Market Research

Professor Lawrence Feick

University of Pittsburgh

Outline

• Definition: what is market research?

• Examples of market research problems

• Who does market research?

• Glossary: types of data, studies, variables

• Focus on focus groups, surveys, observation, experiments

• Sampling

• Market research in 1998

What is market research?

• Collection and organization of information to be used for marketing decision making

Examples of market research problems

• Target market selection

• Product studies

• Pricing studies

• Distribution studies

• Promotion studies

• Sales research

Who does market research?

• Managers or market researchers in the firm producing the product (clients)

• Market research firms (suppliers)

• Advertising agencies (agencies)

• Organizations that produce market research information as a byproduct of other activities

Source: Advertising Age May 25, 1998

The Largest Market Research Firms 1997

Firm 1997 Revenue 1997 Rank 1996 Rank

A C Nielson Corp $1,392MM(20% US)

1 1

IMS Health $981MM(40% US)

2 2

IRI (InformationResources Inc.)

$456MM(80% US)

3 3

Nielson Media $359MM(all US)

4 4

VNU MarketingInfo. Services

$285(75% US)

5 6

ResearchInternational

$268MM(9 % US)

6 5

Market research suppliers:types of services

• Custom research

• Syndicated research

A glossary of research terms

• Types of data

• Types of studies

• Type of variables

Types of data

• Secondary data– collected for another purpose– there is always relevant data available– sources of secondary data

• Primary data– collected to answer the current question

Types of studies

• Quantitative– quantity data: amounts, means, percentages– surveys, experiments, observation methods

• Qualitative– richness, depth of understanding– directional, not quantified results– depth interviews, focus groups

Types of variables

• Independent variable– a variable that has an effect on another– a predictor or explanatory variable

• Dependent variable– a variable that is affected by another

• Examples:– purchase patterns and income

Focus on: Focus Groups

Focus groups

• Most frequently used qualitative method

• Involves moderated group discussion

• Typically 1.5 hours

• Example usage: product concept testing, name tests

Focus on: Surveys

Surveys

• Data collected by asking questions

• Art and science of asking questions

• Descriptive technique that yields:– averages: potato chip consumption– relationships: is potato chip consumption

related to age? to income?

Interviewer-administered questionnaires

• Personal interview surveys

• Telephone surveys

Self-administered questionnaires

• Mail surveys

• Fax surveys

• Computer surveys

Comparing methods of collecting survey data

Criterion Mail, fax Telephone Personal

Response rate

Cost per completion

Complicated questions

Ability to probe

Avoid question bias

Avoid interviewer bias

Protect respondentanonymity

Radisson Hotels Customer Satisfaction SurveyRadisson Hotels Customer Satisfaction Survey

Radisson Hotels Customer Satisfaction SurveyRadisson Hotels Customer Satisfaction Survey

Architectural DigestArchitectural Digest 1998 Rate Card 1998 Rate Card Survey: First pageSurvey: First page

Architectural DigestArchitectural Digest 1998 Rate Card 1998 Rate Card Survey: Last pageSurvey: Last page

Focus on: Observation

Observation

• Data collected by recording information

• Avoid bias from contact that influences responses

• UPC scanners, Nielson Media’s black boxes, hidden cameras

Focus on: Experiments

Experiments

• Involve manipulated independent variables– provide insight into cause and effect

• Data collected with surveys and observation

• Package design tests, ad copy tests, test markets

Sampling: an aside

• Population

• Census versus sample

• Types of samples– probability samples– nonprobability samples

• Sampling and statistics

Market research in the late 1990s:

linked data• Supermarkets loyalty cards

– purchase data from scanners

– demographic data from membership

– tailored promotions to members, neighborhoods

• Reader’s Digest direct mail system– tailored mailings based on expected response

and expected profitability

– uses purchase data, survey data, purchased lists

Market research in the late 1990s:

single source data• Uses a consumer panel• Combines:

– demographics from surveys– observed black box data – observed scanner data

• Provides linkages among:– customer demos, media habits, purchases

• Split cable experiments

Market research in the late 1990s:

brand anthropology• Developing new ways to understand brand

meaning in consumers– collages– thick description– in-home observation

Market research: the bottom line

• Market research defined--reprise– Collection and organization of information to

be used for marketing decision making

• Market research, to be useful,– focuses on manager’s problems– answers the right questions– affects decision making