. In addition, because many scripts and films today are part of a series such as Avengers, Fast & Furious, and Spider-Man, these forms of research can ensure that sequels are consistent with expectations created by the past movies.3 The text describes how social listening is used to help movies become a success. Source: Falcon.io ApS · Test (or preview) screenings. In test screenings, 300 to 400 prospective moviegoers are recruited to attend a “sneak preview” of a film before its release. After viewing the movie, the audience completes a survey to critique its title, plot, characters, music, and ending to identify improvements to make in the final edit. James Cameron, for example, used a test screening of Titanic to cut the length of the movie from 4 hours to 194 minutes, and to change the ending.4 · Tracking studies. Before an upcoming film’s release, studios will ask prospective moviegoers in the target audience three questions: (1) Are you aware of the film? (2) Are you interested in seeing the film? (3) Will you see the film? Studios also use “social listening” to understand what potential moviegoers are saying on Twitter, YouTube, Tumblr, Facebook, Instagram, and other social media sites. Studios use these data to monitor a promotional campaign, forecast the movie’s opening weekend box-office sales, and, if necessary, add additional marketing activities to promote the film.5 These examples show how marketing research leads to effective marketing actions, the main topic of this chapter. Also, marketing research is often used to help a firm develop its sales forecasts, the final topic of this chapter. 214 THE ROLE OF MARKETING RESEARCH Let’s (1) look at what marketing research is, (2) identify some difficulties with it, and LO 8-1 (3) describe the five steps marketers use to conduct it. Identify the reason for conducting marketing What Is Marketing Research? research. Marketing research is the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions.6 Although imperfect, marketers conduct marketing research to reduce the risk of—and thereby improve—marketing decisions. The Challenges in Doing Good Marketing Research Whatever the marketing issue involved—whether discovering consumer tastes or setting the right price—good marketing research is challenging. For example: · Suppose your firm is developing a product that is completely new to the market- place, and you are charged with estimating demand for the product. How can marketing research determine if consumers will buy a product they have never seen, and never thought about, before? · Understanding why consumers purchase some products often requires answers to personal questions. How can marketing research obtain answers that people know but are reluctant to reveal? 215 · Past purchase behaviors may help firms understand the influence of marketing actions. How can marketing research help people accurately remember and report their interests, intentions, and purchases? LO 8-2 Marketing research must overcome these difficulties and obtain the information Describe the five-step CHAPTER 8 Marketing Research: From Customer Insights to Actions marketing research needed so that marketers can assess what consumers want and will buy. approach that leads to marketing actions. Five-Step Marketing Research Approach A decision is a conscious choice from among two or more alternatives. All of us make many such decisions daily. At work we choose from alternative ways to accomplish an FIGURE 8–1 assigned task. At college we choose from alternative courses. As consumers we choose Five-step marketing from alternative brands. No magic formula guarantees correct decisions. research approach Managers and researchers have tried to improve the outcomes of decisions by using leading to marketing more formal, structured approaches to decision making, the act of consciously choosing actions. Lessons from among alternatives. In this chapter, we describe a systematic marketing research learned from past approach used to collect information to improve marketing decisions and actions. This research mistakes are fed back to improve five-step approach is shown in Figure 8–1. Although our focus in this chapter is on mar- each of the steps. keting decisions, this approach provides a systematic checklist for making both business and personal decisions. Step 1 Step 2 Step 3 Step 4 Step 5 Define the Develop the Collect relevant Develop findings Take marketing problem research plan information Analyze the data actions Set research Specify Obtain Present the Make action objectives constraints secondary data findings recommen- Identify Identify data Obtain dations possible needed for primary data Implement marketing marketing action actions actions recommen- Determine how dations to collect data Evaluate results Feedback to learn lessons for future research STEP 1: DEFINE THE PROBLEM Every marketing problem faces its own research challenges. For example, the marketing strategy used by LEGO Group’s toy researchers and designers in Denmark illustrates the wide variations possible in collecting marketing research data to build better toys. LEGO Group’s definition of toy has changed dra- matically in the past 55 years—from interlocking plastic bricks to construction sets that create figures, vehicles, buildings, and even robots. One new version of a LEGO Group toy is the MINDSTORMS® kit, which integrates electronics, computers, and robots with traditional LEGO Group bricks. Developed with the help of the Media Lab at the Massachusetts Institute of Technology, the MINDSTORMS® kit appeals to a diverse market— from elementary school kids to world-class robotics experts. The kits can be found in homes, schools, universities, and industrial laboratories.7 A simplified look at the marketing research for the LEGO Group’s MINDSTORMS® EV3 shows the two key elements in defining a problem: setting the research objectives and identifying possible marketing actions. Set the Research Objectives Marketing research helps LEGO Group identify possible Research objectives are specific, measurable goals the decision maker seeks to achieve marketing actions for products in conducting the marketing research. For LEGO Group, let’s assume the immediate such as its MINDSTORMS® research objective is to decide which of two new MINDSTORMS® designs should be EV3 building system. selected for marketing. Source: LEGO System Inc. In setting research objectives, marketers have to be clear on the purpose of the research that leads to marketing actions. The three main types of marketing research are as follows: LEGO Group’s MINDSTORMS® 1. Exploratory research provides ideas about a vague problem or question. LEGO EV3 TRACK3R can operate Group, for example, was concerned that middle school children might be over- after only 20 minutes of whelmed by the 500-plus pieces in MINDSTORMS® kits and quickly lose inter- assembly. est. LEGO Group’s marketing researchers used exploratory research techniques Source: LEGO Group such as interviews and focus groups to reveal that chil- dren need to have a basic device up, running, and doing tricks in 20 minutes. 2. Descriptive research generally involves trying to find the frequency with which something occurs or the extent of a relationship between two factors. So if LEGO Group wants to know which of the two MINDSTORMS® kits is of greatest interest to middle school versus high school students, it might ask them specific questions about pref- erence. LEGO Group can then assess the relationship by doing a cross tabulation (discussed later in the chapter) of school level versus kit preference. 3. Causal research tries to determine the extent to which the change in one factor changes another one. Changing key pieces in a MINDSTORMS® kit affects how quickly the newly built device can do tricks—affecting accep- tance by kit users. Test markets, discussed later, use causal research. 216  Identify Possible Marketing Actions Effective decision makers develop specific measures of success, which are criteria or standards used in evaluating proposed solutions to the problem. Different research outcomes, based on the measure of success, lead to different marketing actions. For LEGO Group, assume the measure of success is the total time spent with each of the two potential new MINDSTORMS® kits until a device that can do simple tricks is pro- duced. This measure of success leads to a clear-cut marketing action: Market the kit that produces an acceptable device in the least amount of playing time. Marketing researchers know that defining a problem is an incredibly difficult task. If the objectives are too broad, the problem may not be researchable. If they are too nar- row, the value of the research results may be seriously diminished. This is why market- ing researchers spend so much time defining a marketing problem precisely and writing a formal proposal that describes the research to be done.8 STEP 2: DEVELOP THE RESEARCH PLAN The second step in the marketing research process requires that the researcher (1) spec- ify the constraints on the marketing research activity, (2) identify the data needed for marketing actions, and (3) determine how to collect the data. 217 Specify Constraints The constraints in a decision are the restrictions placed on potential solutions to a problem. Examples include the limitations on the time and money available to solve the problem. What constraints might LEGO Group set in developing new LEGO Group MIND- CHAPTER 8 Marketing Research: From Customer Insights to Actions STORMS® EV3 products? LEGO Group might establish the following constraints on its decision to select one of the two new designs: The decision (1) must be made in five weeks (2) using 10 teams of middle school students playing with the two alternative MINDSTORMS® kits. Identify Data Needed for Marketing Actions Effective marketing research studies focus on collecting data that will lead to effective marketing actions. In the MINDSTORMS® case, LEGO Group’s marketers might want to know students’ math skills, time spent playing video games, and so on. But that infor- mation, while nice to know, is largely irrelevant because the study should focus on col- lecting only those data that will help them make a clear choice between the two MINDSTORMS® designs. Determine How to Collect Data Determining how to collect useful marketing research data is often as important as actually collecting the data—step 3 in the process, which is discussed later. Two key elements to consider in deciding how to collect the data are (1) concepts and (2) methods. Concepts In the world of marketing, concepts are ideas about products or services. To find out about consumer reactions to a potential new product, marketing researchers frequently develop a new-product concept, which is a picture or verbal description of a product or service the firm might offer for sale. For example, the LEGO Group design- ers might develop a new-product concept for a new MINDSTORMS® EV3 robot that uses a color sensor, responds to voice commands, or uses GPS navigation software.  Methods Methods are the approaches that can be used to collect data to solve all or part of a problem. To collect data, LEGO Group marketing researchers might use a combination of (1) observing the behavior of MINDSTORMS® users and (2) asking users questions about their opinions of the MINDSTORMS® kits. Observing people and asking them questions—the two main data collection methods—are discussed in the section that follows. How successful is LEGO Group’s marketing research and design strategy for its MINDSTORMS® products? Among younger users alone, tens of thousands of elemen- tary and middle school teams face off in competitions around the world each year. How can you find and use the methods that other marketing researchers have found successful? Information on useful methods is available in tradebooks, textbooks, and handbooks that relate to marketing and marketing research. Some periodicals and tech- nical journals, such as the Journal of Marketing and the Journal of Marketing Research, both published by the American Marketing Association, summarize methods and tech- niques valuable in addressing marketing problems. Special methods vital to marketing are (1) sampling and (2) statistical inference. For example, marketing researchers often use sampling by selecting a group of distributors, customers, or prospects; asking them questions; and treating their answers as typical of all those in whom they are interested. They may then use statistical inference to general- ize the results from the sample to much larger groups of distributors, customers, or prospects to help decide on marketing actions. LEARNING REVIEW 8-1. What is marketing research? 8-2. What is the five-step marketing research approach? 8-3. What are constraints, as they apply to developing a research plan? STEP 3: COLLECT RELEVANT INFORMATION Collecting enough relevant information to make a rational, informed marketing deci- LO 8-3 sion sometimes simply means using your knowledge to decide immediately. At other Explain how marketing times it entails collecting an enormous amount of information at great expense. uses secondary and Figure 8–2 shows how the different kinds of marketing information fit together. primary data. Data, the facts and figures related to the project, are divided into two main parts: sec- ondary data and primary data. Secondary data are facts and figures that have already been recorded prior to the project at hand. As shown in Figure 8–2, secondary data are divided into two parts—internal and external secondary data—depending on whether the data come from inside or outside the organization needing the research. Primary data are facts and figures that are newly collected for the project. Figure 8–2 shows that primary data can be divided into observational data, questionnaire data, and other sources of data. Secondary Data: Internal The internal records of a company generally offer the most easily accessible marketing information. These internal sources of secondary data may be divided into two related parts: (1) marketing inputs and (2) marketing outcomes. Marketing input data relate to the effort expended to make sales. These range from mar- keting budget reports, which include advertising expenditures, to salespeople’s call reports, which describe the number of sales calls per day, who was visited, and what was discussed. 218  Internal data (inside the firm) Inputs (budgets, financial statements, sales call reports) Outcomes (actual sales and Secondary data customer communications) Facts and figures already recorded prior External data (outside the firm) to the project U.S. Census reports Trade association studies Business periodicals Internet-based reports Data Facts and figures pertinent to the Observational data (watching people) project Mechanical methods Personal methods Neuromarketing methods Primary data FIGURE 8–2 Facts and Questionnaire data (asking people) Types of marketing figures newly Idea generation methods information. collected Idea evaluation methods Researchers must for the project choose carefully Other sources of data among these to get the best results, Social media 219 Panels and experiments considering time Information technology, IoT and cost constraints. Data mining Marketing outcome data relate to the results of the marketing efforts. These involve CHAPTER 8 Marketing Research: From Customer Insights to Actions accounting records on shipments and include sales and repeat sales, often broken down by sales representative, industry, and geographic region. In addition, e-mails, phone calls, and social media posts from customers can reveal both complaints and what is working well.9 Secondary Data: External Published data from outside the organization are external secondary data. The U.S. The U.S. Census provides Census Bureau publishes a variety of useful reports. Census 2020, which is the twenty- valuable information for fourth census, is the most recent count of the U.S. population that occurs every marketing decisions. 10 years. Recently, the Census Bureau began collecting data annually from a smaller Source: U.S. Department of number of people through the American Community Survey. Both surveys contain Commerce detailed information on American households, such as the number of people per household and the age, sex, race/ethnic background, income, occupation, and edu- cation of individuals within the household. Marketers use these data to identify characteristics and trends of ultimate consumers. The Census Bureau also publishes the Economic Census, which is conducted every five years. These reports are vital to business firms selling products and services to organizations. The 2017 Economic Census contains data on the number and sales of establish- ments in the United States that produce a product or service based on each firm’s geography (state, county, zip code, etc.), industry sector (manufacturing, retail trade, etc.), and North American Industry Classification  Marketing Matters Technology Online Databases and Internet Resources Useful to Marketers Marketers in search of secondary data can utilize a The Census Bureau (www.census.gov) and the Bureau wide variety of online databases and Internet resources. of Economic Analysis (www.bea.gov) of the U.S. De- These resources provide access to articles in periodicals; partment of Commerce, which provide information on statistical or financial data on markets, products, and U.S. business, economic, and trade activity collected organizations; and reports from commercial information by the federal government. companies. Sources of news and articles include: Portals and search engines include: LexisNexis Academic (www.lexisnexis.com), which pro- USA.gov (www.usa.gov), the portal to all U.S. govern- vides comprehensive news and company information ment websites. Users can click on links to browse by from regional, national, and international sources. topic or enter keywords for specific searches. The Wall Street Journal (www.wsj.com), CNBC (www. Google (www.google.com), the most popular portal to cnbc.com), and Bloomberg (www.bloomberg.com), the entire Internet. Users enter keywords for specific which provide up-to-the-minute business news and searches and then click on results of interest. video clips about companies, industries, and trends. Some of these websites are accessible only if you or Sources of statistical and financial data on markets, your educational institution have paid a subscription fee. products, and organizations include: Check with your institution’s website. System (NAICS) code. The 2017 Economic Census was the first to collect responses VIDEO 8-2 completely through an electronic survey. U.S. Census Several market research companies pay households and businesses to record all their kerin.tv/16e/v8-2 purchases using a paper or electronic diary. Such syndicated panel data economically answer questions that require consistent data collection over time, such as, “How many times did our customers buy our products this year compared to last year?” Examples of syndicated panels that provide a standard set of data on a regular basis are the Nielsen TV ratings and J.D. Power’s automotive quality and customer satisfaction surveys. Some data services provide comprehensive information on household demographics and lifestyle, product purchases, TV viewing behavior, responses to coupon and free- sample promotions, and social media use. Their advantage is that a single firm can collect, analyze, interrelate, and present all this information. For consumer product firms such as Procter & Gamble, sales data from various channels help them allocate scarce marketing resources. As a result, they use tracking services such as IRI’s InfoScan to collect product sales and coupon/free-sample redemptions that have been scanned at the checkout counters of supermarket, drug, convenience, and mass merchandise retailers. Finally, trade associations, universities, and business periodicals provide detailed data of value to market researchers and planners. These data are often available online and can be identified and located using a search engine such as Google or Bing. The Marketing Matters box provides examples. Advantages and Disadvantages of Secondary Data A general rule among marketing researchers is to obtain secondary data first and then collect primary data. Two important advantages of secondary data are (1) the tremen- dous time savings because the data have already been collected and published or exist internally and (2) the low cost, such as free or inexpensive Census reports. Further- more, a greater level of detail is often available through secondary data, especially U.S. Census Bureau data. However, these advantages must be weighed against some significant disadvantages. First, the secondary data may be out of date, especially if they are U.S. Census data 220  collected only every 5 or 10 years. Second, the definitions or categories might not be quite right for a researcher’s project. For example, the age groupings or product catego- ries might be wrong for the project. Also, because the data have been collected for another purpose, they may not be specific enough for the project. In such cases, it may be necessary to collect primary data. LEARNING REVIEW 8-4. What is the difference between secondary and primary data? 8-5. What are some advantages and disadvantages of secondary data? Primary Data: Watching People Observing people and asking them questions are the two principal ways to collect new LO 8-4 or primary data for a marketing study. Facts and figures obtained by watching how Discuss the uses of people actually behave is the way marketing researchers collect observational data. observations, Observational data can be collected by mechanical (including electronic), personal, or questionnaires, panels, experiments, neuromarketing methods. and newer data collection methods. Mechanical Methods National TV ratings, such as those of Nielsen shown in 221 Figure 8–3 on the next page, are an example of mechanical observational data col- lected by a “people meter.” The device measures what channel and program are tuned in and who is watching. The people meter (1) is a box that is attached to a television, DVR, cable box, or satellite dish in about 30,000 households across the country; (2) has a remote control unit that is used to indicate when a viewer begins and finishes watching a TV program; and (3) stores and then transmits the viewing information to Nielsen CHAPTER 8 Marketing Research: From Customer Insights to Actions each night. Data about TV viewing are also collected using diaries (a pencil-and-paper What determines if Young recording system).10 Sheldon stays on the air? For Obtaining an accurate picture of television viewing behavior is complicated, the importance of the TV however, as audiences are increasingly delaying their viewing and watching on multiple “ratings game,” see the text. devices. More than 55 percent of the viewing of The Bachelor, for example, takes place Source: ViacomCBS on a delayed basis, while more than 50 percent of TV viewers watch on devices other than televisions each month. To address these issues, Nielsen introduced a cross-platform television rating system called Total Content Rating that combines Nielsen’s existing TV ratings with its new online ratings. These ratings include traditional consumer viewing of TV programs and programming that is streamed on PCs, smartphones, tablets, and video game consoles.11 On the basis of all these observational data, Nielsen then calculates the rating of each TV program. With 121 million TV households in the United States, a single rating point equals 1 percent, or 1,210,000 TV households.12 In some situations, ratings are reported as share points, or the percentage of television households with a television in use that are tuned to the program. Because TV and cable networks sell over $67 billion annually in advertising and set advertising rates to advertisers on the basis of those data, precision in the Nielsen data is critical.13 A change of 1 percentage point in a rating can mean gaining or losing mil- lions of dollars in advertising revenues because advertisers pay rates on the basis of the size of the audience for a TV program. So as shown by the green rows in Figure 8–3, we might expect to pay more for a 30-second TV ad on FBI than one on This Is Us. Broadcast and cable networks may change the time slot or even cancel a TV program if its ratings are consistently poor and advertisers are unwilling to pay a rate based on a higher rating.  Avg. No. of FIGURE 8–3 Rank Program Network Rating Viewers (000) Nielsen Top Television Program Ranking 1 NBC Sunday Night Football NBC 5.3 16,286 Report for network TV primetime 2 NCIS CBS 5.0 15,415 households. The 3 FBI CBS 4.2 12,890 difference of a few share points in Nielsen 4 NFL Thursday Night Football FOX 4.2 12,859 TV ratings affects the cost of a TV ad on a 5 Blue Bloods CBS 4.0 12,163 show and even 6 Chicago Fire NBC 3.9 11,992 whether the show remains on the air. 7 Chicago PD NBC 3.7 11,519 8 Young Sheldon CBS 3.7 11,407 9 Chicago Med NBC 3.7 11,363 10 This Is Us NBC 3.7 11,254 Source: Nielsen NNTV Program Report. All Broadcast and Cable Regularly Scheduled Primetime Programs. Ratings are the percentage of TV homes in the United States tuned in to television. Personal Methods Watching con- sumers in person is another approach to collecting observational data. Procter & Gamble, for example, invests millions of dollars in observational research to iden- tify new innovations. As several industry experts have observed, “Odds are that as you’re reading this, P&G researchers are in a store somewhere observing shoppers, or even in a consumer’s home.” While observing consumers using its Gillette shavers in India, P&G noticed that many consumers shaved with a small cup of cold water, which caused the blades to clog. As a result, P&G introduced the Gillette Guard razor with a single blade and an easy-rinse design. Similarly, IKEA noticed that customers often stopped Observational data led IKEA to shopping when their baskets or carts were full, so additional shopping bags are now add additional shopping bags placed throughout IKEA stores.14 throughout its stores. Another method of collecting observational data is through the use of mystery shop- Piyaphun Phunyammalee/ Shutterstock pers. Companies pay researchers to shop at their stores, outlets, or showrooms to ob- tain the point of view of actual customers. Mystery shoppers can check on the availability and pricing of products and services and on the quality of the customer service provided by employees. Supermarkets, electronics stores, banks, theme parks, and many other businesses use this technique as part of their customer experience management efforts, thus evaluating customer service, store cleanliness, and staff appearance and conduct. This process provides unique marketing research information that can be obtained in no other way.15 Ethnographic research is a specialized observational approach in which trained observers seek to discover subtle behavioral and emotional reactions as consumers encounter products in their “natural use environment,” such as in their home or car.16 For example, Best Buy studied in-home use of fitness equipment and conducted “shop- alongs” to better understand purchase decisions and preferences. Best Buy discovered 222  that consumers wanted integration of consumer electronics with fitness equipment that provided feedback on health and fitness.17 Personal observation is both useful and flexible, but it can be costly and unreliable if different observers report different conclusions when watching the same event. And while obser- vation can reveal what people do, it cannot easily determine why they do it. Neuromarketing Methods Marketing researchers are also utilizing neuromarketing methods to observe responses to nonconscious stimuli. Neuromarketing is a relatively new field of study that merges technologies used to study the brain with marketing’s interest in understanding consumers. Aradhna Neuromarketing often uses Krishna, one of the foremost experts in the field, suggests that a headset with sensors to “many companies are just starting to recognize how strongly the senses affect the deepest measure brain waves to try to parts of our brains.” Another expert, Martin Lindstrom, has used brain scanning to understand consumers better. analyze the buying processes of more than 2,000 people. The findings of his research are For some changes made by summarized in his book Buyology. Other neuroscience tools such as eye tracking, biometric Campbell Soup Company monitoring, and facial coding are also being used to complement brain studies.18 based on neuromarketing, Neuromarketing can provide insights for many elements of a marketing program, see the text. including media options, advertising content, packaging, and labeling. Based on the 223 (photo): Michael Staudt/VISUM/ results of neuromarketing studies, for example, Campbell Soup Company changed Redux; (background image): the labels of most of its soup cans. Some of the changes: Steam now rises from more xpixel/Shutterstock vibrant images of soup; the “unemotional spoons” have disappeared; and the script logo is smaller and has been moved to the bottom of the can.19 CHAPTER 8 Marketing Research: From Customer Insights to Actions Primary Data: Asking People How many times have you responded to some kind of a questionnaire? Maybe it was a short survey at school rating your course or your professor, or perhaps it was a telephone or e-mail survey asking if you were pleased with some type of service you received. Asking consumers questions and recording their answers is the second principal way of gathering information. We can divide this primary data collection task into (1) idea generation methods and (2) idea evaluation methods, although they sometimes overlap and each has a number of special techniques.20 Each survey method results in valuable questionnaire data, which are facts and figures obtained by asking people about their attitudes, aware- ness, intentions, and behaviors. Idea Generation Methods—Coming Up with Ideas In the past, the most common way of collecting questionnaire data to generate ideas was through an individual interview, which involves a single researcher asking questions of one respondent. This approach has many advantages, such as being able to probe for additional ideas using follow-up questions to a respondent’s initial answers. However, this method is very expensive. Later in the chapter we’ll discuss some alternatives. General Mills sought ideas about why Hamburger Helper didn’t fare well when it was introduced. Initial instructions called for cooking a half-pound of hamburger separately from the noodles or potatoes, which were later mixed with the hamburger. So General Mills researchers used a special kind of individual interview, called a depth interview, in which they asked lengthy, free-flowing kinds of questions to probe for underlying ideas and feelings. These depth interviews discovered that consumers (1) didn’t think it contained enough meat and (2) didn’t want the hassle of cooking in two different pots. The Hamburger Helper product manager changed the recipe to call for a full pound of meat and to allow users to prepare it in one dish, leading to product success.  Focus groups are informal sessions of 6 to 10 past, present, or prospective customers in which a discussion leader, or mod- erator, asks for opinions about the firm’s products and those of its competitors, including how they use these products and special needs they have that these products don’t address. Of- ten recorded and conducted in special interviewing rooms with a one-way mirror, these groups enable marketing researchers and managers to hear and watch consumer reactions. The informality and peer support in an effective focus group help uncover ideas that are often difficult to obtain with individual interviews. For example, to improve understanding and learning by students using this textbook, focus groups were conducted among both marketing instructors and stu- Focus groups of students dents. Both groups recommended providing answers to each and instructors were used in chapter’s set of Learning Review questions. This suggestion was followed, so you can developing this textbook. see the answers by going to the section at the end of the chapter or by tapping your To see the specific suggestion finger on the question in the SmartBook version. that may help you study, read Finding “the next big thing” for consumers has caused marketing researchers to turn the text. to some less traditional techniques. For example, “fuzzy front end” methods attempt Marmaduke St. John/Alamy early identification of elusive consumer tastes or trends. Trend Hunter is a firm that Stock Photo seeks to anticipate and track “the evolution of cool.” Trend hunting (or watching) is the practice of identifying “emerging shifts in social behavior,” which are driven by changes in pop culture that can lead to new products. Trend Hunter has identified about 252,000 VIDEO 8-3 cutting-edge ideas through its global network of 155,000 members, and it features these Trend Hunter new ideas on its daily Trend Hunter TV broadcast via its YouTube channel Top Trends (trendhuntertv).21 kerin.tv/16e/v8-3 Idea Evaluation Methods—Testing an Idea In idea evaluation, the market- Wendy’s spent over two years ing researcher tries to test ideas discovered earlier to help the marketing manager rec- remaking its 42-year-old burger. ommend marketing actions. Idea evaluation methods often involve conventional The result: Dave’s Single (also questionnaires using personal, mail, telephone, and online (e-mail or Internet) surveys available in Double and Triple), of a large sample of past, present, or prospective consumers. In choosing among them, named after Wendy’s founder, the marketing researcher balances the cost of the particular method against the expected Dave Thomas. See Figure 8–4 quality of the information and the speed with which it can be obtained. for some questions that Personal interview surveys enable the interviewer to be flexible in asking probing ques- Wendy’s asked consumers in a tions or getting reactions to visual materials but are very costly. Mail surveys are usually survey to discover their fast- biased because those most likely to respond have had especially positive or negative food preferences, behaviors, experiences with the product or brand. While telephone interviews allow flexibility, and demographics. unhappy respondents may hang up on the interviewer, even with the efficiency of computer- Source: Quality Is Our Recipe, LLC assisted telephone interviewing (CATI). Advances in natural language processing (NLP) have led marketing researchers to begin to use chatbots or surveybots, which mimic human interviewers, to conduct telephone surveys. Increasingly, marketing researchers have begun to use online surveys (e-mail and Internet) to collect primary data. The reason: Online methods can reach most audiences while telephone landlines and mail offer declining access. Marketers can embed a survey in an e-mail sent to targeted respon- dents. When they open the e-mail, consumers can either see the survey or click on a link to access it from a website. Marketers can also ask consumers to complete a “pop-up” survey in a separate browser window when they access an organization’s website. Many organizations use this method to have consumers assess their products and services or evaluate the design and usability of their websites. The advantages of online surveys are that the cost is relatively minimal and the turnaround time from data collection to report presentation is much quicker than the traditional methods discussed earlier. However, online 224  surveys have serious drawbacks: Some consumers may view e-mail surveys as “junk” or “spam” and may either choose to not receive them (if they have a “spam blocker”) or purposely or inadvertently delete them, unopened. For Internet surveys, some consum- ers have a “pop-up blocker” that prohibits a browser from opening a separate window that contains the survey; thus, they may not be able to participate in the research. For both e-mail and Internet surveys, consumers can complete the survey multiple times, creating a significant bias in the results. This is especially true for online panels. In response, research firms such as Qualtrics and SurveyMonkey have developed sampling technology to prevent this practice.22 The foundation of all research using questionnaires is developing precise questions FIGURE 8–4 that get clear, unambiguous answers from respondents.23 Figure 8–4 shows a number of To obtain the most formats for questions taken from a Wendy’s survey that assessed fast-food restaurant valuable information preferences among present and prospective consumers. from consumers, this Question 1 is an example of an open-ended question, which allows respondents to ex- Wendy’s survey utilizes press opinions, ideas, or behaviors in their own words without being forced to choose four different kinds of questions discussed in among alternatives that have been predetermined by a marketing researcher. This infor- the text. mation is invaluable to marketers because it captures the “voice” of respondents, which 1. What things are most important to you when you decide to eat out at a fast-food restaurant? 225 2. Have you eaten at a fast-food restaurant in the past month? Yes No CHAPTER 8 Marketing Research: From Customer Insights to Actions 3. If you answered yes to question 2, how often do you eat at a fast-food restaurant? Once a week or more 2 to 3 times a month Once a month or less 4. How important is it to you that a fast-food restaurant satisfies you on the following characteristics? [Check the response that describes your feelings for each characteristic listed.] Very Somewhat Somewhat Very Characteristic Important Important Important Unimportant Unimportant Unimportant Taste of food Cleanliness Price Variety of menu 5. For each of the characteristics listed below check the space on the scale that describes how you feel about Wendy’s. Mark an X on only one of the five spaces for each characteristic listed. Characteristic Check the space that describes the degree to which Wendy’s is... Taste of food Tasty Not Tasty Cleanliness Clean Dirty Price Inexpensive Expensive Variety of menu Broad Narrow (Continued)  6. Check the response that describes your agreement or disagreement with each statement listed below: Strongly Don’t Strongly Statement Agree Agree Know Disagree Disagree Adults like to take their families to fast-food restaurants Our children have a say in where the family chooses to eat 7. How important are each of the following sources of information to you when selecting a fast-food restaurant at which to eat? [Check one response for each source listed.] Source of Very Somewhat Not at All Information Important Important Important Television Newspapers Radio Billboards Internet Social networks 8. How often do you eat out at each of the following fast-food restaurants? [Check one response for each restaurant listed.] Once a Week 2 to 3 Once a Month Restaurant or More Times a Month or Less Burger King McDonald’s Wendy’s 9. As head of the household, please answer the following questions about you and your household. [Check only one response for each question.] a. What is your gender? Male Female b. What is your marital status? Single Married Other (widowed, divorced, etc.) c. How many children under age 18 live in your home? 0 1 2 3 or more d. What is your age? Under 25 25–44 45 or older e. What is your total annual individual or household income? Less than $15,000 $15,000–$49,000 Over $49,000 Source: Wendy’s International, LLC is useful in understanding consumer behavior, identifying product benefits, or develop- ing advertising messages. In contrast, closed-end or fixed alternative questions require respondents to select one or more response options from a set of predetermined choices. Question 2 is an exam- ple of a dichotomous question, the simplest form of a fixed alternative question that allows only a “yes” or “no” response. A fixed alternative question with three or more choices uses a scale. Question 5 is an example of a question that uses a semantic differential scale, a five-point scale in which the opposite ends have one- or two-word adjectives that have opposite meanings. For example, depending on the respondent’s opinion regarding the cleanliness of Wendy’s restaurants, he or she would check the left-hand space on the scale, the right-hand space, or one of the three other intervening points. Question 6 uses a Likert scale, in 226  which the respondent indicates the extent to which he or she agrees or disagrees with a statement. The questionnaire in Figure 8–4 provides valuable information to the marketing researcher at Wendy’s. Questions 1 to 8 inform him or her about the respondent’s likes and dislikes in eating out, frequency of eating out at fast-food restaurants generally and at Wendy’s specifically, and sources of information used in making decisions about fast- food restaurants. Question 9 gives details about the respondent’s personal or household characteristics, which can be used in trying to segment the fast-food market, a topic discussed in Chapter 9. Marketing research questions must be worded precisely so that all respondents inter- pret the same question similarly. For example, in a question asking whether you eat at fast-food restaurants regularly, the word regularly is ambiguous. Two people might answer “yes” to the question, but one might mean “once a day” while the other means “once or twice a month.” However, each of these interpretations suggests that dramatically differ- ent marketing actions be directed to these two prospective consumers. The high cost of using personal interviews in homes has increased the use of mall intercept interviews, which are personal interviews of consumers visiting shopping cen- ters. These face-to-face interviews reduce the cost of personal visits to consumers in their homes while providing the flexibility to show respondents visual cues such as ads or actual product samples. A disadvantage of mall intercept interviews is that the people Frito-Lay used social media interviewed may not be representative of the consumers targeted, giving a biased result. to ask people to show their Electronic technology has revolutionized traditional concepts of interviews or sur- preferences by voting on new 227 veys. Today, respondents can walk up to a kiosk in a shopping center, read questions off potato chip flavors. a screen, and key their answers into a computer on a touchscreen. Fully automated (Phone): SPF/Shutterstock; (screen): telephone interviews exist in which respondents key their replies on a touch-tone Source: Frito-Lay’s/Instagram, Inc. telephone. Carmex’s Facebook account CHAPTER 8 Marketing Research: From Customer Insights to Actions allows it to respond to Primary Data: Other Sources consumers’ comments and Four other methods of collecting primary data exist that overlap somewhat with the to follow daily consumer methods just discussed. These involve using (1) social media, (2) panels and experi- experiences. For how it ments, (3) data analytics, and (4) data mining. uses social media marketing research, see the Applying Social Media Instagram, Facebook, Twitter, and other social media are revolution- Marketing Metrics box. izing the way today’s marketing research is done. In developing a new potato chip fla- Source: Carma Labs Inc./Facebook vor, Frito-Lay substituted social media research for its usual focus groups. Three new flavor alternatives were distributed in stores and people were asked to vote via Twitter, Insta- gram, and Snapchat. All they had to do was click or swipe to show their preferences and help Frito-Lay decide what new flavor to add to its product mix. And Estée Lauder asked so- cial media users to vote on which discontinued shades to bring back.24 Carma Laboratories, Inc., the maker of Carmex lip balm, is a third-generation, family-owned business with a history of accessibility to customers. In fact, founder Alfred Woelbing personally responded to every letter he received from custom- ers. Today, Carma Labs relies on social media programs to help promote its products.25 One opportunity for Carmex (www.mycarmex.com) is to conduct marketing research using social media listening tools to understand the nature of online lip balm conversations. The Applying Marketing Metrics box on the next page shows how Carmex uses marketing metrics to assess its social media programs for its line of products. Data have been modified to protect proprietary information.  Applying Marketing Metrics Are the Carmex Social Media Programs Working Well? As a marketing consultant to Carmex, you’ve just been Your Actions asked to assess its social media activities for its lip balm You conclude that Carmex’s social media initiatives are product line. doing well. Your next step is to probe deeper into the data Carmex has recently launched new social media pro- to see which ones—such as free samples or the Carmex grams and promotions to tell U.S. consumers more about Kiss—have been especially effective in triggering the its line of lip balm products. These include Facebook and positive results and build on these successes in the future. Twitter contests that allow Carmex fans and followers to win free samples by connecting with Carmex. A creative “Carmex Kiss” widget allows users to upload their photo and to send an animated kiss to a friend. Carmex Conversation Velocity Your Challenge 2020–2021 Impressions per Month To assess how the Carmex social media programs are 300 doing, you choose these five metrics: (1) Carmex (millions) 200 conversation velocity—total Carmex mentions on the Internet; (2) Facebook fans—the number of Facebook 100 users in a time period who have liked Carmex’s Facebook brand page; (3) Twitter followers—the number of Twitter 0 J F M A M J J A S O N D users in a time period who follow Carmex’s Twitter feed; Facebook Twitter (4) Carmex share of voice—Carmex mentions on the 2020 Internet as a percentage of mentions of all major lip 2021 balm brands; and (5) Carmex sentiment—the percentage of Internet Carmex share-of-voice mentions that are Carmex (a) positive, (b) neutral, or (c) negative. Share of Voice Carmex Sentiment December 2021 December 2021 Your Findings Neutral 15% Analyzing the marketing dashboard here, you reach these ChapStick 48% Negative conclusions. First, the number of both Facebook fans and 5% Twitter followers for Carmex is up significantly for 2021 compared to 2020, which is good news. Second, the Carmex Blistex Carmex Positive 17% 35% 80% share of voice of 35 percent is good, certainly relative to the 48 percent for the #1 brand ChapStick. But especially favorable is Carmex’s 12 percent increase in share of voice Percentage Change Percentage Change compared to a year ago. Third, the Carmex sentiment 12/20–12/21 12/20–12/21 dashboard shows 80 percent of the mentions are positive, Carmex +12% Positive +23% ChapStick −7% Neutral +5% and only 5 percent are negative. Even more significant is Blistex −5% Negative −7% that positive mentions are up 23 percent over last year. Carmex uses several social media metrics, such as conversation velocity, share of voice, and sentiment.26 These metrics are tracked by electronic search engines that comb the Internet for consumers’ behaviors and “brand mentions” to calculate share of voice and determine whether these brand mentions appear to be “positive,” “neutral,” or “negative” in order to calculate “sentiment.” A widely used Facebook metric measures the number of likes, which refers to the number of Facebook users opting in to a brand’s messages and liking the brand. Marketing researchers increasingly want to glean information from sites to “mine” their raw consumer-generated content in real time. However, when relying on this consumer- generated content, the sample of individuals from whom this content is gleaned may not be statistically representative of the marketplace.27 Panels and Experiments Two special ways that observations and questionnaires are sometimes used are panels and experiments. 228  Marketing researchers often want to know if consumers change their behavior over time, so they take successive mea- surements of the same people. A panel is a sample of consumers or stores from which researchers take a series of measurements. For example, the NPD Group collects data about consumer pur- chases such as apparel, food, and electronics from its online Consumer Panel, which consists of nearly 2 million individuals worldwide. So a firm like General Mills can count the frequency of consumer purchases to measure switching behavior from one brand of its breakfast cereal (Wheaties) to another (Cheerios) or to a competitor’s brand (Kellogg’s Special K). A disadvan- tage of panels is that the marketing research firm needs to To discover how McDonald’s recruit new members continually to replace those who drop out. These new recruits used test markets to help must match the characteristics of those they replace to keep the panel representative of develop its delivery service, the marketplace. see the text. An experiment involves obtaining data by manipulating factors under tightly con- Source: McDonald’s trolled conditions to test cause and effect. The interest is in whether changing one of the independent variables (a cause) will change the behavior of the dependent variable that is studied (the result). In marketing experiments, the independent variables of interest—sometimes called the marketing drivers—are often one or more of the market- ing mix elements, such as a product’s features, price, or promotion (like advertising messages or coupons). The ideal dependent variable usually is a change in the pur- 229 chases (incremental unit or dollar sales) of individuals, households, or organizations. For example, food companies often use test markets, which offer a product for sale in a small geographic area to help evaluate potential marketing actions. McDonald’s, for example, tested its delivery service in three Florida cities to assess consumer interest before deciding to expand. Recently, McDonald’s expanded delivery to 20,000 of its restaurants.28 CHAPTER 8 Marketing Research: From Customer Insights to Actions A potential difficulty with experiments is that outside factors (such as actions of competitors) can distort the results of an experiment and affect the dependent variable (such as sales). A researcher’s task is to identify the effect of the marketing variable of interest on the dependent variable when the effects of outside factors in an experiment might hide it. Big Data, Data Analytics, and Artificial Intelligence Big data is a vague LO 8-5 term generally used to describe large amounts of data collected from a variety of Explain how data sources and analyzed with an increasingly sophisticated set of technologies. Information analytics and data technology includes all of the computing resources that collect, store, and analyze mining lead to marketing actions. the data. Marketing researchers have observed that today we live in an era of data deluge. The challenge facing managers is not data collection or even storage but how to efficiently transform the huge amount of data into useful information. This trans- formation is accomplished through the use of data analytics. Products such as Apache’s Hadoop and Google’s Bigtable are examples of the analytical tools available for people often referred to as data scientists. Their work is also creating a new field of marketing research that focuses on data visualization, or the presentation of the results of the analysis. Today, businesses can obtain data from many sources such as barcode scanners at checkout counters, online tracking software on computers and tablets, and usage histo- ries on your telephone. In fact, the growth of the Internet of Things (IoT) now allows data collection from almost any device a consumer might use. Marketing managers must use a combination of data, technology, and analytics to convert the data into use- ful information that will answer marketing questions and lead to effective marketing actions. An organization that accomplishes this successfully is often referred to as an intelligent enterprise.29  Intelligent Marketing Enterprise Platform Cloud environment Data storage Cloud computing capabilities Artificial intelligence Big data Internal Data warehouse External data sources data sources Customer orders Databases Global sources Customer data Internal Trade associations Inventory External U.S. Census data Sales calls Internet of Things Promotions Single-source services Analytical tools to organize, manipulate, analyze, and present data Data analytics Buying queries Results Who buys...? How much...? Why...? Marketing researcher or data scientist (Photo): Todd Warnock/Lifesize/Getty Images FIGURE 8–5 How marketing researchers and managers use an As shown in Figure 8–5, the elements of an intelligent marketing enterprise platform intelligent enterprise interact to facilitate the work of the marketing researcher or data scientist. The top half platform to turn data of the figure shows how big data are created through a sophisticated communication into action. network that collects data from internal and external sources. These data are stored, organized, and managed in databases. Collectively, these databases form a data warehouse. Data storage (and computing) may also take place in “the cloud,” which is simply a collection of servers accessed through an Internet connection. Large databases are also subject to artificial intelligence platforms which undertake reasoning and com- monsense tasks to allow computers to “behave” intelligently. IBM, Tesla, and Amazon, for example, are using artificial intelligence to operate Watson, guide self-driving cars, and make purchase recommendations, respectively.30 As shown at the bottom of Figure 8–5, data analytics consists of several elements. Marketers use computers to specify important marketing queries or questions and to access the databases in the warehouse (or the cloud). Analytical tools are used to orga- nize and manipulate the data to identify any managerial insights that may exist. The results are then presented using tables and graphics for easier interpretation. When accessing a database, marketers can use sensitivity analysis to ask “what if” questions to determine how hypothetical changes in product or brand drivers—the factors that influ- ence the buying decisions of a household or organization—can affect sales. Traditional marketing research typically involves identifying possible drivers and then collecting data. For example, we might collect data to test the hypothesis that 230  Making Responsible Decisions Ethics Your Digital Life Is Transparent: The Downside of Data Mining Amazon, Google, Yahoo!, eBay, YouTube, reputation.com OK, OK, sometimes data mining errors occur!... yes... and Facebook and Twitter, too! These data are collected in many ways—from The common denominator for all these is their sophisti- tracking devices (like cookies, discussed in Chapter 17) cated data mining techniques that reveal an incredible on websites, to apps downloaded on a cell phone, PC, or amount of personal information about almost anyone. tablet device that reveal a user’s contact list and location, Time journalist Joel Stein, using both online and offline to algorithms that aggregate data from multiple online sources, discovered how easily outsiders could find his sources. Social Security number and then found a number of other These personal details have huge benefits for things about himself—some correct, some not. marketers. Data mining now enables advertisers to For example, his data mining effort revealed that he target individual consumers and facilitates the design of likes hockey, rap, rock, parenting, recipes, clothes, beauty personalized product offerings. This involves using not products, and movies. He makes most of his purchases only demographics such as age and gender but also online, averaging only $25 per purchase. He uses Face- “likes,” past buying habits, social media used, brands book, LinkedIn, Pandora, and StumbleUpon. He bought bought, TV programs watched, stores visited, and his house in November, which is when his home insur- so on. ance is up for renewal. His dad’s wife has a traffic ticket. Want to do some sleuthing yourself? Download Ghostery And some sources predicted that he is an 18- to at www.ghostery.com. It tells you all the companies grabbing 19-year-old woman! your data when you visit a website. 231 increasing couponing (the driver) during spring will increase trials by first-time buyers (the result). As marketers develop increasingly sophisticated intelligent marketing enterprise platforms the need to ask respondents specific questions may decline. The artificial intelligence and predictive analytics components of the platforms will offer CHAPTER 8 Marketing Research: From Customer Insights to Actions Data mining often confirms our common sense understanding answers by identifying behavioral patterns in the data. of purchasing patterns, such as consumers buying peanut Data Mining In contrast, data mining is the extraction of hidden predictive butter and jelly together. information from large databases to find statistical links between consumer purchas- Sara Stathas/Alamy Stock Photo ing patterns and marketing actions. Some of these are common sense: Since many consumers buy peanut butter and grape jelly together, why not run a joint promotion between Skippy peanut butter and Welch’s grape jelly? But would you have ex- pected that men buying diapers in the evening some- times buy a six-pack of beer as well? Supermarkets discovered this when they mined checkout data from scanners. So they placed diapers and beer near each other, then placed potato chips between them—and in- creased sales on all three items! For how much online data mining can reveal about you personally and the ethical issues involved, see the Making Responsible Decisions box.31 Advantages and Disadvantages of Primary Data Compared with secondary data, primary data have the advantages of being more flexible and more specific to the problem being studied. The main disadvantages are that primary data are usually far more costly and time- consuming to collect than secondary data.  Analyzing Primary Data Using Cross Tabulations Suppose top management at Wendy’s wants to use the questionnaire in Figure 8–4 to survey a sample of U.S. households to assess how often customers of different ages eat at fast-food restaurants. Management suspects that as the age of the head of the household increases, visits to fast-food restaurants decline. The data provided by the question