mk0013.pdf

MK 0013

Marketing Research

Contents

Unit 1

Introduction to Marketing Research 1

Unit 2

Applications of Marketing Research 22

Unit 3

Marketing Information System 41

Unit 4

Research Process and Design 64

Unit 5

Sources and Collection of Marketing Data 82

Unit 6

Qualitative vs Quantitative Research Techniques 104 69

Unit 7

Market Research Techniques 126

Unit 8

Measurement and Scalling Techniques 149

Edition: Spring 2010

BKID – B1223 10th

June 2010

Unit 9

Sampling 174

Unit 10

Data Processing and Analysis 198

Unit 11

Hypothesis Testing 218

Unit 12

Using Statistical Package for the Social Sciences 235

Unit 13

Presentation of Research Results 252

Unit 14

Ethics in Marketing Research 277

Unit 15

Marketing Research in Indian Context 296

Acknowledgements, References &

Suggested Readings 313

Dean Directorate of Distance Education Sikkim Manipal University

Board of Studies

Chairman Mr. Pankaj Khanna HOD Management & Commerce Director SMU – DDE HR, Fidelity Mutual Fund

Additional Registrar Mr. Shankar Jagannathan SMU – DDE Former Group Treasurer Wipro Technologies Limited

Controller of Examination Mr. Abraham Mathew SMU – DDE Chief Financial Officer Infosys BPO, Bangalore

Dr. T. V. Narasimha Rao Ms. Sadhna Dash Adjunct Faculty & Advisor Ex-Senior Manager, HR SMU – DDE Microsoft India Corporation (Pvt.) Ltd.

Prof. K. V. Varambally Director, Manipal Institute of Management, Manipal

Content Preparation Team Content Review: Content Writing Vimala Parthasarathy Dr. S. L. Gupta Assistant Professor Birla Inst. of Technology, Noida Campus SMU DDE

Dr. U. Bhojanna Instructional Designing R.N.S. Institute of Technology Mr. Sharad Chaurasia Bangalore Excel Books, New Delhi – 110 028

Content Editing: Language Editing: Ms. Shailley Nigam Ms. Neelam Singh Excel Books Editor, Excel Books New Delhi – 110 028 New Delhi – 110 028

Edition : Spring 2010 Printed : June 2010

This book is a distance education module comprising of collection of learning material for our students.

All right reserved. No part of this work may be reproduced in any form by any means without permission in writing from Sikkim Manipal University of Health, Medical and Technological Sciences, Gangtok, Sikkim.

Printed and Published on behalf of Sikkim Manipal University of Health, Medical and Technological Sciences, Gangtok, Sikkim by Mr. Rajkumar Mascreen, GM, Manipal Universal Learning Pvt. Ltd., Manipal – 576 104. Printed at Manipal Press Limited, Manipal.

SUBJECT INTRODUCTION

Marketing Research (MK 0013)

This courseware comprises 15 units

Unit 1: Introduction to Marketing Research

Explains market research, Defines marketing research, Distinguishes

between market and marketing research, Describes importance, objective

and limitation of marketing research.

Unit 2: Applications of Marketing Research

Explains market potential, Describes techniques of sales forecasting,

Defines customer profiling, Explains price testing.

Unit 3: Marketing Information System

Explains information system, Describes marketing information system,

Defines value of information, Explains significance of marketing information.

Unit 4: Research Process and Design

Explains research process, Describes various steps in research process,

Defines research design, Explains research design types.

Unit 5: Sources and Collection of Marketing Data

Explains data collection criteria, Sources of secondary data, Describes

limitations of secondary data, Explains primary data collection

methodologies.

Unit 6: Qualitative vs. Quantitative Research Techniques

Explains qualitative research methods, Describes qualitative research

applications, Explains quantitative research, Analyzes various methods of

quantitative research.

Unit 7: Market Research Techniques

Describes national readership survey, Defines consumer panels, Describes

test marketing, Explains marketing and retail store audit, Defines database

marketing.

Unit 8: Measurement and Scalling Techniques

Explains measurement concept, Defines attitude measurement, Describes

various attitude measurement scales.

Unit 9: Sampling

Explains sampling, Defines various sampling terms, Describes sampling

process, Analyzes sample size, Explains various type of errors.

Unit 10: Data Processing and Analysis

Explains various steps involved in data processing, Measurement of central

tendency, Describes dispersion measurement, Explains bivariate and

multivariate analysis.

Unit 11: Hypothesis Testing

Describes various steps involved in hypothesis testing, Explains errors in

hypothesis testing, Defines test of significance, Describes student’s

T-distribution.

Unit 12: Using Statistical Package for the Social Sciences

Explains SPSS, Describes highlights of previous versions of SPSS, SPSS

use as a marketing research tool.

Unit 13: Presentation of Research Results

Explains report writing concept, Describes components of report, Describes

style and layout of report, Defines research report writer

Unit 14: Ethics in Marketing Research

Explains ethical theories, Describes ethics in marketing research, Defines

client ethics, Explains field service ethics.

Unit 15: Marketing Research in Indian Context

Explains growing factor of marketing research in India, Describes various

problems faced by Indian researchers, Describes challenges of marketing

research in India.

Objectives of studying the subject

After studying this subject, you should be able to:

become well versed with various terminologies, aspects, issues and

measurements used in Marketing Research.

develop a research design on your own.

conduct a marketing research as per the expectations of the client.

rectify the errors in research calculations.

conclude and interpret various research finings.

In addition to studying the units in this theory SLM (MK 0013), you are

expected to practice concepts of Business Statistics and Mathematics which

will be very helpful in understanding the subject.

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Marketing Research Unit 1

Sikkim Manipal University Page No. 1

Unit 1 Introduction to Marketing Research

Structure

1.1 Introduction

Objectives

1.2 Market Research

1.3 Types of Research

1.4 Marketing Research

1.5 Market Research vs Marketing Research

1.6 Nature of Marketing Research

1.7 Scope of Marketing Research

1.8 Characteristics of Marketing Research

1.9 Objectives of Marketing Research

1.10 Importance of Marketing Research

1.11 Limitations of Marketing Research

1.12 Prominent Research Agencies in India

Problems with MR in India

Trends in MR in India

1.13 Summary

1.14 Terminal Questions

1.15 Answers

1.1 Introduction

We all know that marketing is the process of planning and executing the

conception, pricing, promotion and distribution of ideas, goods and services

to create exchanges that satisfy customers and organizational objectives.

From this, you can very obviously conclude that the role of the customer and

his relationship to the product remains the central point of concern for all the

organizations. This makes research to be imperative for a company to know

what type of products or services would be profitable to introduce in the

market. You would also note that every company wants to know if it has

been able to satisfy customer needs and whether any changes need to be

made in the packaging, delivery or the product itself. This enables a

company to formulate a viable marketing plan or measure the success of its

existing plan. For all these reasons, the companies use marketing research.



This introductory unit on marketing research familiarizes you with the

concepts of market and marketing research and various concepts of

marketing research. It also explains marketing research as a systematic and

objective identification, collection, analysis, and dissemination of information

for the purpose of assisting management in decision making related to the

identification and solution of problems and opportunities in marketing.

Objectives

After studying this unit, you should be able to:

Explain market research, marketing research and the difference

between them

Discuss various types of research

Examine the nature and scope of marketing research

Define the characteristics of marketing research

Explain the objectives, importance and limitations of marketing research

Elucidate upon prominent research agencies in India

1.2 Market Research

Market research is an organized effort to gather information about markets

or customers. It is a very important component of business strategy. You

must note that market research is used for discovering what people want,

need, or believe. It can also involve discovering how they act. The market

research process may involve defining the problem and research objectives,

developing the research plan, collecting the information, analysing the

information and presenting the findings. Once that research is completed, it

can be used to determine how to market your product.

Questionnaires and focus group discussion surveys are some of the

instruments that you might conveniently use for market research.

Self Assessment Questions

1. Market research is done to gather information about ___________ or

__________.

2. Market research is used for discovering what people ___________or

___________.



1.3 Types of Research

Research can be of following types:

Exploratory research

Descriptive research

Applied research

Conceptual research

Causal research

Historical research

Ex-post Facto research

Action research

Evaluation research

Library research

Exploratory Research: Preliminary investigation is called exploratory

research. Table 1.1 discusses it in detail.

Table 1.1: Exploratory Research

Description Example

carried out at the very beginning when the problem is not clear or is vague.

all possible reasons which are obvious are eliminated, thereby directing the research to proceed further with limited options.

Sales decline in a company may be due to:

Inefficient service

Improper price

Inefficient sales force

Ineffective promotion

Improper quality

The research executives must examine such questions to identify the most useful avenues for further research.

Expert surveys, focus groups, case studies and observation methods are

used to conduct the exploratory survey.

Descriptive Research: Descriptive research is a fact finding investigation.

Table 1.2 discusses it further.



Table 1.2: Descriptive Research

Description Example

definite conclusions can be arrived at, but it does not establish a cause and effect relationship.

deals with demographic characteristics of the consumer

1. There are three types of players who will decide the usage of TV:

(a) Television manufacturers,

(b) Broadcasting agency of the programme,

(c) Viewers.

Therefore, research pertaining to any one of the following can be conducted:

(a) The manufacturer can come out with facilities which will make the television more user-friendly. Some of the facilities are Remote control, Child lock, Different models for different income groups, Internet compatibility, Wall mounting etc.

(b) Broadcasting agencies can come out with programmes, which can suit different age groups and income.

deals with specific predictions

2. Sales of a company's product during the next three years, i.e., forecasting.

estimates the proportion of population who behave in a certain way.

3. Why do middle income groups go to Food World to buy their products?

Applied Research: Applied research aims at finding a solution for an

immediate problem faced by any business organization. Table 1.3 discusses

it further.

Table 1.3: Applied Research

Description Example

deals with real life situations

has a practical problem-solving emphasis

brings out many new facts.

Why have sales decreased during the last quarter?

Use of fibre glass body for cars instead of metal

Develop a new market for the product.

Market research is an example of applied research.

Pure/Fundamental Research or Basic Research: Gathering knowledge

for knowledge's sake is known as basic research. Table 1.4 discusses it

further.



Table 1.4: Basic Research

Description Example

not directly involved with practical problems

does not have any commercial potential

no intention to apply this research in practice

Theory of Relativity (by Einstein)

Studies conducted by Tata Institute of Fundamental Research

Conceptual Research: This is generally used by philosophers. Table 1.5

discusses it further.

Table 1.5: Conceptual Research

Description Example

not directly involved with practical problems

does not have any commercial potential

no intention to apply this research in practice

Theory of Relativity (by Einstein)

Studies conducted by Tata Institute of Fundamental Research

It is related to some abstract idea or theory. In this type of research, the

researcher should collect the data to prove or disprove his hypothesis. The

various ideologies or 'isms' are examples of conceptual research.

Causal Research: Table 1.6 discusses causal research.

Table 1.6: Causal Research

Description Example

Determines the cause and effect

relationship between the two

variables.

Effect of advertisement on sales

Historical Research: The name itself indicates the meaning of the

research. Table 1.7 discusses it further.

Table 1.7: Historical Research

Description Example

Studies past records and data.

Calculates the future trends and development of the organisation or market.

No direct observation

Depend on the conclusions or inferences drawn in the past.

Investors in the share market study the past records or prices of shares which he/she intends to buy.

Crime branch police/CBI officers study the past records or the history of the criminals and terrorists in order to arrive at some conclusions.



There are however, certain shortcomings of Historical Research:

Reliability and adequacy information is subjective and open to question.

Accuracy of measurement of events is doubtful.

Verification of records are difficult.

Ex-post Facto Research: Ex-post facto literally means "from what is done

afterwards". In this research, a variable "A" is observed. Thereafter, the

researcher tries to find a causal variable "B" which caused "A". It is quite

possible that "B" might not have been caused "A". Table 1.8 discusses it

further.

Table 1.8: Ex-post Facto Research

Description Example

empirical research

examines the relationship between independent and dependent variable

researcher has no control over an independent variable

researcher can only report "what has happened" and "what is happening"

Effect of advertisement on sales

Action Research: In action research, a target sample is selected from

among the population. Samples are distributed to selected samples and

feedback is obtained from the respondent. This method is most common for

industrial products, where a trial is a must before regular usage of the

product. Table 1.9 discusses it further.

Table 1.9: Action Research

Description Example

undertaken by direct action.

Conducted to solve a problem

Test marketing a product is an example of action research. Initially, the geographical location is identified.

Evaluation Research: This is an example of applied research. Table 1.10


Table 1.10: Evaluation Research

Description Example

conducted to find out how well a planned programme is implemented.

evaluates the performance or assessment of a project.

Rural Employment Programme Evaluation

Success of Midday Meal Programme.



Library Research: This is done to gather secondary data. Table 1.11


Table 1.11: Library Research

Description Example

includes notes from the past data or review of the reports already conducted saves manpower and time

Review report about what happened and how.

Activity 1:

An Indian company dealing in pesticides hires a qualified business

management graduate to expand its marketing activities. Most of the

current employees of the company are qualified chemists with science

background. During their first review meeting, the management graduate

says that the “company should be involved in market research to get a

better perspective of the problem on hand”. On hearing this, one of the

science graduates laughs and says “There is no such thing as marketing

or business research, research is confined to science alone”. What would

be your response?


3. The generic goal of most evaluations is to provide _____________ to a

variety of audiences.

4. Action research is conducted to ____________a problem.

5. In historical research ___________ of records is difficult.

1.4 Marketing Research

Marketing Research (MR) is the systematic problem analysis, model

building and fact finding method for the purpose of improved decision-

making, with a view to control the marketing of goods and services.

You can use marketing research for studying problems, techniques and

other aspects of marketing and related decision-making and their

implementation. You can also study an economic unit in respect of its

various constituents such as consumers, buyers and sellers. MR studies

their response pattern towards price, promotion, purchasing power and

loyalty towards specific brands and similar other marketing activities. It also



tries to determine the contribution of other relevant factors such as habits,

customs and preferences to decision-making.

The American Marketing Association defined MR as the function which links

the consumer, customer and public to the marketer through information –

information used to identify and define marketing opportunities and

problems, refine and evaluate marketing actions, monitor marketing

performance and improve understanding of marketing as a process.

Marketing research specifies the information required to address these

issues, design the method for collecting information, manages and

implements the data collection process, analyses the result and

communicates the findings and their implications.

All the above definitions of marketing research emphasise the need for

evaluating the problem and information in a more comprehensive and

exhaustive manner. You can say that marketing research is a systematic

and objective process of identifying and formulating the marketing

problems, setting research objectives and methods for collecting,

editing, coding, tabulating, evaluating, analysing, interpreting the data

in order to find justified solutions for these problems.


6. Marketing research is a ___________and ____________ process.

7. MR helps in _____________ and __________ the marketing problems.

8. MR aids the researchers in _____________ research objectives.

1.5 Market Research vs Marketing Research

For many people, market research and marketing research might be

synonymous. But for you as a specialist, „market‟ research means research

into a specific market, and thus is a very narrow concept. 'Marketing‟

research on the other hand is much broader. It not only includes 'market'

research, but also areas such as research into new products, or modes of

distribution such as via the Internet.

Marketing the research is an inclusive term, which embraces research

activities carried on with the management of marketing work. It includes

various subsidiary types of research such as:



Market analysis, which is a study of the size, location, nature and

characteristics of markets.

Sales analysis or research, which is largely an analysis of sales data.

Consumer research of which Motivation Research is a type which is

concerned chiefly with the discovery and analysis of consumer attitude,

reaction and preference.

Advertising research, which is carried on chiefly as an aid to the

management advertising work.

Packaging research, etc.


9. ____________ is a study of the size, location, nature and

characteristics of markets.

10. ___________ is a research concerned with the discovery and analysis

of consumer attitude, reaction and preference.

11. As compared with marketing research market research is very

_______________ term.

1.6 Nature of Marketing Research

We have already discussed that MR is systematic and objective in nature.

Apart from these, the main characteristic features that characterize the

nature of MR are:

Applied/Problem solving research

Often based on cost-benefit analysis

Vital for implementation of marketing concept

Value of information declines with time

Dynamic (ongoing)

Marketing research is one of the principal tools for answering questions

because it:

Links the consumer, customer, and public to the market through

information used to identify and define marketing

Generates, refines, and evaluates marketing actions

Monitors marketing performance

Underlines the understanding of marketing as a process




12. Under MR, the value of information ___________ with time.

13. Marketing Research __________, ________ and _________

marketing actions.

1.7 Scope of Marketing Research

Marketing research provides the right information at the right time in the

right place and to the right person which is important in decision-making.

It helps the decision maker in various ways. Analysing it, you will find two

major reasons

1. The Increased Complexity of Business Environment: The study of

complexity of business environment can be studied in four parts:

Technology changes

Research and development

Product changes

Information technology changes

The Technological Changes: The technological changes consist of

factors related to knowledge applied and the materials and machined

uses in the production of goods and services. These changes have an

impact on the business of an organisation. In India, we know that the

state of technological development varies among different sectors of the

industry.

Research and Development: The breathtaking rate of technology

change racing through all types of industry is due in large part to

increasing expenditures for research and development. Despite the

engagement of few firms in research and development and that too in a

few areas, the impact of these expenditures are felt by all. Not only

products and supporting operations are becoming more complex but the

life cycles of products are also being shortened.

Product Changes: Technological advances resulting partly from

research and development, partly from growing customer sophistication,

have resulted in the third cause of complexity – product changes. While

the marketing manager of yesteryear had greater chances of his or her

product ideas becoming marketable, today‟s manager needs to deal with

an enormously high product mortality rate.



The Information Technology Changes: The changes in Information

Technology (I.T.) have profound impact upon the complexity of

management and organizations. The marketing manager knows that the

ability to obtain, store, process, retrieve, and display the right information

for the right decision is vital.

2. Increased Complexity of Decision Maker: You must have noticed that

In the past, marketing managers have tended to solve problems as

isolated situations, independent of other operations of the company,

everything seems to be complicated when it comes to decision making.

For this reason, marketing research comes to recluse. For example, if a

T.V. manufacturer noted a sales decline and traced it to lack of

aggressive effort by sales officers, the problem was assumed to be a

sales management problem. Marketing research can help solve this.

The other scopes of marketing research are as follows:

Research relating to markets:

To find out market potential for existing products

Sales research-forecasting

Finding and analysing market trends

Research relating to products:

Comparative study of competitors‟ products

Identify multiple uses for existing products

Test marketing of products

Product line research

Packaging of products

Consumer grievances

Research related to promotion:

Measure effectiveness of advertisement

Analyse effectiveness of salesmen

Media selection studies

Study patterns of competitors pricing

Motivational studies

Research related to distribution:

Design and locate outlets

Handling operation

Transportation

Storage



Research on pricing:

Cost analysis

Margin analysis

Price analysis

Demand analysis


14. Research relating to markets may be done to find out market ______

for existing products.

15. The technological changes consist of factors related to ________

applied and the ___________ uses in the production of goods and

services.

16. Analysing consumer grievances is a part of research related to

______________.

1.8 Characteristics of Marketing Research

First, marketing research is systematic. Thus systematic planning is

required at all the stages of the marketing research process. The

procedures followed at each stage are methodologically sound, well

documented, and, as much as possible, planned in advance. Marketing

research uses the scientific method in that data are collected and analyzed

to test prior notions or hypotheses.

Marketing research is unbiased. It attempts to provide accurate information

that reflects a true state of affairs. It should be conducted impartially. While

research is always influenced by the researcher's research philosophy, it

should be free from the personal or political biases of the researcher or the

management. Research which is motivated by personal or political gain

involves a breach of professional standards. Such research is deliberately

biased so as to result in predetermined findings. The motto of every

researcher should be, "Find it and tell it like it is."

Marketing research involves the identification, collection, analysis, and

dissemination of information. Each phase of this process is important. We

identify or define the marketing research problem or opportunity and then

determine what information is needed to investigate it, and inferences are

drawn. Finally, the findings, implications and recommendations are provided

in a format that allows the information to be used for management decision



making and to be acted upon directly. It should be emphasized that

marketing research is conducted to assist management in decision making

and is not: a means or an end in itself. The lesson elaborates on this

definition by classifying different types of marketing research.


17. Research which is motivated by personal or political gain involves a

breach of ___________ standards.

18. __________ planning is required at all the stages of the marketing

research process.

1.9 Objectives of Marketing Research

Marketing research and motivational research are considered crucial and

their results assist in more than one way, in taking business decisions.

Various objectives of marketing research are:

Academic Objectives: The academic object of marketing research is the

acquisition of knowledge to gain awareness about a phenomenon or to

achieve new insights into it. You must be knowing yourself that it is the thirst

for knowledge coupled with curiosity that is the guiding force behind a rich

variety of research work, independent of any material incentive.

Utilitarian Objectives: The primary goal of marketing research is to

understand the marketing culture, marketing environment and marketing

decision process and thereby gain a greater measure of marketing control.

Marketing Research

may be used to determine the frequency with which a certain thing

occurs or with which it is associated with something else.

helps in testing a hypothesis or a casual relationship between variables

to determine the cause and effect impacts.

helps in providing information regarding manufacturers, retailers,

suppliers of all kinds of services.

helps in providing solutions of marketing problems of Business and

Industry.

promotes better decision-making

is the basis for innovation

identifies the problem areas

helps in forecasting, which is very useful for managers



helps in formulation of policies and strategies

helps in the development of new products or in modifying existing

products and in understanding the competitive environment

helps in the optimal utilization of resources

helps in identifying marketing opportunities and constraints

helps in evaluating marketing plans.

Activity 2:

Marketing research is generally conceded to be essential for

manufactures, but is it of any real value to retailers and service

organizations? Why?


19. _____________ is the basis for innovation.

20. The primary goal of marketing research is to understand the marketing

_________, marketing _____________ and marketing ____________.

21. MR helps in formulation of ______________ and ___________.

1.10 Importance of Marketing Research

With the change from a seller‟s market to buyer‟s market, it was deemed

necessary to acquire information on the needs, preferences and

evaluation of the consumer.

The most relevant requirement was to ensure that the right product reaches

the right person at the right place at the right price. Besides, it was also

necessary to get feedback from the customers as to whether they are

getting optimum satisfaction and thus continue to make changes in the

marketing mix so that consumers remain loyal to the product. In turn, the

whole task requires entrepreneurial flair and skill which ultimately calls for

marketing research.

Thus, marketing research is a very useful tool in enhancing the decision-

making ability of the marketer in the dynamic environment of today.

Marketing Research is the function that links the consumer with the

organization through information. It involves systematic and objective

search for and analysis of information that can be used for evolving some

marketing decisions. Here, you should note that any research study must



clearly state the issues being investigated. It must apply a systematic and

formal procedure in collection and analysis of information. It must

communicate the study findings in a manner which could help in arriving at

some marketing decisions.

The various importance of marketing research are:

Marketing research serves two major functions;

i) It provides information for decision making, and

ii) develops new knowledge.

The use of information gathered by the marketing research reduces the

risks involved in decision-making.

It influences decisions such as pricing of the product, scale of

advertising, etc.

The information collected directly affects the planning of the product.

Market research is put to substantial use by firms that produce branded

products and are in competition with other brands to know and maintain

the popularity of their products among consumers.


22. Marketing research serves two major functions, viz. providing

_________ and developing _______________.

23. The information collected directly affects the ________ of the product.

1.11 Limitations of Marketing Research

The various limitations of marketing research are:

MR is not an Exact Science: Results obtained through marketing research

are not very accurate compared to physical sciences. MR is carried in the

open market place where there are so many variables acting upon the

research settings. It is not possible to control as these can be done in a

laboratory. If, for example, a company wants to measure the advertising

effectiveness and conduct an experiment in certain markets, it assumes that

conditions will remain the same, during the experimental period. If

competitors change their strategy during this period, then the experimental

results will be affected.

Complex in Nature: MR is carried out on consumers/dealers/retailers who

are human beings. Human beings have the tendency to behave artificially,

when they know that they are being observed. Validity of the data collected,



conclusions, observations might undergo a change. This aspect of human

behaviour might distort MR results. Human beings are the centre for any MR

study and hence complex in nature.

Inexperienced Research Staff: Well trained and well directed personnel

can alone improve the quality of research. In the absence of well

experienced personnel, research is likely to be unreliable. Tactfulness is

required to collect information. Lack of experience will pose constraints.

Unfortunately availability of trained man power is limited.

Limitation of Time: MR generally takes a long time to conduct. The time by

which the results are presented, there may be a change in the market

situation or competitors might enter the market, people‟s tastes and

preferences might change. The time gap significantly affects the

implementation of results.

Subjectivity: Subjectivity is an important limitation in MR. It is very difficult

to verify the research results. Verification is the main characteristic of

physical science, which is missing in MR. Also, it is not possible to repeat

the same project on the same group of entities or respondents. Even if we

do so, the results will be different.

Time Frame: At times, the top management may hold certain pre-conceived

opinion on the outcome. They may put pressure on the researcher to come

out with a particular type of research report to support their belief. The

management might thrust its opinion to influence research findings.

Decision-Making: This is always influenced by various factors – internal

and external, to the organisation. The internal factors may ensure research

is not taken seriously. The external factors could include inability to consider

all factors influencing the study.


24. Results obtained through marketing research are not very accurate

compared to ___________ .

25. Subjectivity is an important ___________ in MR.

26. Validity of the __________, ___________ and __________ might

undergo a change.



1.12 Prominent Research Agencies in India

There are numerous specialized agencies engaged in conducting marketing

research covering different segments of markets, both actual and potential.

They have experts for conducting specialized research. These research

agencies can be assigned the projects by concerned parties such as

government departments and corporate units. On the basis of their findings,

they prepare research reports for their clients.

In India, some marketing research agencies are Lintas India Ltd, Indian

Market Research Bureau, Hindustan Thompson Associates Ltd, MARG and

ORG.

1.12.1 Problems with MR in India

Marketing research in India is clearly at a point where it is set to become

indispensable if the liberalization of the economy and expansion of

consumer choice, which has become palpable in the recent years, is going

to continue. With the opening of the Indian economy, the markets have

gradually become buyers' markets. In India, market research is essentially

used as a reactive tool, it is in the static stage; whereas, I feel that MR

should serve as a proactive tool, helping corporations optimize their

functioning by bringing research into all marketing efforts, by integrating it

into the long and short term marketing strategies and by involving the

operational staff who actually carry out the work that can use informed

research results. Market research often ends up being used as an isolated

tool that gives a narrow picture of the past without giving a holistic view and

an insight into the future.

The need of the hour are MR professionals who are true managers -

managers who have to facilitate a radical change in the way market

research is looked upon today; very often as an activity done by a separate

cell and an end in itself. I see myself, as an MR professional, using research

as an actionable tool, incorporating cutting edge methodologies, getting the

needed results while saving time and money. I want to turn it into a dynamic

instrument, use it to feel the pulse of the market, make probabilistic

predictions abut the market through sophisticated tools and ultimately get

involved in product innovation and strategic planning.



1.12.2 Trends in MR in India

Marketing Research in India gives statistics which lessens the risk of market

investment. The analysis of the market is important to undertake any

marketing procedures. In India,

marketing research has been slightly less primitive marketing.

though there is quite a substantial bunch of companies providing MR

services, many more conduct such researches in-house also.

marketing research is still generally only confined to the basic aspects of

market research such as market size, which product/brand is selling,

who is buying and media planning like targeting right media for

advertising.

generally undertaken to discover where customers are willing to pay

more for a service.

has helped in the market to find out trends in gross domestic product

(GDP), projections for GDP, whole sale price index (WPI), etc.

Activity 3:

Collect the details of 5 specialised marketing research agencies and

find out how they conduct the researches for their clients.


27. Agencies engaged in conducting marketing research cover both

___________ and __________ segments of markets.

28. Research agencies prepare research reports for their clients on the

basis of their _____________.

1.13 Summary

Marketing research organization could be internal or external. It could be

handled by marketing department itself or by separate department

constituted for this purpose. There may not be a single form of organization

suitable to all types of business operations. They may be organized on the

basis of product, function or geography. External organization includes ad

agencies and association of various trades, government, etc.



Glossary

Market Research: Organized effort to gather information about markets or

customers.

Marketing Research: Systematic gathering, recording, and analysis of data

about issues relating to marketing products and services.

Customer: Current or potential buyer or user of the products of an

individual or organization.

Cost Analysis: Breaking down the costs of some operation and reporting

on each factor separately.

Demand Analysis: Study of sales generated by a good or service to

determine the reasons for its success or failure, and how its sales

performance can be improved

Product Line: A set of related products sold by a single company.


1. Explain descriptive research and causal research. Are these two types

of researches related?

2. What are the problems related with marketing research?

3. “Marketing research provides great help in decision-making.” Discuss.

4. “Marketing Research links the consumer with the organization through

information.” How and why?

1.15 Answers

Answers to self assessment questions

1. markets, customers

2. want, need, believe

3. useful feedback

4. solve

5. verification

6. systematic, objective

7. identifying, formulating

8. setting

9. Market analysis

10. Motivation Research



11. narrow

12. declines

13. generates, refines, evaluates

14. potential

15. knowledge, materials and machines

16. products

17. professional

18. Systematic

19. Research

20. culture, environment, decision process

21. policies, strategies

22. information, new knowledge

23. planning

24. physical sciences.

25. limitation

26. data collected, conclusions, observations

27 actual, potential

28. research findings

Answers to Terminal Questions

1. Refer to section 1.3 – Discuss the definition and characteristics.

2. Refer to section 1.11 – Conclude from the limitations of MR.

3. Refer to section 1.7 – Marketing research provides the right information

at the right time in the right place and to the right person.

4. Refer to section 1.10 – Elucidate upon MR‟s importance.

Mini-case

Mr. Ravi completed his basic degree in science from India and proceeded to

the US to do Masters degree in food technology. After completing the same,

he joined a “Ready to eat food” manufacturing company in Dubai. The

company distributed its manufactured goods through big retailer chains and

enjoyed a great reputation.

After working for 10 years, Mr. Ravi wanted to return to his motherland and

wanted to set up a unit in his native Chennai. He had been toying with an



idea of setting up a factory, where, “ready to eat products” could be

manufactured. During his earlier visits, he made enquires with known people

to ascertain “whether his intention to set up a „ready to eat product‟ would

find customers.” His initial data gathering gave a positive indication.

He was told that with changing demography and lifestyles in sunrise sectors

like IT, BT most families had couples at work. Time was a major constraint.

Hence his “ready to eat food” would find acceptance. All this information

was gathered by “word of mouth”.

His close friends informed him of a foreign company to have started this

business and appeared to be doing well. This did not bother Mr. Ravi, since

he knew that he could meet the taste of Indian customer better than any

multinational. On the contrary, Mr. Ravi was glad that this new foreign

company was doing well, which was an encouraging signal.

Even though ready to eat food was popular abroad, and word of

appreciation yielded positive, Mr. Ravi still wanted to ascertain the feasibility

of setting the project.

Question

Will the tradition-bound Indian society accept a “ready to eat food”? What

should Mr Ravi do to find out the feasibility of his venture in India? Why?

Hint: Discuss about the benefits of MR and relate them with the case.



Unit 2 Applications of Marketing Research

Structure

2.1 Introduction

Objectives

2.2 Assessing Market Potential

2.3 Sales Forecasting

Steps in Sales Forecasting

Role of Sales Forecasting in Marketing Decisions

Sales Forecasting Methods

2.4 Customer Profiling

2.5 Product Research

2.6 New Product Research

2.7 Price Testing

2.8 Assessing Promotion Effectiveness

2.9 Summary


2.11 Answers

2.1 Introduction

In the previous unit, you came to know about the marketing research and

other aspects of market research. In this unit you will study about the

applications of marketing research.

You will also learn that the scope of marketing research stretches from the

identification of a consumer's wants and needs to the evaluation of

consumer satisfaction. It includes research in respect of consumers,

product, sales forecasting. Product research addresses itself to the

questions associated with the products of the company and its competitors.

Product research aims at finding out the product image which will be

compatible with the self-image of consumers and to ascertain whether the

former really fits into the latter or not. Consumer research aims at

understanding the consumers, both current and potential and the level of

satisfaction expected and derived by them from a company‟s products.



Objectives


Explain market potential

Describe techniques of sales forecasting

Define customer profiling

Explain price testing

2.2 Assessing Market Potential

Market potential has been defined as “the maximum demand response

possible for a given group of customers within a well defined geographic

area for a given product or service over a specified period of time under

well-defined competitive and environmental conditions”. Knowledge of

market potential allows us to better allocate the resources we spend on

such marketing inputs as advertising, number of salespersons or outlets.

There are a variety of methods which you can use for the actual estimation

of market potential, we will limit our discussion to three of them, namely the

chain ratio, the market build-up method and the weighted factor index.

The chain ratio method is sometimes referred to as the “top-down”

approach. It begins with the entire population of interest, then multiplies by a

succession of factors to arrive at a smaller, more likely estimate of

customers or sales. The factors used may be percentages, probabilities or

rupee amounts.

The market build-up method also referred to as the “bottom-up” approach

requires that we divide the market into identifiable segments, then make

separate estimates of potential sales to each segment.

The weighted factor index method is used primarily by marketers of

consumer goods to measure the relative market potential of a region or

territory–that is the potential as a percentage of the total potential of all such

regions or territories.


1. Chain ratio method begins with the ___________ of interest and ends at

a ___________, more likely estimate of customers or sales.

2. Market build-up method also referred to as the ___________ approach.



2.3 Sales Forecasting

Sales forecasting can be explained as the prediction of the future sales of a

particular product over a specific period of time based on past performance

of the product, consumer spending patterns, inflation rates, market trends,

unemployment, and interest rates. From this you, may very rightfully say

that sales forecasts help the marketer to develop a marketing budget,

allocate marketing resources, and monitor the competition and the product

environment.

2.3.1 Steps in Sales Forecasting

You should adopt following steps while forecasting sales:

Defining the objectives to be achieved.

Dividing various products into homogeneous groups.

Analysing the importance of various factors to be studied for sales

forecasting.

Selecting the method.

Collecting and analysing the related information.

Drawing conclusions from the analysis made.

Implementing the decisions taken.

Reviewing and revising the sales forecasting from time to time.

2.3.2 Role of Sales Forecasting in Marketing Decisions

The role of marketing research in sales forecasting has increased due to

demand seasonality. The immortal law of marketing is dead. For example,

marketers of Woodland shoes and casual wear are now pulling up their

socks to bring up demands during the lean months. Across a range of

markets–televisions, refrigerators, footwear, garments, paints etc.,

companies are increasingly latching onto a new truth–consumers are no

longer buying during specific seasons in the year. As a result, footwear

sales in lean months is 40 per cent of sales, up from 25 per cent in the early

nineties.

Refrigerator sales too have come out of cold storage during the lean

months. So why is demand seasonality gradually disappearing from Indian

markets. It is surprising then to see that even though consumer-buying is

changing track, marketers are largely in a wait-and-watch mode.



In many categories like black and white TVs, mopeds, cassette recorders,

nearly 50 per cent of the sales occur in rural markets. Yet, companies did

not have any distribution network to reach out to these exterior markets.

Most of the sales would happen at the end of the harvest season in local

markets or annual fairs organized by companies.

Since harvesting was a once-a-year event, rural folks would undertake big

purchases only around that time. So it did not make any sense to set up

elaborate retail networking throughout the year. It was a highly seasonal

economy. With rural income accounting for 70 per cent of the total national

income, it was not surprising that seasonality was a strong factor.

But that is changing now. Gradually, there has been a shift from one crop to

two crop agriculture. So there are two income streams within the year now.

As a result buying is also gradually happening throughout the year as per a

study conducted by the Centre for Media Studies.

How can companies benefit from the changing cycle of season? To take an

example, consumer durable marketers estimate that anything between

three to five per cent of the retail price of a unit can be saved if the sales are

spread evenly throughout the year.

To ensure that these benefits accrue, they can make three fundamental

changes. One, have specific products for the off season; two, optimise

media spends during the lean months and three, extend distribution to

seasonal markets.

2.3.3 Sales Forecasting Methods

An organisation can suffer huge losses due to faulty sales forecasting.

Faulty sales forecast may arise due to incorrect information or faulty

reasoning. But sales forecasting done on scientific lines proves very useful.

The following are the specific tools which are used for sales:

Barometer

Indicators

Economic model

Correlations and Regression

Barometric techniques

During the change of cyclical variations, i.e. prosperity decline, depression

recovery, the index number may indicate the change in business activity.



Since it helps to make sales forecasts for the future conditions of business it

is called business barometer. If the indices of productions, prices trade,

bank clearance, etc., are expressed graphically the curve thus obtained

shows a trend of long period and seasonal movements. These index

numbers may be combined together into a composite index. Now this

composite or general index would reveal the future conditions of trade and

industry, i.e. it will be an indicator. If the barometers show a fair chance of

rising or improvement, then this will lead to an increase in the national

income and expenditure after a lag of some time. These lead lag periods

may cause some advance signals for better changes in time to come.

Lead lag series: In this series, the lapse of time in between the movement

of one service and that of general business conditions is determined. Again,

the turning point also can be determined in advance which will be a good aid

for business affairs. From the graph it is seen that the crest point of leading

series is higher than that of coincident series while the same for the lagging

series is still later. National product, general consumption, index of

wholesale prices, index of consumer prices, stock and share prices, volume

of bank deposits, volume of agricultural product – these quantities are

converted into relatives having a certain base period, then the relatives are

weighed. The average is calculated, which is the barometer. These

barometers guide industrialists and businessmen to take future decisions.

Indicators

From the office of National Bureau of Economic Researcher (NBER) of

U.S.A. indicators like lead indicator, coincident indicator and lag indicator

have been selected.

Coincident Indicators: These indicators move together either positively or

negatively; no lead time or lag time is involved. For example, index of

wholesale prices, index of industrial production, etc.

Lag Indicators: After a time lag, these indicators react. For example,

payment of dividends, price of equity share, etc.

Economic models

It is possible to express economic activity by mathematical equations. Such

analytical expression is known as an econometric model that states in detail



and in quantitative terms the way in which the various aspects of the

economy are interrelated. A few examples are:

1. National income (Y) in t period is equal to the total consumption (C),

investment, expenditure (I) and the government expenditure (G) of the

period

Yt = Ct+It+ Gt

2. Consumption expenditure (C) is again equal to certain minimum

expenditure (A0) plus a ratio of income (Y) less tax paid (T) during t

period

Ct = A0+a(Yt-Tt), 0<a<I.

Correlations

Measures of correlation show the reliable prediction of variables. According

to Tippett the effect of correlation is to reduce the range of uncertainty of our

prediction. The prediction based on correlation analysis will be more reliable

and near to unity.

Regression equations can be used for prediction. The regression equation

of Y on X is

Y = a + bX

For a certain value of X, we can estimate the corresponding value of Y.

Again from the regression of X on Y (X=A+bY), we can also predict the

value of X from a certain value of Y.


3. ___________ indicators move together.

4. Sales forecasting is a ___________ process.

5. ___________ in a period is equal to the total consumption, investment,

expenditure and the government expenditure of the period.

2.4 Customer Profiling

Understanding the customer is one of the most important tenets of any

business. Now, you can no longer simply choose a populous area in which

to set up shop, and then hope to compete.

Customer profiling is one of the most effective tools for determining where

and how to conduct your business. If you have a grasp on what type of

people are most likely to purchase your products or services, you can seek



out the location and the marketing plans that give you the best opportunity

to reach those people.

Concept of Consumer Research: Consumer research is the methodology

used to study consumer behaviour. It helps the marketer to predict how

consumers would react to promotional messages and to understand why

they made a particular purchase decision. It helps in formulating marketing

strategies, analysing the marketing mix and understanding the factors which

influence the decision-making.

The marketing concept is built upon the assumption that marketers have to

first identify consumer needs and then develop products and services to

satisfy customer needs. Consumer research offers a set of diverse methods

to identify such needs.

The research provides the basis for the development of new product and

service concepts to meet target consumer needs. Many of the applications

of consumer research are designed to help a marketer make specific

marketing decisions concerning product, price promotion and distribution.

Importance of Consumer Research: Consumer research is undertaken on

a variety of issues. For example the M.B.A. Research Agency conducts

periodical surveys of consumer behaviour. These surveys are classified

under various groups and sub-groups. The most common consumer

research studies relate to the determination of consumer characteristics,

measurement of market potential and consumer motivation.

In India, consumer research is not yet well developed as in the advanced

countries. Some of the important reasons attributed for this condition

include, the stage of India‟s development, the lack of stiff competition and

the scarcity of supply as a result of which the sellers do not have much

difficulty in selling their goods and services. According to a 1994 survey, the

most frequent use of consumer research in India is in the area of consumer

buying behaviour. Other important applications of consumer research

according to the survey are found in the fields of motivation, brand

preference, brand attributes and customer satisfaction. But the success of

consumer research depends upon the co-operation of the public.

Unprofessional or unethical consumer research practices may seriously

affect public‟s willingness to cooperate in research surveys.



Characteristics of a Good Consumer Research: A good consumer

research is characterised as follows:

Scientific method: Effective consumer research uses the principles of

the scientific method-careful observation formulation of hypotheses

prediction and testing of consumer behaviour.

Research creativity: At its best consumer research develops innovative

ways to solve a problem related to consumer satisfaction.

Multiple method: Competent researchers can adopt various methods

for solving a problem. They also recognise the desirability of gathering

information from multiple sources to give greater confidence.

Value and cost of information: Competent researchers show concern

for estimating the value of information against its cost. Value/cost helps

the research department determine which research projects to conduct,

which research designs to use and whether to gather more information

after the initial results are available. Research costs are typically easy to

quantify while the value is harder to anticipate. The value depends on

the reliability and validity of the research findings and management‟s

willingness to accept and act on its findings.

Ethical marketing: Most of the consumer research benefits both the

sponsoring company and its consumers. Through consumer research

companies learn more about consumer‟s needs and are able to supply

more satisfying products and services. However, the misuse of

marketing research can also harm or annoy consumers.

Consumer Research Process: The consumer research process is a set of

operations which aids the researcher in systematic gathering, recording and

analysis of data to help solve decision-making problems. The process

provides the researcher with an orderly means to investigate problems: It is

not a static and highly structured framework. Given the diversity of

management problems and their corresponding information requirements,

the sequence must be considered as topics of concern to the researcher

rather than a strict step-by-step procedure to be followed in all cases.

Sequence of Steps in Consumer Research: Each consumer problem is

different from the other and hence requires a special emphasis and different

approach. Since every consumer research problem is unique in some ways

the research procedure has to be typically customer-oriented. Nonetheless,



there is a sequence of steps called the consumer research process that can

be followed when designing the research project. Figure 2.1 shows the

relationship among the stages in the research process.

Formulate consumer research problem

List out research objectives

Determine research design

Design data collection methods and forms

Analyse and interpret the data

Prepare the research report

Figure 2.1: Stages in the Consumer Research Process

Formulate consumer research problem: One of the most valuable

roles consumer research can play is, helping to define the problem to be

solved. Only when the problem is carefully and precisely defined can

research be designed to provide pertinent information. Part of the

process of problem definition includes specifying the objectives of the

specific research project that might be undertaken.

List out research objectives: After identification of research problem,

researcher should make a list of research objectives which are

considered for research purpose.

Determine research design: The sources of information for a study and

the research design go hand in hand. They both depend on how much is

known about the problem. If relatively little is known about the

phenomenon to be investigated, exploratory research will be warranted.

If on the other hand, the problem is precisely and unambiguously

formulated, descriptive or causal research is needed.

Design data collection method and forms: It begins by determining if

the information needed is already available as secondary data, either

within the firm or from an outside source. If not, information will have to

be generated by means of a surveyor in an experiment. While

considering the sources of research information, it will be necessary to

determine exactly how and by whom the information will be collected.



Analyse and interpret data: First of all research data collection forms

must be scanned to be sure that they are complete and consistent and

that the instructions are followed. This process is called editing. Once

the forms have been edited, they must be coded. Coding involves

assigning numbers to each of the answers so that they may be

analysed. The final step in analysing the data is tabulation. This refers to

the orderly arrangement of data in a table or other summary format

achieved by counting the frequency of responses to each question. It is

also common to classify the data against other variables. Apart from

these, statistical tests are also applied to analyse and interpret data.

Prepare the research report: The research report is the document

submitted to management that summarises the research results and

conclusions. It is all that the research executives will see of the research

effort and it becomes the standard by which that research is judged.

Thus, it is imperative that the research report be clear and accurate. For

it is the formalised presentation of the conclusions of the study.

Activity 1:

What are the goals of sales forecasting, and why more and more

organization concentrate on this? Explain.


6. Marketers have to first _______ and then _____ products and services.

7. Consumer research helps to ___________ the problem to be solved.

8. Consumer research is the methodology used to study ___________.

2.5 Product Research

One of the major application areas of marketing research is product

research. A large number of companies spend substantial amount of funds

in R&D activities related to new product development. As profit margins

decline on their established products, organisations rely on new products to

sustain their overall profitability.

Product research is the development of a product line which meets the

needs of a certain group of consumers. The essence of any firm‟s new

product policy is the identification of those product opportunities which



should generate, over a given period, the greatest return on investment in

relation to risk involved.

Procedures used in product research include the following eight steps:

Developing an overall product strategy based on market needs, industry

structure and corporate resources.

Developing a flow of new product ideas from a variety of sources.

Develop procedures to screen on a preliminary basis.

Develop procedures for final reasoning.

Develop product specifications with regard to optimum product.

Product testing.

Test marketing.

Commercialisation, including supervision of the product.

Developing a Product Strategy: Consumption systems are a useful

concept in helping to develop a meaningful product strategy. Products are

used with other products, labour and machines and hence form a part of the

system. Innovation through integration of the system is a common measure.

A product should fulfil these needs so opportunities for new products should

be exploited because of the change in the environment. A firm‟s product

strategy in terms of sales volume, type and number of competitors, technical

opportunity, patent opportunity, raw material, production load, similarity to

major business effects on present product and so forth.

Developing New Product Ideas: The actual source of product ideas are

many and varied. The value of each will differ substantially from company to

company. Suggestions and complaints from customers are a major source.

The following are the potential sources of ideas:

Company staff, company records, including research and development

Channels of distribution, especially with respect to product modification

Competitors

Government agencies

Miscellaneous, including trade associations, advertising agencies, trade

magazines, marketing research agencies, commercial laboratories,

consultants and so on.

Preliminary Screening of Product Ideas: It is necessary to have a

preliminary screening device which is fairly routine and economical. The first



step is usually to determine whether the product idea meets the criteria

stated in the company‟s strategy statements. If it does not, it is eliminated.

However, provision is usually made to set aside, for further screening, any

ideas that seem particularly powerful.

Final Screening: Those products which serve the preliminary screening are

ready for a final check. This screening varies in complexity depending on

how obvious the decision is. A new idea may not go through the entire final

screening process if it is obvious that the product could never produce the

required return on investment.

Developing Product Specification: The set of product attributes which are

“optimum” for the market segments, to which the product may appeal must

be determined. The “optimum” must take into account the characteristic of

competitive products. Consumers describe, what they want in terms of

product benefits, functions and effects. These must be translated into

ingredients, design characteristics, performance criteria and even

manufacturing procedures. Therefore, the relative importance of individual

attributes will be determined.

Product Testing: It is the way of determining whether potential customers

have understood the idea behind the product and how they evaluate the

product attributes. On the basis of up-to-date information the marketer is

now in a position to undertake a research which provides him insights into

whether he has been successful in developing the desired product.

Test Marketing: It is the procedure by which a company attempts to launch

a new product marketing plan by introducing it on a miniature basis before

committing the product to the entire market. Here the basic assumption is

that the test market results are projectable to the entire market so that

potential buyers may rationalise the desire to buy.

The product research decision itself is really a result of a collection of

decisions, for example, what class of product, what type of brand, what

design, what quantity, in what place, from whom, at what price, by what

method of payment and so on.

One of the tasks of marketing is to communicate with the potential buyer in

such a way that not only does he become aware of the existence of a

product or service offered, but develops such a sufficiently strong and



favourable attitude that he will go through the buying decision process with a

greater degree of confidence. Uncertainty and delay in making buying

decisions is often the result of a conflict between rational economic motive

and non-rational external and internal stimuli. The so called „impulse‟ buying

is more frequently found, where there is no anxiety with comparatively

inexpensive, frequently purchased products, for example, where non-

rational external stimuli like packaging, promotion, display, etc., have a

major influence.

Commercialisation: The following points fall under this category:

1. Product Life Cycle: Products pass through a life cycle comprising an

introductory period, a growth stage, maturity and decline. Each of these

stages requires a different set of strategies and tactics, if the firm is to

cope successfully with the problems of the particular stage.

2. Package Testing: Packaging has become increasingly important as a

result of the increase in self-service. Packaging materials, design,

colour, size, illustration, brand names and associated symbols, copy and

layout may affect to a very considerable extent a potential buyer‟s

perception of a product. Packaging has assumed such importance today

that packaging research has become an indispensable part of product

research.

3. Display: Advertising and communication must be directed towards

stimulating favourable trade opinion and feelings about a company as

well as favourable customer attitude towards product price, quality,

delivery, sales and technical services. Concepts derived from the clinical

research and findings of sociologists, psychologists and anthropologists

may be used to determine why people buy particular products or

services and lead to advertising which appeals to needs, wants and

desires.


9. Product research is the development of a ___________ which meets

the needs of a certain group of consumers.

10. ___________ covers product life cycle, package testing and display.

11. ___________ is the procedure by which a company attempts to launch

a new product marketing plan by introducing it on a miniature basis

before committing the product to the entire market.



2.6 New Product Research

While analysing a new product, you should always consider:

Marketing

Product Life

Required Input

Future Planning

Financial Appraisal

Marketing: It includes a study of all the aspects of the relationship of the

product with its market:

Examine the product thoroughly; find out its main features and whether

any additional features can be added.

Consider the performance characteristics and limitations of the product.

Take the help of an expert opinion for understanding the ideal

performance level.

Consider the market in which the product is to be sold.

Find out a suitable distribution network for the product.

Assess the competition and the extent of the inter-product rivalry.

Train the sales-force, enabling the team to sell the new product.

Assess the services in addition to manufacturing and selling.

Product Life: All product lines have a definite life and it is important to

obtain some idea about the life span of a new product. The effective life of a

product should be taken into consideration. Product life cycles are not easy

to estimate and are largely dependent on the forecasters own judgment. It is

necessary for you to have a knowledge of competitors activity and about

potential customers.

Required Input: The following input requirements are felt in case of new

product research. Researchers should try to estimate:

Staff requirements for the new product.

Sales and market forecast for the purpose.

May have to consult personnel department.

Estimation of capital and plant requirement.

Raw material and components required for the product.



Future Planning: It is necessary for researchers to estimate the future

effect the product will have on the company. The following points need to be

considered:

Effect on company‟s growth.

Compatibility with company‟s growth intentions.

Effect on competitors plans and policies.

Future of customers and end-users.

Financial Appraisal: It is necessary to make a financial appraisal while

developing and launching a new product. There are three widely used

methods – payback, return on investment and discounted cash and

flow. The payback method is merely to ascertain how quickly gross

investment can be recovered out of gross profit before charging tax and

depreciation. ROI method is basically the return on gross investment

represented by the profit before tax but after depreciation. The discounted

cash flow is a more recent method of investment appraisal. There are two

variants in this approach. In the yield method, the total cash flow resulting

from the new product is calculated after allowing for tax and grants. This

cash flow is discounted at an arbitrary rate of interest. In the net present

value method the net present value of the investment is computed.

Activity 2:

What you think customer profile would help for better sales

promotions or launch a new product into the market.


12. While analysing a new product, we should always consider _________,

___________ , ___________ , ___________ and financial appraisal.

13. ___________ , ___________ and ___________ are the main methods

of financial appraisal.

14. Cash flow is discounted at an ___________ rate of interest.

2.7 Price Testing

Pricing testing reveals the quantity demanded at various level of price. It

gives an idea about the behaviour of the competitors, the market share,

dealers attitude, etc., factors affecting determination of prices are examined



thoroughly. The extent of competition, return on investment, channel of

distribution and government control are the various factors that affect

determination of prices. Companies adopt different pricing policies to

procure the maximum market share. Pricing research involves prediction of

the quantity demanded at various prices, prediction of competitors‟ behavior

and prediction of external and other variables.


15. ___________ reveals the quantity demanded at various level of price.

16. ___________ involves prediction of the quantity demanded at various

prices, prediction of competitors‟ behavior and prediction of external

and other variables.

2.8 Assessing Promotion Effectiveness

Creating effective promotion with customers is the most important aspect

in marketing since it helps in attracting and maintaining prospective and

present customers.

We all know the importance of marketing an investment for generating and

maintaining profit Finding, getting, and retaining business costs money. As a

result, you need to compare the return on investment (ROI) with your

promotional expenditure. However, this can be quite problematic.

Moreover, promotional tactics are not considered as an exact science.

Because of this, there is no way for someone to measure exactly the

achievement of the advertising campaign. To take a simple example, the

investment in an advertising campaign is easy to establish, but calculating

the results is imprecise because so many other factors impact sales. To

overcome the problem, many companies are looking at activities that can be

measured more precisely, such as direct marketing and online advertising

where response rates are easily measured. This helps a lot in assessing

promotional effectiveness.

It is found that despite the existence of cultural differences at an ethnic level,

culture does not appear to have a significant impact on consumer responses

to sales promotion.




17. To assess its effectiveness, we must calculate the ___________ of our

promotional expenditure.

18. Marketing as an investment is important for ___________ and

___________ profit.

2.9 Summary

Marketing research can make valuable contribution to the determination of a

segment. There are innumerable products and services offered in the

markets. These products are consumed by different individuals, households

at different rates.

Instead of aiming at the market as whole, if marketing efforts are directed

towards selected market segments, the available resources can be utilised

to the optimum.

Glossary

Market Potential: Estimated maximum total sales revenue of all suppliers

of a product in a market during a certain period.

Sales Forecasting: Process of estimating what your business‟s sales are

going to be in the future.

Consumer Research: Marketing research that yields information about the

motives and needs of different classes of consumers

Ethical Marketing: An honest and factual representation of a product,

delivered in a framework of cultural and social values for the consumer.

Product Research: Marketing research that yields information about

desired characteristics of the product or service.


1. What do you mean by sales forecasting? What are their effects in

marketing research?

2. Do you think customer research is important? If yes, why?.

3. Describe consumer research process in detail.

4. What do you mean by test marketing?

5. Why will you recommend price testing?



2.11 Answers

Answers to Self Assessment Questions

1. entire population, smaller

2. bottom-up

3. Coincident

4. stepwise

5. National income

6. identify consumer needs, develop

7. define

8. consumer behaviour

9. product line

10. Commercialisation

11. Test Marketing

12. marketing, product life, required input, future planning

13. payback, return on investment and discounted cash & flow

14. arbitrary

15. Pricing testing

16. Pricing research

17. ROI

18. generating, maintaining


1. Refer to 2.3 – After defining sales forecasting, discuss the role of sales

forecasting in marketing decisions.

2. Refer to 2.4 – Discuss importance of customer research

3. Refer to 2.4 – Clearly discussed in the subsection

4. Refer to 2.5 – Clearly discussed in the subsection.

5. Refer to 2.7 – Discuss the importance of price testing.

Mini-case

The company‟s Bangalore-based appliance division launched a microwave

oven under the name “Electron”. It sells in Chandigarh and Bangalore in the

hope of attracting people with its price – an affordable Rs. 9,995. That is

around Rs. 4,000 lower than the next cheapest product.

It was a brave shot to take. The market for this product has been so sticky

that most marketers say they know better than to stake their future here. So,



what has motivated IFB Industries, a company known for looking hard

before it leaps, to launch a microwave oven?

The product was aimed at double income families earning over Rs 10,000 a

month. Where the wife was “Modern and Educated” and in an age group 25-

35 willing to adopt convenient cooking practices. There were an estimated

1.5 million households in India that fit this description and not only in the

metros. By the last week of August, 1996 the product had to be taken to all

metros and Class I towns. The market was placed at a dismal 25,000 units

in 1995 with North inexplicably accounting for 80% of sales.

Electron‟s entry plan was conceived in 1994, as the company‟s second foray

into home appliances the launch of its well known fully automatic washing

machine. While the microwave oven was being discussed, Madhya

Pradesh-based Microwin, which was selling an indigenously designed

microwave oven under its corporate name, became sick and went up for

sale. IFB took it over in 1995.

Is there potential in microwave ovens? Of course, said IFB management,

that outlined IFB‟s offers as an “advanced machine at an affordable price”.

Pricing ought to get the product moving. Also, status purchases happening

IFB had to just cut down on features – relative to other offerings – to keep

prices low.

IFB was sure that the rising number of double income nuclear families will

work to give the category its due. The company is using door-to-door

campaigns and demonstrations to convert households to the technology.

Direct mail will be employed besides advertising (Ad. Budget

Rs. 2 crore).

Major competitors to IFB were Kelvinator & BPL. BPL has backed its

product by sales promotion. But, the biggest competition is from National

which comes in through smuggled route.

Question

Given the profile of the target market, plan a research study to determine

the acceptance of oven by double income families in Class-I cities.

Hint: Use the cultural yet modern mindset of the target customers as the

factor to determine the success of Electron and develop the study based on

it.



Unit 3 Marketing Information System

Structure

3.1 Introduction

Objectives

3.2 Marketing and Information

3.3 Marketing Information System

3.4 Marketing Decision Support System

Components of a Marketing Decision Support System

Characteristics of a Marketing Decision Support System

Levels of Marketing Decision Support System

Types of Marketing Decision Support System

3.5 Internal Record Systems

3.6 Marketing Intelligence

3.7 Significance of Marketing Information in Market Research

3.8 Quality and Quantity of Market Information

3.9 Value of Information

3.10 Types of Market Information

3.11 Summary


3.13 Answers

3.1 Introduction

The primary function of information is to increase the knowledge or reduce

the uncertainty of the user. There are many pieces of information, which

might be useful and in one or the other way influence the recipient’s

response in a given situation. Some information might arise from personal

observation; others may be derived from conversation with others and from

committee meetings. In general, we can say that information provides

relevant details in a time-frame about the state of affairs which gives a

greater degree of predictability.

In this unit you also learn how internet and latest technology affect the

traditional system. What are the benefits of information system in market

and for the purpose of marketing research.



Objectives


Explain information system

Describe marketing information system

Define value of information

Explain significance of marketing information

3.2 Marketing and Information

You must have noticed that the information needs, in terms of its quality,

and quantity are different at different levels of marketing. This is indicated in

the Figure 3.1.

Figure 3.1

The terms, data and information are often interchangeable when referring

to two distinct concepts. Data are raw facts in isolation which when placed in

meaningful context by data processing operations allows inferences to be

drawn. Such meaningful data is information.

The basic purpose of capturing and processing data is to produce

information. Although data are key ingredients, not all data produce

relevant and timely information. There is an unlimited amount of data from

sources both internal and external to the organisation. No data processing

method guarantees that data will be processed in accordance with the

needs of the user. These needs must be determined in a context somewhat

distinct from the data processing method used.


1. Data are ____________ facts in isolation.

2. The basic purpose of capturing and processing data is to ___________.



3.3 Marketing Information System

A Marketing Information System (MkIS) consists of people, equipment, and

procedures to gather, sort, analyze, evaluate, and distribute needed, timely

and accurate information to marketing decision makers. MkIS distributes

information to managers in the right form and at the right time to help them

make better marketing decisions. Figure 3.2 illustrates an MkIS.

Figure 3.2: Marketing Information System

Activities or functions of marketing information systems

Activities or functions of marketing information systems are:

Assessing Information Needs

Developing Information

Internal records

Procedures to gather and analyze information for marketing

decision-making. Information Analysis

Distributing Information

Marketing information systems integrate the information flow required by

many marketing activities. Marketing information systems provide

information for:

Internet/intranet websites and services make an interactive marketing

process possible where customers can become partners in creating,

marketing, purchasing, and improving products and services.



Sales force automation systems use mobile computing and Internet

technologies to automate many information processing activities for

sales support and management.

Other marketing systems assist marketing managers in product

planning, pricing, and other product management decisions, advertising

and sales promotion strategies, and market research and forecasting.

Interactive marketing

The explosive growth of internet technologies has had a major impact on the

marketing function. The term interactive marketing has been coined to

describe a type of marketing that is based on using the internet, intranets,

and extranets to establish two-way interaction between a business and its

customers or potential customers. The goal of interactive marketing is to

enable a company to profitably use those networks to attract and keep

customers who will become partners with the business in creating,

purchasing, and improving products and services.

Customers are not passive participants, but are actively engaged in a

network-enabled proactive and interactive process.

Encourages customers to become involved in product development,

delivery, and service issues.

Enabled by various Internet technologies, including chat and discussion

groups, web forms and questionnaires, and e-mail correspondence.

Expected outcomes are a rich mixture of vital marketing data, new

product ideas, volume sales and strong customer relationships.

Sales force automation

Increasingly, computers and networks are providing the basis for sales force

automation.

In many companies, the sales force is being outfitted with notebook

computers that connect them to Web browsers, and sales contact

management software that connect them to marketing websites on the

Internet, extranets, and their company intranets. Characteristics of sales

force automation include:

Increases the personal productivity of salespeople.

Dramatically speeds up the capture and analysis of sales data from the

field to marketing managers at company headquarters.



Allows marketing and sales management to improve the delivery of

information and the support they provide to their salespeople.

Many companies view sales force automation as a way to gain a

strategic advantage in sales productivity and marketing responsiveness.

Customer Relationship Management (CRM)

By keeping the customer in the center of all the processes, a state of the art

CRM will fulfill several goals. First, it should enhance customer experience

by delivering a personalized service no matter which interaction channel is

chosen. Second, it will assist the employees to bring a better service,

providing them with a broad and consolidated view on customer profile and

relationship. Third, it helps the management to capture and analyze

customer behavior, to provide metrics for customer segmentation and

further supplies input for Decision Support Systems. Customer care and

handling processes are systematized and marketing budgets can be

optimally allocated to target specific groups. On the long term CRM will

allow to maximize the customer life time value of each relationship where

relationship is not the sum of punctual sales of poorly related products

anymore but turns to the delivery of a consistent value proposition

accompanying the customer in every stage of his life.

Activity 1:

How marketing information system beneficial for marketing research?


3. A Marketing Information System consists of __________, ________ and

___________.

4. MKIS distributes information to managers in the right _________ and at

the right ___________.

5. The activities of marketing information systems include _________.

information needs, ___________ information and ________ information.

3.4 Marketing Decision Support System

Decision Support Systems (DSS) are a specific class of computerized

information systems that supports business and organizational decision-

making activities.



The main purpose of MDSS is to combine marketing data from various

sources into a single database, which can be accessed quickly by the

managers. MDSS is more powerful than MIS.

Typical information that a MDSS might gather and present would be:

An inventory of all of your current information,

Comparative sales figures between one week and the next,

Projected revenue figures based on new product sales assumptions,

The consequences of different decision alternatives, given past

experience in a context that is described.

3.4.1 Components of a Marketing Decision Support System

Figure 3.3: Components of MDSS

As shown in Figure 3.3, the components of decision support system include:

Database

Report and display

Analysis

Models



Database is a collection of data organized to service many applications at

the same time by storing and managing data so that they appear to be in

one location.

A marketing database contains information on customers and their

characteristics. A database helps the marketer predict the future

preferences of the customers from the past data.

Contents of database

Contents of databases are:

Identification of each customer through code.

Name of the organisation.

Address and postal code, e-mail ID.

Time-period when the transaction was carried out.

Amount in rupees (volume of transaction).

Benefits of data base marketing

Retention of the customer: It should be remembered that an

organization needs to spend five times more to acquire a new customer,

compared to retaining an existing customer. Generally, it is an accepted

fact that 20% of the customers are responsible for 80% of the business.

Therefore, maintaining an excellent relationship with customer becomes

imperative.

Estimate the value for lifetime of a customer: Each customer when

valued is an asset to the organisation. If a cell phone subscriber pays

Rs. 300 per month, he is worth 2.5 lakh rupees assuming he continues

with the same service-provider for 30 to 40 years.

Report and display: Report consists of tables, charts, graphs and other

graphic displays. It also consists of other important inferences of a particular

product, company, market, etc.

Analysis: Calculations such as average, percentage changes, seasonal

changes, statistical procedure used are all parts of analysis.

Models: Models represent the assumptions and how it really works. For

example, how brand sales responds to changes in marketing mix. Strategy

models are used to test alternative marketing programme. Models help in

setting objectives.



3.4.2 Characteristics of a Marketing Decision Support System

A good MDSS should have the following characteristics:

Interactive: The process of interaction with the MDSS should be simple

and direct. With just a few commands the user should be able to obtain

the results immediately. There should be no need for a programmer in

between.

Flexible: A good MDSS should be flexible. It should be able to present

the available data in either discrete or aggregate form. It should satisfy

the information needs of the managers in different hierarchical levels

and functions.

Discovery oriented: The MDSS should not only assist managers in

solving the existing problems but should also help them to probe for

trends and ask new questions. The managers should be able to discover

new patterns and be able to act on them using the MDSS.

User friendly: The MDSS should be user friendly. It should be easy for

the managers to learn and use the system. It should not take hours just

to figure out what is going on. Most MDSS packages are menu driven

and are easy to operate.

3.4.3 Levels of Marketing Decision Support System

There are three levels of MDSS:

1. Level 1: Data Management: Data management is a process of data

acquisition, storage and retrieval. This consists of Tools, Database,

Database Management System (DBMS), Query facilities, Report writers,

Document and image management system.

2. Level 2: Data Analysis: Data analysis involves, finding and analyzing

relationships between variables. It comprises basic data analysis tools,

spreadsheet, what-if analysis, goal seeking analysis, graphical tools,

statistical tools, etc.

3. Level 3: Decision Analysis: Decision analysis is a procedure of

prioritization and choice among various alternatives. It addresses both

qualitative and quantitative issues. For example, sales growth, market

share, market position, customer satisfaction, etc.



3.4.4 Types of Marketing Decision Support System

The various types of MDSS are:

Model-driven MDSS

Data-driven MDSS

Communications-driven MDSS

Document-driven MDSS

A model-driven MDSS emphasizes access to and manipulation of financial,

optimization and/or simulation models. It analyses what-if analysis, goal

seeking analysis and sensitivity analysis.

In general, a data-driven MDSS emphasizes access to and manipulation

of a time-series of internal company data and sometimes external and real-

time data. Simple file systems accessed by query and retrieval tools provide

the most elementary level of functionality.

Communications-driven MDSS use network and communications

technologies to facilitate decision-relevant collaboration and

communication. In these systems, communication technologies are the

dominant architectural component. Tools used include groupware, video

conferencing and computer-based bulletin boards.

A document-driven MDSS uses computer storage and processing

technologies to provide document retrieval and analysis.

Knowledge-driven DSS can suggest or recommend actions to managers.

These DSS are person-computer systems with specialized problem-solving

expertise. The “expertise” consists of knowledge about a particular domain,

understanding of problems within that domain, and “skill” at solving some of

these problems. These systems have been called suggestion DSS and

knowledge-based DSS.

Apart from these, world wide web and internet provided a technology

platform for further extending the capabilities and deployment of

computerized decision support. Power (1998), defined a Web-based

decision support system as a computerized system that delivers decision

support information or decision support tools to a manager or business

analyst using a Internet Explorer.



Activity 2:

If you are a research manager from a telecom organization. What are

your sources of collecting information from market?


6. MDSS is a coordinated collection of ____________, __________,

___________and __________ with supporting software and hardware.

7. _________, ___________, __________ and __________ are the

components of decision support system.

8. Database_________ and ____________customer information.

9. A model-driven MDSS emphasizes access to and manipulation of

__________, ___________ and/or simulation models

10. A data-driven MDSS emphasizes __________ and _______ a time-

series of data.

11. The purpose of data mining is to identify __________,__________

data.

3.5 Internal Record Systems

You would have noted that all enterprises which have been in operation for

any period of time have a wealth of information. Nevertheless, this

information may remain under-utilised because it is compartmentalised,

either in the form of an individual entrepreneur or in the functional

departments of larger businesses. This makes it imperative for various

organizations to maintain an efficient and adequate internal record system.

Information is usually classified into various categories depending upon its

nature so that there are, financial, production, manpower, marketing,

stockholding and logistical data. Often the entrepreneur, or other personnel

working in the functional departments holding unrecorded pieces of data, do

not see how it could help decision makers in other functional areas.

Similarly, decision makers can fail to appreciate how information from other

functional areas might help them and therefore do not request it.

The internal records that are of immediate value to marketing decisions are:

orders received

stockholdings and

sales invoices.



These are just some of the internal records that marketing managers use,

but even this small set of records is capable of generating a great deal of

information. Below, is a list of some of the information that can be derived

from sales invoices:

Product type, size and pack type by territory

Product type, size and pack type by type of account

Product type, size and pack type by industry

Product type, size and pack type by customer

Average value and/or volume of sale by territory

Average value and/or volume of sale by type of account

Average value and/or volume of sale by industry

Average value and/or volume of sale by sales person

By comparing orders received with invoices an enterprise can establish the

extent to which it is providing an acceptable level of customer service. In the

same way, comparing stockholding records with orders received helps an

enterprise ascertain whether its stocks are in line with current demand

patterns.


12. Information is usually classified into various categories depending upon

its ______________.

13. The internal records that are of immediate value to marketing decisions

______________, _____________ and ________________.

3.6 Marketing Intelligence

A marketing intelligence system provides the information relevant to a

company’s markets, gathered and analyzed specifically for the purpose of

accurate and confident decision-making in determining market opportunity,

market penetration strategy, and market development metrics. Market

intelligence is necessary when entering a foreign market.

This scanning of the economic and business environment can be

undertaken in many ways like

Formal search

Informal search

Unfocused scanning

Semi-focused scanning



Under formal search, the information will be required to address a specific

issue. Whilst this sort of activity may seem to share the characteristics of

marketing research it is carried out by the manager him/herself rather than a

professional researcher. The scope of such a search is likely to be narrow in

scope and far less intensive than marketing research.

Informal search describes the situation where a fairly limited and

unstructured attempt is made to obtain information for a specific purpose.

For example, the marketing manager of a firm considering entering the

business of importing frozen fish from a neighbouring country may make

informal inquiries as to prices and demand levels of frozen and fresh fish.

There would be little structure to this search with the manager making

inquiries with traders he/she happens to encounter as well as with other ad

hoc contacts in ministries, international aid agencies, with trade

associations, importers/exporters etc.

Unfocused scanning highlights manager, by virtue of what he/she reads,

hears and watches exposes him/herself to information that may prove

useful. Whilst the behaviour is unfocused and the manager has no specific

purpose in mind, it is not unintentional.

Semi-focused scanning states that the manager is not in search of

particular pieces of information that he/she is actively searching but does

narrow the range of media that is scanned. For instance, the manager may

focus more on economic and business publications, broadcasts etc. and pay

less attention to political, scientific or technological media.

If an organisation wants to be close to the market it needs to fully

understand it, including the roles that the competitors and customers play

there. Certain interpretations are that can be made in market intelligence

include:

Market and customer orientation – promote external focus

Identification of new opportunities – e.g. identify new trends before our

markets and competitors

Early warning of competitor moves – enable counter measures

Minimizing investment risks – detect threats and trends early on

Better customer interaction – inherit intensified customer market view

Better market selection & positioning – understand where your offer fits

and discover untapped or under-served potential



Quicker, more efficient and cost-effective information – avoid duplication

of report acquisitions and expensive consultant work


14. _____________ search describes the situation where a fairly limited

and unstructured attempt is made to obtain information for a specific

purpose.

15. _____________ states that the manager is not in search of particular

pieces of information that he/she is actively searching but does narrow

the range of media that is scanned.

3.7 Significance of Marketing Information in Market Research

Information is defined as meaningful data, which is needed by the

managers for taking correct and accurate decisions. Information is recorded

experience that is useful for decision-making In other words it consists of

that recorded experience which will reduce the level of uncertainty in making

a decision. The emphasis in marketing is on the identification and

satisfaction of customer needs. In order to determine customer needs

and to implement marketing strategies and programs aimed at satisfying

these need, marketing managers need information. They need information

about customers, Competitors, and other forces in the market place. As the

firms become national and international in scope, the need for information

on large and more distant markets has increased.

The task of marketing research is to provide the information useful for

decision-making with following characteristics.

Relevant: refers to the pertinence and applicability of information to the

decision and is the single most important characteristic.

Accurate: refers to the degree to which information reflects reality.

Accuracy should be judged as a relative criterion in terms of the specific

decision at hand.

Current: degree to which information reflects events in the relevant time

period, past and present.

Sufficient: Information must be complete and/or detailed enough to

allow a decision to be made.



Decisions carry out for information unavailable at any price. Unless the

information collected does not lead the manager to change or modify his

decision, the information has no value. Information is useful in cases

i) where one is unsure of what is to be done

ii) where extreme values, for example, huge profits or losses are involved.

By collecting the information, the management is reducing the chance of

making a wrong decision. A question is – how much information should be

collected in a given situation? As the collection of information involves a

cost, it is necessary to ensure that the benefit from information is more than

the cost involved in its collection.

Marketing information system is a continuing and interacting structure of

people, equipment, and procedures designed to gather, sort, analyse,

evaluate, and distribute needed, timely, and accurate information to

marketing decision makers.

Assessing information needs: Organisations are supposed to assess the

information needs in view of the changes occuring inside and outside the

organisation.

The MkIS increases the number of options available to decision-makers and

supports every element of marketing strategy. MkIS affects marketing’s

interfaces with customers, suppliers and other partners. The primary

benefits of the MkIS impact in the areas of functional integration, market

monitoring, strategy development, and strategy implementation.

Market Monitoring: Through the use of market research and marketing

intelligence activities the MkIS can enable the identification of emerging

market segments, and the monitoring of the market environment for

changes in consumer behavior, competitor activities, new technologies,

economic conditions and governmental policies. There are three major

sources of market information. The first is syndicated data published by

market research companies and industry associations. Company-

sponsored primary research is another option. It is much more

focused since you ask specific questions of respondents within your

markets. But, it is considerably more expensive and time consuming.

Perhaps the best data available are your own customer’s behavior

captured from web site viewing, Point of Sale (POS) transactions, and

systematic feed back from the sales force.



Strategy Development: The MkIS provides the information necessary

to develop marketing strategy. It supports strategy development for new

products, product positioning, marketing communications (advertising,

public relations, and sales promotion), pricing, personal selling,

distribution, customer service and partnerships and alliances. The MkIS

provides the foundation for the development information system-

dependent e-commerce strategies.

Strategy Implementation: The MkIS provides support for product

launches, enables the coordination of marketing strategies, and is an

integral part of Sales Force Automation (SFA), Customer Relationship

Management (CRM), and customer service systems implementations.

The MkIS enables decision-makers to more effectively manage the sales

force as well as customer relationships. This has become increasingly

important as many marketers are choosing to outsource important

marketing functions and form strategic alliances to address new

markets.

Functional integration: The MkIS enables the coordination of activities

within the marketing department and between marketing and other

organizational functions such as engineering, production, product

management, finance, manufacturing, logistics, and customer service.


16. Information is defined as ___________ data.

17. The information should be _________,_____________,

__________and ____________.

18. The MkIS increases the number of _____________ available to

decision-makers.

3.8 Quality and Quantity of Market Information

Marketing information is useful only if it can help a marketing manager to

make a decision. In order to be useful, information should be of high quality,

relevant, timely and complete. To be of a high quality, information should

provide a good picture of reality and it should thus be accurate, valid and

reliable. The information should also be relevant in other words, it should

clarify the questions that face the decision maker. Marketing information

should also be timely as outdated information could lead to poor decisions.



For example, if the business intends to launch a new product in winter all

the research regarding the price, packaging, name, logo and so forth should

be conducted well in advance. It is important that the information should

also be complete, which refers to having the right quantity of information.

There should thus be sufficient information about all aspects of the

decisions to be taken.

The degree of efficiency of a marketing information system is an

important factor in the speed and accuracy of a marketing decision-making.

The internal records that are of immediate value to marketing decisions are:

orders received, stockholdings and sales invoices. These are but a few

of the internal records that can be used by marketing managers, but even

this small set of records is capable of generating a great deal of information.

Information systems have to be designed to meet the way in which

managers tend to work.

Below, is a list of some examples of the information that can be derived

from sales invoices.

Product type, size and pack type by territory

Average value and/or volume of sale by territory

Average value and/or volume of sale by type of account


19. The internal records that are of immediate value to marketing decisions

are __________, __________ and ___________.

20. Information systems have to be designed to meet the way in which

managers tend to ___________.

3.9 Value of Information

Information plays a vital role in decision-making. Three aspects of

information is important.

What is information used for?

What influences the use of information?

How to value the information?

Information is required because of two reasons:

we don’t know enough of what we are supposed to know

many times what we know, we think it is wrong.



Sometimes some decisions may need very little or no information in

decision-making. Example: Boss asking the subordinate whether he would

like to work extra time for the day, the answer may be yes or no.

Any additional information in this case is not likely to change the decision,

on the other hand, if some one wants to know the information regarding the

price of reliance stock, six months from today, to decide whether to buy or

sell the stock, this information may not be available to all. However there are

situations, where information can improve the probability of making right

decision.

Thus right decision made, is directly related to the value of information.

Example: Suppose a decision maker is faced with two choices, each one of

them seems to be equally likely to be correct, i.e. the probability of right

decision is 50:50. Now, using the experience of the manager, this probability

can be increased to 60:40. Now, by collecting the best available information,

the probability may be increased to 80:20. Hence, the value of information in

this case has helped to increase the chance of making the right decision

from 3 out of 5 to 4 out of 5.

The important point to be remembered is that, unless decision changes

as a result of additional information, such information may have no

value, i.e. if the manager/decision maker is not willing to change his or

her mind based on the data, data collection becomes waste. Example,

Marketing manager has recommended the company to introduce a new

product immediately. Data collection shows that, this may not be the

most opportune time to do it. Still the company goes ahead introducing

the product. In this case, there is no change in the decision, even after

obtaining the information. In this case, the information has no value.

Expected Value of Perfect Information (EVPI)

What is Perfect Information? This is the return that can be got, if there is a

perfect information before a decision is taken. In our example of

shopkeeper selling fruits, if we can remove all uncertainty, by getting

complete and accurate information about the future, such an information is

called perfect information knowing the market in advance. The shopkeeper

can choose the stock to be ordered to maximize his profit. There will be no

losses, either because of over stocking or lost sales. We can compute

expected profit with perfect information as shown in Table 3.1.



Table 3.1: Illustration for Perfect Information

Demand for fruits in

number of boxes

Conditional Profit (Rs) with

perfect information

Probability that this sales takes

place

Expected Profit with perfect

information (Rs)

10 300 0.15 45

11 330 0.20 66

12 360 0.40 144

13 390 0.25 97.50

1.00 352.50

Thus, when the demand is for a particular number of boxes, exactly same

number is ordered and hence there is no loss due to unsold stock or loss of

business due to no stock. Profit is Rs. 352.50/day which is the highest.

If the shopkeeper selling fruits gets a perfect prediction about the future, he

must compare the cost incurred to get the information vs profit additional

made by him an account of receiving the information.

The EVPI serves as an indicator of the maximum value that the decision

maker can have. The formula used to determine the expected value of

information is

EVPI = EV (with perfect information) – EV (under conditions of uncertainty).

In our example, the daily profit of the shopkeeper is Rs. 352.50, if he had

perfect information. Otherwise his best profit is Rs. 335.00 (refer to

comparison of profit for various market demand). The difference is

Rs. 17.50/day. This is the maximum amount that the shopkeeper will pay for

the information. Expected value of perfect information is referred as EVPI. If

he pays more than Rs. 17.50, for information, it means he is paying more for

information than it is worth.

The value of information i.e., the benefits could be ascertained by the

following:

Accessibility: the ease and speed with which the particular information

could be obtained. Faster and easier access will have more value as

compared to slow and difficult access.

Comprehensiveness: more complete the information in itself, more

valuable it becomes. This attribute does not refer to the value of

information but refers only to its usefulness.



Accuracy: information if free from any error will have more value than

otherwise.

Timeliness: it takes certain time to generate the information and the

value of the information depends very much on how timely it is made

available to the user manager.

Authenticity: if the information is being generated from a formal

information system, it is authentic and could be measurable.

Free from Bias: the information if free from any bias towards the

preconceived conclusion will have more value than otherwise.


21. If the information is being generated from a formal information system,

it is _____________.

22. The information if free from any bias towards the preconceived

conclusion will have ____________value than otherwise.

3.10 Types of Market Information

Various types of information available in market include:

Quantitative vs Qualitative Information: The difference is shown through

Table 3.2.

Table 3.2: Quantitative vs Qualitative Information

Qualitative Information Quantitative Information

Deals with descriptions. Deals with numbers.

Can be observed but not measured. Can be measured.

Colors, textures, smells, tastes, appearance, beauty, etc.

Length, height, area, volume, weight, speed, time, temperature, humidity, sound levels, cost, members, ages, etc.

Exact vs Tentative Information: The difference is shown through Table

3.3.

Table 3.3: Exact vs Tentative Information

Exact Information Tentative Information

Deals with perfect revelations Deals with tentative revelations

Can be trusted totally. Can be trusted blindly

What does one prefer eating (veg/non veg); which type of restaurants a specific group of customers like going to, etc.

Will a non vegetarian prefer eating crab on a visit to Hawaii; would someone happily married like to date a person if not married happily, etc.



Primary vs Secondary Information: Primary information helps in

determining the survival of the market. The popular ways to collect primary

data consist of surveys, interviews and focus groups, which shows that

direct relationship between potential customers and the companies.

Secondary research is a means to reprocess and reuse collected

information as an indication for betterments of the service or product. Both

primary and secondary data are useful for businesses but both may differ

from each other in various aspects.

In secondary data, information relates to a past period. Hence, it lacks

aptness and therefore, it has unsatisfactory value. Primary data is more

accommodating as it shows latest information. Secondary data is obtained

from some other organization than the one instantaneously interested with

current research project. Secondary data was collected and analyzed by the

organization to convene the requirements of various research objectives.

Primary data is accumulated by the researcher particularly to meet up the

research objective of the subsisting project.

Activity 3:

Marketing Research is not immediate or an obvious path to finding

solutions to all managerial problems. Suggest.


23. Qualitative information can only be ____________.

24. In secondary data, information relates to a ____________ period.

3.11 Summary

A good marketing information system should determine the various

information needs of the organization. These information can be got from

internal source or from external sources.

Database is a source of information about individuals or organizations.

Database may contain customer’s purchase history, demographic life style

etc. data base helps to locate potential prospects. When a transaction takes

place certain relationship is developed. Relationship marketing focus on

retention of customer forever.



Marketing information systems support traditional and e-commerce

processes and management of the marketing function. Major types of

marketing information systems include interactive marketing at e-commerce

websites, sales force automation, customer relationship management, sales

management, product management, targeted marketing, advertising and

promotion, and market research. Thus, marketing information systems

assist marketing managers in electronic commerce product development

and customer relationship decisions, as well as in planning advertising and

sales promotion strategies and developing the e-commerce potential of new

and present products, and new channels of distribution.

Glossary

Management Information System: a system or process that provides

information needed to manage organizations effectively.

Marketing Information System: a set of procedures and methods for the

regular, planned collection, analysis and presentation of information for use

in marketing decisions.

Targeted Marketing: a strategic approach to creating a marketing mix for a

specific, targeted market segment and set of buyers.

Decision Support System: a way to model data and make quality

decisions based upon it.

Database: collection of data that is organized so that its contents can easily

be accessed, managed, and updated.

Data Mining: the process of extracting patterns from data.


1. Describe the relation between marketing and information system.

2. Explain the functions of marketing information system.

3. What do you mean by marketing decision support system? Also explain

the various components of MDSS.

4. Describe data-driven MDSS in detail.

5. What do you mean by value of information?



3.13 Answers


1. raw

2. produce information

3. people, equipment, procedures

4. form, time

5. assessing, developing, distributing

6. data, systems, tools, techniques

7. Database, report and display, analysis, models

8. collects, analyzes

9. financial, optimization

10. access to, manipulation of

11. valid, useful

12. nature

13. orders received, stockholdings, sales invoices

14. Informal

15. Semi-focused scanning

16. meaningful

17. relevant, accurate, current, sufficient:

18. options

19. orders received, stockholdings, sales invoices

20. work

21. authentics

22. more

23. observed.

24. past


1. A marketing information system (MIS) is intended to bring together

disparate items of data into a coherent body of information. Link this

with what a marketing manger does and discuss it further.

2. Refer to 3.3 – Discuss activities of MkIS.

3. Refer to 3.4 – Discuss the constituent parts and their functions.

4. Refer to 3.5 – Since good quality data is important for every researcher,

attention must be paid to getting the numbers right. Discuss the topic in

this context.

5. Refer to 3.8 – Discuss value on the basis of the benefits of information.



Mini-case

JP Insurance Company has been facing problems related to the operational

and regulatory environment. The company's problems increased after it

acquired the Earnest Insurance Company.

Earnest Insurance Company is based in London, whereas JP Insurance

Company is based in Bangalore, India. JP's problems regarding Earnest are

related to high costs and the lack of flexibility associated with multiple IT

systems and applications.

This can be attributed to a change in JP's organizational structure following

its acquisition of Earnest and the subsequent expansion of JP's operations.

The existing IT department at JP was not able to sufficiently scale its

operations, and failed to effectively meet the changed needs and

requirements of the organization.

Actually, after the acquisition of Earnest Insurance Company, considerable

flexibility was needed by the IT department of JP Insurance Company. But,

due to certain changes that followed the acquisition, the size and operation

levels of the company grew beyond its expectations. Managing this required

a high degree of flexibility of the IT department as well as the other

departments.

Question

What you learn from this case study?

Hint: Discuss in context of the lag in information flow after acquisition.



Unit 4 Research Process and Design

Structure

4.1 Introduction

Objectives

4.2 Research Design

4.3 Need for a Step by Step Process

4.4 Steps in Research Process

4.5 Meaning of Research Design

4.6 Types of Research Design

4.7 Research Design and Marketing Decision Process

4.8 Types of Decision Models

Decision-making under Certainty

Decision-making under Risk

4.9 Choosing a Good Research Design

4.10 Summary


4.12 Answers

4.1 Introduction

In the earlier units, you came to know about the marketing research and

marketing information system. In this unit you will study about the research

process and its design.

In this unit you will learn about the first phase in planning the research

project, which is formulating a research design. Based on causality,

research designs have been divided into four categories of exploratory,

descriptive, causal and experimental designs. While exploratory and

descriptive studies provide information on events and attributes from which

inferences can be drawn, they can only offer tenuous conclusions.

Objectives


Explain research process

Describe various steps in research process

Define research design

Explain research design types



4.2 Research Design

Research design is “the framework or plan for a study that is used as a

guide in collecting and analyzing the data it is blueprint that is followed in

completing a study.”

Features of research design: Research design

is a plan specifying the sources and types of information relevant to the

research problem.

is a strategy specifying which approach will be used for gathering and

analyzing the data.

also includes the time and cost budgets since most studies are done

under these two constraints.

Need for research design: The various needs of research designs are:

It facilitates the smooth sailing of the various research operations,

thereby making as efficient research as efficient as possible yielding

maximal information with minimal expenditure of effort, time and money.

It gives us a plan in advance of data collection and analysis for our

research project.

It has a great bearing on the reliability of the results arrived at and as

such constitutes the firm foundation of the entire edifice of the research

work.

It helps the researcher to organize his ideas in a form of whereby it will

be possible for him to look for flaws and inadequacies.


1. Research design is a _________ for a study.

2. Research Design is a plan specifying the _________ and types of

_________ relevant to the research problem.

4.3 Need for a Step by Step Process

A researcher is often required to think a few steps ahead, because various

steps in research process are inter-woven into each other and each step will

have some influence over the other steps. In marketing research, even

though our focus is on one particular step, other interrelated steps of

operations are also being looked into simultaneously. As we complete one

activity or operation, our focus naturally shifts from it to the subsequent one,

i.e. the focus is not concentrated exclusively on one single activity or



operation at any particular point of time. The research process provides

systematic, planned approach to the research project and ensures that all

aspects of the research project are consistent with each other.


3. A researcher is often required to think _________.

4. The research process provides _____ approach to the research project.

4.4 Steps in Research Process

Figure 4.1: Steps in Marketing Research Process

Being a systematic inquiry marketing research requires careful planning of

the orderly investigation process. Though it is an over simplification to

assume that all research processes would necessarily follow a given



sequence marketing research often follows a generalised pattern which can

be broken down and studied as sequential stages.

Figure 4.1 gives the stages in the marketing research process. As shown in

the figure, research process begins with the identification. The research task

may clarify a problem or define an opportunity.

Defining the problem

You should first define the problem clearly since it is of crucial importance in

marketing research as in terms of both time and money research is a costly

process. Careful attention to problem definition allows the researcher to set

the proper research objectives which in turn facilitate relevant and economic

data collection.

Statement of research objectives

After clarifying and identifying the research problem, you must make a

formal statement of research objectives. Research objectives may be state

in qualitative or quantitative terms and expressed as research question

statements or hypothesis. For example, the research objective "to find out

the extent to which the sales promotion programmes affected sales" is a

research objective expressed as a statement. A hypothesis on the other

hand is a statement that can be refuted or supported by empirical findings.

Planning the research design

In this stage you must determine the type of sources of information needed,

the data collection methods (surveys or interviews for example), the

sampling methodology and the timing and possible costs of research. The

design chosen may be exploratory, descriptive, quasi-experimental or

experimental design categories which again include a number of alternative

methods.

Planning the sample

Sampling involves procedures that use a small number of items or parts of

the population to make conclusion regarding the whole population. The first

sampling question that needs to be asked is who is to be sampled, which

follow from what is the target population. Defining the population may not be

as simple as it seems.

Data collection

The data collection process follows the formulation of research design

including the sampling plan. Data which can be secondary or primary can be



collected from tools that are classified into two broad categories, the

observation methods and the communication methods.

Data processing and analysis

Data processing begins with the editing of data and coding. Editing involved

inspecting the data collection forms for omission, legibility and consistency

in classification.

Analysis represents the application of logic to the understanding of data

collected about the subject.

Formulating conclusion, preparing and presenting the report

Finally you have to interpret the information for drawing conclusions to be

used in managerial decisions. The research report should effectively

communicate the research findings and need not necessarily include

complicated statements about the technical aspect of the study and

research methods.


5. The first step in marketing research process is _________.

6. Data processing begins with the _________ and _________.

7. Data which can be _________ or _________.

4.5 Meaning of Research Design

A research design is the framework, a blueprint for the research study which

guides the collection and analysis of data. To be effective, a research

design should furnish at least the following details:

A statement of objectives of the study or the research output.

A statement of the data inputs required on the basis of which the

research problem is to be solved.

The methods of analysis which shall be used to treat and analyze the

data inputs.

The objective is to calculate the margin earned on sales when this

discount is offered and compare it with the margin when discount is not

being offered.

The data to be collected over a period of time



Activity 1:

What are the major problems involved in the undertaking of a

marketing research study designed to facilitate the segmentation of a

given market? Explain.


8. A research design should furnish statement of _________ of the study

or the research output.

9. A research design is the framework for the research study which guides

the _________ and _________ of data.

4.6 Types of Research Design

There are four types of research designs which are broadly classified as:

Exploratory Design

Descriptive Design

Causal Design

Experimental Design

Exploratory Research Design: The exploratory research design involves

getting a feel of the situation and emphasises a discovery of ideas and

possible insights that may help in identifying areas of further rigorous study.

For example a food product manufacturer, wanting in introduce a breakfast

cereal may be in knowing the desirable attributes of such a product before

really defining the product concept. The main objective of the exploratory

research is to fine tune the broad problem into specific problem statement

and generate possible hypotheses. It therefore, gives useful direction for

farther research. The exploratory studies are mainly used for:

Providing information to enable a more precise problem definition or

hypothesis formulation.

Establishing research priorities.

Giving the researcher a feel of the problem situation and familiarizing

him with the problem.

Collecting information about possible problems in carrying out research,

using specific collection tools and specific techniques for analysis.



Descriptive Research Design: Descriptive research is used to obtain

information concerning the current status of the phenomena to describe

"what exists" with respect to variables or conditions in a situation. The

methods involved range from the survey which describes the status quo, the

correlation study which investigates the relationship between variables, to

developmental studies which seek to determine changes over time.

Description or inference could be quantitative or qualitative in nature.

Descriptive designs only describe the phenomenon under study attempting

to establish a relationship between factors. The data collected may relate to

the demographically or the behavioural variables of respondents under

study or some situational variables. For example, descriptive research

design could be suited to measure the various attributes of successful sales

people, or evaluate a training programme or a retailing situation.

Causal Design: Causal Research explores the effect of one thing on

another and more specifically, the effect of one variable on another.

The research is used to measure what impact a specific change will have on

existing norms and allows market researchers to predict hypothetical

scenarios upon which a company can base its business plan. For example,

if a clothing company currently sells blue denim jeans, causal research can

measure the impact of the company changing the product design to the

colour white.

Following the research, company bosses will be able to decide whether

changing the colour of the jeans to white would be profitable.

Experimental Design: Experimental design provides a stronger and more

reliable basis for the existence of casual relationship between variables.

Here, your aim as a researcher is to investigate the possible cause-and-

effect relationship by manipulating one independent variable to influence the

other variable(s) in the experimental group, and by controlling the other

relevant variables, and measuring the effects of the manipulation by some

statistical means. By manipulating the independent variable, the researcher

can see if the treatment makes a difference on the subjects.




10. _________ Research explores the effect of one variable on another.

11. The researcher in ________ method does not know “what he will find”.

12. Descriptive research can be _________ or _________ in nature.

4.7 Research Design and Marketing Decision Process

The management of an industry or an organisation is involved in taking

decisions about the development or expansion of the concern. No doubt the

concern has to face many problems from time to time. The management

has to overcome or solve these problems. These problems may be

regarding the availability of resources, quality of production, costing,

publicity or promotion, etc. For example, for the publicity of goods

produced, the manufacturer or seller may take the help of TV, radio,

newspapers or door-to-door promotion. Many such endless problems are

there. In each of these decision-making problems, there are some common

components. These are:

Course of Action

States of Nature (Events)

Outcomes

Course of Action: Decision-making problems deal with the selection of a

single act from a set of alternative acts. If two or more alternative courses of

action occur in a problem, then making a decision is necessary to select

only one course of action. In the above example of advertising goods

produced, there are so many alternative courses of actions. The final choice

of any one will depend on the pay-off (or money value) of each strategy

under the circumstances.

Let the acts or actions be symbolised by a1, a2, a3, a4, ...........; then the

totality of all these actions is known as action space denoted by A. For four

actions a1, a2, a3, a4; A = action space = {a1, a2, a3} or A = {A1, A2, A3}. In a

tree diagram the acts or actions are given after the initial fork as shown. As

shown in Figure 4.2, acts may be also be represented in the following matrix

form , i.e., either in row or column way.



(Actions represented in rows) (Actions represented in cloumns)

Figure 4.2

States of Nature (Events): If the outcome of some action (or act) is not

known in advance, then that outcome is uncertain, but is vital for the choice

of any act. When there are many possible outcomes (or states of nature) of

an event, one cannot predict what will happen–it is only in terms of

probability that one may forecast.

The various states of nature are outside a firm and, as such, not under their

control, e.g., consumer demand, change of taste, improvement of

technology, etc. These affect the pay-off and, hence, the choice of an act. A

set of states of nature may be represented in any one of the following ways:

S = {S1, S2, S3, ....... Sn}

or E = {E1, E2, E3 .......En}

or = 1 2 3{ , , ...........}



For example, if a cosmetic product is marketed, it may be highly liked by

customers (outcome 1 ) or it may not appeal at all (outcome 2 ), or it may

satisfy only a small fraction, say 20% (outcome 3 ).

1 2 3 = { , , }

In a tree diagram the places are text to acts. We may also get another act

on the happening of an event as shown in Figure 4.3.

Figure 4.3



In matrix form they may be represented in either of the following two ways

as shown in Figure 4.4.

Figure 4.4

Outcomes

There is an outcome (or consequence) of the combination of each act with

each possible state of nature. This outcome is also known as conditional

value. In a tree diagram, outcomes are placed after events.

In general, if there are m possible actions and n admissible states of nature,

the consequences will be m × n in number.

It may be noted here that these consequences may be evaluated in several

ways such as

i) in terms of profit

ii) in terms of cost

iii) in terms of opportunity loss

iv) utility

Consequences of m × n in number are shown in Table 4.1 in centre cell in

row and column of a matrix.

Table 4.1: Consequences in Matrix Form



Here outcome O21 means 2nd row and 1st column and Oij means ith row and

jth column and so on.

Activity 2:

Assume yourself to be the head of an organization that is eyeing on

overseas expansions. What steps will you follow to zero down of the

right mode of entry? Illustrate it through suitable diagram.


13. The three components of decision-making are __________,

__________ and __________.

14. Decision-making problems deal with the selection of a single act from a

set of __________ acts.

4.8 Types of Decision Models

The aim of the decision theory is to guide the decision-maker in choosing

the best course of action. Depending upon the available information about

the occurrence of various states of nature and environment, the decision

models may be classified into the following types:

Decision-making under Certainty

Decision-making under Risk

4.8.1 Decision-making under certainty

In this case the decision-maker can easily select the course of action, as he

presumes that only one state of nature is relevant for his purposes. For

example, suppose a person desires to deposit Rs. 10,000 for a certain

period. Bank deposit gives 12%, Unit Trust of India offers 14% and

Government bond’s rate is 11% p.a. All the investments are fully secured.

Then surely investment in Unit Trust of India is the best choice.

4.8.2 Decision-making under risk

Here the decision-maker faces many states of nature. As such, he is

supposed to believe authentic information, knowledge, past experience or

happenings to enable him to allot probability values to the likelihood of

occurrence of each state of nature. Sometimes with reference to past

records, experience or information, probabilities to future events could be



allotted. On the basis of probability distribution of the states of nature, one

may select the best course of action having the highest expected pay-off

value.

The expected value (or expected monetary value, i.e., EMV is widely used

to evaluate the alternative course of action or act). The expected value is

calculated by the following formula for one row only.

∑ Pj Oij = P1 Oi1 + P2 O12 + ............ + Pn Oin’

Where P1 to Pn indicate the probabilities of states of nature (or events) and

Oij the pay-offs of the outcomes due to combination of each event and act.

Activity 3:

Suppose the manufacturer of a particular brand of a desert cooler

decreased the price of his sets by 5%. It was observed that there

was an increase in sales during the succeeding four months as

compared to what the company had prior to price reduction. Has the

price reduction increased the sales? Justify your answer.


15. During decision-making under certainty, the decision-maker can easily

select the __________.

16. During decision-making under risk, the decision-maker has to _______

authentic information, knowledge, past experience or happenings.

4.9 Choosing a Good Research Design

Whatever may be the type of research work and studies, one thing that is

important is that they all meet on the common ground of scientific method

employed by them. One expects scientific research to satisfy the following

criteria:

The purpose of the research should be clearly defined and common

concepts be used.

The research procedure used should be described in sufficient detail in

permit another researcher to repeat the research for further

advancement, keeping the continuity of what has already attained.

The procedural design of the research should be carefully planned to

yield results that are as objectives as possible.



The researcher should report with complete frankness, flaws in

procedural design and estimate their effect upon the findings.

The analysis of data should be sufficiently adequate to reveal its

significance and the methods of analysis used should be appropriate.

The validity and reliability of the data should be checked carefully.

Conclusions should be confined to those justified by the data of the

research and limited to those for which the data provided and adequate

basis.

Greater confidence in research is warranted if the researcher is

experienced, has a good reputation in research and is a person of

integrity.

In other words, you can say the qualities of a good research are:

Good research is systematic: it means that research is structured with

specified steps to be taken in a specified sequence in accordance with

the well defined set of rules. Systematic characteristic of the research

does not rule out creative thinking but it certainly does reject the use of

guessing and intuition in arriving at conclusions.

Good research is logical: This implies that research is guided by the

rules of logical reasoning and the logical process of induction and

deduction are of great value in carrying out research. Induction is the

process of reasoning from a part to the whole whereas deduction is the

process of reasoning from some premise to a conclusion which follows

from that very premise. In fact, logical reasoning makes research more

meaningful in the context of decision making.

Good research is empirical: It implies that research is related basically

to one or more aspects of a real situation and deals with concentrate

data that provides a basis for external validity to research results.

Good research is replicable: This characteristic allows research

results to be verified by replicating the study and thereby building a

sound basis for decisions.


17. The __________ design of the research should be carefully planned to

yield results that are as objectives as possible.

18. Conclusions should be confined to those __________ by the data of

the research.



4.10 Summary

This unit on research design gives an overiew of the research designs and

their application in marketing research. After discussing the meaning and

benefits of a research design, the discussion focusses on the four basic

types of designs namely exploratory, descriptive, quasi-experimental and

experimental. Causality, the relationship between data and conclusions,

forms the basis of this classification. The nature of causality and the need to

measure it has also been discussed.

The major design categories and their applications have been described.

Specific subtypes within the major categories have also been discussed.

Under the descriptive design, panel design, cross sectional design and

focus groups were discussed. The quasi-experimental designs discussed

include after only without control group, before-after without control group

the static group comparison, longitudinal design and multiple time series

designs.

Glossary

Research Process: The ordered set of activities focused on the systematic

collection of information using accepted methods of analysis as a basis for

drawing conclusions and making recommendations.

Data Collection: Systematic gathering of data for a particular purpose from

various sources, including questionnaires, interviews, observation, existing

records, and electronic devices. The process is usually preliminary to

statistical analysis of the data

Research Design: A plan outlining as to how information is to be gathered

for an assessment or evaluation that includes identifying the data gathering

method(s), the instruments to be used/created, how the instruments will be

administered, and how the information will be organized and analysed.

Experimental Design: A branch of statistics that attempts to outline the

way in which experiments should be carried out so the data gathered will

have statistical value.

Focus Group: A marketing research tool in which a small group of people

(typically eight to ten individuals engages in a roundtable discussion of

selected topics of interest in an informal setting.




1. What do you mean by research design? Why is it needed?

2. Explain research process.

3. What will you keep in mind while undertaking a research?

4. Distinguish between Causal and Experimental design.

5. Describe the relation between research design and marketing decision

process.

4.12 Answers


1. framework or plan

2. sources, information

3. a few steps ahead

4. planned

5. defining the problem

6. data editing, coding

7. secondary, primary

8. objectives

9. collection, analysis

10. Causal

11. exploratory

12. quantitative, qualitative

13. Course of Action, States of Nature (Events), Outcomes

14. alternative

15. course of action.

16. believe

17. procedural

18. justified


1. Refer to 4.2 – Also explain the need

2. Refer to 4.4 – Discuss step by step research process.

3. Refer to 4.9 – Base your answer on the qualities of a good research

4. Refer to 4.6 – Discuss the basic difference and give examples.

5. Refer to 4.7 – Research aims to identify those aspects of the world we

want to understand more clearly. Discuss this with respected to

marketing.



Mini-case

Repatriate Co-op Bank is located in a town with a population of about 2

lakh. Its two main competitors were Bharat Co-operative Bank Textile

Workers Co-op Bank.

The size of all the three banks in terms of number of shareholders, assets,

were more are less the same. Interest offered on S.B and F.D were more or

less the same.

The main services offered by Repatriate Co-op Bank were savings bank,

vehicle and personal loan, mortgage loan, Jewel loan etc. The bank had an

ATM operating 24 hours. The services offered by other two banks were also

similar.

Since services offered by all the three banks were similar, the board of

directors of Repco Bank decided to find, loyalty of current customers to the

bank. The bank also wanted a measure of how customers perceive the

various services offered by the institution.

In the light of the above, the company appointed a leading market research

agency to conduct a survey among 2,000 current customers. The decision

of the bank was that, if this survey indicates anything worthwhile, a similar

survey would be conducted on current non-customers too.

The following was the specific information sought by the bank from the M.R

agency:

1. What percentage of the current bank customers of Repco Bank use the

services of competitors for one or more services?

2. For which service of the competitors does the current customer go?

3. Of the two competitors, who has the largest percentage of Repco Bank

customer as their customers as well?

4. How do the Repco Bank customers perceive the following attributes of

the bank?

a) Locational advantage

b) Quickness

c) Ambiance

d) Convenience of working hours

e) Courtesy of Staff

f) Correctness/Accuracy

g) Use of Technology



h) How important is each of the above to Repco customers?

i) Do the above attributes have any relations with age, education, sex,

annual

j) income, numbers of years of association with Repco Bank?

A mail questionnaire has to be sent to the respondents of Repco Bank,

along with a covering note and reply envelope.

Question

What are the advantages of limiting of survey to just the current customers

of Repco Bank?

Hint: Base your answer on the facts like Surveys are relatively inexpensive,

useful in describing the characteristics of a population, can be administered

from remote locations (using mail, email or telephone) and so on.



Unit 5 Sources and Collection of Marketing Data

Structure

5.1 Introduction

Objectives

5.2 Data and the Research Process

5.3 Secondary Data

5.4 Advantages of Secondary Data

5.5 Limitations of Secondary Data

5.6 Sources of Secondary Data

5.7 Primary Data

5.8 Advantages of Primary Data

5.9 Limitations of Primary Data

5.10 Sources of Primary Data

5.11 Methodology for Collection of Primary Data

Online Surveys

Observation Method

Designing the Questionnaire

5.12 Mail Questionnaire

Advantages of Mail Questionnaire

Limitations of Mail Questionnaire

Additional consideration for the Preparation of Mail Questionnaire

5.13 Summary


5.15 Answers

5.1 Introduction

In the earlier units, you came to know about the research process and

design. In this unit you will study about the data collection and its sources.

You will also learn about the major sources of secondary and primary data

as well as the basic methods of collecting data. Whichever way, the data is

collected, errors of different types creep in. In this unit you will also learn the

important sources of error associated with data collection.

Objectives


Explain data collection criteria



Elucidate upon and use various sources of secondary data

Describe limitations of secondary data

Explain primary data collection methodologies

5.2 Data and the Research Process

Once the research objectives have been defined the next step you must

follow is to identify the nature and type of information needed to achieve

these objectives. Figure 5.1 represents the initial steps in the research

process with emphasis upon the types of data sources and options available

to the researcher. The research objectives define the type and extent of

information needed to achieve the research objectives – the data needs are

further clarified by the type of research design chosen as well as by the

nature of research e.g. whether the problem at hand is that of exploratory or

preliminary research or causal and conclusive research and so on.

Types of data

As you have already noted, all data sources available to the researcher can

be classified as either secondary or primary.

Secondary data are already published data collected for purposes

other than the research problem at hand.

Primary data are those generated specifically for the purposes of the

research problem in question.

As the Figure 5.1 shows the major sources of primary data are

respondents, analogous case studies and experiments. The secondary

data on the other hand can be obtained from official government

publication, marketing research agencies and syndicated sources

(which sell the data) and the library sources. Published individual research

projects have not been dealt with separately as they are included the library

source.



Figure 5.1: Data and the Research Process


1. All data sources available to the researcher can be classified as either

or ___________.

2. Major sources of primary data are _________, ________ and _______.

5.3 Secondary Data

As you know that the secondary data is collected by others for another

purpose and saves considerable time and effort in solving the research

problem at hand.

The uses of secondary data can be conveniently arranged into the following

four categories.

Problem recognition: A constant monitoring of secondary data can

provide the impetus for problem recognition. Moreover, exploratory

studies may be initiated to identify future opportunities or weaknesses in

the firm’s current operations.



Problem clarification: Secondary data can also fruitfully be used to

help clarify the specific problem that we may be facing. Here,

clarification usually means making the decision problem more reachable

by delineating the components of the situation. Another related use of

secondary data is that they can help plan the study design and provide

information to write the research proposal.

Formulation of feasible alternatives: Alternatives must exist before

decision-making can take place. Secondary data are very useful in

generating viable alternatives to solve problems. The multiplicity of data

sources, research approaches and managerial styles usually lead to a

number of possibilities which should be examined by the researcher.

Problem solution: Not only are secondary data helpful in the definition

and development of a problem, they are often sufficient in and of

themselves, to generate a problem’s solution.

The secondary data can be obtained internally (within the firm) or externally

(from one or more outside agencies). Internal secondary data include

financial accounts, sales and other records maintained by the firm. External

secondary data can be collected from the originating sources or from

secondary sources. For example, the Office of the Economic Adviser,

Government of India, is the originating source for data on wholesale prices.

In contrast, a publication such as the RBI bulletin containing some parts of

the series of wholesale prices, is a secondary source of secondary data. For

example, the Central Statistical Organisation (CSO) brings out statistics of

national income. Syndicated services are provided by certain organisations,

which collect and tabulate marketing information on a continuing basis.

Reports based on such information are sent periodically by these

organisations to clients who are subscribers. In India, some of the agencies

engaged in syndicated research are the Operations Research Group

(ORG), Indian Market Research Beareau (IMRB), Pathfinders: India and

National Council of Applied Economic Research (NCAER).


3. Financial accounts are example of ___________ secondary data.

4. The secondary data can be obtained ___________ or ___________.



5.4 Advantages of Secondary Data

The various advantages of secondary data are:

can be obtained at a relatively low cost.

can be obtained quickly.

enable the researchers to identify the deficiencies in the data and make

primary data collection specific.

useful in the case of exploratory researches as they provide increased

understanding of the problem.

act as a basis for comparison after primary data are collected.

provide for data which cannot obtained by the typical organisation like

census reports.


5. Secondary data is useful in the case of ___________ researches as

they provide increased understanding of the problem.

6. Secondary data act as a basis for comparison after primary data are

___________.

5.5 Limitations of Secondary Data

The limitations of secondary data are:

The available data may not suit the current purpose of research, due to

incompleteness, generalities and so on.

Information may be outdated or obsolete.

The methodology used in collecting the data such as the sample size,

date of the research, etc., may be unknown.

All the findings of a research study may not be made public.

Conflicting data may exist.

It may be difficult to determine the accuracy of the secondary data.

Activity 1:

Study the demand estimation process for an existing product in your

organisation or any other organisation that you are familiar with:

a) What were the sources of secondary data utilized?

b) What specific use of secondary data was made in the study?




7. It may be _________ to determine the accuracy of the secondary data.

8. Secondary data may use ___________ information.

5.6 Sources of Secondary Data

The type of secondary data required to meet research objectives determine

the sources of secondary data. Some of the common and important sources

are:

Government Agencies and Official Publications: The largest single

source of secondary data in macro terms are the' publications by the Union

government. Marketing researches rely heavily on this source of data for

estimating market potential and sales forecasts, determining distribution

penetration and location of intermediate and final outlets, as well as for

defining sales territories and routing schedules. For example, estimates of

income and expenditure patterns become good starting points for estimation

of paying capacity for different products and services.

Census Data: Since 1872, the census of India’s population is being done

once a decade. The next census for which the machinery is already geared

up has been done in our country in 2001. Most of the demographic data are

available through census. For example: household type, sex, race, age,

marital status, etc.

National Sample Survey: This was started in 1950 and collects data about

demographic, social and economic aspects of a household. Unlike a census

which is done once in a decade, this is a continuous ongoing activity

throughout the year.

Population Statistics: Population statistics in India have been collected,

every ten years since 1871-72. Besides forming a basis for most macro

planning estimates, census data in respect of the marketing research

function is the most important source of national population statistics and its

basic characteristics especially demographic and economic. It provides

factual bases for estimation of consumer demand for various goods and

services, by furnishing data on size of population and its distribution by age,

sex, occupation and income levels. Estimates of population density,

distribution, literacy levels, consumption patterns all become important

inputs in distribution decisions, communication decisions and overall

marketing policy.



Statistical Abstract of India: Brought out annually by the Central Statistical

Organisation, this publication contains the statistics of various section of the

Indian economy for the preceding five years. Statewise, statistics for these

economic variables are also furnished periodically.

Estimation of National Product, Savings and Capital Formation: This is

also an annual publication of the Central Statistical Organisation. It

publishes annual estimates, of national income, savings and consumption,

capital formation and expenditure as well as national and public sector

accounts.

Monthly Statistics on the Production of Selected Industries: To bridge

the gap between the census taken and data published, the C.S.O. publishes

monthly statistics relating to production, installed capacity and stock

positions in selected industries. More than 90 industries are included in the

compilation of chosen statistics.

Basic Statistics Relating to Indian Economy: Published annually by the

statistics and survey division of Planning Commission this publication

contains basic indicators on various aspects of economy for the past few

years based on time series.

India, Pocketbook of Economic Information: It is an annual publication of

the Ministry of Finance. Giving particular emphasis on estimates of foreign

financial and international comparisons, it includes statistics on the various

aspects of the national economy.

Trade Statistics: The Department of Commercial Intelligence and Statistics

compiles monthly statistics of commercial intelligence and statistics,

publishes data on import and export of goods in terms of their quantity and

value, classified as received from or sent to centres of consignment. In

addition, this publication provides information on value of foreign trade,

balance of trade, foreign trade with each country and currency area, foreign

trade in groups of commodities with each country and currency area, foreign

trade with selected countries etc.

Other sources of secondary data

Library: The library sources of marketing data include the whole gamut of

publicly circulated material i.e, government documents and reports, books,

periodicals, journals, individuals research project reports and trade



association publications. As the categories noted above are intended for

public circulation, the library represents an easy, economic and efficient

source of secondary data.

Research Agencies and Data Services: The growing demand for

marketing data has brought forth several organisation which collect and sell

standardized data. Also called syndicated sources, these agencies include

the marketing research agencies as well as the data services which in

addition to providing standardized data also undertake specific data

collection research projects. In India, advertising agencies have also

emerged as 'good sources of data on readership media habits, attitudinal

research and other communication related areas.

Internet: In toady’s internet savvy world, the largest and argumentably the

least expensive source for secondary data is the World Wide Web. Internet

serves as an extremely popular source for collecting secondary data for

marketing research because almost any data imaginable is readily available

online. Secondary data can be retrieved from thousands of places on the

internet. A lot of business and research organizations list secondary data on

the internet for instant access to marketing researchers. This allows the

latter to have a quick access to information, which consequently, allows

marketing researchers to make faster, more precise decisions.

Activity 2:

List some major secondary sources of information for the following:

a) Market research manager of a tea manufacturing company has

to prepare a comprehensive report on the tea industry as a

whole.

b) M.T.R has several product ideas on ready-to-eat products. It

wishes to convert ideas into products and enter the market.

Before entering, the company needs to find necessary

information to assess the market potential.

c) An MNC wishes to open a showroom in a Metro. The first step

that the company would like to take is to collect the information

about suitability.

d) Number of residential houses less than 10 years old in a given

locality.




9. The largest single source of secondary data in macro terms are the

publications by the ___________.

10. Population statistics in India have been collected, every _______

years.

5.7 Primary Data

Primary data collection begins when a researcher is not able to find the data

required for his research purpose from the secondary sources. Market

researchers are interested in a variety of primary data about demographic/

socioeconomic characteristics, attitudes/opinions/interests, awareness/

knowledge, intentions, motivation, and behavior. There are two basic means

of obtaining primary data depending on the nature of the problem and by the

availability of time and money.


11. Data observed or collected directly from first-hand experience is called

___________ data.

12. Primary data is ___________ data.

5.8 Advantages of Primary Data

Primary sources usually provide more detailed information than the

secondary sources. This is partly because methods of data collection and

the tools used can be tailored more precisely to the informational needs of

the researcher. This also contributes to the flexibility of analysis for the

research purpose at hand.

Terms and units can be more precisely defined and the researcher can

choose the appropriate unit for this purpose with a much greater degree of

fit since he has greater degree of flexibility in choosing the appropriate unit.

In case of secondary data, as the data have been collected for some other

purpose, the researcher may not have much of control over the choice of

units used in the secondary data source.

The user in case of primary data can judge the degree of confidence that he

may place on the data because he has an accurate idea of the tools and

methodology used and their limitations.



In addition to the above general advantages, there are other merits which

characterise the different methods of primary data collection. We shall study

them under the section concerned with tools of data collection. The major

limitations of primary data relates itself to costs in terms of time and money

involved, availability of skilled investigators or interviewers and the errors

that may creep in various stages i.e. sample selection, sample size

selection, tools chosen etc.


13. Primary data can include a ___________ population.

14. Primary data gives a better ___________ view to the researcher about

the topic under consideration.

5.9 Limitations of Primary Data

The primary data collection methods are also subject to three important

types of errors. These are sampling error, non-response error and response

error.

In most direct structured interviews i.e. surveys involving use of

questionnaires, non-response bias is a sizeable error. It may affect

completeness as well as objectivity in data collection as families who cannot

be reached after certain attempts during the day may be significantly

different from those which can be easily contacted. The non-response error

is a serious matter because the direction of the error is generally unknown.

One can assume that the non-response respondents would each have

responded in a given way and therefore can determine the maximum error

due to non-response but it is difficult to measure the magnitude of the error.

One simple way of minimising this error would be to fix up an appointment

before the interview but specially in a country like ours where a large

number of respondents do not have access to the telephone, this may not

be very practicable.

Response error occurs when the value of the reported variable differs from

the actual value of that variable. We world here include errors of both

communication and observation. We have already talked about two reasons

for response error i.e. inability of the respondent to give accurate information

or their unwillingness to give accurate information because of time factor,

prestige factor and invasion of primary factor. Let us now discuss the



sources of response error related to the investigator and the tools used by

him.

Inaccurate Information due to the Investigator: The most common cause

of this type of inaccuracy is cheating by the interviewer. There are a number

of way in which interviewers deliberately obtain inaccurate information and

supply it. If the questionnaire, happens to contain a question that the

investigator finds embarrassing to ask, he may decide to supply his own

answer or supply an inference on what the respondents answer would have

been. In extreme cases reports of interviewees' without ever having

contacted the interviews have been discovered to be submitted. Another in

between situation that is found to exist is that interviewers get their own

friends and associates to fill in the questionnaire or respond to a direct

interview amid list the responses in the names of the people listed in the

sample, thus vitating the entire sampling exercise.

Ambiguity: Ambiguity which is defined as errors made in interpreting

behaviour or words spoken or written is source of error which occurs in both,

communication and observation methods of data collection. All languages

are capable of being ambiguous as the person transmitting information and

the person receiving them are two different people and the interpretation of

the question/behaviour may differ from one person to another.


15. A big limitation of primary data is that it may result in ___________

information.

16. ___________ error occurs when the value of the reported variable

differs from the actual value of that variable.

17. ________ is defined as errors made in interpreting behaviour or words.

5.10 Sources of Primary Data

The major sources of primary data include respondents, analogous case

situations and research experiments.

1. Respondents: Respondents represent by far the most important source

of primary marketing data. Marketing decisions are characterised by the

fact that they always involve in one way or the other, prediction of the

behaviour of the market participants- be it consumer, industrial users,

marketing intermediaries or competitors. The study of respondents

characterises most marketing research situations.



Past behaviour is frequently used as a predictor of future behaviour,

acting on the premise that there is a relatively stable relationship

between past and future behaviour patterns. Information or past

behaviour of respondents is sought on past consumption habits,

exposure and awareness of communication tools, experience of

competitor's vis-a vis the company's products or services etc., in order to

get an idea of the consumption of the product or service.

Attitudes and opinions represents predisposed mental state to act in a

certain way. For example, the statement by a respondent that he

prefers fresh ground coffee to the instant blends, gives a clue to his

likely behaviour when faced with a decision to buy coffee. Attitude

research in marketing has found the greatest use in product designs and

advertising. Both qualitative and quantitative techniques are used to

collect information on attitudes and opinions.

2. Socio-economic characteristics: Whenever in a consumer research

situation there is a basis for the belief that some socio-economic

characteristics like income, education occupational status etc. are

associated with the purchase of a product or service, information is

sought on these characteristics. Study on these types of variables may

help defining the target market more precisely and arriving at more

accurate pricing and promotion decisions.

Life styles are increasingly being used to segment markets reposition

products and targeting positioning strategies wore closely to the

consumer profile. Life style profiles are developed though systematic

study of values attitudes, opinions and interests, as well as by income,

all of which can be elicited from the respondents through communication

methods or a combination of communication and observation methods.

Activity 3:

Are data collection errors resulting from fieldwork largely eliminated by

using telephone interviews instead of personal interviews in the home?

By using shopping centre interviews instead of personal interviews in

the home?




18. The major sources of primary data include ______ , _____ and _____ .

19. Attitudes and opinions represent __________ mental state to act in a

certain way.

20. __________ profiles are developed though systematic study of values

attitudes, opinions, interests, etc.

5.11 Methodology for Collection of Primary Data

Observation and questioning are two broad approaches available for

primary data collection. The major difference between the two approaches is

that in the questioning process, the respondents play an active role because

of their interaction with the researcher.

5.11.1 Online Surveys

When it comes to primary data for market research, or customer

satisfaction, online surveys can be a great way to collect data. Online

surveys ask consumers about their activities, interests, and opinions. This

often sheds light onto which publications or media the target audience reads

or watches, which enables the advertising agency to fine-tune its message.

Steps to Developing a Survey instrument include

Clearly defining objectives and research questions

Developing methodology

Defining sample (or population)

Developing survey protocol

Draft survey instrument (questionnaire)

Develop content Formulate questions Sequence questions

Format Questionnaire

Create Pilot test survey instrument

Revise survey instrument (as needed)

5.11.2 Observation method

In the observation method, only present/current behaviour can be studied.

Therefore, many researchers feel that this is a great disadvantage. A causal

observation could enlighten the researcher to identify the problem. Such as

the length of the queue in front of a food chain, price and advertising activity

of the competitor etc. Observation is the least expensive mode of data

collection.



Example: Suppose a Road Safety Week is observed in a city and the public

is made aware of advance precautions while walking on the road. After one

week, an observer can stand at a street corner and observe the number of

people walking on the footpath and those walking on the road during a given

period of time. This will tell him whether the campaign on safety is

successful or unsuccessful.

Sometimes, observation will be the only method available to the researcher.

Types of observation methods

There are several methods of observation of which any one or a

combination of some of them, could be used by the observer. Some of these

are:

Structured or unstructured method

Disguised or undisguised method

Direct-indirect observation

Human-mechanical observation

1. Structured-Unstructured Observation: Whether the observation

should be structured or unstructured depends on the data needed.

Example 1: A manager of a hotel wants to know “how many of his

customers visit the hotel with their families and how many come as

single customers. Here, the observation is structured, since it is clear

“what is to be observed”. He may instruct his waiters to record this. This

information is required to decide requirements of the chairs and tables

and also the ambience.

Suppose, the manager wants to know how single customers and those

with families behave and what their attitudes are like. This study is

vague, and it needs a non-structured observation.

It is easier to record structured observation than non-structured

observation.

2. Disguised-Undisguised Observation: In disguised observation, the

respondents do not know that they are being observed. In non-disguised

observation, the respondents are well aware that they are being

observed. In disguised observation, observers often pose as shoppers.

They are known as “mystery shoppers”. They are paid by research



organisations. The main strength of disguised observation is that it

allows for registering the true behaviour of the individuals.

3. Direct-Indirect Observation: In direct observation, the actual behaviour

or phenomenon of interest is observed. In indirect observation, the

results of the consequences of the phenomenon are observed.

Example, a researcher is interested in knowing about the soft drinks

consumption of a student in a hostel room. He may like to observe

empty soft drink bottles dropped into the bin. Similarly, the observer may

seek the permission of the hotel owner to visit the kitchen or stores. He

may carry out a kitchen/stores audit, to find out the consumption of

various brands of spice items being used by the hotel.

4. Human-Mechanical Observation: Most of the studies in marketing

research are based on human observation, wherein trained observers

are required to observe and record their observation. In some cases,

mechanical devices such as eye cameras are used for observation. One

of the major advantages of electrical/mechanical devices is that their

recordings are free from any subjective bias.

Advantages of observation method

1. The original data can be collected at the time of occurrence of the event.

2. Observation is done in natural surroundings. Therefore, the facts

emerge more clearly, whereas in a questionnaire, experiments have

environmental as well as time constraints.

3. Sometimes, the respondents may not like to part with some of the

information. Such information can be obtained by the researcher through

observation.

4. Observation can also be done on those who cannot articulate.

5. Any bias on the part of the researcher is greatly reduced in the

observation method.

5.11.3 Designing the Questionnaire

Questionnaire: A questionnaire is a tool used to collect the data.

Importance of questionnaire in marketing research

To study:

1. Behaviour, past and present

2. Demographic characteristics such as age, sex, income, occupation



3. Attitudes and opinions

4. Level of knowledge.

Characteristics of questionnaire

1. It must be simple. The respondents should be able to understand the

questions

2. It must generate replies that can be easily be recorded by the

interviewer

3. It should be specific, so as to allow the interviewer to keep the interview

to the point

4. It should be well arranged, to facilitate analysis and interpretation

5. It must keep the respondent interested throughout.

Different types of questionnaire

1. Structured and Non-disguised

2. Structured and Disguised

3. Non-structured and Disguised

4. Non-structured and Non-disguised

1. Structured and Non-disguised Questionnaire: Here, questions are

structured so as to obtain the facts. The interviewer will ask the

questions strictly in accordance with the pre-arranged order. For

example: What are the strengths of soap A in comparison with soap B?

Cost is less

Lasts longer

Better fragrance

Produces more lather

Available in more convenient sizes

2. Structured and Disguised Questionnaire: This type of questionnaire

is least used in marketing research. This type of questionnaire is used to

know the peoples’ attitude, when a direct undisguised question produces

a bias. In this type of questionnaire, what comes out is “what does the

respondent know” rather than what he feels. Therefore, the endeavour in

this method is to know the respondent’s attitude.

Currently, the “Office of Profit” Bill is:

a) In the Lok Sabha for approval.



b) Approved by the Lok Sabha and pending in the Rajya Sabha.

c) Passed by both the Houses, pending the presidential approval.

d) The bill is being passed by the President.

Depending on which answer the respondent chooses, his knowledge on

the subject is classified.

In a disguised type, the respondent is not informed of the purpose of the

questionnaire. Here the purpose is to hide “what is expected from the

respondent?” Example 1: “Tell me your opinion about Mr. Ben’s healing

effect show conducted at Bangalore?” Example 2: “What do you think

about the Babri Masjid demolition?”

3. Non-structured and Disguised Questionnaire: The main objective is

to conceal the topic of enquiry by using a disguised stimulus. Projective

techniques are examples of non-structured disguised technique. The

techniques involve the use of a vague stimulus, which an individual is

asked to expand or describe or build a story, three common types under

this category are (a) Word association (b) Sentence completion (c) Story

telling.

4. Non-structured and Non-disguised Questionnaire: Here the purpose

of the study is clear, but the responses to the question are open-ended.

Example: “How do you feel about the Cyber law currently in practice

and its need for further modification”? The initial part of the question is

consistent. After presenting the initial question, the interview becomes

very unstructured as the interviewer probes more deeply. Subsequent

answers by the respondents determine the direction the interviewer

takes next. The question asked by the interviewer varies from person to

person. This method is called “the depth interview”.


21. Questionnaire should be __________ to answer.

22. The main disadvantage of in-depth interview is that it is __________.

23. In direct observation, the __________ behaviour or phenomenon of

interest is observed.



5.12 Mail Questionnaire

5.12.1 Advantages of Mail Questionnaire

1. Easier to reach a larger number of respondents throughout the country.

2. Since the interviewer is not present face to face, the influence of

interviewer on the respondent is eliminated.

3. Where the questions asked are such that they cannot be answered

immediately, and needs some thinking on the part of the respondent, the

respondent can think over leisurely and give the answer.

4. Saves cost (cheaper than interview).

5. No need to train interviewers.

6. Personal and sensitive questions are well answered.

5.12.2 Limitations of Mail Questionnaire

1. It is not suitable when questions are difficult and complicated. Example:

“Do you believe in value price relationship”?

2. When the researcher is interested in a spontaneous response, this

method is unsuitable. Because thinking time allowed to the respondent

will influence the answer. Example: “Tell me spontaneously, what

comes to your mind if I ask you about cigarette smoking”.

3. In case of a mail questionnaire, it is not possible to verify whether the

respondent himself/herself has filled the questionnaire. Example, If the

questionnaire is directed towards the housewife, say, to know her

expenditure on kitchen items, she alone is supposed to answer it.

Instead, if her husband answers the questionnaire, the answer may not

be correct.

4. Any clarification required by the respondent regarding questions is not

possible. Example: Prorated discount, product profile, marginal rate,

etc., may not be understood by the respondents.

5. If the answers are not correct, the researcher cannot probe further.

6. Poor response (30%) – Not all reply.

5.12.3 Additional consideration for the Preparation of Mail

Questionnaire

1. It should be shorter than the questionnaire used for a personal interview.

2. The wording should be extremely simple.

3. If a lengthy questionnaire has to be made, first write a letter requesting

the cooperation of the respondents.



4. Provide clear guidance, wherever necessary.

5. Send a pre-addressed and stamped envelope to receive the reply.

Activity 4:

One method of sequencing the question in a questionnaire is to

proceed from general to specific. What is the logical reason behind

this?


24. In mail questionnaires, __________ questions are well answered.

25. If a lengthy questionnaire has to be made, one should first write a letter

requesting the __________ of the respondents.

26. When the researcher is interested in a spontaneous response, mail

questionnaire is __________.

5.13 Summary

In this unit we have discussed the main types of data used for marketing

research in the context of the different research designs that may be

employed. The sources of secondary and primary data have been

discussed. The two basic methods of data collection i.e. through

communication and through observation have. been explained alongwith

their various modification. The unit ends with a discussion of the sources of

error in data collection.

Sometimes, secondary data may not be able to solve the research problem.

In that case researcher need to turn towards primary data. Primary data

may pertain to life style, income, awareness or any other attribute of

individuals or groups. There are two ways of collecting primary data namely.

(a) Observation (b) By questioning the appropriate sample. Observation

method has a limitation i.e, certain attitudes, knowledge, motivation etc

cannot be measured by this method. For this reason, researcher needs to

communicate.

Communication method is classified based on whether it is structured or

disguised. Structured questionnaire is easy to administer. This type is most

suited for descriptive research. If the researcher wants to do exploratory

sturdy, unstructured method is better. In unstructured method questions will

have to be framed based on the answer by the respondent. In disguised



questionnaire, the purpose of research is not disclosed to respondents. This

is done so that the respondents might speak the truth instead of giving some

answer which satisfies the researcher.

Glossary

Primary Data: Data observed or collected directly from first-hand

experience.

Ambiguity: having more than one meaning

Respondent: One who responds

Loaded Questions: A question heavy with meaning or emotional impact


1. What do you mean by data collection? Also explain the various types of

data collection techniques.

2. Describe the various sources of secondary data.

3. Distinguish between primary and secondary data collection.

4. What are the disadvatages of primary data?

5. Explain the methodology of primary data collection.

5.15 Answers

Answers to self assessment questions

1. secondary, primary

2. respondents, analogous case studies, experiments

3. internal

4. internally, externally

5. exploratory

6. collected

7. difficult

8. outdated or obsolete

9. Union government

10. ten

11. primary

12. unprocessed

13. large

14. realistic



15. inaccurate

16. Response

17. Ambiguity

18. respondents, analogous case situations, research experiments

19. predisposed

20. Lifestyle

21. easy

22. time-taking

23. actual

24. personal and sensitive

25. cooperation

26. unsuitable

Answers to terminal questions

1. Refer to 5.2 – Data collection is the process of sending data to a central

point from one. or more.

2. Refer to 5.6 – Government Agencies and Official Publications, Census

Data, National Sample Survey, Population Statistics, etc.

3. Refer to 5.3, 5.7 – Primary data is gathered first hand; secondary data is

gathered from secondary sources.

4. Refer to 5.9 – Limitations of primary data.

5. Refer to 5.11 – primary data collection.

Mini-case

An autonomous management institute of repute was well-known for the high

quality of the students graduating and entering to the corporate world. The

institute’s main mission was to extend this high quality of education to those

who could not undertake a full time college programme. Therefore, the

institute conducted programmes aimed at providing education and training

in several areas of management to working executives. These working

executives attended the programmes either their own (after working hours)

or sponsored by the company where they were working.

The executive development programme had three tiers. The First tier was to

develop supervisory personal, the Second and Third tiers were meant for

middle level and top level executive. The main emphasis of this programme

was to improve trainee’s managerial, decision-making, human relation skills.



Over a period of time the enrolment to this programme was on the decline.

The institute was at a loss to explain, why such a thing was happening? The

institute was very sure that the many of the doubts raised by the programme

participants were amply cleared and the feedback from the participants was

very positive, with no negatives in the feed back form. Despite this, the

institute could not trace the reason for the declining attendance. The

institute wondered, whether the decline was caused by economic factors or

increased competition from other education providers. Could it be due to

content or structure of the programme, or could it be due to the fact that it

was not properly promoted and not properly targeted at the right level.

Consequently, a major promotion programme was conducted by mailing the

brochures which indicated the content and the structure of the course. The

mailing was done, both for those who attended the past programme and

others (freshers).

Questions

1. What is the research problem?

Hint: Base it on the primary data available in the case.

2. What data should be collected and how this data can be used to answer

the research question?

Hint: Feedback, industry demand, etc.



Unit 6 Qualitative vs Quantitative

Research Techniques

Structure

6.1 Introduction

Objectives

6.2 Qualitative vs Quantitative Research

Quantitative Research

Qualitative Research

6.3 What is Qualitative Research?

6.4 Qualitative Research Methods/Techniques

Depth Interview

Delphi Technique

Focus Group Interview

Projective Techniques

Protocol Analysis

6.5 Latest Techniques of Qualitative Research

6.6 Uses of Qualitative Research

6.7 Quantitative Research Techniques

Observation Research

Experimental Research

6.8 Summary


6.10 Answers

6.1 Introduction

In the earlier units, you came to know about the research process and

sources of data collection. In this unit you will study about the research

techniques.

In this unit you will learn qualitative research is used to analyze those data

which cannot be quantified. Qualitative research is used in exploratory

research. The number of respondents covered in this type of research is

small compared to quantitative research.



Objectives


Explain qualitative research methods

Describe qualitative research applications

Explain quantitative research

Analyze various methods of quantitative research

6.2 Qualitative vs Quantitative Research

These two research methods vary in a number of ways. They vary in terms

of

Measurability criteria

Features

Characteristics

Qualitative Research Quantitative Research

Exploratory or diagnostic in nature used to understand behaviour and generate hypothessis

Once hypothesis has been generated, used to test out hypothesis

No calculation of sample size possible - size of sample depends upon dine available to conduct research, cost, variation in the population.

Generally a probabilistic approach is used to calculate sample size, using the sample size formula.

Sample selected is such that it represents different sections of the population

Random selection of respondents to be part of research work – may or may not represent different population segments, depending upon the sampling method utilized.

It is dangerous to generalize conclusions for the entire population.

Conclusions are generalized to the universe, of which the sample purports to be representative.



Figure 6.1: Market Research

Figure 6.1 explains the importance of Qualitative and Quantitative Research

methods.

6.2.1 Quantitative Research

Measurability: Quantitative data is measurable, for example, size of

market, rate of product usage, etc.

Features:

Data collected is numerical in nature.

Data collection methods are

Mail questionnaire

Personal interview

Telephonic interview

Characteristics:

Sample size used is very large.

Structured questionnaire is used for data collection.



6.2.2 Qualitative Research

Measurability: Not possible or difficult to measure.

Features: It is a kind of exploratory research.

Characteristics:

Unstructured questionnaire is used.

Sample size is usually small


1. ____________ Research is difficult to measure.

2. Random selection of respondents is done under ___________ research

to be part of research work.

6.3 What is Qualitative Research?

Qualitative research could be:

Qualitative research is exploratory or diagnostic in nature.

It involves a small number of people who are not sampled on any

probabilistic basis.

Qualitative research is impressionistic rather than definitive.

Qualitative research is used to generate hypothesis for further research.

Qualitative research is used to get better insights into consumer

behaviour, and to understand underlying behaviour of the consumer in

the buying process.

Through Qualitative research, one can get subtle clues about

products/brands/services, that very few quantitative studies can

replicate.

In Qualitative research, no attempt is made to draw hard and fast

conclusions about facts that emerge.

Qualitative Research is highly subjective in nature, and one would need

trained psychologists and interviewers to conduct the research work and

also for analysis and interpretation of data.


3. Qualitative Research is ___________ in nature.

4. Qualitative Research is used to generate ___________ for further

research.



6.4 Qualitative Research Methods/Techniques

There are five major techniques in qualitative research. They are:

Depth Interview

Delphi Technique

Focus Group

Projective Technique

Protocol Analysis

6.4.1 Depth Interview

Unstructured, direct interview is known as a depth interview. Here the

interviewer will continue to ask probing questions like, “What did you mean

by that statement?”, “Why did you feel this way?” and “What other reasons

do you have?”, etc., until he is satisfied that he has obtained the information

he wants. The unstructured interview is free from restrictions imposed by a

formal list of questions. The interview may be conducted in a casual and

informal manner in which the flow of the conversation determines what

questions are to be asked and the order in which they should be asked.

Advantages of depth interview

Advantages of depth interviews are:

The primary advantage of the depth interview technique is its ability to

discover motivations. Marketing decisions like the choice of product,

methods of selling and advertising appeals, etc., must be decided only

after receiving feedback from consumer.

The second advantage of the depth interview procedure is that it

encourages respondents to express any ideas they have.

The third advantage is that it provides a lot of flexibility to the

interviewer. We have a two-way communication where both interviewer

and the interviewee contribute to the knowledge gained.

Limitations of depth interview:

Limitations of depth interviews are:

There are number of weaknesses in the depth interviewing approach.

First of all, depth interview takes much longer than a typical structured

questionnaire filling. It may lead to respondent fatigue and hence may

lead to biased response.



The second weakness of the depth interview is the lack of systematic

structure for interpretation of the information obtained. This requires a

trained psychoanalyst. It is difficult to find the qualified and trained

people for conducting depth interview.

Another difficulty is that no quantifiable data is obtained in the depth

interviewing process. This means that human judgment is involved in

summarising the findings. Different results will often be obtained by

different people in the same situation. As a result, there is little or no

opportunity for verification. Flexibility on the part of the interviewer is

sometimes a major weakness.

6.4.2 Delphi Technique

This is a process where a group of experts in the field gather together. They

may have to reach a consensus on forecasts. Sometimes, the judgment

may be made by some group members who have strong personalities. In

the Delphi approach, the group members are asked to make individual

judgments about a particular subject, say „sales forecast‟. These judgments

are compiled and returned to the group members, so that they can compare

their previous judgment with those of others. Then they are given an

opportunity to revise their judgments, especially if it differs from the others.

They can say, why their judgment is accurate, even if it differs, from that of

the other group members. After 5 to 6 rounds of interaction, the group

members reach conclusion.

Advantages of delphi technique

Advantages of Delphi techniques are:

Forecasting can be made quickly and inexpensively.

Viewpoints of different sector people are weighed. Example, There may

be policy makers, Entrepreneurs, Executive from industry, Government

officials, etc., view points of all these people are taken into consideration

and weighed appropriately.

If basic data is inadequate or not available, there is no other alternative

to Delphi technique.

Limitations of delphi techniques

Limitations of Delphi techniques are:

Expert‟s opinion and facts may be different.

Good and bad estimates are given equal weightage.



6.4.3 Focus Group Interview

They are the best known and most widely used type of indirect interviews.

Here, a group of people jointly participate in an unstructured indirect

interview conducted by a moderator. The group usually consists of six to ten

people. In general, the selected persons have similar backgrounds. The

moderator attempts to focus the discussion on the problem areas.

Focus groups are used primarily to provide background information and to

generate hypothesis rather than to provide solution to problems. The areas

of application include:

Development of new product concept.

The generation of ideas for improving established products.

Development of creative concepts in advertising.

Advantages of focus group interview

Advantages of focus group Interviews are:

This technique provides more sophisticated data because of the

interaction among different members of the group.

It also offers other benefits of depth interviews and offers in addition the

advantages of saving cost, time and resources during data collection

stage.

Disadvantages of focus group interview

Disadvantages of focus group Interviews are:

As the samples are small and invariably non-probabilistic, extrapolation

of findings is not permitted.

Responses of individual members are not independent, and are

influenced by what others have to say. The results of group interviews

are difficult to quantify since they are unstructured.

The key component of a successful focus group interview is the skill of the

group moderator (interviewer).

6.4.4 Projective Techniques

Projective techniques (Indirect method of gathering information/indirect

interview) are unstructured and involve indirect form of questioning.

In projective techniques, respondents are asked to interpret the behaviour of

users, rather than describe their own behaviour. In interpreting the

behaviour of others, respondents indirectly project their own motivation and



feelings into the situation. Example: Many a time, people do not want to

reveal their true motive for fear of being branded „old fashioned‟. Questions

such as “Do you do all household work yourself?” The answer may be „no‟,

though the truth is „yes‟. A „yes‟ answer may not be given because it may

suggest that the family is not financially sound and cannot afford a maid for

help.

The general categories of projective techniques are:

Word association test

Completion technique

TAT, and

Cartoon test

Word association test

This test consists of presenting a series of stimulus words to the

respondent, who is asked to answer quickly with the first word that comes to

his mind. The respondent, by answering quickly, gives the word that he or

she associates most closely with the stimulus word.

Example: What brand of detergent comes to your mind first, when I mention

washing of an expensive cloth?

Surf

Tide

Key

Ariel

Completion techniques

There are two types of completion techniques and these are:

Sentence completion

Story completion

Sentence Completion: Here the respondents have to finish a set of

incomplete sentences.

Example: Let us make a study dealing with people‟s inner feelings towards

software professionals.

Earnings of a software professional ____________.

Being a software professional means ___________.

Working hours for software professional are __________.



Story Completion: A situation is described to a respondent who is asked to

complete the story based on his opinion and attitude. This technique will

reveal the interest of the respondent, but it is difficult to interpret.

The story completion has numerous applications in solving marketing

problem. The most important of which is to provide data to the seller,

recognising the image and feelings people have about the company‟s

products and services. This method is used before finalising an

advertisement.

Thematic apperception test (TAT)

Definition: TAT is a projective technique. It is used to measure the attitude

and perception of the individual. Some picture cards are shown to

respondents. The respondent is required to tell the story by looking at the

picture. When the subjects start telling the story, the researcher notices the

respondents‟ expression, pauses and emotions to draw the inference.

Administration: TAT is administered to individuals in an atmosphere free

from interruptions. The usual number of cards shown varies between 10 to

14. The original TAT developer Murry recommended the use of 20 cards.

The original TAT consisted of 31 cards divided into three categories viz., for

use with men or women only or for use with subjects of either sex. Of late,

the use of separate set of cards for men and women has been discontinued.

Recording: Murry‟s original practice was to take notes by hand on the

subject‟s responses, including his (her) non-verbal behaviours. Research

has indicated, however, that a great deal of significant material is lost when

notes are recorded in this way. As a result, some examiners now use a tape

recorder to record the respondent‟s answers. Another option involves asking

the respondent to write down his (her) answers.

Interpretation: In interpreting responses to the TAT, examiners typically

focus their attention on one of the three areas: the content of the stories that

the respondent tells; the feeling or tone of the stories; or the respondents‟

behaviour apart from responses. These behaviours may include verbal

remarks (for example, comments about feeling stressed by the situation or

not being a good story teller) as well as non-verbal actions or signs

(blushing, stammering, difficulties in making eye contact with the examiner,

etc.). The story content usually reveals the respondents‟ attitudes, fantasies,



wishes, inner conflicts, and views about the world outside. The respondent

is helped by asking questions such as:

What is happening in the picture?

Why is it happening?

What is your feeling about the character shown in the picture?

Who is right?

Who is the aggressor? Or who is right and who is wrong?

Cartoon test or balloon test

Here a cartoon is shown. The cartoon character belongs to a particular

situation. One or more of „balloons‟ include the conversation of the

character, and is left open and the respondent is asked to fill in.

In comparing the cartoon technique with the direct question, let us take the

example of “choosing a brand ambassador”.

In the above case, with which person would you agree and why?



6.4.5 Protocol Analysis

In this method, people are placed in decision-making situations and asked

to speak about everything that they will consider while making a choice of a

product or services. This is a qualitative research. In this, the researcher will

gain insight into consumer‟s decision-making process. After several people

have given protocols, the researcher will review them and look at the

commonalities such as brands considered, price, etc. Protocol studies are

useful in the following situations, i.e., when the decision-making process is

very long involving several factors. Example, Buying an apartment or a

house or an expensive car.

Activity 1:

Conduct a depth interview with one person to find out his/her feelings

on the purchase and consumption of (a) Packaged fruit juices and

(b) Ice-creams.


5. Thematic Apperception Test (TAT) is a ____________ technique.

6. ______________ Test consists of presenting a series of stimulus words

to the respondent, who is asked to answer quickly with the first word that

comes to his mind.

7. In ___________, people are placed in decision-making situations and

ask them to speak about everything that they will consider while making

a choice of a product or services.

8. By Delphi technique, forecasting can be made ___________and

___________

6.5 Latest Techniques of Qualitative Research

Qualitative Research is taking more and more inputs from psychology, to

develop latest techniques in Qualitative Research. Some of the latest

techniques used are as follows:

Imagery technique

Synectics

Neuro-linguistic programming

Imagery Technique: This technique is used to determine the images of two

competing brands. As an example, readers were asked to describe two

competing magazines.



Magazine 1 was described as young, attractive, bubbling teenager.

Magazine 2 was described as older, less interesting, introvert lady. This

information helped the owner of the magazine to reposition magazine 2.

Synectics: This technique gives the researcher an insight into the intuitive

or emotional impressions of the consumer for either a brand or advertising

campaign, by unleashing the creative side of the consumer. The

respondents are asked to go through a series of games designed to lower

their inhibitions which help in unleashing the child present in every adult.

The basic idea is that creativity works at child level. With this exercise, the

researcher can get original ideas for use in developing advertising

campaign, as also the consumer's real feelings about products.

Neuro-linguistic Programming: This technique provides an insight into the

'Non-verbal Impact' of an advertisement on the target consumer. This is

done by analyzing as to which of the five senses (smell, taste, touch, sight,

aural) a consumer uses to recall an advertisement. As an example, the

Onida advertisement campaign was analyzed using this technique, and it

was able to reveal strong sensory effect of Rasping Voice and Shattering

Glass. The underlying idea behind this technique is that much of the

recording of experience goes on „below the surface‟ and outside conscious

awareness. To decode the emotions surrounding the product purchase and

experience, researchers use the NLP technique. NLP techniques are

modeled on techniques used in other fields of psychology (Erieksonian

Hypnosis and Classical Conditioning), and hence only persons trained in the

field of psychology can use this technique.


9. Neuro-linguistic Programming provides an insight into the _________

of an advertisement on the target consumer.

10. ___________ Technique is used to determine the images of two

competing brands.

6.6 Uses of Qualitative Research

The various uses of qualitative research are:

Whenever a company wants to develop new product, or modify existing

product, it would conduct Qualitative Research among target consumers



to understand new emerging consumer needs, or problems which

consumer has with the existing product.

It is used to define the problem areas more fully – in marketing research

one normally starts with qualitative research which is validated further by

quantitative research.

It is used to formulate hypothesis for further investigation/quantification.

It is used to obtain large amount of data about beliefs, attitudes, etc. as

data input for developing questionnaires, attitude scales, which would be

used as input for multivariate analysis studies.

It is also used to conduct post-research study i.e., to amplify or explain

same points that emerge from a major study, without having to repeat on

a large scale.

In some areas of marketing research especially understanding of

consumer behaviour, a more flexible approach is required, rather than a

rigid approach as provided by a structured questionnaire hence

qualitative research could be used.

In studies of distribution channels, sales, pricing strategies quantitative

approach is most suitable, whereas in concept development, product

development (needs of 4 consumer), advertising research qualitative

approach is more suitable.

Ultimately, whether one uses a Qualitative Research or Quantitative

Research approach, depends upon the objective of the research work, and

the value of decisions that would be taken from the data generated by the

research work.


11. Whether one uses a Qualitative Research or Quantitative Research

approach, depends upon the ____________ of the research work.

12. Whenever a company wants to develop new product, or modify existing

product, it would conduct __________ Research among target

consumers.

6.7 Quantitative Research Techniques

Quantitative research is most common encountered as part of formal or

conclusive research, but is also sometimes used when conducting



exploratory research. Quantitative research techniques are part of primary

research.

The most common quantitative research techniques include:

Observation technique

Experimentation

Survey technique

6.7.1 Observation research

Observation is one of the methods of collecting data. It is used to get both

past and current information. Instead of asking people questions, as a

survey does, observation depends on watching what people do. Although it

is not possible to observe past behaviour, we may observe the results of

such behaviour. In a way, secondary data reflect the results of the past

behaviour of people as also of past occurrences. In marketing research, the

observational methods are not used frequently. All the same, as it is used

especially in marketing experimentation, a brief discussion is provided here.

The major application of observation as an information collection method

may be classified into categories of the audit, coincidental recording

devices, and a general classification, direct observation.

Nature of observation research

Conditions for use:

Information must be observable or inferable from observable

Behavior must be repetitive frequent, or predictable

Behavior must be of relatively short duration

Methods of observation

There are several methods of observation of which anyone or a combination

of some of them can be used by the observer. Thus, there are structured or

unstructured methods, disguised or undisguised methods, observations

made in a natural setting or laboratory setting, direct-indirect observation, or

humanmechanical observation. These are briefly discussed below.

Structured-unstructured observation: Structured observation is used

when the research problem has been formulated precisely and the

observers have been told specifically what is to be observed. While

structured observations are subject to this limitation. The extent of the

bias may vary to the extent an observation is unstructured.



Disguised-undisguised observation: In the case of disguised

observation, the subjects do not know that they are being observed. In

some cases, the observer may make disguised observation by posing

as one of the shoppers who are being observed. This type of

observation is often preferred because it is feared that people may

behave differently when they know they are being observed. It may be

difficult to completely disguise an observation, though this apart, it poses

an ethical question of its desirability when those who are being observed

are kept in the dark.

Natural and laboratory setting: Another way to classify observations in

on the setting, i.e. natural or laboratory. Sometimes, an experimental

manipulation may be introduced in a field study. Observation in a

laboratory setting, on the other hand, enables the observer to control

extraneous variables which influence the behaviour of people.

Observational studies in laboratory setting have certain advantages over

field studies. They enable the collection of data. Promptly and

economically and in addition, permit the use of more objective

measurements.

Direct-indirect observation: Direct observation of people and how they

behave in situations of interest is a commonly used method of collecting

information. Supermarkets and store managers continually relay on

observation of traffic flows and length of waiting lines to determine

proper location of various lines of products and the number and the

location of the sales people and cash registers. In the case of direct

observation, the event or the behaviour of a person as it occurs. In

contrast, indirect observation implies that some of part behaviour is

observed. In other words, the behaviour itself is not observed, rather its

effects are observed.

Human-mechanical observation: Another way of classifying

observations is whether they are made manually or by machines. Most

of the studies in marketing research based on human observation

wherein trained observers are required to observe and faithfully record

their observations. One of the major advantages of electrical/mechanical

devices is that their recordings are free from subjective bias. As against

this advantage, such observations may be less valid than human



observations. This is because observers power of integration. can lead

to a more valid evaluation of the observation.

Advantages of observation

Avoid problems associated with willingness and ability of respondents to

answer questions.

Some forms of data are gathered more quickly and accurately by

observation

Direct observation technique enables a researcher to record behaviour

as it occurs. In contrast, other techniques record the data mostly

retrospectively on the basis of the respondent‟s report after the event.

Observation is such that it can be used regardless of whether the

respondent is willing to report or not.

Observation is such that it can be used even when it is pertains to those

who are unable to respond such as infants and animals.

Disadvantages

Firstly only the current behaviour of a person or a group of persons can

be observed. The researcher does not learn about motives, attitudes,

intentions, or feelings.

One is not unable to observe the past behaviour nor can one observe a

person‟s future behaviour because the act of observation takes place in

the present.

Observation does not help us in gauging a person‟s attitude or opinion

on a certain subject nor his knowledge of the same.

The observational method is very slow and as such, when a large

number of persons are to be contacted; it becomes unsuitable because

of the long required for this purpose.

Activity 2:

Conduct a focus group interview with six people in your organization on

the purchase and consumption of (a) fast food (b) Packaged fruit juices.

Prepare a report based on your result.

6.7.2 Experimental Research

Experimental research is also called “experimentation”. It is a research

process in which one or more variables are manipulated under conditions

that permit the collection of data that show the effects, if any such variables



in unconfused fashion. Other meaning of experimentation is, it is a process

of manipulating one variable in a controlled environment while holding all

other variables constant in order to establish a casual relationship. This

indicates that the distinction between experimental and non experimental

research may indicates that it is a matter of degree rather than of kind.

Experiments have been the basis for the advancement of knowledge in

most scientific fields. They can be used in marketing when the researcher

has established a hypothesis. Also the researcher must be in a position to

control conditions pertinent to testing the hypothesis. Both these conditions

must be fulfilled before the experiment can actually be started.

All experiments involve three basic components:

The variable manipulated in an experiment is referred to as the

independent variables or test units.

The actual alteration is called the treatment.

The actual variables chosen to measure the subject‟s response are

known as dependent variable

Survey

The survey technique involves the collection of primary data about subjects,

usually by selecting a representative sample of the population or universe

under study, through the use of a questionnaire. It is a very popular since

many different types of information can be collected, including attitudinal,

motivational, behavioural and perceptive aspects. It allows for

standardization and uniformity both in the questions asked and in the

method of approaching subjects, making it far easier to compare and

contrast answers by respondent group. It also ensures higher reliability than

some other techniques. If properly designed and implemented, surveys can

be an efficient and accurate means of determining information about a given

population.

Survey techniques

There are three basic types of surveys:

Telephone survey

Self-administered survey

In-person interview survey

1. The Telephone Survey: The use of the telephone has been found to be

one of the most inexpensive, quick and efficient ways of surveying



respondents. The ubiquity of telephone ownership as well as the use of

unlisted numbers are factors that must, however, be considered as part

of the sampling frame, where the number of households with phones

approaches 100%.

Telephone surveys also allow for random sampling, allowing for the

extrapolation of characteristics from the sample to the population as a

whole.

Telephone surveys are also known to have a number of limitations. The

length of the survey has to be kept relatively short to less than 15

minutes as longer interviews can result in refusal to participate or

premature termination of the call. The questions themselves must also

be kept quite short and the response options simple, since there can be

no visual aids such as a cue card.

The increasing use of voice mail and answering machines has made

phone surveys more difficult and more costly to undertake. Calls that go

answered receive a busy signal or reach a machine, require callbacks.

Usually, eligible respondents will be contacted a pre-determined number

of times, before they are abandoned in favour of someone else. The

potential for response bias must be considered, however, when

discussing the results of a study that relied on the telephone. The

sample for a telephone survey can be chosen by selecting respondents

from the telephone directory, e.g. by calling every 100th name, through

Random-digit Dialing (RDD) where the last four digits of a telephone

number are chosen randomly for each telephone exchange or prefix (i.e.

first three numbers), or the use of a table of random numbers.

2. The Self-administered Survey: Any survey technique that requires the

respondent to complete the questionnaire him/herself is referred to as a

self-administered survey. The most common ways of distributing these

surveys are through the use of mail, fax, newspapers/magazines, and

increasingly the internet, or through the place of purchase of a good or

service (hotel, restaurant, and store). They can also be distributed in

person, for instance as part of an intercept survey. Depending on the

method of survey administration, there is a number of sampling frame

considerations, such as who can or cannot be reached by fax or

internet, or whether there is a sample bias.



In most forms of self-administered surveys, there is no control over who

actually fills out the questionnaire. Also, the respondent may very well

read part or all of the questionnaire before filling it out, thus potentially

biasing his/her responses. However, one of the most important

disadvantages of self-administered surveys is their low response rate.

3. The In-person Interview Survey: Face-to-face interviews are a direct

communication, primary research collection technique. If relatively

unstructured but in-depth, they tend to be considered as part of

qualitative research. When administered as an intercept survey or door-

to-door, they are usually part of quantitative research.

Application of quantitative research

Quantitative marketing research is a social research method that utilizes

statistical techniques. It typically involves the construction of questionnaires

and scales. Large numbers of people are contacted, usually in a survey.

Marketers use the information so obtained to craft strategies and marketing

plans.

Activity 3:

Select any product and brand of interest to you. Administer each of

the following techniques to five fellow colleagues to develop an idea

of their feelings towards the brand: (a) Word Association Test,

(b) Sentence Completion Test, (c) Cartoon (d) Thematic Apperception

Test.


13. Three basic types of surveys include _________,_________ and survey

____________

14. The survey technique involves the collection of primary data about

subjects through the use of a ___________

15. Quantitative marketing research is a __________ method that utilizes

statistical techniques.

6.8 Summary

The various methods by which information about consumers can be

obtained are broadly classified into two categories Qualitative Research and

Quantitative Research. Qualitative Research may be used to generate



hypothesis for further research, is exploratory in nature and involves a small

number of people who are not sampled on probabilistic basis. Qualitative

research can provide leads and insights which could be of extreme help in

conducting quantitative research. There are various methods of conducting

qualitative research. These are depth interviews, focus groups, observation

and projective techniques like word association test, sentence completion

test, cartoons, thematic apperception test. Qualitative research is

increasingly using inputs from psychology and some; of latest techniques

being used include imagery, synectics and neuro-linguistic programming.

Glossary

Qualitative Research: seeks out the „why‟, not the „how‟ of its topic through

the analysis of unstructured information

Quantitative Research: systematic empirical investigation of quantitative

properties and phenomena and their relationships.

Depth Interview: Research technique conducted in person in the field

(rather than in the researcher's office) by a trained interviewer for the

purpose of learning the motivation of consumers in the purchase decision

process

Protocol Analysis: a psychological research method that elicits verbal

reports from research participants.


1. Distinguish between quantitative and qualitative research.

2. Describe projective techniques of qualitative research.

3. What are the benefits and limitations of focus group interviews?

4. Explain latest techniques of qualitative research.

5. What do you mean by survey technique of quantitative research?

6.10 Answers


1. Qualitative

2. Quantitative

3. exploratory or diagnostic

4. hypothesis



5. projective

6. Word Association

7. Protocol Analysis

8. quickly, inexpensively

9. 'Non-verbal Impact'

10. Imagery

11. objective

12. Qualitative

13. telephone survey, self-administered survey, in-person interview

14. questionnaire

15. social research


1. Refer to 6.2 – Tabulate the differences to make it easier

2. Refer to 6.4 – Discuss various projective techniues

3. Refer to 6.4 – List the advantages and disadvantages

4. Refer to 6.5 – Discuss Imagery technique, Synectics and Neuro-

linguistic programming

5. Refer to 6.7 – Discuss survey method.

Mini-case

Tasty Foods (India) Ltd. is a wholly owned subsidiary of delicious foods, a

giant German based restaurants chain. Tasty food was famous for its

continental cuisine. The chain of restaurants was well spread across

Europe. It was eyeing the Asian continent for a long time. In 1996, it entered

Japan and gained enormous success. The same year it entered Malaysia,

Singapore and made a landmark.

The Asian market was had prove to be lucrative, as the chain had more than

100 restaurants across these countries. The chain thought of entering the

Indian sub-continent, which was supposed to have enormous potential. In

2001, the chain made a survey, and the survey revealed the shocking

information that, most food-lovers were vegetarians. Unfortunately, the

chain was well-known for its non-vegetarian cuisine, especially, Barbecue

and Dover sole. The chain also gathered information that McDonalds and

Tricon groups of restaurants had already set up their operation, but adopted



vegetarian cuisine. The chain was surprised to find that McDonalds, very

well-known for its Hamburgers (Beef) and chicken burgers had adopted

Indian dishes and were running successfully. Moreover, Tricon has set up a

100% pure vegetarian restaurant in Ahmedabad where the majority were

vegetarians.

The chain was in a dilemma. But it finally decided to launch its restaurants in

different metros of the country, with its world famous non-vegetarian cuisine.

The cuisine also contained vegetarian dishes but not many. The restaurant

had a poor response rate in the first six months. The chain incurred a loss of

Rs. 2 crores in this period, and hence thought of closing some of its

restaurants. Then it appointed a well renowned market research agency to

find out what went wrong. Research findings revealed that if the chain

wanted to survive and succeed in the Indian market it had to add vegetarian

dishes to its cuisine.

The main problem was that the cuisine of the chain was predominantly non-

vegetarian, and did not contain many vegetarian dishes. It appealed to the

global headquarters in Germany to solve the problem, by suggesting

vegetarian dishes. The headquarters after consulting the experts advised

the chain to stick to the non-vegetarian cuisine. It also suggested that the

chain might run the restaurants in particular metros where more number of

non-vegetarian food lovers were present and close down rest of the

restaurants. Contrary to this decision, the chain was firm to introduce many

vegetarian cuisine and asked the expert team to find vegetarian dishes

irrespective of its acceptance by customers.

Question

What appropriate data collection would you suggest and the instrument to

be used for this situation?

Hint: Base your answer on the methods and techniques of data collection.



Unit 7 Market Research Techniques

Structure

7.1 Introduction

Objectives

7.2 National Readership Survey

7.3 Retail Store Audits

7.4 Benefits of Audit Technology

7.5 Consumer Panels

7.6 Test Marketing

7.7 Research in Advertising Decisions

7.8 Marketing Audit

Components of Marketing Audit

7.9 DataBase Marketing

7.10 Focus Group Interview

7.11 Summary


7.13 Answers

7.1 Introduction

In the earlier units, you came to know about the data collection methods and

qualitative research technique. In this unit you will study about the new

techniques of marketing research.

Researchers often use more than one research design. They may start with

secondary research to get background information, and then conduct a

focus group (qualitative research design) to explore the issues. Finally they

might do a full nation-wide survey (quantitative research design) in order to

devise specific recommendations for the client.

In this unit you will learn various techniques of market research other than

conventional techniques or research.

Marketing audit

Retail store audit

Advertising research etc.



Objectives


Describe national readership survey

Define consumer panels

Describe test marketing

Explain marketing and retail store audit

Define database marketing

7.2 National Readership Survey

Readership research is a scientific process in which readers‟ perceptions,

attitudes, satisfaction, and expectations about a publication are

quantitatively collected and analyzed for better decision making and offering

of the publication.

The 2009 Round One of the Indian Readership Survey is out, with mixed

trends. Only nine of the top 25 most read publications (including dailies and

periodicals) registered a growth in readership. Depending on how their

publications fared, media houses typically support total readership, or the

other metric, average issue readership.

Segment-wise Readership: This category measures the universe of

readers who reads any publication in a segment. So the universe of readers

who read any English daily, grew 0.47% to 3.1 crore. There are no definitive

trends across categories, but weeklies in all languages, except Malayalam,

registered a drop.

Gainers and Losers: Some of the most read publications also figure in the

list that lost the most readers. Dainik Jagran, India‟s most read publication,

for instance, lost some 1.1 million readers. Telugu daily Vartha lost the

most, 1.3 million readers, or 21% of its readership. Vartha has presumably

been cannibalized by Saakshi, the new Telugu daily that was launched by

chief minister Y.S.R. Reddy‟s son Jagan Mohan Reddy.

English Dailies: Of the top 24 most read English dailies, only six registered

a gain in readership. Mint, HT Media‟s business daily, grew the most,

posting a 15.67% growth in readership. This, is however, not counting Metro

Now, which grew its readership by 103%, but has since been discontinued

as a daily by its joint promoters Bennett, Coleman & Co. Ltd. and HT Media



Ltd. DNA, which grew 11.37%, comes second. The New Indian Express,

lost 14.19% of its readers, followed by The Indian Express, which lost

11.37%.

The National Readership Study 2006: The National Readership Study

2006 (NRS 2006) in India is the largest survey of its kind in the world, with a

sample size of 2,84,373 house-to-house interviews to measure the media

exposure and consumer product penetration in both urban and rural India –

and of course the estimated readership of publications. The study covers

535 publications of which 230 are dailies and 305 are magazines.

Highlights from National Readership Survey (NRS) 2006

The reach of the press medium (dailies and magazines combined) has

increased from 216 million to 222 million over the last one year.

As a proportion however, press reach has stabilized in urban India at

45%. Press reach in rural India has also stayed the same at 19%

needless to say, on a much larger population base. The number of

readers in rural India (110 million) is now roughly equal to that in urban

India (112 million).

Dailies have driven this growth in the press medium, their reach rising as

a proportion of all individuals aged 12 years and above which is the

universe defined for NRS from 24% to 25%. Magazines have declined in

reach from 9% to 8% over the last one year.

The time spent reading has remained the same at 39 minutes daily on

an average per day over the last year. But there has been increase in

urban India (from 41 to 44 minutes daily) and decrease in rural India

(from 36 to 35 minutes daily).

Literacy as measured in the NRS has risen from 69.9% to 71.1% over

the last year. The rate of growth has been marginally lower urban areas

(84.4% to 85.3%) than in rural areas (63.6% to 64.8%).

Satellite TV has grown considerably in reach from 207 million individuals

watching in an average week in 2005 to as many as 230 million

individuals in 2006 further expanding its lead over the number of

readers.

Radio is one medium that has shown considerable resurgence. Its reach

has increased from 23% to 27% of the population listening to any station

in the average week.



Radio FM has driven this explosion in reach from 76 million individuals

listening in an average week in 2005 to as many as 119 million

individuals in 2006 a 55% increase over last year.

Cinema has, on the surface, declined sharply from 51 million individuals

going regularly to the movies (at least once a month) to 39 million. This

has been the story for years now.

The Internet as a medium seems to have paused on its growth

trajectory. From 7.2 million users who logged in every week last year,

the number has grown, though only to 9.4 million. As proportions, these

represent 0.9% and 1.2% of India‟s 12 years plus population. However,

urban India has shown faster growth in internet reach from 2.3% to

3.4%.

Mobile phones must now be given their due place as media. Reach of

this medium as measured by the proportion of the population accessing

Value-added-features (VAS) at least once a week has grown from 1.1%

last year to 2.7% translating to nearly 22 million individuals.

If there is one overall conclusion, it is that the press medium must watch

emerging media closely.

The National Readership Study 2005: The National Readership Study

2005 (NRS 2005) in India is the largest survey of its kind in the world, with a

sample size of over 2,61,212 house-to-house interviews to track the media

exposure and changing consumer trends in both urban and rural India and

of course the estimated readership of publications.

The study covers 522 publications (221 dailies and 301 magazines).


1. _________ Readership measures the universe of readers who reads

any publication in a segment.

2. NRS 2005 in India is the _________ survey of its kind in the world.

7.3 Retail Store Audits

Retail store audit functions, challenged by resource and budget limitations,

multiple business locations, and regulatory reforms, are turning to

technology to manage the often vast quantities of information associated

with store audits. Staffing priorities, such as assisting with the

implementation of new regulatory processes, annual audit projects and



limited man-hours, as well as strained budgets, keep some internal audit,

loss prevention or store operations functions from venturing into the

electronic store audit world.

Traditional Store Audits: Whether it is reducing shrink or complying with

regulatory requirements, a rigorous store-level audit process is critical to

protecting and substantiating company assets and reporting processes, as

well as providing management with the real-time information necessary to

focus on identifying and resolving issues. Traditional retail store audit

methodologies include a visit from an internal auditor or loss prevention

personnel; they then complete a formal audit work plan, which results in

significant paperwork. Additionally, performing traditional audits alone often

results in incomplete or infrequent coverage of stores due to resource

constraints, limiting the efficiency and effectiveness of the store audit

function.

The current, traditional method of conducting store audits would benefit from

an innovative use of technology.

Store Self-assessment: The first step to progressing toward a more

effective and efficient store audit program is the implementation and

acculturation of control self-assessment. Self-assessment program raises

accountability by engaging store managers, who are direct control owners,

and places overall responsibility for control operations and assessment in

their hands.

Technology Enabling the Self-assessment Program: The next step in

building an effective self-assessment program is to ensure that data is

collected, analyzed and reported in a timely fashion. Efficient audits no

longer can be conducted by filling out paperwork at the store, and sending

those paper audits back to the corporate office, where data is entered into a

spreadsheet, and only then is a report manually created. Whether through

the use of simple Web-based forms or more advanced mobile collection

technologies, such as laptops, smart phones, or Pocket PCs, electronic

delivery mechanisms can expedite immediately the store audit process.

Such technology assists internal audit functions, management, and store

managers in conducting consistent self-assessments that can meet both

operational and regulatory objectives.



Activity 1:

How national readership survey‟s provide help to the organization for

making their future decisions?


3. The first step to progressing toward a more effective and efficient store

audit program is the and _________ of control self-assessment.

4. The self-assessment program _________ accountability.

7.4 Benefits of Audit Technology

Is an automated store audit solution really worth your investment? The

answer to that question depends on many factors. Each individual company

must explore its specific business priorities and the financial realities of the

current audit process. Once a clear picture of the current situation emerges,

the benefits and savings of an automated process also will become clear.

The three key benefits from audit technology:

Enhanced audit productivity

Increased operational effectiveness

Improved reporting capabilities.

Enhance audit productivity

Improve Consistency: Uniform data collection from standardized questions

provides the most useful information for analysis. Audit technology can

enhance consistency through customized scoring models and

predetermined response selections for specific questions. Advanced

collection rules can pose questions in sequence to elicit accurate and

relevant responses.

Minimize the Impact of Question Interpretation: Everyone interprets audit

questions from their own unique perspective, which can cause problems

with accuracy and render subjective questions all but useless. Audit

software is designed to keep audits on track, with downloadable support

documentation, context-sensitive hints and “help text” to clarify management

expectations.

Increase Location Coverage: In a large population of stores spread over a

wide area, sheer volume demands audits targeted at specific stores and

some important locations may be lost in the rush. Self-assessment, coupled



with improved productivity from an automated solution, can increase the

amount of time available to expand audit coverage to new topics, new

stores, distribution centers and emerging trouble spots.

Increase operational effectiveness

Generate Action Items Automatically: The audit process assists retailers

in understanding where a particular store is failing in terms of operational

controls. However, the onus rests on the management team to ensure

identified issues are addressed. Audit technology allows the retailer to

implement a proactive approach to areas identified as needing remediation.

For all questions where an unsuitable response is recorded, the user can be

prompted immediately to assign an action item. E-mail reminders and action

reports provide an effective management tool to ensure timely follow-up.

Manage Shifts in Responsibility: Utilizing a configurable user interface,

administrators are able to tightly control security privileges and user

functionality and oversee changes to the organizational hierarchy by adding

and moving stores in the company‟s structure.

Enhance Communication to the Field: A news bulletin board can provide

management with a centralized portal to create and distribute relevant

updates to users of the audit application. Furthermore, automated action

item notification ensures tasks are assigned consistently to the appropriate

users, improving productivity and communication among all team members.

Improve reporting

Reduce Cycle Time from Data Entry to Reporting: Information

bottlenecks are a silent killer of organizational strategy. Without timely data,

leaders are left to make decisions with an insufficient understanding of

performance. Audits completed electronically are available automatically;

there is no need to fax, transcribe or e-mail audit data. By accelerating the

audit life cycle, management can make informed decisions about targeting

low-performing stores and implementing meaningful change.

Improve Visibility of Key Performance Metrics: With the audit

technology, management has the ability to assess key performance metrics

in real-time. Armed with this intelligence, management can identify

operational issues and respond with swift, corrective action.



Eliminate Data Redundancy and Enhance Security: In the traditional

paper-based system, audits are distributed via fax or e-mail, which places

data in multiple locations and enhances the probability that redundant data

will be stored on disparate, unprotected systems. With audit technology,

data is synchronized upon completion and saved on a secure, centralized

server, limiting the opportunity for erroneous data to make its way into

reports or the wrong hands.


5. _________ technology can enhance consistency through customized

scoring models.

6. With the audit technology, management has the ability to assess

_________ in real-time.

7. _________ data collection from standardized questions provides the

most useful information for analysis.

7.5 Consumer Panels

When researchers are interested in detailed information about purchasing

behaviour or insight into certain leisure activities, they will often resort to

panels of consumers. A panel will allow the researcher to track behaviour

using the same sample over time. This type of longitudinal research

provides more reliable results on changes that occur as a result of life cycle,

social or professional status, attitudes and opinions. By working with the

same panel members, intentions can be checked against action, one of the

more problematic challenges that researchers face when studying planned

purchases or intentions to engage in certain behaviour (e.g. going on trips,

visiting certain sites, participating in sports, etc.).

Panels, whether formally established or tracked informally through common

behaviour (e.g. membership in a club, purchase of a specific product, use of

a fidelity card, etc.), can also be used to study the reaction to potential or

actual events, the use of promotional materials, or the search for

information.

Compared to the depth interview and the focus group, a panel is less likely

to exaggerate the frequency of a behaviour or purchase decision, or their

brand loyalty. In order to allow researchers to obtain more detailed follow-up

information from panel members, they are usually paid for their services. At



the same time, this can introduce a bias into the panel, since the financial

incentive will be more or less important depending on the panelists

economic status. Possibly one of the more interesting advantages of panels

is that they can provide significant insight into non-response as well as non-

participation or decisions not to purchase a given product.

Activity 2:

How consumer panel play vital role in market research?


8. Compared to the depth interview and the focus group, a panel is

_________ likely to exaggerate the frequency of a behaviour or

purchase decision.

9. Panels can be used to study the _________ to potential or actual

events.

7.6 Test Marketing

Test marketing is carried out to find out the acceptance level of the product.

A new product is introduced in a small geographical territory, and

commercial viability is checked. This procedure is known as test marketing.

Test marketing helps the management in two ways.

It helps in ascertaining the potential sale and profit for the new product.

It also helps to carry out any correction required before launching on a

commercial scale.

With test marketing, companies can minimize losses. Information collected

in test marketing is as follows:

Awareness level.

Reasons for not using a product.

User experience about the product.

Usage pattern of the product.

Reaction to the product by retailers.

Purchasing pattern.

Characteristics of buyers.

Effectiveness of advertising.

Reaction to offers made by company.



Designing test marketing

While designing test markets, the following factors should be taken into

account:

Time duration of the test.

Criteria used to select test markets.

Decide what to measure.

Time duration of the test

At least three repurchases should be allowed, before the sales are

estimated. This is because it has been found that in case of some products,

initial purchases are large and subsequently the product met its end value.

Therefore, a duration should be allowed before drawing any conclusion on

the sales volume. Shorter the repurchase period of the product, shorter will

be the test marketing period.

Criteria used to select a test market

The following criteria may be used to select a test market:

The market chosen for test marketing should not be too small or too big.

If it is too small, the results are not reliable. If it is too big, the cost

escalates.

A single industry should not dominate the market.

Decide what to measure

Effectiveness of advertising: In this case, the product awareness of

the customer is measured. How much the customer is aware of the

product feature, how long he is able to retain the advertisement, etc.

Awareness depends on how effective is the message and what medium

is used to advertise. The frequency of exposure also decides the ability

to recall an ad.

Market share: This is important when a new product is introduced. The

following questions are to be answered:

Does the new product increase the total sales?

Does it cannibalise any of the existing brands?


10. At least _________ repurchases should be allowed, before the sales

are estimated.

11. The market chosen for test marketing should not be _________.



7.7 Research in Advertising Decisions

The advertiser is interested in getting the best results of the advertisement

in the practical form especially in terms of rupee expenditure. The basic

purpose of advertising effectiveness studies is to test whether or not the

advertisement is achieving the expected or intended purpose of

communication.

Most of the advertisement effectiveness studies deal with a specific

advertisement or with specific advertisement campaigns. The studies are

also conducted on the level of consumer awareness, consumer knowledge,

consumer preference, etc.

Significance of advertisement as one of the promotional techniques is

undoubtedly increasing day-by-day. So, also the importance of such studies

is ever increasing, with the passage of time.

Objectives

The various objectives of research in advertising decisions are:

To identify target markets.

To study the habits of target markets.

To estimate the number of target customers.

To test an advertisement copy for advertisement layout.

To conduct media research.

To select a suitable media for advertisement.

To study practical effectiveness of an advertising agency.

Methodologies

For conducting advertisement effectiveness studies the following two as the

most common methodologies are utilized by the advertisers.

Opinion research

Memory tests.

Opinion research

The opinions or the reactions of individual potential buyers are recorded

either for an advertisement or far an advertisement campaign.

The opinions or the reactions of individual potential buyers pertain to:

Advertisement message.

Advertisement design.



Advertisement copy.

Typography.

The methodology could effectively be utilized either:

Prior to the advertisement are released

Post to the advertisements are released

Limitations of opinion research

Here as the feedback or the reaction of individual potential buyers are in

the opinion form, the feedback really fails to provide a guideline

regarding.

Attention value of the advertisement.

Recalling of the media where the advertisement was released.

How long the advertisement is remembered.

Which is the exact part of the advertisement that is remembered for

long?

The opinions of the reactions of individual potential buyers may be

unreal. Sometimes, it is also observed that the potential buyers prefer or

tend to give socially desirable response to real response.

Memory tests

In order to overcome the limitations of “Opinion Research”, as an

advertisement effectiveness studying methodology, different types of

memory tests are conducted.

Invariably, the tests are carried out after the advertisements have appeared

in different media.

Memory tests are further categorized in the following two kinds:

Recognition test

Recall test.

Recognition test: These tests are carried out with the help of different

illustrations, as follows:

The respondents are shown different advertisements. Thereafter, they

are asked:

To recognize the advertisements which have been seen earlier.

To remember the media in which they have seen them earlier.

As to why they have liked a particular advertisement.



As to which part, they have liked about a particular advertisement,

etc.

The names of the sponsors, brand names, etc. are removed from the

advertisement. Therefore, the respondents are asked.

To recognize the sponsors to whom the advertisement belong.

To remember the media in which they have seen them earlier.

To identify the advertisement agency releasing the advertisement.

Precaution of Reorganization Test: For both these recognition tests, a

precaution is needed to be taken to minimize respondents.

Inaccuracies

Biases.

If these are not minimized, to the possible extent, the basic purpose of

conducting of these tests stands totally defeated.

Recall Test: Just like “Recognition Test”, “Recall Test”, no practical

illustration are utilized. However, the tests are carried out in the following

two ways:

1. The respondents are asked to recall all the advertisements for a type of

a particular product.

For example,

Which advertisement have you seen for a toothpaste of late?

In which media have you seen an advertisement for a toothpaste, of

late?

Really, this undoubtedly becomes fully unaided form of the test.

2. The respondents are asked to recall a particular advertisement in

respect of a particular brand.

Example,

Do you mean remember the advertisement for Flair pen with cricket

star „X‟?

Do you remember in which media have you seen the advertisement

for Flair pen with cricket star „X‟?

As it can be observed, this definitely become partly aided form of the test.




12. _________ are conducted in order to overcome the limitations of

opinion research.

13. To identify target markets and to study the habits of target markets are

the various objectives of research in _________ decisions.

7.8 Marketing Audit

Marketing audit is the hottest management concept in the new millennium

and marketers are getting increasingly conscious about this, no matter small

or large sized companies. No chief or head of marketing can afford to stay

away from the up-to-date check on marketing process. The marketing audit

provides good input for a plan of action to improve a company‟s marketing

performance.

The ultimate utility or objective of conducting of Marketing Research could

really lie in conducting Marketing Audit of the organization.

The marketing audit has the following four characteristic:

1. Comprehensive: The scope of marketing audit is relatively broad as it

includes all the important marketing activities of business. In other

words, it is not at all, problem oriented always.

2. Systematic: The audit follows a specific system and it is an orderly and

well-organized scrutiny of organizations environment, objectives,

strategies, activities, systems, etc.

3. Independent: It can be conducted in different ways as follows:

Self-audit: Here, the marketing manager utilizes a checklist in order

to rate and evaluate different marketing activities or marketing

operations.

Audit from across: Here, the marketing auditing activities are

performed across the table.

Audit from above: Here the superior marketing manager in the

official hierarchy conducts the audit of different marketing activities

or marketing operations.

Audit officer of the company: Here, the officer of the company

appointed for the purpose of conducting audit, conducts the same in

respect of different marketing activities or marketing operations. This



is technically termed as „Internal Audit‟, and the auditor, here is

called as „Internal Auditor‟.

Company taskforce audit: Here, the audit is conducted by the

company taskforce, created, specially, for the purpose of conducting

audit.

Outside audit: Here, an outside agency or an organization is

employed for conducting the audit. This is technically termed as

„External Audit‟ and the auditor, here, is called as „External Auditor‟.

4. Periodic: The marketing audit is periodic that is repetitive in its nature.

The period of audit may be varied depending upon the nature and the

requirements of the sponsoring organization.

(a) Periodic audit is, naturally, always superior as compared to its

conducting as and only when there crops up a marketing problem

like:

Poor sales performance

Decline in sales

Incurring of heavy looses

(b) The scope of the marketing audit extends to:

Marketing Environment

Marketing Objectives

Marketing Strategies

Marketing Activities, etc

(c) The objectives of the marketing audit are:

i) To determine the problem areas and opportunities.

ii) To recommend a plan of action, in order to improve the

marketing performance.

Components of marketing audit

The various components of marketing audit have been identified as follows:

Marketing environment audit

Marketing strategy audit

Marketing organization audit

Marketing systems audit

Marketing function audit

Marketing productivity audit



Marketing Environment Audit: Marketing environment audit concentrates

on:

Macro environment

Demographic environment

Economic environment

Political environment

Cultural environment

Technological environment

Task environment

Markets

Customers

Competitors

Distributors

Dealers.

Marketing Strategy Audit: Marketing strategy audit focus on:

Business strategy

Business mission

Business objectives

Marketing Organization Audit: Marketing organization audit area of

concentrates on:

Organization structure

Organizational efficiency

Marketing Systems Audit: The area of marketing system audit are:

Marketing information systems

Marketing planning systems

Marketing control systems

New product development systems

Marketing Function Audit

Marketing function audit concentrates on:

Product line objectives

Pricing objectives

Distribution objectives

Advertising objectives

Sales force objectives



Marketing Productivity Audit

Marketing productivity audit concentrates on:

Cost-benefit analysis

Profitability analysis

Methodology of Marketing Audit

The auditor collects the relevant and significant data for the purpose of audit

by conducting interviews of:

Customers

Dealers

Sales representatives

Marketing executives

People from top management.

Activity 3:

According to this text marketing audit is a very hot concept in today‟s

marketing field. What you think how it is very hot? Suggest with good

example.


14. The auditor collects the _________ and _________ data for the

purpose of audit

15. Periodic audit is _________ as compared to its conducting as and only

when there crops up a marketing problem.

16. The audit follows a _________ system.

7.9 Database Marketing

Database marketing is a systematic approach to the gathering,

consolidation, and processing of consumer data (both for customers and

potential customers) that is maintained in a company's databases. Although

databases have been used for customer data in traditional marketing for a

long time, the database marketing approach is differentiated by the fact that

much more consumer data is maintained, and that the data is processed

and used in new and more sophisticated ways.

One of the most successful forms of marketing used by marketers in India

and abroad on the Internet today is database marketing. Database



marketing is essentially about sending targeted promotions to any segment

of the customer and prospect lists and measuring the value of each

individual customer and tracking the promotional efforts, measuring

responses, purchases, and the return on investment for every dollar spent

on the promotional efforts.

Database marketing has in fact for long been in the domain of the Fortune

500 companies, which spend millions of dollars on their Database marketing

efforts. But, recently, it has also become the domain of smaller

organizations with smaller budgets.

Database marketing is essentially the technique of gathering all the

information available about your customer, leads, and prospects into a

central database. This central database is then used for the information, and

it is this information then that drives all the marketing efforts.

This information collected in Database marketing is stored in a marketing

database and then can be used at both the strategic and tactical levels to

drive targeted marketing efforts.

Future of database marketing

The development of the Internet has offered enterprises a highly effective

way to gather customer information. Internet users are now perfectly

comfortable with completing electronic forms for everything from online

purchasing to setting up e-mail accounts, so the amount of consumer

information available has increased greatly.

Online advertisers now use surfing habits as a method of directing

advertising towards Internet users. Search engines such as Google serve

ads according to users' keyword searches, while vendors such as Amazon

use details of previous transactions to build a list of user-targeted

recommendations. We can expect this trend to continue until all online

activities are tracked for marketing purposes.


17. _________ is a systematic approach to the gathering, consolidation,

and processing of consumer data maintained in a company's

databases.

18. _________ use surfing habits as a method of directing advertising

towards Internet users.



7.10 Focus Group Interview

There are broadly two ways in which a group discussion can be conducted:

Brain-storming: In such a method, there is no moderator for the group,

and the group freely expresses its ideas on the given topic. The ideas

could be absolutely abstract, but then this would help in generating new

product ideas and also better ways of conducting a particular business

etc. In this, use is made of tape-recorder to record the group discussion,

video-taping of proceedings is also done in order to record the facial

expressions of the, participants, as also the intensity of their feelings.

Focussed Group Discussion: In such a method, the group is given a

topic and asked to discuss the topic. A moderator would also be

involved in order to ensure that the group 'discussion remains relevant

and does not go off the track. The moderator could stop the, discussion

between time intervals to find out what conclusions are being drawn by

the group after each time interval.

Size and composition of a group discussion panel

There is no correct size prescribed for a Group Discussion. The size of the

group depends upon (a) the subject matter under discussion. (b) the type of

participants. Normally, 8 to 12 individuals in a group discussion panel is an

ideal size. However, for highly professional and articulate people, the ideal

size is 5/6 participants in the group, as the participants would have more to

contribute to the topic under discussion.

The role of the moderator in a group discussion is to establish a rapport with

the group members. He/she also informs the members of the rules to be

followed in the group discussion. The moderator acts as a stimulus' to

provoke heated discussion in, the group, so ' that all underlying ideas,

feelings and emotions emerge. The moderator also intervenes after time

intervals, to asses the extent of agreement/disagreement with the ideas that

are emerging.

Advantages of a group discussion

Advantages of a group discussion are:

In a group discussion setting, the interaction among members acts as a

stimulant to generate new ideas, which may never be possible in an in-

depth individual interview situation.



The group discussion setting leads to spontaneity in conversation which

cannot come in individual interview situation.

The group setting is emotionally provocative the conversation may set

off the thinking process, and one would recall older memories and

conversations that may be relevant to the discussion on hand.

Disadvantages of a group discussion

Disadvantages of a group discussion are:

Qualified and trained personnel are required to conduct group

discussion.

Analysis is highly subjective.

A few members in a group could dominate the entire discussion.


19. The size of the group for group discussion depends upon the

_________ under discussion and the _________.

20. Database marketing is a systematic approach to the _________,

_________ and _________ of consumer data that is maintained in a

company's databases

7.11 Summary

Marketing research is the function that links the consumer, customer, and

public to the marketer through information – information used to identify and

define marketing opportunities and problems; generate, refine, and evaluate

marketing actions; monitor marketing performance; and improve

understanding of marketing as a process. Marketing research is a

systematic one.

Marketing research techniques come in many forms, including: Ad Tracking,

Advertising Research, Brand equity research, Brand name testing,

Commercial eye tracking research, Concept testing, Cool hunting, Buyer

decision processes research, Copy testing Customer satisfaction research,

Demand estimation, Distribution channel audits, Internet strategic

intelligence, Marketing effectiveness and analytics, Mystery Consumer or

Mystery shopping, Positioning research, Price elasticity testing, Sales

forecasting, Segmentation research, Online panel, Store audit.



Glossary

Auditing: evaluation of a person, organization, system, process, enterprise,

project or product.

Retail Audit: Study of a selected sample of retail outlets, provided as

subscription-based service by market research firms. Retail-audit service

providers gather information on a brand's sales volume, sales trends, stock

levels, effectiveness of in-store display and promotion efforts, and other

associated aspects

Consumer Panels: Sample group of consumers in a target market whose

buying behavior is believed to be representative of the entire market.

Test Marketing: to market a product or service in a limited area for a period

of time to determine the probable demand.

Advertising: The activity of attracting public attention to a product or

business, as by paid announcements in the print, broadcast, or electronic.


1. What are the highlights of national readership survey of 2006?

2. Describe traditional store audit.

3. Explain the benefits of audit technology.

4. What are test marketing and marketing audit? Also explain the

marketing audit in detail.

5. Explain database marketing.

7.13 Answers


1. Segment-wise

2. largest

3. implementation, acculturation

4. raises

5. Audit

6. key performance metrics

7. Uniform

8. less

9. reaction



10. three

11. too small or too big

12. Memory tests

13. advertising

14. relevant, significant

15. superior

16. specific

17. Database marketing

18. Online advertisers

19. subject matter, type of participants

20. gathering, consolidation, processing

Answers to Terminal questions

1. Refer to 7.2 – Discuss NRS 2006

2. Refer to 7.3.

3. Refer to 7.4 – Discuss advantages

4. Refer to 7.6 – Describe test marketing and also explain the marketing

audit in detail

5. Refer to 7.9.

Mini-case

Coca Cola established its China market organization by the help of following

functions in various departments.

Marketing department: Major functions include integrated planning of

brand and enterprise‟s image, promotion idea collection and promotion

campaign planning and relevant budget decision-making and implement

monitoring.

Operation department: Major functions include implementation of planning

and other decisions made by the management, product distribution and

channel expansion, daily transform of feedback collected from markets.

Quality control department: Major functions include all round control to

guarantee the credit of its products. For example, all products relevant to the

production of Coca Cola would be under the strict quality control system.

Those products that can pass the inspection will get certificate. Continuers

and strict control over quality has been acted through out the whole process

of production from the purchasing of raw materials to the output of final



products. It doesn‟t aim to control the rate of waster but to improve the

quality of all products.

Finance department: Control of the cash flow and storage of the products

as well as professional inspections of slots of marketing distribution channel.

Administration department: To ensure the fluency and efficiency of

communication of business, especially to keep good relationship with news

press and eliminate all the possible negative influence.

Question

How would the manager of China project come to know if the things are on

right track or not.

Hint: Discuss with respect to marketing audit.



Unit 8 Measurement and Scaling Techniques

Structure

8.1 Introduction

Objectives

8.2 Measurement of Attitude

8.3 Difficulty of Attitude Measurement

8.4 Use of Scaling in Marketing Research

8.5 Types of Scales

8.6 Criteria for Good Measurement

8.7 Summary


8.9 Answers

8.1 Introduction

In the earlier units, you came to know about the various techniques of

marketing research. In this unit you will study about the measurement and

scaling techniques.

In this unit you learn marketing research generally deals with the behaviour

of the consumers. A company which is able to sell its product/services must

be viewed by customers as pocessing a favourable attitude towards it. It is

therefore very important for the organization to understand and measure the

attitudes of its customers towards its products and services. This is because

if the customers have an unfavourable attitude or a poor image about the

company, it will not be able to sustain for a long time. It is not only essential

for the company to ensure that consumers have a favourable attitude

towards its product, but also to anticipate their future preferences.

Measuring attitude is a very difficult task because we cannot measure

product or customers but we can measures the opinion! perceptions of the

customers towards the product. In other words, attitude is inferred and not

directly observed. A study of consumer behaviour and likes and dislikes of

the customers play a very important role in understanding their perceptions

and thereby inferring their attitudes towards the product. This may be of help

in estimating how much of the product a company will be able to sell in

future.



Objectives


Explain measurement concept

Define attitude measurement

Describe various attitude measurement scales

8.2 Measurement of Attitude

The measurement of attitudes is central to many marketing situations.

Marketing programmes are based on marketing executives‟ perceptions of

consumer attitudes towards their products, what attitudes they would like

consumers to have and how they can change existing consumers‟ attitudes

to the latter.

Nature of Attitudes: An attitude is an individual‟s enduring perceptual

knowledge based evaluative and action-oriented process with respect to an

object or phenomenon.

Components of Attitudes: Attitudes are generally considered to have three

main components (i) a cognitive component of a person‟s beliefs about the

object of concern, such as its speed or durability, strength or economy, etc.

(ii) an affective component (iii) behavioural component a person‟s readiness

to respond behaviourally to the object. A person‟s emotional feelings about

the object such as like and dislike, good or bad. The tendency to bring these

three components together into something is called image.

Link between Attitudes and Behaviour: Attitudes are important in

marketing decision-making because of the assumed relationship between

attitudes and behaviour. Models which conceptualise construct of an attitude

typically represent an attitude as a series of sequential components which

leads to behaviour. The connection between attitudes and behaviour is not a

simple one. The decision-maker and the researcher should be cautious in

assuming such a relationship in a decision situation. The prediction of future

behaviour for an aggregate of buyers does appear to be higher than the

most decision situations are concerned with aggregate behaviour rather

than individual behaviour, the attitude behaviour link does have some

empirical support for any marketing decision situations. However, attitudes

have only one influence on behaviour and in a particular decision situation

other factors could be more influential than attitude.



Attitude Measurement Process: In the attitude measurement process

numbers are used to represent the marketing phenomena under

investigation. The empirical system includes marketing phenomena, such as

buyer reactions to products or advertisements. Therefore, measurement

may be defined as the assignment of numbers to characteristics of objects

or events according to rules. In effective attitude measurement, there is a

requirement of relationships existing among the objects or events, the

empirical system directly corresponds to the rules of the number system.

Numbers are being used as symbols to model the characteristics of interest

in the empirical system. The nature of the relationships existing in the

empirical system determines the type of numerical manipulations that are

valid in the abstract system.

Measurement may be defined as the assignment of numbers to

characteristics of objects, persons, state or the event itself but some

characteristic of it. When objectives are counted, for example, we do not

measure the object itself but only its characteristic of being present. We

never measure people, only their age, height, weight, or some other

characteristic. A study to determine whether a higher percentage of males

or females purchases a given product measures the male-female and

purchase-nonpurchaser attribute of the persons sampled.

The most critical aspect of measurement is the creation of the rules that

specify how the numbers are to be assigned to the characteristics to be

measured. Once a measurement rule has been created and agreed on, the

characteristics of events, persons, states or objects are described in terms

of it.


1. An _________ is an individual‟s enduring perceptual knowledge based

evaluative and action-oriented process with respect to an object or

phenomenon.

2. _________ may be defined as the assignment of numbers to

characteristics of objects, persons, state or the event itself but some

characteristic of it.



8.3 Difficulty of Attitude Measurement

As we know the measurement of weight, length and height is an easy task

involving the use of a ratio scale. The natural zero point and equality of

differences are obvious. This type of measurement situation is more

characteristic of the physical sciences than the social sciences, marketing

being one of them. Consequently, the task of measurement in marketing is

typically more difficult and involves lower scales of measurement than those

found in the physical sciences. The following Table 8.1 shows the

comparison:

Table 8.1: Difficulty of the Measurement Process

Length Preference Happiness

Weight Attitudes Creativity

Easy Difficult Very difficult

Ratio Internal Nominal/ordinal

Scale Scale Scale

Measurement Accuracy: A measurement is a number designed to reflect a

characteristic of an individual, object, or event. However, it is just an

observation or picture of the characteristics of interest.

The terms validity, reliability and measurement accuracy are often used

interchangeably. The term reliability is used to refer to the degree of variable

error in a measurement. We define reliability as the extent to which a

measurement is free of variable errors.

Approaches to assessing reliability:

Test-retest reliability: Applying the same measure to the same objects

a second time.

Alternative-forms reliability: Measuring the same objects by two

instruments that are designed to be as nearly alike as possible.

Internal-comparison reliability: Comparing the responses among the

various items on a multiple-item item designed to measure a

homogenous concept.

Scorer reliability: Comparing the scores assigned to the same

qualitative material by two or more judges.



Measurement Development: Suppose you need to develop a

measurement for a particular concept such as brand image, customer

satisfaction or opinion leadership. The following steps are considered.

Figure 8.1: Methodology for Developing Sound Marketing Measures

Activity 1:

Reliability is the extent to which scale is free from errors. Explain.


3. The task of measurement in marketing involves _____________ scales

of measurement than those found in the physical sciences.

4. ____________ refers to the degree of variable error in a measurement.

5. _________ reliability refers to applying the same measure to the same

objects a second time.

8.4 Use of Scaling in Marketing Research

Attitude can be defined as the mental state of a consumer which

predisposes him/her to respond in a certain way to a given stimulus. In

marketing this can be perceived as a consumer‟s predisposition to respond

to a product or service.



Marketing segmentation strategy is based on attitudinal segmentation. In

measuring the effectiveness of advertising, attitude measurement plays a

important role.

Scaling refers to the process of measuring of attitudes. Depending upon the

types of attitude, the following appropriate scales are designed:

Figure 8.2


6. ____________ refers to the process of measuring of attitudes.

7. Marketing segmentation strategy is based on ______________.

8.5 Types of Scales

Types of attitude rating scales

There are many ways to present a respondent with a continuum of

numbered categories that represent the range of possible attitude

judgments. The figure 8.3 shows various types of scales which are used in

research.

Figure 8.3: Types of Scale



Single-item scale

As the name itself suggests, single-item scales are those that have only one

item to measure a conduct. Under the single-item scale, the itemized-

category scale is most widely used by researchers.

Itemised-category scales

These are four categories from which respondents can choose to indicate

their overall level of satisfaction with their present banking facilities.

Very satisfied

Quite satisfied

Somewhat satisfied

Not at all satisfied

The itemised scales are also known as satisfaction scales with following

characteristics.

All categories are labelled.

The respondent is forced to make a choice.

There is no explicit comparison of the respondents.

A numerical scaling of the response categories form +2 to –2, as presented

in the following chart.

Comparative scales

Another version of the preceding scale would label the categories “excellent”

“very good” “good” “fair” and “poor” thereby eliminating the implicit

comparison. The problem with a comparative scale is that the reference

point is unclear and different respondents may use different reference points

or standards.

For example: Comparison of public school in an area with government

school in terms of quality of education.

Very superior Neither superior nor inferior Very inferior

Rank orders ordinal scale

Ordinal scales represent numbers, letters or other symbols used to rank

items. It can be classified not only on the basis of whether they share some

characteristic with another item but also whether they have more or less of



this characteristic than some other object. The ranking of certain

attributes/benefits as deemed important by the respondent is obtained

through this scale.

Example: Rank the following attributes on a scale of 1-5 according to their

importance to a washing machine.

A. Company image

B. Functions

C. Price

D. Comfort

E. Design

Suppose that the attribute ratings received from a sample of 100 washing

machine owners are as follows:

Attribute rating Number of respondents giving rating

1 40

2 60

3 40

4 30

5 30

A mode or a median may be used. The model– attribute rating is „2‟, as it is

for the median. A mean should not be calculated because the differences

between ordinal scaled values are not necessarily the same.

Q-sort scaling

When the number of objects or characteristics that are to be rated or ranked

is very large, it becomes rather tedious for the respondents to rank order or

do a pair wise comparison.

If the respondent is forced to do a rank ordering or a pair wise comparison,

a number of problems and biases creep into the study. In Q-sort scaling the

respondents are asked to sort the various characteristics or objects that are

being categorised into various groups, such that the distribution of the

numbers of objects or characteristics in each group follows a normal

distribution.

Constant-sum scales

Constant-Sum scales require respondents to allocate a fixed number of

rating points among several objects, to reflect the relative preference of



each object. It is widely used to measure the relative importance of

attributes, as in the following example:

Please divide 100 among the following characteristics so the division

reflects the importance of each characteristic to you in the selection of a

management institute.

Placement __________________

Faculty __________________

Location __________________

Computer Centre __________________

Library __________________

Interval scale

Interval scale represents numbers used to rank items such that numerically

equal distances on the scale represent equal distances in the property being

measured. It involves qualitative description of number of aspects of a

product or traits of a person.

Example: How do you rate your present washing machine on the following

qualities?

A Product design Poor 1 2 3 4 5 Good

B Brand name Lesser known 1 2 3 4 5 Well known

C Price Low 1 2 3 4 5 High

D After sales services very dissatisfied 1 2 3 4 5 Very satisfied

Ratio scale

Ratio scales consist of numbers that rank items such that numerically equal

distances on the scale represent equal distances in the property being

measured and have a meaningful zero. All descriptive measures and

inferential techniques are applicable to ratio scaled data. Table 8.2 Gives a

Summary Description of each of the Four Types of Scales

Table 8.2: Types of Measurement Scales

Basic Empirical Typical Statistics

Scale Inferential

Operations Typical Usage Descriptive

Nominal Determination of equality

Classification: male-female, purchaser non-purchaser, social class

Percentages, mode

Chi-square, binomial test



Ordinal Determination greater or less

Rankings: Preference data, market position attitude measures, many psychological measures

Median Mean-Whitney U, Friedman two-way ANOVA, rank order

Interval Determination of equality of intervals about brands

Index numbers, attitude measures, level of knowledge

Mean, range, standard deviation

Product moment correlation, t-test, factor analyse ANOVA

Ratio Determination of equality of ratios

Sales, units produced, number of customers costs

Coefficient of variation

Source: Adapted from S S Stevens, “On the Theory of Scales of Measurement,”

Science, June 7, 1946, pp. 677-680.

Specialised scales

The judgements are against other similar objects. The respondents directly

compare two or more objects and may choose among them.

Methods of ranking scales are as follows:

Method of paired comparison

When there are more stimuli to judge, the number of judgements required in

paired comparison is given as:

n(n –1)N=

2

N = number of judgements

n = number of stimuli or objects to be judged

Limitations

If N becomes a big figure, there is a risk of respondents giving all

considered answers or no answer at all. Paired comparisons provide ordinal

data. We can reduce the number of comparisons by choosing a few objects

which cover the range of attractiveness at equal intervals.

Law of comparative judgement by L L Thurstone

It involves converting the frequencies of preferences into a table of

proportions. This is then transformed to z matrix by referring to the table of

area under the curve.



Response patterns of paired comparison of different chocolate brands.

Dairy Milk Five Star Kit-Kat Perk Amul

Dairy Milk

Five Star

Kit-Kat

Perk

Amul

Total

Rank Order

In the above example, there are five brands so the number of comparisons

to be made should be 10 which will be as follows:

Dairy Milk vs Five Star

Dairy Milk vs Kit-kat

Dairy Milk vs Perk

Dairy Milk vs Amul

Five Star vs Kit-kat

Five Star vs Perk

Five Star vs Amul

Kit Kat vs Perk

Kit Kat vs Amul

Perk vs Amul

The strength of the paired comparison approach is the ease with which the

respondents compare only two brands/attributes at a time. And, the

weakness of paired comparison rating scale is the rapid increase in the

number of comparisons to be made in quick succession.

Composite standard method

The following steps are used in composite standard method:

Step 1: Comparing the total number of proposals or preferences for

each.

Step 2: Using the data, column mean can be calculated by using the

following formula.

MP = C + 0.5(N)

n(N)

Mp = the mean proportion of columns



C = Total number of choices for a given suggestion

N = Number of stimuli

N = Number of items in the sample

Step 3: When the Mp < 0.5, z is negative, where Mp > 0.5, z is positive,

z for Mp is secured from area under the curve.

Step 4: z represents an interval scale, zero is an arbitrary value.

Hence, negative value is eliminated considering zero is the

lowest.

Graphically it can be represented as

Example: Figures for Top Ten national advertisers are given as a per cent

of sales.

Top Ten MNC Advertisers

Rank Company Advt. as a ranking % of sales United State

1. Procter & Gamble 13.8 II

2. Pepsi Co. 6.0 IV

3. McDonald‟s 18.7 I

4. Ford 1.1 V

5. Eastman (Kodak) 6.1 III

Arbitrary scales

They are developed on an adhoc basis and are designed largely through the

researcher‟s own subjective selection of items. The researcher first collects

a few statements or items which he believes are unambiguous and

appropriate to a given topic, then a few of them are selected for inclusion in

the measuring instrument. People are then asked to check the list for the

statement on which they agree.

Merits

They can be developed very easily and quickly and are relatively less

expensive.

Designed to be highly specific and adequate.



Limitations

We do not have objective evidence that such scales measure the

concepts for which they have been developed.

We have to rely on the researcher‟s insight and competence.

Example of an arbitrary scale

Keeping in mind the conditions of Delhi roads owning a luxury, high-cost

brand car is:

1. A necessity

2. To satisfy self-esteem

3. For comfort

4. A status symbol

5. A prevention against road accidents

Differential scales – Thurstone-type scales

They are developed using consensus scale approach, where the selection

of items is made by a panel of judges who evaluate the items in terms of

whether they are relevant to that topic area and unambiguous in implication.

It is used to measure attitudes towards various issues like war, religion, etc.

Merits

These type of scales are most appropriate and reliable when used to

measure a single attitude.

Limitations

More cost and effort is required.

Values assigned to various statements by the judges may reflect their

own attitudes.

This method is more subjective then objective.

Summated scales (Likert type scales)

They are developed by utilising the item analysis approach wherein a

particular item is evaluated on the basis of how well it discriminates between

those persons whose total score is high and those whose score is low.

Thus, summated scales consist of a number of statements which express

either a favourable or unfavourable attitude towards a given object to which

the respondent is asked to react. The respondent indicates his agreement or

disagreement with each statement in the instrument. Each response is given



a numerical scale/score and these scores are totalled to measure the

respondent‟s attitudes.

Most frequently used summated scales in the study of social attitudes

follow the pattern devised by Likert. The respondent may respond in any

one of the following ways:

i) Strongly Agree

ii) Agree

iii) Undecided

iv) Disagree

v) Strongly disagree

Advantages

1. Easy to construct and reliable. It also provides more information and

data.

2. Each statement included in the Likert type scale is given an empirical

test for discriminating ability.

3. It permits the use of statements that are not manifestly related to the

attitude being studied.

4. Such a scale can easily be used in respondent-centred and stimulus-

centred studies.

5. It takes less time to construct.

Limitations

1. We can simply examine whether respondents are more or less

favourable to that topic, but we cannot tell how much more or less they

are.

2. No basis for belief that the five positions are equally spaced. This

means that the Likert scale does not rise to a stature more than that of

an Ordinal scale.

3. There remains a possibility that people may answer according to what

they think they should feel rather than how they feel.

Cumulative scales

It consists of a series of statements to which a respondent expresses his

agreement or disagreement. These statements form a cumulative series,



i.e., they are related to one another in such a way that an individual who

replies favourably to say item no. 3 also replies favourably to items no. 2

and 1 and so on. The individual‟s score is worked out by counting the

number of points concerning the number of statements he answers

favourably. If one knows the total score one can estimate as to how a

respondent has answered individual statements constituting cumulative

scales.

Advantages

1. It assures that only a single dimension of attitude is being measured.

2. Researcher‟s subjective judgement is not allowed to influence the

development of scale since the scale is determined by the replies of

respondents.

Limitations

1. In practice perfect cumulative or undimensional scales are very rarely

found and we have only to use its approximation, testing it through

coefficient of reproducibility.

2. Its development procedure is tedious and complex.

An Example of cumulative scale

Item Name

Esteem Cielo Opel Ford/Score

Escort/ Respondent

1. Which is the most luxurious car

– – – – 2

2. Which car provides you best comfort

x x × x 4

3. Which car gives best mileage

× × – x 3

4. Which is the most expensive car

– – – x 1

5. Which is an economic luxury car

x x – – 2

6. Which car has best service outlets

x x – – 2

Stapel scale

It is a modification of the differential scale. It differs from the semantic

differential scale in that the adjectives or descriptive phrases are tested



separately instead of simultaneously as bipolar pairs. Also, the points on the

scale are identified by number as these are ten scale positions rather than

five or seven as in the required manner.

Please rate AIR India on the following dimensions:

Fractionation Rating Scale: It requires the raters to rate an object by

comparing it with reference point. The goal is a ratio-scale representation of

attitudes toward the complete set of objects. An example is presented

below:

Please divide 100 points among the following TV brands so as to reflect how

much overall quality you believe each one has:

BPL __________________ points

SAMSUNG __________________ points

Fishbein’s Scale: This scale uses a combination of constant sum and

semantic differential scale. To assess, how consumers perceive a set of

alternative offerings, this type of scale is used. Here the respondent is first

asked to assign a weightage to a set of given attributes. Afterwards the

respondent is given some specific choice alternatives. For example,

suppose a research study was assessing consumers‟ attitude towards five

leading brands of decorative points in terms of the attributes like durability,

washability, finish, range of package size, range of colour, price, etc.

Fishben scale is found useful in problems such as comparing brand image

and advertising designs.

Multi-dimensional scaling

It is a complicated scaling device. But with this we can scale objects,

individuals or both with a minimum of information. MDS can be

characterised as a set of procedures for portraying perceptual or effective



dimensions of substantive interest. It is used when all the variables (metric

or non-metric) in a study are to be analysed simultaneously and all such

variables happen to be independent.

Assumptions

“0 people” perceive a set of objects as being more or less similar to one

another on a number of dimensions instead of one.

These techniques attempt to locate the points, given the information

about a set of interpoint distances, in space of one or more dimensions

such as to best summarise the information contained in the interpoint

distances.

An example of MDS

An example of consumer perception of similarities of selected cars on two

dimensions.

Uses of multi-dimensional scaling

1. Market segmentation

2. Product life cycle

3. Vendor evaluations

4. Advertising media selection

Limitations of multi-dimensional scaling

1. Conceptual problems

2. Empirical problems

3. Computational problems



Semantic differential scaling

It is developed by Charles. E. Osgood. G.J. Suci and P.H. Tennenbnum

(1957) is an attempt to measure the psychological meaning of an object to

an individual. For instance, the S.D. scale items for analysing candidates for

leadership position may be shown as under.

Figure 8.4

Disguised, structured, scaling techniques

For the disguised structured scaling method of data collection, certain

projective techniques are used. The popular projective techniques used are

(i) Word Association, (ii) Sentence Completion, (iii) Thematic Apperception

Test (TAT), (iv) Story-telling, (v) Body-building/House-building.

A. Word association

Description: A series of situation/words is given to the respondents and

they are asked to fill up the first word/brand which comes to their mind.

It is interesting for the respondent to fill up the various word associations. It

is also quick and easily understood.

Example:

1. DOVE: LOVE

2. Which brand of cooking oil comes to your mind when speaking of a light

and nutritious sunflower oil?

3. Who do you think is most likely to use the Bajaj Sunny?

a. A decent college-going student

b. A family man

c. A middle-aged executive

d. A robust youngster



B. Sentence completion

Description: The respondent is given a number of sentences and asked to

complete them. The profile of the respondent as well as his attitude towards

certain feelings can be approximated. The responses can be varied and

difficult to analyse. The respondent might require more time to fill up the

sentences.

Example: If the Times Group is interested in developing a profile of its FM

radio listeners of its Time Style programme by asking viewers to check

whether there exist any differences between the two, it can administer the

following sentences to the respondents.

A person listening to Times FM radio regularly is __________________.

Time Style viewership will definitely consist of people belonging to

__________________.

C. Thematic Apperception Test

Description: Pictures, instead of, words are used in this technique. A series

of pictures are shown to the respondent who may be asked to compare

them or answer questions on them. The innermost attitudes of the

respondents can get reflected, if the technique is properly administered. It is,

however, difficult to interpret the responses at times.

Example: Two typical housewives may be shown. A simple, traditional

housewife and a modern working woman. The question could be: Who do

you think is most likely to use instant mixes for cakes?

D. Story-telling

Description: A situation is described to the respondent who is asked to

complete the story based on his opinion and attitude. This technique holds

the interest of the respondent but its results may be difficult to interpret as

the responses would be varied. However, it is extensively used to tap any

creative responses which can be put to use.



Example: Two children are quarrelling at the breakfast table just before

going to school. The younger child has dropped some tomato ketchup on

her brother‟s shirt which he has to wear on the same day for the annual

sports day. What will the mother do?

E. House-building/Body-building

Description: The important values for a brand are given to the consumer

and he is asked to sort the values such that they can be used to construct a

house or build a body. The core values of the brand might form the

foundation of the house or the heart of the body. The packaging or the after-

sales services might be viewed as the arms/feet or windows as the case

may be.

The respondent may not be able to complete the house/body in case the

brand has few values. A strong brand, on the other hand, results in a

stronger body/house.

Also a situation may be described to the respondent to assess the value of

the brand most prone to attack from competition by asking questions like:

If the body meets with an accident, which parts would survive and which

would get severely damaged and which would escape with small cuts

and wounds?



General guidelines for developing a multiple-item scale

Multiple-item scales often are widely used in social sciences research to

measure abstract constructs. The characteristic that is to be measured is

generally referred to as the construct. The following steps are used in

construction of a scale.

Activity 2:

Identify the type of scale, you will use in each of the following (ordinal,

nominal, internal, ratio). Justify your answer.


8. The merit of ___________ scales is that these type of scales are most

appropriate and reliable when used to measure a single attitude.

9. _____________ scales consist of a number of statements which

express either a favourable or unfavourable attitude towards a given

object to which the respondent is asked to react.

10. ____________ Scale requires the raters to rate an object by

comparing it with reference point.

8.6 Criteria for Good Measurement

The adequacy of scale is judged in a way as to have measurement of

acceptable quality. The overall usefulness or the scale depends upon its

validity, reliability and sensitivity.

Validity

A-scale is said to be valid if it measures correctly what it is expected to

measure. As we know attitudes are multifaceted, therefore single item

scales are usually deficient on this criterion. In other words an attitude scale

is valid only when it is real – and correct: There are several different types of

validity and these are:

Content validity

Construct validity

Predictive validity

Content validity: This is also known as face validity. Here the contents of

an attitude scale should cover all relevant facets of an issue which influence

respondent's attitude. Suppose we have a-scale to measure job satisfaction

of employees in, an organization. The scale, covers various dimensions like



nature of work, pay, security and superior. The scale, however, lacks in

content validity as it does not cover an important dimension like company

policies and practices. This could happen because what dimensions to be

included in a scale would depend on the judgement of the researcher which

is likely to vary from individual to individual. Therefore, in order to avoid this,

it would be better to approach a group of knowledgeable persons rather

than leaving to one person.

Construct validity: It is known that it is not possible to measure attitude

directly. It is inferred indirectly from the responses given by the respondents.

Construct validity involves understanding the theoretical rationale underlying

the obtained measurements. The content validity of an attitude can be

assessed quantitatively by finding its correlation with measures of other

constructs that one would expect to be strongly associated with the attitude

and measures of constructs that would not be correlated to the attitude.

Strong correlation of attitude with the construct is an example of convergent

validity whereas low correlation of attitude with the construct is an example

of discriminating validity. A scale with construct validity should have both

convergent and discriminating validity.

Predictive validity: It involves the ability of a measured market

phenomenon at one point of time to predict successfully another market

phenomenon at another point of time. If the correlation between two is high,

the initial measure is said to have a high predictive, validity. An opinion

questionnaire which forms the basis for correctly forecasting, the demand

for product has high predictive validity.

Reliability: A scale is said to be reliable when it gives the same

measurement under similar condition. If a scale makes equal error every

time, it would be reliable. However such a scale cannot be valid as we know

that the validity depends upon correct measurement. Reliability is achieved

when the scale is free from erratic measurements. The following two

methods are used for testing reliability.

Test-retest Reliability: It is concerned with how stable the ratings are when

the scale is administered to the same group of persons at two different

points of time. If there is a high correlation between two sets of scores

(consistency), the test-retest reliability is very high.



Split-half Reliability: It can be assessed only for multiple-item scales. Here

the scale items are split randomly into two equal parts. At times splitting may

be done by putting even number of items on one side and odd number on

the other side.

The correlation coefficient between respondents' total score derived from

two sets of items is computed. A high degree of correlation indicates a high

split-halt reliability of the scale.

Predicate Validity: The predicate validity of a scale is closely related to its

reliability. It is the ability of a scale to be able to discriminate between

respondents who differ even slightly in terms of their attitude toward

something. An essential of a rating scale is that it should have a sufficient

range of numbers to help detection of fine variations in attitude.


11. ___________ Reliability can be assessed only for multiple-item scales.

12. The ____________ validity of a scale is the ability of a scale to be able

to discriminate between respondents who differ even slightly in terms of

their attitude toward something.

8.7 Summary

Measurement involves the use of numbers to represent the marketing

phenomenon under investigation. The direct measurement of attitude is a

very difficult task. It can only be inferred indirectly from the responses of the

respondent. Attitude comprises of three components viz a cognitive

component, an affective component and a behavioural component. For

marketing decisions the attitude behaviour relationship relates to measuring

of cognitive and affective components so as to be able to predict future

behaviour.

There are four types of scales used in marketing research to infer attitude

towards a particular product/service. There are Nominal, Ordinal, Interval

and Ratio scale. The most powerful among them is ratio scale

measurement. A study of these scales is important in the sense that the

method of analysis for data depends upon the type of measurement used to

measure it.

The rating scale may take various physical forms. They could be presented

in graphic and itemized formats, comparative and non-comparative formats,



forced and non-forced response formats, balanced and tin-balanced

formats, constant sum rating format, paired comparison rating format and

ordinal scale format.

Glossary

Measurement: involves the use of numbers to represent the marketing

phenomenon under investigation.

Attitude: an individual‟s enduring perceptual knowledge based evaluative

and action-oriented process with respect to an object or phenomenon

Reliability: The probability that a component part, equipment, or system will

satisfactorily perform its intended.


1. Describe the link between attitude and behaviour.

2. What are the difficulties of attitude measurement?

3. Describe comparative scale in attitude measurement.

4. Explain multidimensional scaling.

5. What are the criteria behind for choosing good measurement?

8.9 Answers


1. attitude

2. Measurement

3. lower

4. Reliability

5. Test-retest

6. Scaling

7. attitudinal segmentation

8. differential

9. Summated

10. Fractionation Rating

11. Split-halt

12. predicate


1. Refer to 8.2 – Base your answer on the definition of attitude.

2. Refer to 8.3 – Discuss limitations and constraints



3. Refer to 8.5.

4. Refer to 8.5

5. Refer to 8.6.

Mini-case

Neckties have been in vogue in India for several decades. Prior to the 60s

neckties were imported from France or England and a couple of other

countries. It was Zodiac that gave the necessary impetus to the domestic tie

industry in the 70s. This was followed by a firm in Bombay called „designers

tie‟, a private limited manufacturing company in 1971. The ties were sold

under the name „fashion‟, which later took the name „Prestige‟. Designer ties

remained the only well-known players specializing in neck wear, other

companies manufacturing tie, treat the tie as an additional item in men‟s

wear market.

Today, the market for ties is flooded with a number of brands such as

Zodiac, Park Avenue, etc. Prestige tie was facing stiff competition from new

entrants from the US, Japan, etc. Customers‟ tastes seemed to be shifting

from domestic to foreign brands. The government was allowing imports

freely due to liberalization and the market was flooded. This import policy

likely to gain further momentum due to entry of many foreign retailers.

These retailers treat the tie as a part of an important dress item. This has

further added value to the product, with more choice to customers. Apart

from the discouraging trend domestic tie, there was another unfavourable

trend in recent times, the onslaught of denim wear and casual wear resulting

in the reduced usage of ties.

Prestige is now seriously thinking of sponsoring a comprehensive study on

the necktie market in India. It would like the proposed study to enlighten it

on the consumer profile, its image of local brand vis-a-vis other brands to

the various segments in the tie market. The company would like the study to

lay great emphasis on market segmentation.

Question

You have been approached by the company for the proposed study. How

would you proceed with it, keeping in mind three major issues pointed out by

Prestige?

Hint: Define the problem and then move ahead with determining various

measurement and scaling techniques.



Unit 9 Sampling

Structure

9.1 Introduction

Objectives

9.2 Census vs Sampling

9.3 Sampling Terms

9.4 Sampling Process

9.5 Features of Sampling Method

9.6 Limitations of Sampling

9.7 Characteristics of Ideal Sample

9.8 Types of Sample Design

Probability Sampling Techniques

Non-probability Sampling Techniques

Distinction between Probability and Non-probability Sample

9.9 Sampling Size Decision

9.10 Sample Size

9.11 Approaches to Determination of Sample Size

9.12 Types of Sampling Errors

Measurement of Errors

Biased and Unbiased Errors

9.13 Summary


9.15 Answers

9.1 Introduction

In the earlier units, you came to know about the research techniques and

scaling measurement of consumer. In this unit you will study about the

sampling concept.

In this unit you learn how sampling plays a vital role in carrying out any

marketing research study. There would be hardly any marketing research

study which does not involve the use of sampling. It is the backbone of

marketing research. A company selling a particular brand of toothpaste and

interested in knowing what proportion of households in Delhi use its brand

would involve the selection of samples of households. A market potential

study aiming at finding the numbers, distribution and socio-economic



characteristics of potential customers 'of a product would definetly involve

the selection of some kind of sample. A company interested in introducing a

new style of packaging for its product would be interested in knowing the

reactions of its customers a study of which would require the selection of

some type of sample.

Objectives


Explain sampling

Define various sampling terms

Describe sampling process

Analyze sample size

Explain various type of errors

9.2 Census vs Sampling

Census refers to complete inclusion of all elements in the population. A

sample is a sub-group of the population.

When is a census appropriate?

A census is appropriate if the size of population is small. For example, A

researcher may be interested in contacting firms in iron and steel or

petroleum products industry. These industries are limited in number, so

a census will be suitable.

Sometimes, the researcher is interested in gathering information from

every individual.

Example: Quality of food served in a mess.

When is sample appropriate?

When the size of population is large.

When time and cost are the main considerations in research.

If the population is homogeneous.

Also, there are circumstances when a census is not possible. Example:

Reactions to global advertising by a company.


1. _________ refers to complete inclusion of all elements in the population.

2. Sample is appropriate when the size of population is _______________



9.3 Sampling Terms

The sampling terms are:

Element

Population

Sampling units

Sampling frame

Study population

Element: An element is the unit about which information is collected. This

provides the basis for analysis according to a well defined procedure. It is

important that these should be well defined and it is possible to identify them

physically.

Population: Population or universe is the aggregate of all elements

possessing certain specified characteristics which the researcher wishes to

study and defined prior to the selection of sample. A properly designated

population must be defined in terms of elements, sampling units, extent and

time.

For example

A survey of consumers might specify the relevant population as:

Element: Males 35-40

Sampling Unit: Males 35-40

Extent: Delhi

Time: March 10-April 30, 1990

Sampling Units: A sampling unit is that element or elements considered

available for selection in some stage of the sampling process. In single

stage sampling, sampling units and the elements are same. For instance, in

our first example of specifying the population (see example above), both

sampling units and elements were "males 35-40". This is an example of

direct single stage sampling process as the sample of males 35-40 is

selected directly.

Sampling Frame: It is a list of all sampling units belonging to the population

to be studied with their proper identification and available for selection at a

stage of sampling process. In fact, the actual sample is drawn from the

sampling frame. Usually the availability of sampling frame defines the

population. Each stage of sampling process requires – its own sampling



frame. For instance, in three stage sampling process, we would need three

sampling frames. These are (1) a list of tehsils (2) a list of villages under the

selected tehsils (3) a list of households within the selected villages.

Study Population: A study population is the aggregation of elements from

which the sample is actually drawn. You might recall that previously

population was defined “as the aggregate of elements prior to the selection

of sample". Because of certain unavoidable problems, the actual sample is

selected from somewhat different population from the one defined prior to

the selection of sample. This is because it is very seldom that every element

which satisfies our definition of a population actually has a chance of being

selected. Our list may be incomplete as some elements are likely to be

omitted from a list of population because of certain reasons such as some

people may have unlisted phone numbers, a. map may not include a new

street, a list of registered voters may be incomplete.


3. A __________ is the aggregation of elements from which the sample is

actually drawn.

4. In single stage sampling _________ and the ___________ are same.

9.4 Sampling Process

Sampling process consists of seven steps. They are:

Step 1: Define the population

Population is defined in terms of:

Elements

Sampling units

Extent

Time.

Example: If we are monitoring the sale of a new product recently introduced

by a company, say (shampoo sachet) the population will be:

Element – Company’s product

Sampling unit – Retail outlet, super market

Extent – Hyderabad and Secunderabad

Time – April 10 to May 10, 2006.



Figure 9.1: Sampling Process

Step 2: Identify the sampling frame

Sampling frame could be (a) Telephone Directory (b) Localities of a city

using the municipal corporation listing (c) Any other list consisting of all

sampling units.

Step 3: Specify the sampling unit

Individuals who are to be contacted are the sampling units. If retailers are to

be contacted in a locality, they are the sampling units.

Step 4: Selection of sampling method

This refers to whether (a) probability or (b) non-probability methods are

used.

Step 5: Determine the sample size

This means we need to decide “how many elements of the target population

are to be chosen?” The sample size depends upon the type of study that is

being conducted. For example, If it is an exploratory research, the sample

size will be generally small. The sample size also depends upon the

resources available with the company. It depends on the accuracy required

in the study and the permissible errors allowed.



Step 6: Specify the sampling plan

A sampling plan should clearly specify the target population. Improper

defining would lead to wrong data collection.

Example: This means that, if a survey of a household is to be conducted, a

sampling plan should define a “household” i.e., “Does the household consist

of husband or wife or both”, minors etc., “Who should be included or

excluded”.

Step 7: Select the sample

This is the final step in the sampling process. Based on the above

parameters sample respondents may be selected to collect the data for the

purpose of research.

Activity 1:

One mobile phone user is asked to recruit another mobile phone

user. What sampling method is this known as and why?


5. A ____________ is the element considered available for selection in

some stage of the sampling process.

6. ___________ and ____________ methods are two sampling methods.

7. The final step in the sampling process is ____________

9.5 Features of Sampling Method

The sampling technique has following good features and these highlight its

value and significance.

Economy: The sampling technique is less expensive, much less time-

consuming than the census technique.

Reliability: If the choice of sample units is made with due care and the

matter under survey is not heterogeneous, the conclusion of the sample

survey can have almost the same reliability as that of census survey.

Detailed Study: Since the number of sample units is fairly small these

can be studied intensively and elaborately and can be examined from

multiple viewpoints.

Scientific Base: This is a scientific technique because the conclusions

derived from the study of certain units can be verified from other units.



By taking random samples we can determine the amount of deviation

from the norm.

Greater Suitability in most Situations: Most of the surveys are made

by the technique of sample survey, because when the matter is of a

homogeneous nature, the examination of a few units suffices as is the

case in the majority of situations.


8. The sampling technique is ___________ expensive, much _________

time-consuming than the census technique

9. Most of the surveys are made by the technique of ____________

9.6 Limitations of Sampling

The limitations of sampling are:

Less Accuracy: In comparison to census technique the conclusions

derived from sample are more liable to error. Therefore, sampling

technique is less accurate than the census technique.

Changeability of Units: If the units in the field of survey are liable to

change or if these are not homogeneous, the sampling technique will be

very hazardous. It is not scientific to extend the conclusions derived from

one set of sample to other sets which are dissimilar or are changeable.

Misleading Conclusions: If due care is not taken in the selection of

samples or if they are arbitrarily selected, the conclusions derived from

them will become misleading if extended to all units. For example, in

assessing the monthly expenditure of university students we select for

sample study only rich students, our results will be highly erroneous if

extended to all students.

Need for Specialised Knowledge: The sample technique can be

successful only if a competent and able scientist makes the selection. If

this is done by an average scientist, the selection is liable to be wrong.

When Sampling is not Possible: Under certain circumstances it is very

difficult to use the sampling technique. If the time is very short and it is

not possible to make selection of the sample, the technique cannot be

used. Besides, if we need 100% accuracy the sampling technique

cannot be used. It can also not be used if the material is of a

heterogeneous nature.




10. In comparison to census technique the conclusions derived from sample

are __________ liable to error.

11. If the units in the field of survey are liable to change or if these are

__________, the sampling technique will be very hazardous.

9.7 Characteristics of Ideal Sample

A good sample has following qualities:

Representativeness: An ideal sample must be such that it represents

adequately the whole populations. We would select those units which

have the same set of qualities and features as are found in the whole

data. It should not lack in any characteristic of the population.

Independence: The second feature of a sample is independence, that

is interchangeability of units. Every unit should be available to be

included in the sample.

Adequacy: The number of units included in a sample should be

sufficient to enable derivation of conclusions applicable to the whole

population. A sample having 10% of the whole population is generally

adequate.

Homogeneity: The units included in the sample must bear likeness with

order units, otherwise the sample will be unscientific.


12. An ideal sample must be such that it represents adequately the

_________.

13. The number of units included in a sample should be sufficient to enable

__________ applicable to the whole population.

9.8 Types of Sample Design

Sampling design may be classified into two types i.e., probability sampling

and non-probability sampling.

Probability sampling: In a probability sample, every unit in the population

has equal chances for being selected as a sample unit.

Non-probability sampling: In the non-probability sampling, the units in the

population have unequal or negligible, almost no chances for being selected

as a sample unit.



9.8.1 Probability sampling techniques

1. Random sampling

2. Systematic sampling

3. Stratified random sampling

4. Cluster sampling

5. Multistage sampling

6. Area sampling

Random sampling

Simple random sample is a process in which every item of the population

has an equal probability of being chosen.

There are two methods used in the random sampling:

1. Lottery method

2. Using random number table.

1. Lottery method: Take a population containing four departmental stores:

A, B, C and D. Suppose we need to pick a sample of two stores from the

population using a simple random procedure. We write down all possible

samples of two. Six different combinations, each containing two stores

from the population, are AB, AD, AC, BC, BD, CD. We can now write

down six sample combination on six identical pieces of paper, fold the

piece of paper so that they cannot be distinguished. Put them in a box.

Mix them and pull one at random. This procedure is the lottery method

of making a random selection.

2. Using random number Table: A random number table consists of a

group of digits that are arranged in random order, i.e., any row, column,

or diagonal in such a table contains digits that are not in any systematic

order. There are three tables for random numbers (a) Tippet’s table (b)

Fisher and Yate’s Table (c) Kendall and Raington Table.

The table for random number is as follows:

40743 39672

80833 18496

10743 39431

88103 23016

53946 43761

31230 41212

24323 18054



Systematic random sampling

There are three steps:

1. Sampling interval K is determined by the following formula:

K = populationtheinunitsof.No

populationtheinunitsof.No

2. One unit between the first and Kth unit in the population list is randomly

chosen.

3. Add Kth unit to the randomly chosen number.

Example: Consider 1,000 households from which we want to select 50

units.

Calculate K = 2050

1000

To select the first unit, we randomly pick one number between 1 to 20, say

17. So our sample begins with 17, 37, 57………….. Please note that only

the first item was randomly selected. The rest are systematically selected.

This is a very popular method because we need only one random number.

Stratified random sampling

A probability sampling procedure in which simple random sub-samples are

drawn from within different strata, that are, more or less equal on some

characteristics. Stratified sampling are of two types:

1. Proportionate stratified sampling: The number of sampling units

drawn from each stratum is in proportion to the population size of that

stratum.

2. Disproportionate stratified sampling: The number of sampling units

drawn from each stratum is based on the analytical consideration, but

not in proportion to the size of the population of that stratum.

Sampling process is as follows:

1. The population to be sampled is divided into groups (stratified).

2. A simple random sample is chosen.

Cluster sampling

The following steps are followed.

1. The population is divided into clusters.

2. A simple random sample of few clusters is selected.

3. All the units in the selected cluster are studied.



Step 1: The above mentioned cluster sampling is similar to the first step of

stratified random sampling. But the two sampling methods are different. The

key to cluster sampling is decided by how homogeneous or heterogeneous

the clusters are.

A major advantage of simple cluster sampling is the case of sample

selection. Suppose, we have a population of 20,000 units from which we

wish to select 500 units. Choosing a sample of that size is a very time-

consuming process, if we use Random Numbers table. Suppose, the entire

population is divided into 80 clusters of 250 units each, we can choose two

sample clusters (2 × 250 = 500) easily by using cluster sampling. The most

difficult job is to form clusters. In marketing, the researcher forms clusters so

that he can deal with each cluster differently.

Multistage sampling

The name implies that sampling is done in several stages. This is used with

stratified/cluster designs.

An illustration of double sampling is as follows.

The management of a newly-opened club is solicits new membership.

During the first rounds, all corporates were sent details so that those who

are interested may enroll.

Advantage: May reduce cost, if first stage results are enough to stratify or

cluster.

Disadvantage: Costs increase as more and more stages are included.

Area sampling

This is another type of cluster sampling. In this method clusters are formed

on the basis of geographical location.

Suppose a researcher wishes to measure certain characteristics of

salesman working in a certain industry. Assume that the attributes required

to be measured is job satisfaction or earnings or pride, etc. The researcher

could prepare a list of salesman working for various selected firms. If the

researcher studied each of the salesman in each of the firm selected, with

respect to the above characteristics he is carrying out would amount to one

stage sampling. If on the other hand the researcher sub sampled the

salesman from each of the firm listed, it would be 2 stage sampling. Area

sampling is very similar to this.



There are two types of area sampling (i) one stage area sampling, and

(ii) two stage area sampling.

One stage area sampling: One stage area sampling involves the following

procedure:

Segmenting the total area (state or country) into sub areas.

Select sub areas randomly.

Study all the units in the sub area which has been selected. For

example, retailers or agents or households in a particular sub area

selected.

Advantages

Easy to understand.

There is no need to segment the population.

Disadvantages

Final sample may not be representative of the population. This is because,

characteristics of the units within a given sub area will be similar to one

another.

Two stage area sampling: Two stage area sampling is done as follows. As

the name itself indicates, the entire sampling is done in two stages of

random sampling. First stage involves selection of sub areas randomly.

Second stage involves further division of sub areas and selecting sampling

units from the sub divided areas. Sample chosen by this method will be

representative of the population. Therefore, statistically it will be more

accurate.

The disadvantage of this method is that, it is time consuming and expensive.

Advantages of probability sampling

It is unbiased.

Quantification is possible in probability sampling.

Less knowledge of universe is sufficient.

Disadvantages of probability sampling

It takes time.

It is costly.

More resources are required to design and execute than in non-

probability design.



In marketing research, non-probability sample is used due to time and

budget constraints.

9.8.2 Non-probability sampling techniques

1. Deliberate sampling

2. Shopping mall intercept sampling

3. Sequential sampling

4. Quota sampling

5. Snowball sampling

6. Panel samples

Deliberate or purposive sampling

This is also known as the judgment sampling. The investigator uses his

discretion in selecting sample observations from the universe. As a result,

there is an element of bias in the selection. The units in the universe do not

enjoy an equal chance of getting included in the sample. Therefore, it

cannot be considered a probability sampling.

Shopping mall intercept sampling

This is a non-probability sampling method. In this method the respondents

are recruited for individual interviews at fixed locations in shopping malls.

(Example: Shopper’s Shoppe, Food World, Sunday to Monday). This type of

study would include several malls, each serving different socio-economic

population.

Merits

1. It has a relatively small universe.

2. In most cases, it is expected to give quick results. The purpose of

deliberate sampling has become a practical method in dealing with

economic or practical problems.

3. In studies, where the level of accuracy can vary from the prescribed

norms, this method can be used.

Demerits

1. Fundamentally, this is not considered a scientific approach, as it allows

for bias.

2. The investigator may start with a preconceived idea and draw samples

such that the units selected will be subjected to specific judgment of the

enumerator.



Sequential sampling

This is a method in which the sample is formed on the basis of a series of

successive decisions.

First a sample is selected, from the selected sample data collection and

analysis is done. Based on this, a decision is made whether further samples

are required or not. Sample size is not known in advance or beforehand in

this method. At each stage, a decision is taken, whether further samples are

required or not. This depends on the adequacy of information provided by

existing sample respondents.

Quota sampling

Quota sampling is quite frequently used in marketing research. It involves

the fixation of certain quotas, which are to be fulfilled by the interviewers.

Suppose, 2,00,000 students are appearing for a competitive examination.

We need to select 1% of them based on quota sampling. The classification

of quota may be as follows:

Example: Classification of Samples

Category Quota

General merit 1,000

Sport 600

NRI 100

SC/ST 300

TOTAL 2,000

Quota sampling involves the following steps:

1. The population is divided into segments on the basis of certain

characteristics. Here, the segments are termed as cells.

2. A quota of unit is selected from each cell.

Advantages

1. Quota sampling does not require prior knowledge about the cell to which

each population unit belongs. Therefore, this sampling has a distinct

advantage over stratified random sampling, where every population unit

must be placed in the appropriate stratum before the actual sample

selection.

2. It is simple to administer. Sampling can be done very quickly.



3. The necessity of the researcher going to various geographical locations

is avoided and thus cost is reduced.

Limitations

1. It may not be possible to get a “representative” sample within the quota

as the selection depends entirely on the mood and convenience of the

interviewer.

2. Since too much liberty is being allowed to the interviewer, the quality of

work suffers if they are not competent.

Snowball sampling

This is a non-probability sampling. In this method, the initial group of

respondents are selected randomly. Subsequent respondents are being

selected based on the opinion or referrals provided by the initial

respondents. Further referrals will lead to more referrals, thus leading to a

snowball sampling.

Example: College students bring in more students on the consumption of

Pepsi. The major advantage of snowball sampling is that it monitors the

desired characteristics in the population.

Panel samples

Panel samples are frequently used in marketing research. To give an

example, suppose that one is interested in knowing the change in the

consumption pattern of households. A sample of households are drawn.

9.8.3 Distinction between probability and non-probability sample

Probability sample

1. Here, each member of a universe has a known chance of being selected

and included in the sample.

2. Any personal bias is avoided. The researcher cannot exercise his

discretion in the selection of sample items.

Examples: Random Sample, cluster sample.

Non-probability sample

In this case, the likelihood of choosing a particular universe element is

unknown. The sample chosen in this method is based on aspects like

convenience, quota, etc.

Examples: Quota sampling, Judgment sampling.




14. In __________ sample, the likelihood of choosing a particular universe

element is unknown.

15. _________ Sampling is a probability sampling procedure in which

simple random sub-samples are drawn from within different strata.

16. Snowball Sampling is a ____________ sampling.

9.9 Sampling Size Decision

1. The first factor that must be considered in estimating sample size, is the

error permissible.

2. Greater the desired precision, larger will be the sample size.

3. Higher the confidence level in the estimate, the larger the sample must

be. There is a trade off between the degree of confidence and the

degree of precision with a sample of fixed size.

4. The greater the number of sub-groups of interest within the sample, the

greater its size must be.

5. Cost is a factor that determines the size of the sample.

6. The issue of response rate: The issue to be considered in deciding the

necessary sample size is the actual number of questionnaires, that must

be sent out. Calculation-wise, we may send questionnaires to the

required number of people, but we may not receive the response. For

example, we may like to obtain the family income level from a mail

survey, but the researcher may not receive response from everyone. If

the researcher feels the response rate is 40%, then he needs to

despatch that many extra questionnaires

Non-response error may be due to (1) failure to locate, (2) flat refusal.

The failure to locate: People move to new destinations. However, if the

sample frames used are of recent origin, this problem can be overcome.

Flat refusal: We do not know if those who did not respond hold different

views or opinions from those who responded.

This implies that those who don’t respond should be motivated. It can be

done in any one of the following ways:

1. An advance letter informing the respondents that they will receive a

questionnaire and requesting their cooperation. This will generally

increase the rate of response.



2. Monetary incentive or gift given to respondents will yield a larger

response rate.

3. Proper follow up is necessary after the potential respondent received the

questionnaire.

Illustration: Determine the sample size if standard deviation of the

population is 3.9, population mean is 36 and sample mean is 33 and the

desired degree of precision is 99%.

Solution: Given = 3.9, = 36, X = 33 and z = 1% (99% precision implies

1% level of significance)

i.e. z = 2.576 (at 1% l.o.s) (Table value)

We know that sample size n can be obtained using the relation

n =

2z

d

where d = – X

n = 11:21.113336

9.3576.2


17. The first factor that must be considered in estimating sample size is the

___________

18. The greater the number of __________ within the sample, the greater its

size must be.

9.10 Sample Size

For proper study of the problem, it is necessary to have proper sampling. It

means that the sample should be of proper size. If the sample is either too

small or too big, it shall make the study difficult. What should be the size of

the sample, is a question which should be answered only after taking into

account the various factors of the research problem at hand. In this context,

Parten has laid down that:

“An optimum sample in survey is one, which fulfills the requirements of

efficiency, representativeness, reliability and flexibility. The sample should

be small enough to avoid unnecessary expenses and large enough to avoid

intolerable sampling error”.




19. What should be the size of the sample, is a question which should be

answered only after taking into account the various factors of the

___________ at hand.

20. An optimum sample in survey is one, which fulfills the requirements of

________,__________, ___________ and __________

9.11 Approaches to Determination of Sample Size

The following factors should be considered while deciding the sample size:

The size of the universe: The large the size of the universe, the bigger

should be the sample size.

The resources available: If the resources available are vast, a large

sample size could be taken. However, in most cases resources

constitute a big constraint on sample size.

The degree of accuracy or precision desired: The greater the degree

of accuracy desired the larger should be the sample size. However, it

does not necessarily mean that bigger samples always ensure greater

accuracy.

Homogeneity or heterogeneity of the universe: If the universe

consists of homogeneous units, a small sample may serve the purpose

but if the universe consists of heterogeneous units, a large sample may

be required.

Nature of study: For an intensive and continuous study, a small sample

may be suitable. But for studies which are not likely to be repeated and

are quite extensive in nature, it may be necessary to take a large sample

size.

Method of sampling adopted: The size of samples is also influenced

by the type of sampling plan adopted. For example, if the sample is a

simple random sample it may necessitate a bigger sample size.

However, in a properly drawn stratified sampling plan, even a small

sample may give better results.

The above factors have to be properly weighted before arriving at the

sample size. However, the selection of optimum sample size is not that

simple as it might seem to be.




21. The greater the degree of accuracy desired the ___________ should

be the sample size.

22. For an intensive and continuous study, a ____________ sample may

be suitable.

9.12 Types of Sampling Errors

Errors in statistics are classified in two categories:

1. Sampling Errors

2. Non-sampling Errors

Sampling errors

Sample always gives approximation to the parameter of universe. So, the

differences between the actual figure and the estimated figure is always

there. Generally sampling errors are due to the following reasons:

1. Improper selection of the sample leads to sampling error. This improper

selection may be due to the personal judgement, etc. i.e., non-

probability sampling techniques.

2. These errors may be there due to the variability of population and wrong

method of estimation. Usually this is in the case of hetrogeneous

population.

3. Faculty demarcation of statistical units.

Non-sampling errors

These kind of errors are present in both complete and sample enumeration.

These errors generally arise when data are not properly observed,

approximated and processed. The following factors give rise to the non-

sampling errors:

1. Incomplete questionnaire and defective method of interviewing.

2. Errors in compilation and tabulation gives rise to non-sampling errors.

Compilation errors include calculation mistakes.

3. Personal bias of the investigator.

4. If the various terms used are not properly defined then it also leads to

non-sampling errors.

9.12.1 Measurement of errors

Statistical errors can be measured

a. Absolutely or

b. Relatively



Absolute errors: Absolute error is the difference between true value and

the estimated value.

Example

Suppose that the actual figure of sales of a concern is 8,800 and the

approximated figure is 8,900. Then Absolute Error = 8900 – 8800 = 100

Relative errors: Relative error is the ratio of absolute error to the estimated

figure. Let

U’ actual value

U estimated value

Ue Relative error

Then e

U’ -UU =

U

Let actual value = U’ = 10,100

Estimated value = U = 10,000

Then

Relative errors = U’-U 10,100 -10000

= =0.01=1%U 10000

9.12.2 Biased and unbiased errors

Statistical error can also be divided into the following categories:

1. Biased errors

2. Unbiased errors

Biased errors: When the errors are introduced due to the personal bias,

these are known as biased errors. These errors have a tendency to grow in

magnitude with the increase in number of observations.

Unbiased errors: These are the errors which do not accumulate with the

increase in the size of observations but rather have a tendency to get

neutralised. The main purpose of the statistical method is to avoid the

biased errors and devise methods in such a way that the errors, if any, are

only biased ones. One such devise is random selection over the bias

selection.



Activity 2:

List out some marketing research studies carried out in your

organisation or the organisation you know of where sample surveys

were conducted.


23. Errors in __________ and ____________ gives rise to non-sampling

errors.

24. Relative error is the ratio of _______________ to the ____________.

9.13 Summary

Sample is a representative of population. Census represents cent percent of

population. The most important factors distinguishing whether to choose

sample or census is cost and time. There are seven steps involved in

selecting the sample. There are 2 types of sample (a) Probability sampling

(b) Non probability sample. Probability sampling includes random sampling,

stratified random sampling systematic sampling, cluster sampling,

Multistage sampling. Random sampling can be chosen by Lottery method or

using random number table. Samples can be chosen either with equal

probability or varying probability. Random sampling can be systematic or

stratified. In systematic random sampling, only the first number is randomly

selected.

Glossary

Sampling: the process of selecting units (e.g., people, organizations) from a

population of interest so that by studying the sample we may fairly

generalize our results back to the population from which they were chosen.

Census: the procedure of systematically acquiring and recording

information about the members of a given population

Sampling Frame: the actual set of units from which a sample has been

drawn

Sample Size: the number of observations that constitute it




1. What do you mean by sampling units?

2. Distinguish between census and sampling.

3. Explain sampling process.

4. Describe the characteristics of an ideal sample.

5. Explain the approaches behind determination of sample size.

9.15 Answers


1. Census

2. large

3. population

4. sampling units, elements

5. sampling unit

6. Probability, non-probability

7. selecting the sample

8. less, less

9. sample survey

10. more

11. not homogeneous

12. whole population

13. derivation of conclusions

14. non-probability

15. Stratified Random

16. non-probability

17. error permissible

18. sub-groups of interest

19. research problem

20. efficiency, representativeness, reliability, flexibility

21. larger

22. small

23. compilation, tabulation

24. absolute error, estimated figure




1. Refer to 9.3 – Discuss the definition with examples.

2. Refer to 9.2 – Differentiate theoretically as well as with the help of

examples.

3. Refer to 9.4 – Discuss the process.

4. Refer to 9.7 – Try to illustrate through example

5. Refer to 9.11 – Discuss the approaches in simple language.

Mini-case

ABC Milk Federation, a well-known public sector milk federation in India,

has commanding a leadership position in the market for the last three and

half decades. ABCMF has 500 milk processing units. The total turnover of

the company is over Rs. 20,000 crores. ABCMF staff head count is 26,000.

The product portfolio of the company is milk and its by-products. For

example, milk is a basic products of the company and ghee, butter, curd,

milkshake, doodhpedha, paneer, sweets, milk drinks, ice creams and

chocolates etc., are the by-products.

ABCMF’S supply chain is very strong. It has about 1.5 lakh trucks to procure

milk from every nook and corner of India and supply packaged milk to all

parts of the country. Since ABCMF is a public sector under taking, its social

responsibility is greater than any private organisation. This social

responsibility forced the company to procure all the milk supplied by the

farmers, though there is no requirement. Eventually, the company was

caught in the mismatch of demand and supply. Supply of milk was more

than the demand in the market.

As explained in the first paragraph, the company started producing various

by-products with the excess milk which remained after supply of packaged

milk to the customer. Even after producing by-products, barrels of milk

remained the excess. Milk is a perishable product, and it can not be stored

for more than two weeks with the available technology. So, the best

alternative for the company was to convert the milk into milk powder. By

producing and selling the milk powder, the company incurred Rs 1.00/loss

per liter. Profits made by the company in milk and other dairy products was

being eaten away in milk powder. Year ending, ABCMF made no profit. This

has been a major problem of the company for the last one decade. The

above problem drove the company to mounting losses.



Keeping in mind the company’s responsibility towards the farmers and

inevitability to purchase milk supplied by the farmers, answer the following

issues.

Question

If you conduct a study, who are the sample respondents for data collection?

Hint: Base your answer on the sample selection procedures.



Unit 10 Data Processing and Analysis

Structure

10.1 Introduction

Objectives

10.2 Steps in Data Processing

10.3 Measure of Central Tendency

10.4 Measures of Dispersion

10.5 Bivariate Analysis

10.6 Multivariate Analysis

10.7 Summary


10.9 Answers

10.1 Introduction

In the earlier units, you came to know about the sampling process in

research. In this unit, you will study about the data processing and analysis

criteria.

In this unit you learn processing of data is very important in market

research. After collecting the data, the next task of the researcher is to

analyse and interpret the data. The purpose of analysis is to draw

conclusions. There are two parts in processing the data:

Data analysis

Interpretation of data

You also learn analysis of the data involves organising the data in a

particular manner. Interpretation of data is a method for deriving conclusions

from the data analysed. Analysis of data is not complete, unless it is

interpreted.

Objectives


Explain various steps involved in data processing

Discuss the measures of central tendency

Describe dispersion measurement

Explain bivariate and multivariate analysis



10.2 Steps in Data Processing

Step 1: Preparing raw data

Step 2: Editing

Step 3: Coding

Step 4: Data Entry

Step 5: Tabulation.

Step 1: Preparing raw data

Data collection is a significant part of market research. Even more

significant is to filter out the relevant data from the mass of data collected.

Data continues to be in raw form, unless they are processed and analysed.

The data lying in a crude form are not ready for analysis. Keeping this in

mind, the researcher must take some measures to organise the data so that

it can be analysed.

The various steps which are required to be taken for this purpose are (a)

editing (b) coding and (c) tabulating.

Step 2: Editing

The main purpose of editing is to eliminate errors and confusion. Editing

involves inspection and correction of each questionnaire. Editing thus

means the activity of inspecting, correcting and modifying the correct data.

This can be done in two stages (a) Field editing (b) Office editing.

a) Field Editing: Objectives of field editing are – to make sure that proper

procedure is followed in selecting the respondent, interview them and

record their responses. In field editing, speed is the main criteria, since

editing should be done when the study is still under progress. The main

problems faced in field editing are:

1. Inappropriate respondents

2. Incomplete interviews

3. Improper understanding

4. Lack of consistency

5. Legibility

6. Fictitious interview

b) Office Editing: Office editing is more thorough than field editing. The job

of an office editor is more difficult than that of the field editor. In case of



a mail questionnaire there are no other methods of cross-verification,

except to conduct office audit. Examples as below illustrate the kind of

problems faced by office editors. Problems of consistency, rapport with

respondents, etc., are some of the issues which get highlighted during

office editing.

Step 3: Coding

Coding refers to those activities which helps in transforming edited

questionnaires into a form that is ready for analysis. Coding involves

assigning numbers or other symbols to answers so that the responses can

be grouped into limited number of classes or categories.

Examples: 1 is used for male and 2 for female.

Step 4: Data entry

Data entry can be defined as direct input of data in the appropriate data

fields of a database, through the use of a human data-input device such as

a keyboard, mouse, stylus, or touch screen, or through speech recognition

software. It is very important that the data entry personnel take meticulous

approach while entering the data.

Cost of quality: Errors in data cause a variety of problems and raise the

costs in several areas. The cost to recognize and detect errors is not trivial.

Further costs are incurred to correct the data errors. The largest cost

components are the hidden costs that affect other departments.

Error detection: Detecting data errors in programs often takes as much, or

more, of the analysis and programming efforts than the main logic. The

earlier an error is detected, the cheaper it is to correct it. Fifty years ago it

was common to “key verify” punch cards. This technique is still one of the

best methods for detecting errors. Re-key verifying selected data items,

combined with programs that look for invalid data, can detect most data

errors.

Error correction: Correcting errors programmatically is the cheapest way.

Doing it with a single keystroke when the data is initially keyed is the

cheapest manual method. Conversely, it costs hundreds, or thousands, of

times more to create update transactions to fix errors that remain

undetected until later in the process.



Hidden costs: The hidden cost of errors is much higher. For example,

customer service problems increase proportionately to the number of

mistakes that result in billing errors or shipping the wrong product, or

potential costs of litigation resulting from bad data.

There are many reasons for errors in the entry. But the main of the errors

are missing characters, extraneous characters and key entry speed.

Step 5: Tabulation

This is the final step in data processing. The final product i.e. the data is

tabulated and arranged in a systematic format so that it can be further

analyzed.

Example:

A class has 10 students. Tabulate the data according to their heights and

ages.

Ram: Height – 5 ft 2 inches; Age – 18 years

Manoj: Height – 5 ft 6 inches; Age – 18 years 3 months

Mukesh: Height – 5 ft 9 inches; Age – 19 years

Preet: Height – 5 ft 2 inches; Age – 18 years 6 months

Ajay: Height – 5 ft 4 inches; Age – 18 years 6 months

Akhilesh: Height – 6 ft; Age – 18 years 3 months

Raman: Height – 6 ft 1 inch; Age – 19 years 3 months

Rajdev: Height – 5 ft 3inches; Age – 18 years 9months

Dilshan: Height – 5 ft 5 inches; Age – 18 years 3 months

Abhimanyu: Height – 5 ft 8 inches; Age – 18 years 6 months

S.No. Name of the Student Height (ft. inches) Age (years)

1. Ram 5.2 18.00

2. Manoj 5.6 18.25

3. Mukesh 5.9 19.00

4. Preet 5.2 18.2

5. Ajay 5.4 18.2

6. Akhilesh 6.0 18.25

7. Raman 6.1 19.25

8. Rajdev 5.3 18.75

9. Dilshan 5.5 18.25

10. Abhimanyu 5.8 18.5




1. Data entry can be defined as direct input of data in the appropriate data

fields of a _________.

2. Data editing can be done in two stages namely _________ editing and

_________ editing.

10.3 Measure of Central Tendency

In marketing research, central value or tendency plays a very important role.

The researcher may be interested in the average sales/shop, average

consumption per month etc.

The three most common ways to measure centrality or central tendency are

the mode, median and mean.

Mode

The mode is the central value or item that occurs most often, when data is

categorized in a frequency distribution, it is very easy to identify the mode,

since the category in which the mode lies has the greatest number of

observations.

Median

Median lies precisely halfway between the highest and lowest values. It is

necessary to arrange the data into ascending or descending order before

selecting the median value. For the ungrouped data with an odd number of

observations, the median would be the middle value. For an even number of

observations, the median value is half way between central value.

Mean

In a grouped data, the midpoint of each category would be multiplied by the

number of observation in that category.


3. The three most common ways to measure centrality or central tendency

are the _________, _________ and _________.

4. Median lies precisely _________ between the highest and lowest

values.

5. The mode is the central value or item that occurs _________.



10.4 Measures of Dispersion

Dispersion, also called statistical variability or variation, is variability or

spread in a variable or a probability distribution. A measure of statistical

dispersion is a real number that is zero if all the data are identical, and

increases as the data becomes more diverse. It cannot be less than zero.

Most measures of dispersion have the same scale as the quantity being

measured. In other words, if the measurements have units, such as metres

or seconds, the measure of dispersion has the same units. Such measures

of dispersion include Standard deviation; Interquartile range, Range, Mean

deviation. A measure of dispersion indicates the degrees of the

scatteredness of the observations.

Figure 10.1

Let us understand dispersion through figure 10.1. If curves A and B

represent two frequency distributions, the point to be noticed is that A and B

have the same mean. But curve A has less variability than B.

If we measure only the mean of these two distributions, we will miss an

important difference between A and B. To increase our understanding of the

pattern of the data, we must also measure its dispersion.

Range: the range is the length of the smallest interval which contains all the

data. It is calculated by subtracting the smallest observation from the

greatest and provides an indication of statistical dispersion. Range is the

crudest measure of dispersion.

Mean Deviation (MD): The mean deviation of a statistical data is defined as

the arithmetic mean of the numerical values of the deviations of items from



some average value. Mean deviation is also known as average deviation.

The mean deviation is generally denoted by M.D..

Variance: The variance of a random variable is a measure of its statistical

dispersion, indicating how far from the expected value its values typically

are. Variance measures the variability (volatility) from an average. Volatility

is a measure of risk, so this statistic can help determine the risk an investor

might take on when purchasing a specific security.

Standard deviation: Standard deviation of a statistical population, a data

set, or a probability distribution is the positive square root of the variance.

Standard deviation is a widely used measure of the variability or dispersion,

being algebraically more tractable though practically less robust than the

expected deviation or average absolute deviation.

Coefficient of Variation (CV): It is a relative measure of dispersion that

enables us to compare two distributions. It relates the standard deviation

and the mean by expressing the standard deviation as a percentage of the

mean.

Activity 1:

A marketing research organization is conducting a survey to

determine the consumption pattern of food items by households in

Delhi. You are the head of computer division responsible for editing

the raw data from the questionnaires and analyzing the same. A

filled up set of questionnaires have been sent to you. List out the

points on which you would like to concentrate while editing the raw

data.


6. ____ is the difference between the highest and lowest observed values.

7. _________ equals the standard deviation as a percentage of the mean.

8. Standard deviation is the _________ of the variance.

10.5 Bivariate Analysis

Sometimes, the marketers will come across situations, which are complex

involving two or more variables. Hence, bi-variate analysis deals with this

type of situation.

Example: Chi-Square is an example of bi-variate analysis.



Chi-square test

The chi-square (I) test is used to determine whether there is a significant

difference between the expected frequencies and the observed frequencies

in one or more categories.

It tests a null hypothesis stating that the frequency distribution of certain

events observed in a sample is consistent with a particular theoretical

distribution. The events considered must be mutually exclusive and have

total probability 1.

Pearson's chi-square is used to assess two types of comparison: tests of

goodness of fit and tests of independence. A test of goodness of fit

establishes whether or not an observed frequency distribution differs from a

theoretical distribution. A test of independence assesses whether paired

observations on two variables, expressed in a contingency table, are

independent of each other – for example, whether people from different

regions differ in the frequency with which they report that they support a

political candidate.

Activity 2:

Distinguish between descriptive and inferential analysis of data.


9. A _________ is any statistical hypothesis test in which the sampling

distribution of the test statistic is a chi-square distribution when the null

hypothesis is true.

10. A _________ is a hypothesis that might be falsified using a test of

observed data.

10.6 Multivariate Analysis

In multi-variate analysis, the number of variables to be tackled are many.

Example: The demand for television sets may depend not only on price, but

also on the income of households, advertising expenditure incurred by TV

manufacturer and other similar factors. To solve this type of problem,

multivariate analysis is required.

This can be studied under:

1. Discriminant analysis



2. Factor analysis

3. Cluster analysis

4. Conjoint analysis

5. Multidimensional scaling.

Discriminant analysis

In this analysis, two or more groups are compared. In the final analysis, we

need to find out whether the groups differ one from another.

Example: Where discriminant analysis is used

1. Those who buy our brand and those who buy competitors‟ brand.

2. Good salesman, poor salesman, medium salesman

If we are interested in segmenting the market using income and education,

we would be interested in the total effect of two variables in combinations,

and not their effects separately. Further, we would be interested in

determining which of the variables are more important or had a greater

impact. To summarize, we can say, that Discriminant Analysis can be used

when we want to consider the variables simultaneously to take into account

their interrelationship.

Like regression, the value of dependent variable is calculated by using the

data of independent variable.

Z = b1x1 + b2x2 + b3x3 + ..............

Z = Discriminant score

b1 = Discriminant weight for variable

x = Independent variable

Application: A company manufacturing FMCG products introduces a sales

contest among its marketing executives to find out “How many distributors

can be roped in to handle the company‟s product”. Assume that this contest

runs for three months. Each marketing executive is given target regarding

number of new distributors and sales they can generate during the period.

This target is fixed and based on the past sales achieved by them about

which, the data is available in the company. It is also announced that

marketing executives who add 15 or more distributors will be given a Maruti

omni-van as prize. Those who generate between 5 and 10 distributors will

be given a two-wheeler as the prize. Those who generate less than

5 distributors will get nothing. Now assume that 5 marketing executives won

a Maruti van and 4 won a two-wheeler.



The company now wants to find out, “Which activities of the marketing

executive made the difference in terms of winning a prize and not winning

the prize”. One can proceed in a number of ways. The company could

compare those who won the Maruti van against the others. Alternatively, the

company might compare those who won, one of the two prizes against

those who won nothing. It might compare each group against each of the

other two.

Discriminant analysis will highlight the difference in activities performed by

each group members to get the prize. The activity might include:

1. More number of calls made to the distributors.

2. More personal visits to the distributors with advance appointments.

3. Use of better convincing skills.

Factor analysis

The main purpose of Factor Analysis is to group large set of variable factors

into fewer factors. Each factor will account for one or more component.

Each factor a combination of many variables. There are two most commonly

employed factor analysis procedures. They are:

1. Principle component analysis

2. Common factor analysis.

When the objective is to summarise information from a large set of variables

into fewer factors, principle component factor analysis is used. On the other

hand, if the researcher wants to analyse the components of the main factor,

common factor analysis is used.

Example: Common factor – Inconvenience inside a car. The components

may be:

1. Leg room.

2. Seat arrangement.

3. Entering the rare seat.

4. Inadequate dickey space.

5. Door locking mechanism.

Principle component factor analysis

Purposes: Customer feedback about a two-wheeler manufactured by a

company.



Method: The M.R manager prepares a questionnaire to study the customer

feedback. The researcher has identified six variables or factors for this

purpose. They are as follows:

1. Fuel efficiency (A)

2. Durability (Life) (B)

3. Comfort (C)

4. Spare parts availability (D)

5. Breakdown frequency (E)

6. Price (F)

The questionnaire may be administered to 5,000 respondents. The opinion

of the customer is gathered. Let us allot points 1 to 10 for the variables

factors A to F. 1 is the lowest and 10 is the highest. Let us assume that

application of factor analysis has led to grouping the variables as follows:

A, B, D, E into factor-1

F into Factor -2

C into Factor - 3

Factor - 1 can be termed as Technical factor;

Factor - 2 can be termed as Price factor;

Factor - 3 can be termed as Personal factor.

For future analysis, while conducting a study to obtain customers‟ opinion,

three factors mentioned above would be sufficient. One basic purpose of

using factor analysis is to reduce the number of independent variables in the

study. By having too many independent variables, the M.R study will suffer

from following disadvantages:

1. Time for data collection is very high due to several independent

variables.

2. Expenditure increases due to the time factor.

3. Computation time is more, resulting in delay.

4. There may be redundant independent variables.

Cluster analysis

Cluster Analysis is used:

1. To classify persons or objects into small number of clusters or group.

2. To identify specific customer segment for the company‟s brand.



Cluster analysis is applicable when:

An FMCG company wants to map the profile of its target audience in

terms of lifestyle, attitude and perceptions.

A consumer durable company wants to know the features and services

a consumer takes into account, when purchasing through catalogues.

A housing finance corporation wants to identify and cluster the basic

characteristics, lifestyles and mindset of persons who would be availing

housing loans. Clustering can be done based on parameters such as

interest rates, documentation, processing fee, number of installments

etc.

Process

There are two ways in which Cluster Analysis can be carried out:

1. First, objects/respondents are segmented into a pre-decided number of

clusters. In this case, a method called non-hierarchical method can be

used, which partitions data into the specified number of clusters

2. The second method is called the hierarchical method.

The above two are basic approaches used in cluster analysis. This can be

used to segment customer groups for a brand or product category, or to

segment retail stores into similar groups based on selected variables.

Ideally, the variables should be measured on an interval or ratio scale. This

is because the clustering techniques use the distance measure to find the

closest objects to group into a cluster. An example of its use can be

clustering of towns similar to each other which will help decide where to

locate new retail stores.

Example: In cluster analysis, the following five steps to be used:

1. Selection of the sample to be clustered (buyers, products, employees).

2. Definition on which the measurement to be made (E.g.: product

attributes, buyer characteristics, employees‟ qualification).

3. Computing the similarities among the entities.

4. Arrange the cluster in a hierarchy.

5. Cluster comparison and validation.

Cluster analysis on three dimensions

The example below shows Cluster Analysis based on three dimensions age,

income and family size. Cluster Analysis is used to segment the car-buying



population in a Metro. For example “A” might represent potential buyers of

low end cars. For example, Maruti 800 (for common man). These are

people who are graduating from the two-wheeler market segment. Cluster

“B” may represent mid-population segment buying Zen, Santro, Alto etc.

Cluster “C” represents car buyers, who belong to upper strata of society.

Buyers of Lancer, Honda city etc. Cluster “D” represents the super-rich

cluster, i.e. Buyers of Benz, BMW etc.

Figure 10.1: Matching Measure

Example: Suppose there are five attributes, 1 to 5, on which we are judging

two objects A and B. The existence of an attribute may be indicated by 1

and its absence by 0. In this way, two objects are viewed as similar if they

share common attributes.

Attribute 1 2 3 4 5 6 7

Brand – A 1 0 0 1 0 0 1

Brand – B 0 0 1 1 1 0 0

One measure of simple matching S is given by:

a dS

a b c d

Where, a = No. of attributes possessed by brands A and B

b = No. of attributes possessed by brand A but not by brand B

c = No. of attributes possessed by brand B but not by brand A

d = No. of attributes not possessed by both brands.



Substituting, we get 1 2 3

0.431 2 2 2 7

S

A and B‟s association is to be the extent of 43%.

It is now clear that object A possess attributes 1, 4, and 7 while object B

possess the attributes 3, 4 and 5. A glance at the above table will indicate

that objects A and B are similar in respect of 2 (0 & 0), 6 (0 & 0) and 4 (1 &

1). In respect of other attributes, there is no similarity between A and B. Now

we can arrive at a simple matching measure by (a) counting up the total

number of matches – either 0, 0 or 1, (b) dividing this number by the total

number of attributes.

Symbolically,

SAB = M/N

SAB = Similarity between A and B

M = Number of attributes held in common (0 or 1)

N = Total number of attributes

SAB = 3/7 = 0.43

i.e., A & B are similar to the extent of 43%.

Conjoint analysis

Conjoint analysis is concerned with the measurement of the joint effect of

two or more attributes that are important from the customers‟ point of view.

In a situation where the company would like to know the most desirable

attributes or their combination for a new product or service, the use of

conjoint analysis is most appropriate.

Example: A comparison between the utility of a price level of Rs. 400

versus Rs. 500, a delivery period of 1 week versus 2 weeks, or an after-

sales response of 24 hours versus 48 hours.

Once we know the utility levels for each attribute (and at individual levels as

well), we can combine these to find the best combination of attributes that

gives the customer the highest utility, the second best combination that

gives the second highest utility, and so on. This information is then used to

design a product or service offering.



Process

Design attributes for a product are first identified. For a shirt manufacturer,

these could be design such as designer shirts Vs plain shirts, this price of

Rs. 400 versus Rs. 800. The outlets can have exclusive distribution or mass

distribution. All possible combinations of these attribute levels are then listed

out. Each design combination will be ranked by customers and used as

input data for Conjoint Analysis. Then the utility of the products relative to

price can be measured.

The output is a part-worth or utility for each level of each attribute. For

example, the design may get a utility level of 5 and plain, 7.5. Similarly, the

exclusive distribution may have a part utility of 2, and mass distribution, 5.8.

We then put together the part utilities and come up with a total utility for any

product combination we want to offer, and compare that with the maximum

utility combination for this customer segment.

This process clarifies to the marketer about the product or service regarding

the attributes that they should focus on in the design.

If a retail store finds that the height of a shelf is an important attribute for

selling at a particular level, a well-designed shelf may result from this

knowledge. Similarly, a designer of clocks will benefit from knowing the

utility attached by customers to the dial size, background colours, and price

range of the clocks.

Approach

From a discussion with the client, identify the design attributes to be studied

and the levels at which they can be offered. Then build a list of product

concepts on offer. These product concepts are then ranked by customers.

Once this data is available, use Conjoint Analysis to derive the part utilities

of each attribute level. This is then used to predict the best product design

for the given customer segment. Use the SPSS Conjoint procedure to

analyse the data.

There are three steps in conjoint analysis:

(a) Identification of relevant products or service attributes.

(b) Collection of data.

(c) Estimation of worth for the attribute chosen.



For attributes selection, the market researcher can conduct interview with

the customers directly.

Example of conjoint analysis for a Laptop:

For a laptop, consider 3 attributes:

Weight (3 Kg or 5 Kg)

Battery life (2 hours or 4 hours)

Brand name (Lenovo or Dell)

Task: Rank order the following combination of these characteristics:

1 = Most preferred, 8 = Least preferred

Combination Rank

3 Kg, 2 hours, Lenovo 4

5 Kg, 4 hours, Dell 5







One combination 3 kg, 4 hours, Dell clearly dominates and 5 kg, 2 hours,

Lenovo is least preferred.

Let us now take the average rank for 3 kg option = (4 + 3 + 2 + 1)/4 = 2.5

For 5 kg option average rank is (5 + 8 + 7 + 6)/4 = 6.5

For 4 hour option (5 + 3 + 7 + 1)/4 = 4

For 2 hour option (4 + 8 + 2 + 6)/4 = 5

For Dell (5 + 6 + 1 + 2)/4 = 3.5

For Lenovo 5.5

Looking at the difference in average ranks, the most important characteristic

to this respondent is weight = 4, followed by brand name = 2 and battery

life = 1.



Activity 3:

You have collected data on employees of a large organisation in a

metro. You analyse the data by the type of work, education level,

whether the employee belongs to an urban or rural area. The results

are as below. How would you interpret them?

Annual Employee Turnover*

Higher Education Lower Education

Salaried monthly

Daily wage

Salaried monthly

Daily wage

Rural 6 14 18 18

Urban 10 12 19 20

*Turnover per 1,000 employees


11. In multi-variate analysis, the number of variables to be tackled is

_________.

12. _________ analysis is concerned with the measurement of the joint

effect of two or more attributes that are important from the customers‟

point of view.

13. The main purpose of _________ is to group large set of variable

factors into fewer factors.

10.7 Summary

In this unit various aspects of data processing namely editing, coding,

classification and presentation of data through tables and graphs have been

discussed. Editing is of two type namely field editing and central editing.

Coding involves assigning of some symbols or numerals or both to the

answers of the questions in a questionnaire so that the responses can be

recorded in a limited number of classes or categories. This helps in analysis

of data. Designing of a coding scheme has been discussed with the help of

a sample questionnaire. Classification is the process of arranging data in

groups or classes on the basis of certain characteristics. It involves

condensation of data which facilitates comparison and helps in establishing

relationships between variables. Classification can be according to attributes

or numerical characteristics. The former may be divided into simple and



manifold classification. The later is achieved using either inclusive or

exclusive method of forming frequency distribution. The data may be

presented in the form of tables or graphs.

Glossary

Mean: Average of two or more numbers.

Median: The numeric value separating the higher half of a sample, a

population, or a probability distribution, from the lower half.

Data Processing: Conversion of data into a form that can be processed by

computer.

Null Hypothesis: A null hypothesis is a statistical hypothesis that is tested

for possible rejection under the assumption that it is true.

Cluster Analysis: The assignment of a set of observations into subsets so

that observations in the same cluster are similar in some sense.


1. Explain data processing.

2. Elucidate upon data editing.

3. Explain the following:

(a) Mode

(b) Median

(c) Mean

4. What is measure of dispersion?

5. Explain the following:

(a) Mean deviation

(b) Variance and Standard deviation

(c) Coefficient of variation

10.9 Answers

Answers to Self Asessment Questions

1. database

2. field, office

3. mode, median, mean

4. halfway

5. most often



6. Range

7. Coefficient of Variation

8. positive square root

9. chi-square test

10. null hypothesis

11. large

12. Conjoint

13. Factor Analysis


1. Refer to 10.2 – Discuss definition and stages.

2. Refer to 10.2 – Discuss editing and its types

3. Refer to 10.3 – Discuss each with appropriate example.

4. Refer to 10.4 – Discuss in short with examples.

5. Refer to 10.4 – Discuss each with example.

Mini-case

This is a company having branches all over India. Their activity includes

market research service provision, advertising research, project consultancy

and recruitment. Among all the above services, the organisation offers a

two-week marketing research training programme to employees of various

companies. The highlight of this programme is to train those employees,

who will be conducting market research on their own. It was also meant for

those who use marketing research information in decision-making.

The first week of the programme is spent in explaining to the participant, a

feel of the nature and potential utility of market research. Topics for

discussion would include: (a) Role of research (b) Different applications

(c) How it helps decision-making (d) What M.R can accomplish and what it

cannot (e) How effective is overall organizational decision. All the above

discussions are done through quoting live examples from real life situation.

During the second week, participants are asked to discuss role that M.R can

play in different situations. Participants are told that they should focus on the

following four issues:

1. Can market research be helpful to solve the problem?

2. If the answer is „yes‟, in what ways and situations will it help?



3. What type of marketing research activities are likely to be beneficial in

generating information which is relevant to given situation?

4. If the answer is „no‟ explain what are the limitations or impediments

which are likely to prevent marketing research from being useful?

The following examples were used by Angel Market Research Agency

during their training programme.

Situation 1: Auto component manufacturer

An auto component manufacturer has a very large customer base. The firm

has developed a new spark plug as one of its components. This newly-

designed component (spark plug) is expected to greatly increase the

reliability when installed in a car. However, the improved version of the

component will cost about 40% more than the present component being

sold.

Situation 2: XYZ – Insurance firm

A major life insurance company is becoming increasingly concerned about

the increasing lapse rate in life insurance policies it has sold to its

customers. Lapse rate means the percentage of policy holders who drop out

after some period of time. For example: If 20,000 policies are sold and 1,000

of them dropout within a year, the lapse rate is 5%. During the last five

years, XYZ firm‟s lapse rate is 10%. During first year of its marketing, its

policies with its lapse rate increasing to 18% during last year.

Question

Address the issues that participants in the programme are asked to discuss.

Answer the four questions discussed during the training programme with

respect to the two situations.

Hint: Answer the question assuming you are one of the participant in

Angel‟s two week market research training programme.



Unit 11 Hypothesis Testing

Structure

11.1 Introduction

Objectives

11.2 Types of Hypothesis

11.3 Steps involved in Hypothesis

11.4 Tests of Significance

11.5 Sources of Hypothesis

11.6 Errors in Hypothesis Testing

11.7 Student‟s T-Distribution

11.8 Kruskal-Wallis Test

11.9 Kolmogorov-Simmov Test

11.10 Summary


11.12 Answers

11.1 Introduction

In the earlier units, you came to know about the sampling and data

processing. In this unit, you will study about the hypothesis testing.

In this unit, you learn hypothesis is a tentative proposition relating to certain

phenomenon, which the researcher wants to verify when required.

We may say that, while a hypothesis is useful, it is not always necessary.

Many a time, the researcher is interested in collecting and analysing the

data indicating the main characteristics without a hypothesis. You also know

how, a hypothesis may be rejected but can never be accepted except

tentatively. Further evidence may prove it wrong. It is wrong to conclude that

since hypothesis was not rejected it can be accepted as valid.

This unit on hypothesis testing will help you get familiar with the concept of

test of significance and student‟s t-distribution.

Objectives


Describe various steps involved in hypothesis testing

Explain errors in hypothesis testing

Define test of significance

Describe student‟s T-distribution



11.2 Types of Hypothesis

There are several basis on which hypothesis are classified:

a. Descriptive Hypothesis

b. Relation Hypothesis

Descriptive hypothesis

These by name implies describing some characteristics of an object, a

situation, an individual or even an organization.

Example:

1. Students from autonomous institutions are placed faster than other

institutions.

2. Research and practice of educations system in our country is not

integrated.

3. Why youngster prefer “X” soft drinks?

4. Decentralization of decision making is more effective.

The above tells us the characteristics of some entity.

Relational hypothesis

In this case we describe relationship between two variables:

1. Why rich people shop at life style?

2. Rate of attrition is high in those Jobs where there is night shift working

3. More cohesive is the group, better is the output

Working hypothesis: This is a hypothesis framed in the early stages of

research. These are altered or modified as investigation proceeds.

Example: As of now “demand and quality are related”. Later on this may

not be the fact as investigation proceeds.

4. Null hypothesis: This hypothesis states that there is no difference

between the parameter and the statistic that is being compared.

Example: There is no relationship between marks obtained in the

examination and the success of the same student in the corporate world.

Null hypothesis are framed for testing statistical significance. Null

hypothesis is very exact.

5. Analytical hypothesis: Here relationship of analytical variable is found.

These are used when one would like to specify the relationship between

changes in one property leading to change in another.



Example: Income level related to number of children in the family or

literacy related to number of children in the family.

6. Statistical hypothesis: These are got from samples that are

measurable. Statistical hypothesis are of two types:

(a) Hypothesis which indicates differences

Example: There is a difference between the performance of students

graduating from English medium schools and those of others.

(b) Hypothesis which indicates association

Example: There is a perfect relationship between price and demand.

7. Common sense hypothesis: They are based on what is being

observed. (1) Junior students are more disciplined than seniors

(2) Economically poor students work hard compared to those who come

from well to do families (3) Middle class families lead a humble living.

The above are observed on a day to day basis over a period of time

before drawing any conclusions.

Activity 1:

An automobile company has manufacturing facility at two different

geographical locations. Each location manufactures two-wheelers of

a different model. The customer wants to know if the mileage given

by both the models is the same or not. Samples of 45 numbers may

be taken for this purpose. Suggest what hypothesis test and

procedure would you use in this situation?


1. ___________ hypothesis is a hypothesis framed in the early stages of

research.

2. Statistical hypothesis are of two types, namely hypothesis which

indicates ___________ and hypothesis which indicates ___________.

11.3 Steps involved in Hypothesis

1. Formulate the null hypothesis, with H0 and HA, the alternate hypothesis.

According to the given problem, H0 represents the value of some

parameter of population.



2. Select on appropriate test assuming H0 to be true.

3. Calculate the value.

4. Select the level of significance other at 1% or 5%.

5. Find the critical region.

6. If the calculated value lies within the critical region, then reject Ho.

7. State the conclusion in writing.

Formulate the hypothesis

The normal approach is to set two hypotheses instead of one, in such a

way, that if one hypothesis is true, the other is false. Alternatively, if one

hypothesis is false or rejected, then the other is true or accepted. These two

hypotheses are:

1. Null hypothesis

2. Alternate hypothesis

Let us assume that the mean of the population is µo and the mean of the

sample is x. Since we have assumed that the population has a mean of µo,

this is our null hypothesis. We write this as Hoµ = µo, where Ho is the null

hypothesis. Alternate hypothesis is HA = µ. The rejection of null hypothesis

will show that the mean of the population is not µo. This implies that

alternate hypothesis is accepted.

Significance level

Having formulated the hypothesis, the next step is its validity at a certain

level of significance. The confidence with which a null hypothesis is

accepted or rejected depends upon the significance level. A significance

level of say 5% means that the risk of making a wrong decision is 5%. The

researcher is likely to be wrong in accepting false hypothesis or rejecting a

true hypothesis by 5 out of 100 occasions. A significance level of say 1%

means, that the researcher is running the risk of being wrong in accepting or

rejecting the hypothesis is one of every 100 occasions. Therefore, a 1%

significance level provides greater confidence to the decision than 5%

significance level.

There are two types of tests.

One-tailed and two-tailed tests

A hypothesis test may be one-tailed or two-tailed. In one-tailed test the test-

statistic for rejection of null hypothesis falls only in one-tail of sampling

distribution curve.



Example: In a right side test, the critical region lies entirely in the right tail of

the sample distribution. Whether the test is one-sided or two-sided –

depends on alternate hypothesis.

Example: A tyre company claims that mean life of its new tyre is 15,000 km.

Now the researcher formulates the hypothesis that tyre life is = 15,000 km.

A two-tailed test is one in which the test statistics leading to rejection of null

hypothesis falls on both tails of the sampling distribution curve as shown.

When we should apply a hypothesis test that is one-tailed or two-tailed

depends on the nature of the problem. One-tailed test is used when the

researcher's interest is primarily on one side of the issue.

Example: A product is manufactured by a semi-automatic machine. Now,

assume that the same product is manufactured by the fully automatic

machine. This will be two-sided test, because the null hypothesis is that "the

two methods used for manufacturing the product do not differ significantly".

H0 = 1 = 2

Sign of alternate hypothesis Type of test

= / Two-sided

< One-sided to right

> One-sided to left

Degree of freedom

It tells the researcher the number of elements that can be chosen freely.

Example: a + b/2 = 5. fix a = 3, b has to be 7. Therefore, the degree of

freedom is 1.



Select test criteria

If the hypothesis pertains to a larger sample (30 or more), the Z-test is used.

When the sample is small (less than 30), the T-test is used.

Compute

Carry out computation.

Make decisions

Accepting or rejecting of the null hypothesis depends on whether the

computed value falls in the region of rejection at a given level of

significance.


3. The two types of hypotheses are ______ hypothesis and ________

hypothesis

4. Accepting or rejecting of the null hypothesis depends on whether the

computed value falls in the ______ at a given level of significance.

5. A hypothesis test may be ______ or ______ .

11.4 Tests of Significance

The following are the factors to be taken into account before judging

whether hypothesis is good or not. Some of the characteristics of a

hypothesis to be good are:

1. Clarity of concepts

2. Whether possible to test or not?

3. Whether “what is to be tested is clear or not”?

4. Whether appropriate statistical techniques are available for testing?

5. Whether logical derivation is possible or not?

6. Whether bias or subjectivity is eliminated or not. Objectivity should be

the sole criteria?

7. Whether the hypothesis is simple or not?

8. Adequate theoretical backing is a prerequisite for hypothesis testing

1. Clarity of concepts: Concepts should not be abstract. If concepts are

not clear, precise problem formulation will be difficult leading to difficulty

in data collection. Concepts are important because, it means different to

different people. The way concept is understood depends on the needs

of a person.



Example: Wearing a sunglass represents a life style for a student,

whereas it is a eye protecting device to a doctor. Therefore different

people hold different concepts about the same object. Concept can be

classified as concrete concepts and abstract concepts. Concrete

concepts are tangible things like chair or book. Abstracts concepts refer

to characteristics of items such as attitude, motivation etc. concepts can

also refer to different phenomenon.

Example: Same word may have several meaning. The researcher may

use a word in one context but it may mean different to different people.

2. Ability to test: It should be possible to verify the hypothesis. Therefore

a good hypothesis is one in which there is empirical evidence.

Example: “Children of rich parents do not do well in their studies”.

“Most multinationals do not follow ethical codes” statement such as

above, which are general in nature should be avoided.

3. Specific/Clear: What is to be tested should be clear. The relationship

between the variables should clear or the statistic under verification

should be mentioned clearly.

Example: Two wheeler manufactured by company “A” gives better

mileage than that manufactured by company “B”. Here what is to be

verified is clear and specific.

4. Statistical tools: Hypothesis should be such that, it is possible to use

statistical techniques. Such as Anova, Chi square, t test or other non

parametric tests.

5. Logical: If there is 2 or more Hypothesis derived from the same basic

theory, they should not contradict each other.

Example: All objects dropped from a height come down. Stone is an

object. Therefore when dropped from a height should come down.

6. Subjectivity: Researchers subjectivity or his biased judgement should

be eliminated from the hypothesis.

Example: older sales man sells less than younger salesman. This may

be a biased opinion. As a matter of fact, older salesman may be selling

more due to their experience and rapport developed with the customer.

7. Simple: Hypothesis should be simple. Simple means less constraints or

assumptions before formulating it.



Example: Our advertisement and our sales are related. Here the

assumption made is that “No other factor other than our advertisement is

responsible for our sales. In reality, the advertiser should know that

competitor‟s activity, which is beyond the control of the advertiser is

assumed to be non existent. This may be done by the researcher to

make the hypothesis simple. In reality it is not so.

8. Theory: Hypothesis must be supported or backed up by theoretical

relevance.

Example: Attitude of customer towards a new product introduction. This

study is very well backed up by theory on consumer behaviour.

Activity 2:

A study was conducted to measure the motivation level of each of

the category of managers. Formulate a hypothesis, suggesting

testing procedures to show that there is no relation between the

category of managers and the level of motivation.


6. Every test of significance begins with a ____________ .

7. A significance test consists of calculating the ______ of obtaining a

statistic as different or more different from the null hypothesis.

11.5 Sources of Hypothesis

Hypothesis can be derived from many sources:

1. Theory

2. Observation

3. Past experience

4. Case studies

1. Theory: Theory on the subject can act as a source of hypothesis. We

start of from a general premise and then formulate hypothesis.

Example: Providing employment opportunity is an indicator of social

responsibility of a government enterprise. From the above several

hypothesis, it can be deduced that:

(a) Public enterprise has greater social concern than other enterprises

(b) Peoples perception of government enterprise is social concern.

(c) Govt enterprise helps in improving the life of less privileged people.



2. Observation: Peoples‟ behaviour is observed. In this method we use

observed behaviour to infer the attitudes. This is indirect method of

attitude measurement. Direct observation is used to get insights into

research behaviour and other related issues.

Example: A shopper in a supermarket may be disguised, to watch the

customer in the stores. The following may be observed. (a) How the

customer approaches the – Product category (b) How long he/she

spends in front of display. (c) Whether the customer had difficulty in

locating the product. Collect all these data and formulate a hypothesis

regarding the behaviour of the customer towards the product.

3. Past experience: Here researcher goes by past experience to formulate

the hypothesis

Example: A dealer may state that fastest moving kid‟s apparel is frock.

This may be verified.

4. Case studies: Case studies published can be used as a source for

hypothesis. Normally this is done before the launch of a product to find

customer taste and preferences

Similarity: This could be with respect to similarity in activities of human

beings.

Example: Dress, food habits or any other activities found in human

living in different parts of the globe.


8. Theory on the subject can act as a source of ____________.

9. Under observation method, we use observed behaviour to infer the

_________ .

10. _________ published can be used as a source for hypothesis.

11.6 Errors in Hypothesis Testing

There are two types of errors:

1. Hypothesis is rejected when it is true.

2. Hypothesis is not rejected when it is false.

(1) is called Type 1 error ( ), (2) is called Type 2 error ( ). When a =0.10 it

means that true hypothesis will be accepted in 90 out of 100 occasions.

Thus, there is a risk of rejecting a true hypothesis in 10 out of every 100



occasions. To reduce the risk, use a = 0.01 which implies that we are

prepared to take a 1% risk i.e., the probability of rejecting a true hypothesis

is 1%. It is also possible that in hypothesis testing, we may commit Type 2

error () i.e., accepting a null hypothesis which is false. The only way to

reduce Type 1 and Type 2 error is by increasing the sample size.

Example of Type 1 and Type 2 error: Type 1 and Type 2 error is

presented as follows. Suppose a marketing company has 2 distributors

(retailers) with varying capabilities. On the basis of capabilities, the company

has grouped them into two categories (1) Competent retailer

(2) Incompetent retailer. Thus R1 is a competent retailer and R2 is an

incompetent retailer. The firm wishes to award a performance bonus (as a

part of trade promotion) to encourage good retailership. Assume that two

actions A1 and A2 would represent whether the bonus or trade incentive is

given and not given. This is shown as follows:

Action (R1) Competent

retailer

(R2) Incompetent retailer

A 1 performance

bonus is awarded

Correct decision Incorrect decision error ()

A 2 performance

bonus is not awarded

Incorrect decision error

()

Correct decision

When the firm has failed to reward a competent retailer, it has committed

type-2 error. On the other hand, when it was rewarded to an incompetent

retailer, it has committed type-1 error.

Self assessment questions

11. _________ error is when a hypothesis is rejected when it is true.

12. _________ error is when a hypothesis is not rejected when it is false.

11.7 Student’s T-Distribution

T-test is used when the sample size n < 30.

A t-test is any statistical hypothesis test in which the test statistic follows a

Student's t distribution if the null hypothesis is true. It is most commonly

applied when the test statistic would follow a normal distribution if the value

of a scaling term in the test statistic were known. When the scaling term is

unknown and is replaced by an estimate based on the data, the test statistic

follows a Student's t distribution.



The important properties of the Student t distribution are:

The Student t distribution is different for different sample sizes.

The Student t distribution is generally bell-shaped, but with smaller

sample sizes shows increased variability (flatter). In other words, the

distribution is less peaked than a normal distribution and with thicker

tails. As the sample size increases, the distribution approaches a normal

distribution. For n > 30, the differences are negligible.

The mean is zero (much like the standard normal distribution).

The distribution is symmetrical about the mean.

The variance is greater than one, but approaches one from above as the

sample size increases (2 = 1 for the standard normal distribution).

It takes into account the fact that the population standard deviation is

unknown.

The population is essentially normal (unimodal and basically symmetric)

Among the most frequently used t-tests are:

A one-sample location test of whether the mean of a normally distributed

population has a value specified in a null hypothesis.

A two sample location test of the null hypothesis that the means of two

normally distributed populations are equal. All such tests are usually

called Student's t-tests, though strictly speaking that name should only

be used if the variances of the two populations are also assumed to be

equal; the form of the test used when this assumption is dropped is

sometimes called Welch's t-test. These tests are often referred to as

"unpaired" or "independent samples" t-tests, as they are typically applied

when the statistical units underlying the two samples being compared

are non-overlapping.

A test of the null hypothesis that the difference between two responses

measured on the same statistical unit has a mean value of zero. For

example, suppose we measure the size of a cancer patient's tumor

before and after a treatment. If the treatment is effective, we expect the

tumor size for many of the patients to be smaller following the treatment.

This is often referred to as the "paired" or "repeated measures" t-test.

A test of whether the slope of a regression line differs significantly

from 0.




13. t-distribution is generally _________ shaped.

14. t-distribution is _________ for different sample sizes.

11.8 Kruskal-Wallis Test

The Kruskal-Wallis Test was developed by Kruskal and Wallis jointly and is

named after them. The test is used, when more than two populations are

involved. It enables us to know whether independent samples have been

drawn from the same population or from different populations having the

same distribution.

This test is used to find out whether two or more independent samples are

drawn from an identical population. This test is also called the H Test. Mann

Whitney test is used when only two populations are involved and Kruskal-

Wallis test is used when more than two populations are involved.

Hypothesis in Kruskal-Wallis Test

Null hypothesis: assumes that the samples are from identical populations.

Alternative hypothesis: assumes that the sample comes from different

populations.

Assumption in Kruskal-Wallis Test

1. In Kruskal-Wallis Test, we assume that the samples drawn from the

population are random.

2. In Kruskal-Wallis Test, we also assume that the cases of each group are

independent.

3. The measurement scale for Kruskal-Wallis Test should be at least

ordinal

Self assessment questions

15. The Kruskal-Wallis test is used, when more than _________.

populations are involved.

16. This test will enable us to know whether independent samples have

been drawn from the same population or from different populations

having the _________ distribution.

11.9 Kolmogorov-Simmov Test

The Kolmogorov-Smirnov test (KS-test) is one of the useful and general

nonparametric method for comparing two samples. It can be used to test



whether the two samples are different in the location and the shape of

empirical distribution functions. As a nonparametric test, it does not require

the normality of the population. This is used for examining the efficacy of fit

between observed samples and expected frequency distribution of data

when the variable is in the ordinal scale.

Example: A manufacturer of cosmetics wants to test four different shades of

the liquid foundation compound - very light, light, medium and dark. The

company has hired a market research agency to determine whether any

distinct preference exists towards either extreme. If so, the company will

manufacture only the preferred shade, otherwise, the company is planning

to market all shades. Suppose, out of a sample of hundred, 50 preferred

"very light shade" 30 liked light shade, 15 the medium shade, and 50 dark

shades. Do you think the results show any kind of preference?

The Kolmogorov-Smirnov test (KS-test) tries to determine if two datasets

differ significantly. The KS-test has the advantage of making no assumption

about the distribution of data. (Technically speaking it is non-parametric and

distribution free.) Note however, that this generality comes at some cost:

other tests (for example Student's t-test) may be more sensitive if the data

meet the requirements of the test. In addition to calculating the D statistic,

this page will report if the data seem normal or lognormal. (If it is silent,

assume normal data at your own risk!) It will enable you to view the data

graphically which can help you understand how the data is distributed.

How the Kolmogorov-Simmov test works

In looking at a list of numbers, for example, the controlB group results from

the second example:

Control B = {1.26, 0.34, 0.70, 1.75, 50.57, 1.55, 0.08, 0.42, 0.50, 3.20, 0.15,

0.49, 0.95, 0.24, 1.37, 0.17, 6.98, 0.10, 0.94, 0.38}

it is hard to see the general situation. Thus descriptive statistics were

developed to reduce the list of all the data items to a few simpler numbers.

Thus we can perhaps better interpret data set from the following:

Mean = 3.61

Median = 0.60

High = 50.6 Low = 0.08

Standard Deviation = 11.2



We can see from this that something is abnormal. For normally distributed

data you should expect about 15% of the data to lie more than 1 standard

deviation below the mean (i.e., below 3.61-11.2=-7.59), but no data are that

small, in fact no datum is even negative. Similarly only about 2% of the data

should be more than 2 standard deviations above the mean (i.e., above

3.61+2×11.2=26.01), but in fact we have one data-point (50.57) way beyond

that (hence an "outlier"). Something is funny about the distribution of this

data; we need a way to look at how the data is distributed.

Activity 3:

What type of error evolved in hypothesis? Suggest the use of all

types of errors.


17. The Kolmogorov-Simmov test tries to determine if _________ differ

significantly.

18. The value of the _________ statistic is not affected by scale changes

like using log.

11.10 Summary

Hypothesis is a proposition which the researcher wants to verify. There are

two types of hypothesis, descriptive and relationship, there are several types

of hypothesis such as theory, observation, past experience and case

studies. There are several characteristics of the hypothesis, which decides

whether a hypothesis is good or bad. Researcher will form 2 hypothesis (a)

Null hypothesis (b) Alternative hypothesis, for accepting or rejecting the

statement. There are 2 types of tests one tailed test or two tailed test. Two

types of error may occur while testing hypothesis (a) Hypothesis is rejected

when it is true (b) Hypothesis not rejected when it is false former is known

as types error and later is known as type 2 error.

Glossary

t-Distribution: continuous probability distribution that arises in the problem

of estimating the mean of a normally distributed population when the sample

size is small

Type-I error: also known as an "error of the first kind", an error, or a "false

positive": the error of rejecting a null hypothesis when it is actually true.



Type-II error: also known as an "error of the second kind", a error, or a

"false negative": the error of failing to reject a null hypothesis when it is in

fact not true. In other words, this is the error of failing to observe a difference

when in truth there is one, thus indicating a test of poor sensitivity.


1. Discuss hypothesis and its types.

2. Explain the various sources from which hypothesis are derived.

3. What are the characteristics of hypothesis?

4. What are the various steps used to test hypothesis?

5. What is null hypothesis and alternate hypothesis?

11.12 Answers


1. Working

2. differences, association

3. null, alternate

4. region of rejection

5. one-tailed, two-tailed

6. null hypothesis

7. probability

8. hypothesis.

9. attitudes

10. Case studies

11. Type 1

12. Type 2

13. bell

14. different

15. two

16. same

17. two datasets

18. D


1. Refer to 11.2 – Discuss with examples

2. Refer to 11.5.

3. Refer to 11.4 – Explain each one in detail



4. Refer to 11.3

5. Refer to 11.6 – Explain with examples.

Mini-case

Sandwich Corner was a regional fast food chain, with 150 outlets throughout

the country. The balance sheet of previous year showed that, last year‟s

sales varied from Rs. 6 lakhs to Rs. 12 lakhs per outlet depending on size

and location, average sales per outlet was around Rs. 8 lakhs.

Recently, Sandwich Corner introduced pizza to its menu in a selected group

of 30 outlets. This was the costliest item, around Rs. 65 per piece. The

management wanted to evaluate the potential impact of pizza on over all

sales in the selected outlets, before deciding whether to offer the pizza, in all

its outlets.

Before selecting the 30 outlets for test marketing, all the outlets were

arranged from smallest to biggest, based on previous year sales. Then,

using systematic random sampling, one outlet between first and sixth outlet

in the list is chosen. This method is continued till 30 outlets are chosen. The

previous year‟s annual sale per outlet, within the group of 30 was Rs. 7

lakhs.

Pizza was introduced in the beginning of July, and monthly sales in 30 test

outlets were monitored up to end of December. During this 6 month period,

from July to December, point of promotion displays was setup in all the

outlet selling pizza. The message was “Try out the special dish exclusively

made for you”. Except for „point of purchase‟ display in 30 outlets, no other

form of promotion was undertaken. The reason for not promoting in

newspapers, radio was that pizza was not available in all the outlets. In the

same city, one outlet offered pizza and the other did not. Therefore the

management thought that mass media may not be appropriate for

promotion.

Study of sales impact on the introduction of pizza

Average monthly sales during six month period (July through December) for

the rest were approximately Rs. 60,000 per month. The average monthly

sales for the same outlets, during the six months preceding the introduction

of pizza (January through July) had been Rs. 68,000 per month. The

management of Sandwich Corner was quite disappointed with these results.



For comparison purpose. The management examined the first six months

and second six months average monthly sales for the 30 test outlets during

the past two years. The figures are as follows:

Jan-Jun Jul-Dec

Last Year 70,000 68,000

Year Before Last 66,000 63,000

After comparing this year‟s sales in these test outlets, with the sales figure

tabulated, the management concluded that pizza “was not a viable new

product” capable of significantly adding to Sandwich Corner‟s sales.

Therefore they decided to withdraw the product.

Question

Do you agree/disagree with the decision made by Sandwich Corner? Why?

Give reasons.

Hint: Proceed step by step while reaching to the decision.



Unit 12 Using Statistical Package for the

Social Sciences Structure

12.1 Introduction

Objectives

12.2 Concept of Statistical Package for the Social Sciences

12.3 Statistical Package for the Social Sciences Products

12.4 Loading/Using of Statistical Package for the Social Sciences

12.5 Summary


12.7 Answers

12.1 Introduction

In the earlier units, you came to know about the hypothesis testing. In this

unit, you will study about the SPSS package used for the purpose of

marketing research.

In this unit, you learn to know the SPSS is a computer application that

provides statistical analysis of data. It allows for in-depth data access and

preparation, analytical reporting, graphics and modelling.

SPSS (originally, Statistical Package for the Social Sciences) is a software

program developed in the late 1960s by graduate students at Stanford

University. Although initially created to manage a large survey research

project of citizen participation in seven nations, the package quickly gained

popularity, and was greatly enhanced over the next few years. In 1985, a

microcomputer version of SPSS for IIBM-compatible personal computers

was introduced, which included many of the most popular features of the

mainframe version of SPSS. Today there are more than one million users of

SPSS in academic, business, government, and non-profit organizations.

This unit on using SPSS will help you get familiar with the use of SPSS tool

for the purpose of marketing research.

Objectives


Explain SPSS

Describe highlights of previous versions of SPSS

SPSS use as a marketing research tool



12.2 Concept of Statistical Package for the Social Sciences

SPSS is the data analysis package of choice for people wanting to analyze

quantitative data. However, most researchers find dealing with quantitative

data quite daunting. Although most researchers are quite comfortable with

qualitative research methods and analyses, they tend to shy away from

using quantitative statistics. However, the ability to perform quantitative data

analysis is increasingly becoming an important skill for researchers to

possess. Actually most people’s fear of statistics is unfounded. The advent

of computer software programmes such as SPSS that can be used to

analyze data, has meant that people do not have to know or learn

mathematical formulae in order to be able to perform quantitative statistical

analyses. Nowadays, all one needs to know is the appropriate analyses to

perform on their data and how to do it so they can obtain the information

they need to know.

Knowledge of SPSS is useful because:

SPSS is a leader in the field of market research and social surveys

It has been in the forefront of these fields for over 40 years

It is a very powerful piece of software that will enable you to carry out

quantitative analysis in seconds

You can legitimately see it as an extension or complement to Excel

It is easier to use than other packages when it comes to handling large

datasets

It may help you get a job in the job market.

Statistical Package for the Social Sciences for Windows

SPSS for Windows is a comprehensive, interactive, general-purpose

package for data analysis and it includes most routine statistical techniques.

SPSS is a true Windows package being mouse-driven with movable,

scalable windows, drop-down menus and dialog boxes. Underlying the

graphical interface is a command language consistent with previous

versions of the package.

SPSS for Windows is probably one of the easiest major statistics package to

use. It allows even inexperienced users to run complicated statistical

analyses at the click of a few buttons. When you are at the PC, you are in

charge of the package and it will attempt to do whatever you ask it, whether

your instructions are sensible or not. The adage of garbage in, garbage out



applies. It is therefore essential that you get a good understanding of the

commands that you need to use and what the results mean.

SPSS for Windows provides a powerful statistical analysis and data

management system in a graphical environment, using descriptive menus

and simple dialog boxes to do most of the tasks for you. Simply pointing and

clicking the mouse can accomplish most tasks.

SPSS provides a powerful statistical-analysis and data-management system

in a graphical environment, using descriptive menus and simple dialog

boxes to do most of the work for you.

In addition to the simple point-and-click interface for statistical analysis,

SPSS provides:

Data editor: The Data Editor is a versatile spreadsheet-like system for

defining, entering, editing, and displaying data.

Viewer: The Viewer makes it easy to browse your results, selectively

show and hide output, change the display order results, and move

presentation-quality tables and charts to and from other applications.

Multidimensional pivot tables: Your results come alive with

multidimensional pivot tables. Explore your tables by rearranging rows,

columns, and layers. Uncover important findings that can get lost in

standard reports. Compare groups easily by splitting your table so that

only one group is displayed at a time.

High-resolution graphics: High-resolution, full-color pie charts, bar

charts, histograms, scatter-plots, 3-D graphics, and more are included

as standard features.

Database access: Retrieve information from databases by using the

Database Wizard instead of complicated SQL queries.

Data transformations: Transformation features help get your data

ready for analysis. You can easily subset data; combine categories; add,

aggregate, merge, split, and transpose files; and more.

Online help: Detailed tutorials provide a comprehensive overview;

context-sensitive Help topics in dialog boxes guide you through specific

tasks; pop-up definitions in pivot table results explain statistical terms;

the Statistics Coach helps you find the procedures that you need; Case

Studies provide hands-on examples of how to use statistical procedures

and interpret the results.



Command language: Although most tasks can be accomplished with

simple point-and-click gestures, SPSS also provides a powerful

command language that allows you to save and automate many

common tasks. The command language also provides some

functionality that is not found in the menus and dialog boxes.

New added to Statistical Package for the Social Sciences 16.0

User Interface Enhancements: Enhancements to the point-and-click

interface include:

All dialog boxes are now resizable. The ability to make a dialog box

wider makes variable lists wider so that you can see more of the variable

names and/or descriptive labels. The ability to make a dialog box longer

makes variable lists longer so that you can see more variables without

scrolling.

Drag-and-drop variable selection is now supported in all dialog boxes.

Variable list display order and display characteristics can be changed on

the fly in all dialog boxes. Change the sort order (alphabetic, file order,

measurement level) and/or switch between display of variable names or

variable labels whenever you want.

Data and Output Management: Data and output management

enhancements include:

Read and write Excel 2007 files.

Choose between working with multiple datasets or one dataset at a time.

Search and replace information in Viewer documents, including hidden

items and layers in multidimensional pivot tables.

Assign missing values and value labels to any string variable, regardless

of the defined string width (previously limited to strings with a defined

width of 8 or less bytes).

New character-based string functions.

Output Management System (OMS) support for Viewer file format (.spv)

and VML-format charts and image maps with pop-up chart information

for HTML documents.

Customize Variable View in the Data Editor. Change the display order of

the attribute columns, and control which attribute columns are displayed.

Sort variables in the active dataset alphabetically or by attribute

(dictionary) values.



Spell check variable labels and value labels in Variable View.

Change basic variable type (string, numeric), change the defined width

of string variables, and automatically set the width of string variables to

the longest observed value for each variable.

Read and write Unicode data and syntax files.

Control the default directory location to look for and save files.

Performance: For computers with multiple processors or processors with

multiple cores, multithreading for faster performance is now available for

some procedures.

Statistical Enhancements: Statistical enhancements include:

Partial Least Squares (PLS): A predictive technique that is an

alternative to ordinary least squares (OLS) regression, canonical

correlation, or structural equation modeling, and it is particularly useful

when predictor variables are highly correlated or when the number of

predictors exceeds the number of cases.

Multilayer Perceptron (MLP): The MLP procedure fits a particular kind

of neural network called a multilayer perceptron. The multilayer

perceptron uses a feed-forward architecture and can have multiple

hidden layers. The multilayer perceptron is very flexible in the types of

models it can fit. It is one of the most commonly used neural network

architectures. This procedure is available in the new Neural Networks

option.

Radial Basis Function (RBF): A Radial basis function (RBF) network is

a feed-forward, supervised learning network with only one hidden layer,

called the radial basis function layer. Like the multilayer perceptron

(MLP) network, the RBF network can do both prediction and

classification. It can be much faster than MLP, however it is not as

flexible in the types of models it can fit. This procedure is available in the

new Neural Networks option.

Generalized Linear Models supports numerous new features, including

ordinal multinomial and Tweedie distributions, maximum likelihood

estimation of the negative binomial ancillary parameter, and likelihood-

ratio statistics. This procedure is available in the Advanced Models

option.



Cox Regression now provides the ability to export model information to

an XML (PMML) file. This procedure is available in the Advanced

Models option.

Complex Samples Cox Regression: Apply Cox proportional hazards

regression to analysis of survival times – that is, the length of time

before the occurrence of an event for samples drawn by complex

sampling methods. This procedure supports continuous and categorical

predictors, which can be time-dependent. This procedure provides an

easy way of considering differences in subgroups as well as analyzing

effects of a set of predictors. The procedure estimates variances by

taking into account the sample design used to select the sample,

including equal probability and Probability Proportional to Size (PPS)

methods and With Replacement (WR) and Without Replacement (WOR)

sampling procedures. This procedure is available in the Complex

Samples option.


1. SPSS stands for _________.

2. SPSS for Windows is a package for _________.

12.3 Statistical Package for the Social Sciences Products

SPSS is used by market researchers, health researchers, survey

companies, government, education researchers, marketing organizations

and others. In addition to statistical analysis, data management (case

selection, file reshaping, creating derived data) and data documentation (a

metadata dictionary is stored with the data) are features of the base

software.

The developers of the Statistical Package for the Social Sciences (SPSS)

made every effort to make the software easy to use. This prevents you from

making mistakes or even forgetting something. That's not to say it's

impossible to do something wrong, but the SPSS software works hard to

keep you from running into the ditch. To foul things up, you almost have to

work at figuring out a way of doing something wrong.

You always begin by defining a set of variables, and then you enter data for

the variables to create a number of cases. For example, if you are doing an

analysis of automobiles, each car in your study would be a case. The



variables that define the cases could be things such as the year of

manufacture, horsepower, and cubic inches of displacement. Each car in

the study is defined as a single case, and each case is defined as a set of

values assigned to the collection of variables. Every case has a value for

each variable. (Well, you can have a missing value, but that's a special

situation described later.)

Variables have types. That is, each variable is defined as containing a

specific kind of number. For example, a scale variable is a numeric

measurement, such as weight or miles per gallon. A categorical variable

contains values that define a category; for example, a variable named

gender could be a categorical variable defined to contain only values 1 for

female and 2 for male. Things that make sense for one type of variable don't

necessarily make sense for another. For example, it makes sense to

calculate the average miles per gallon, but not the average gender.

After your data is entered into SPSS – your cases are all defined by values

stored in the variables – you can run an analysis. You have already finished

the hard part. Running an analysis on the data is much easier than entering

the data. To run an analysis, you select the one you want to run from the

menu, select appropriate variables, and click the OK button. SPSS reads

through all your cases, performs the analysis, and presents you with the

output.

You can instruct SPSS to draw graphs and charts the same way you instruct

it to do an analysis. You select the desired graph from the menu, assign

variables to it, and click OK.

When preparing SPSS to run an analysis or draw a graph, the OK button is

unavailable until you have made all the choices necessary to produce

output. Not only does SPSS require that you select a sufficient number of

variables to produce output, it also requires that you choose the right kinds

of variables. If a categorical variable is required for a certain slot, SPSS will

not allow you to choose any other kind. Whether the output makes sense is

up to you and your data, but SPSS makes certain that the choices you make

can be used to produce some kind of result.

All output from SPSS goes to the same place – a dialog box named SPSS

Viewer. It opens to display the results of whatever you've done. After you

have output, if you perform some action that produces more output, the new



output is displayed in the same dialog box. And almost anything you do

produces output.


3. On SPSS wealways begin by defining a _________.

4. SPSS _________ models predict behaviour or events when your data

go beyond the assumptions of simpler regression techniques.

12.4 Loading/Using of Statistical Package for the Social Sciences

Click on the SPSS option to load and run SPSS. You may get a screen that

looks like this:



If you do, click on the cancel button at the bottom of the dialogue box to

remove it. You will see Untitled SPSS Data Editor screen.

When you load and run the SPSS package it opens up a menu bar and two

views. These are the Data View (currently visible) and the Variable View.

Menu Bar: This provides a selection of options (File Edit View Data.....)

which allow you for example to open files, edit data, generate graphs,

create tables and perform statistical analyses. Selecting from this menu

bar will, like in other windows packages, provide further pull-down

menus and dialogue boxes.

Data View: This sheet contains your data (once you have entered it!),

each column representing a variable for which data are available and

each row representing that data for an individual or case. At present this

sheet should be blank. As this sheet is currently selected its name on

the tab at the bottom is in bold.

Variable View: At present this sheet is not visible as the variable view

sheet is not active. Consequently the name is not in bold.



The menu bar options are used as follows:

File is used to access any files whether you want to Open an existing

SPSS file or read data in from another application such as Excel of

dBase, or start a New file. It is also the menu option you choose to Save

files.

Edit can be used to alter data or text in the Data View or the Variable

View.

View can be used to alter the way your screen looks. Please leave this

on the default settings.

Data is used to define variables and make changes to the data file you

are using.

Transform is used to make changes to selected variable(s) in the data

file you are using. This can include recode(ing) existing variables and

compute(ing) new variables.

Analyze is used to undertake a variety of analyses such as producing

Reports, Calculating Descriptive Statistics such as Frequencies and

Crosstabs (crosstabulations) and associated summary statistics, as well

as various statistical procedures such as Regression and Correlation.

Graph is used to create a variety of graphs and charts such as Bar, Line

and Pie charts.

Utilities are for more general housekeeping such as changing display

options and fonts, displaying information on variables.

Window operates in the same way as other Windows packages.

Help is a context sensitive help feature which operates the same way as

other Windows packages.

Enter the data in the SPSS data editor after creating variables. Then save

the files as TEACH which will be saved as TEACH.SAV

You will now see the file appear in the Data View and the filename above

the menu bar change to TEACH.SAV



Example 1: To check how variables have been coded

To check what the column heading for each variable and the codes refer to:

click on the Variable View sheet at the bottom of the screen. You will now

see:

The first column contains the variable Name, in the case of the first row

“gender”. This is the column heading that appears in the Data View.

The second column refers to the Type of data. Although gender is

categorical data, it is refereed to as numeric because numeric code values

have been used. The key to these code values is given in the column

headed Values.

The fifth column contains the variable’s Label. At present this is partially

obscured by the subsequent column. To see the full value label:

(a) Move your mouse pointer in-between the Label and the Values column

headings so that the appears.

(b) Click and drag the column width to the right until the variable’s label can

be read.

(Note: if you wish to edit a variable’s label just retype the label in the

appropriate cell)



The sixth column contains the key to the codes used for each variable.

These are known as the Values Labels.

To see the Value Labels used:

(a) Click on the cell containing the first value for the variable gender

(b) Click on the to the right of this cell

The following dialogue box will be displayed:

It shows the current value labels for this variable.

Note: you can also use this option to change each value label for the codes

or enter new value labels.

Example 2: Frequency distribution

Return to the Data View

Click on Analyse then Descriptive Statistics then Frequencies

This will usually give the Frequencies dialogue box. However sometimes

the variables in the left hand box are arranged alphabetically.



If the variables are arranged alphabetically use the downward arrow on the

left hand box to scroll down until gender appears.

Highlight gender in the left hand box by clicking on it. Click on the button to

move gender into the Variable(s) box and then click on OK

You will now see a series of tables displayed in the SPSS Output Viewer.

Note how SPSS first tells you if there are any missing cases. For this

variable there is one missing case.



To save the contents of the SPSS Output Viewer to a file

(a) Ensure that the SPSS Output Viewer window is maximised

(b) Click on File, Save as

(c) Type in the filename you wish to save it to in the File name box, making

sure the file type is *.spo

(d) Ensure that the file is being saved to the correct drive and directory

(N.B. please don't save output from the teach.sav file)

(e) Click on the Save button

Example 3: To produce a bar chart

(a) Click on Analyze, Descriptive Statistics, Frequencies

(b) Dselect all variables by clicking on the Reset button

(c) Scroll down and select the variable social class in the normal way

(d) Click on the charts button, you will see the following dialogue box:

(e) Click on the Bar Chart(s) radio button and then on the Continue button

(f) At the Frequencies dialogue box click on OK

The SPSS Output Viewer should now contain your bar chart.

Notice that missing data are automatically excluded from the chart. Notice

also that you are presented with a different menu bar which allows you to

Edit the current chart and other options such as Delete.




5. When you load and run the SPSS package it opens up a menu bar and

_________ views.

6. In SPSS, the results of the correlation will appear in the _________.

7. The positive sign of the _________ indicates that this relationship is

positive.

12.5 Summary

Statistical software systems have been available for performing basic

statistical analysis since the early years of the computer. These systems

analyze large volumes of data and compute basic statistics such as means

and standard deviations. They also compare sets of numbers and use such

tests as t-tests and chi-square tests to determine how similar or different the

number sets are. More sophisticated routines like multiple regression and

analysis of variance are also included.

While a variety of statistical software systems exist, SAS and SPSS-X are

the most robust packages for the MDSS. Due to the vast knowledge of

mathematical and statistical background needed to use these systems,

however, they are usually the favorite choice for the research analyst, not

the manager. Therefore, managerial function software systems are also

incorporated into the MDSS.



The SPSS, Inc. software package is designed to be user-friendly, even for

novice computer users. Released in the Microsoft Windows format and

touted as “Real Stats. Real Easy,” SPSS delivers easy data access and

management, highly customizable output, complete just-in-time-training, and

a revolutionary system for working with charts and graphs. The producers of

SPSS proudly claim that “you don’t have to be a statistician to use SPSS,”

an important characteristic for individuals who are somewhat afraid of

computers and their power. Available in almost any format, SPSS provides

immense statistical analysis capability while remaining one of the most user-

friendly statistical packages available today.

Glossary

Data Editor: The data editor window is the default window when you run

SPSS. The data worksheet works just like a spreadsheet, where a column

represents a variable and a row represents a case or an observation

Data Transformation: converts data from a source data format into

destination data. It can be divided into two steps, namely data mapping

which maps data elements from the source to the destination and captures

any transformation that must occur and code generation that creates the

actual transformation program.

HTML: stands for Hyper Text Markup Language. It is not a programming

language, but a markup language (a set of markup tags).

Object Linking and Embedding, Database (OLEDB): An application

programming interface designed by Microsoft for accessing data from a

variety of sources in a uniform manner.


1. What you mean by SPSS?

2. What are the new features added in SPSS 16.0?

3. Explain SPSS base in detail.

4. Explain how will you calculate variance with the help of SPSS.

12.7 Answers


1. Statistical Package for the Social Sciences



2. data analysis

3. set of variables

4. Regression

5. two

6. Output Window

7. slope coefficient


1. Refer to 12.2

2. Refer to 12.2

3. Refer to 12.3

4. Refer to 12.4



Unit 13 Presentation of Research Results

Structure

13.1 Introduction

Objectives

13.2 Types of Reports

Oral Report

Written Report

13.3 Writing a Market Research Report

13.4 Components of the Report

13.5 Style and Layout

13.6 Revising and Finalizing the Report Text

13.7 Quality Research Report

13.8 Responsibilities of a Market

13.9 Research Report Writer

13.10 Presentation of the Report

13.11 Presentation Plan

13.12 Summary


13.14 Answers

13.1 Introduction

In this unit, you will learn about the research reporting is an essential

component of the research and knowledge translation process (KT).

Knowledge translation is facilitated when research is reported and

communicated with sufficient depth and accuracy for readers to interpret,

synthesize, and utilize the study findings. This unit emphasizes on reporting,

types of reports and how to interpret the qualitative & quantitative data, and

contents of report.

This unit on presentation of research report will help you get familiar with the

report writing to report presentation plan.

Objectives


Explain report writing concept

Describe components of report

Describe style and layout of report

Define research report writer



13.2 Types of Reports

There are two types of reports:

Oral report

Written report

13.2.1 Oral report

This type of reporting is required, when the researchers are asked to make

an oral presentation. Making an oral presentation is somewhat difficult

compared to the written report. This is because the reporter has to interact

directly with the audience. Any faltering during an oral presentation can

leave a negative impression on the audience. This may also lower the self-

confidence of the presenter. In an oral presentation, communication plays a

big role. A lot of planning and thinking is required to decide „What to say‟,

„How to say‟, „How much to say‟. Also, the presenter may have to face a

barrage of questions from the audience. A lot of preparation is required; the

broad classification of an oral presentation is as follows:

Nature of an oral presentation

Opening: A brief statement can be made on the nature of discussion

that will follow. The opening statement should explain the nature of the

project, how it came about and what was attempted.

Finding/Conclusion: Each conclusion may be stated backed up by

findings.

Recommendation: Each recommendation must have the support of

conclusion. At the end of the presentation, question-answer session

should follow from the audience.

Method of presentation: Visuals, if need to be exhibited, can be made

use of. The use of tabular form for statistical information would help the

audience.

Points to remember in oral presentation

Language used must be simple and understandable.

Time Management should be adhered.

Use of charts, graph etc. will enhance understanding by the audience.

Vital data such as figures may be printed and circulated to the audience

so that their ability to comprehend increases, since they can refer to it

when the presentation is going on.



The presenter should know his target audience well in advance to

prepare tailor-made presentation.

The presenter should know the purpose of report such as “Is it for

making a decision”, “Is it for the sake of information” etc.

13.2.2 Written Report

Types of Written Reports:

Reports can be classified based on the time-interval such as:

Daily

Weekly

Monthly

Quarterly

Yearly

Type of reports:

Short report

Long report

Technical report

Informal report

Government report

Short report: Short reports are produced when the problem is very well

defined and if the scope is limited, e.g. Monthly sales report. It will run into

about five pages. It consists of report about the progress made with respect

to a particular product in a clearly specified geographical locations.

Long report: This could be both a technical report as well as non-technical

report. This will present the outcome of the research in detail.

Technical report: This will include the sources of data, research procedure,

sample design, tools used for gathering data, data analysis methods used,

appendix, conclusion and detailed recommendations with respect to specific

findings. If any journal, paper or periodical is referred, such references must

be given for the benefit of reader.

Non-technical report: This report is meant for those who are not

technically qualified, e.g. Chief of the finance department. He may be

interested in financial implications only, such as margins, volumes etc. He

may not be interested in the methodology.



Informal report: The report prepared by the supervisor by way of filling the

shift log book, to be used by his colleagues.

Government report: These may be prepared by State Governments or the

Central Government on a given issue.

Other types of report

Incident report: a report describing how many goods or services were

sold, and the reasons for any differences from the plan.

Accident report: a report describing how close you are to completing

something you planned.

Progress report: an academic report on how and why something has

changed over time.

Recommendation report: a report on how practical a proposal is.


1. There are two types of reports, namely __________ report and

__________ report.

2. __________ reports are produced when the problem is very well defined

and if the scope is limited.

3. __________ report may be prepared by the supervisor by way of filling

the shift log book, to be used by his colleagues.

13.3 Writing a Market Research Report

The professional marketing research report must achieve four primary

objectives:

To effectively communicate the findings of the marketing research

project,

To provide interpretations of those findings in the form of sound and

logical recommendations,

To illustrate the credibility of the research project,

To serve as a future reference document for strategic or tactical

decisions.

The first and foremost objective of the research report is to effectively

communicate the findings of the marketing research project. Since the

primary purpose of the research project was to obtain information that will

answer specific questions in relation to a specific business problem, the



report must explain both how the information was obtained and what

relevance it has to the research questions. Best practices suggest that a

detailed description of the following factors be communicated to the client:

The specific research objectives.

The specific research questions the study was to answer.

Specific procedural information relevant to the collection of secondary

data (if necessary).

A description of the research methods employed.

Findings displayed in tables, graphs, or charts.

An accurate interpretation and summation of the findings.

Conclusions based on data analysis.

Recommendations and suggestions for their implementation.

Far too often, the researcher is so concerned about communicating results

that he or she forgets to provide a clear, logical interpretation of those

results. The researcher must always be aware that his or her level of

understanding regarding sampling methods and statistics, for example, may

not be the same as that of the user. Therefore, the researcher must always

attempt to take technical or complex information and present it in a manner

that is understandable to all parties concerned. Most researchers are often

fully armed with statistics, computer output, questionnaires, and other

project-related material. In presenting such information to the client, the

researcher should always rely on the original research objectives. The task

is to focus on each objective and communicate how each part of the project

is related to the accomplishment of that objective.

A critical dimension of the research report is to establish credibility of the

research methods, findings, and conclusions. This can be accomplished

only if the report is accurate, believable, and professionally organized.

These three dimensions cannot be treated separately, for they collectively

operate to build credibility into the research document. For the report to be

accurate, all of the input must be accurate. No degree of carelessness in

handling data, reporting statistics, or phasing outcomes must be tolerated.

Errors in mathematical calculations, grammatical errors, and incorrect

terminology are just a few types of inaccuracy that can serve to diminish the

credibility of the entire report.



Activity 1:

What are the good and bad effect of any research report based on

genuine project?


4. The main objective of the research report is to ________ the findings of

the marketing research project.

5. For the report to be accurate, all __________ must be accurate.

13.4 Components of the Report

Prior to commencing work on a report, a few queries should be raised by the

report-writer and satisfactorily answered. This enables the writer to produce

a highly focused report. The queries are central on the five W's and the one

H. What is the problem? What is it that needs to be ascertained? Clarity

along these lines helps in eliminating any redundancies that might crop up.

Identification of the genesis of the problem help in streamlining the

approach.

The five W's and One H are:

Why, What, Who, When, Where and How.

Questions like the following pertaining to these W's and H are to be

answered before writing the report:

1. Why is it important to study the problem?

2. Why (purpose) should the problem be analyzed?

3. What is its relevance and significance to the department in specific,

and organisation in general?

4. What are the benefits that will accrue as a result of this particular report

– to the department, the organisation, and the self?

5. Who is involved in the situation? This could take into account both the

reader(s) and the writer. In case there is a third party involved, it would

also account for that.

6. Who is going to be the reader of this report? With a change in the

reader, a change is visible in the manner of approach in the report.

7. When did the trouble start? In case it is an analytical report, one would

also need to address oneself to the source and time of the problem

before reaching any conclusion.



8. When am I going to write the report? The time factor is very important.

9. Where would the reader be at the time when he receives the report?

Would the reader read the report in a meeting or read it within the

confines of his room? There would definitely be a difference in the

manner of approach.

10. Finally, how would the report be written? What information is to be

included and what is to be excluded/which graphs and chart would be

used/avoided?

All these queries need to be satisfied before beginning a report. They give

the report a certain direction and help the writer to concentrate on making

the report acceptable to the audience for whom it is aimed.

There is no set outline that can be used in preparing reports. The most

appropriate form and contents of a particular report should be determined by

nature of the target audience. The following is the suggested broad outline

of a report.

1. Preliminary pages:

(a) Title page is showing the heading.

(b) Contents along with chapter headings and page numbers.

(c) Preface and acknowledgements

(d) Foreword

(e) List of tables

(f) List of graphs and diagrams

(g) Abbreviations

2. Main text

(a) Summary

i) Introduction

ii) Main findings

iii) Conclusions and Recommendations

(b) Introduction

i) Introducing the theme

ii) Review of related literature

iii) Methodology

(c) Results

i) Statistical analysis

ii) Testing of hypothesis



iii) Conclusions

iv) Recommendations

3. End Matter

(a) Annexure

(b) Bibliography

(c) Questionnaire

(d) Indexing

(e) Mathematical derivations

(f) Appendices


6. The five W's and One H are: __________ , __________ , __________,

__________ , __________ and __________.

7. The most appropriate form and contents of a particular report should be

determined by nature of the __________.

13.5 Style and Layout

Style of Report Writing:

Remember that the reader:

Has short of time,

Has many other urgent matters demanding his or her interest and

attention,

Is probably not knowledgeable concerning „research jargon‟.

Therefore, the rules are:

Simplify. Keep to the essentials.

Justify. Make no statement that is not based on facts and data.

Quantify when you have the data to do so. Avoid large, small, instead,

say 50%, one in three.

Be precise and specific in your phrasing of findings.

Inform, not impress. Avoid exaggeration.

Use short sentences.

Use adverbs and adjectives sparingly.

Be consistent in the use of tenses (past or present tense). Avoid the

passive voice, if possible, as it creates vagueness (e.g., „patients were

interviewed‟ leaves uncertainty as to who interviewed them) and

repeated use makes dull reading.



Aim to be logical and systematic in your presentation.

Layout of the report:

A good physical layout is important, as it will help your report:

Make a good initial impression,

Encourage the readers, and

Give them an idea of how the material has been organised so the reader

can make a quick determination of what he will read first.

Particular attention should be paid to make sure there is:

An attractive layout for the title page and a clear table of contents.

Consistency in margins and spacing.

Consistency in headings and subheadings, for example, font size 16 or

18 bold, for headings of chapters; size 14 bold for headings of major

sections; size 12 bold, for headings of sub-sections, etc.

Good quality printing and photocopying. Correct drafts carefully with

spell check as well as critical reading for clarity by other team-members,

your facilitator and, if possible, outsiders.

Numbering of figures and tables, provision of clear titles for tables, and

clear headings for columns and rows, etc.

Accuracy and consistency in quotations and references.


8. One of the most important points in report writing style is __________

needless words.

9. An __________ , ________ report stands a better chance of being read.

13.6 Revising and Finalizing the Report Text

Revise your report in the context of your research of any problem in the final

report and your findings make sure before finalize the report it should be in

proper shape with required changes. After revising your research report

throughly what the text and style used in the report. It should be good for

your report you make sure not use many type of text in the same report.

Activity 2:

On what criteria, oral report is evaluated. Suggest a suitable format.



Self Assessment Question

10. One must revise a report in the context of __________ of any problem in

the final report.

13.7 Quality Research Report

Before communicating the results of the project to the manager, the

researcher should keep several issues in mind for effective communication.

The first and foremost rule for writing the report is to empathize. The

researcher must keep in mind that the manager who is going to read and

utilize the findings of the research project might not be as technically

knowledgeable with statistical techniques or at times with the methodology.

Furthermore, the manager will be more interested in knowing how results

can be used for decision making rather than how they have been derived.

Therefore, the jargons and technical terms should be kept at minimum. If the

jargons cannot be avoided, then researcher should provide a brief

explanation for the manager to understand it.

The second rule researcher should keep in mind is related to the structure of

the report. The report should be logically structured and easy to follow. The

manager should easily be able to grasp the inherent linkages and

connections within the report. The write up should be succinct and to the

point. A clear and uniform pattern should be employed. One of the best

ways to check weather the structure of the report is sound or not, the report

should be critically looked at by some of the research team members.

Furthermore, researcher must make sure that the scientific rigour and

objectivity is not lost when presenting the research project findings. At times,

because of the heavy involvement of researcher in the overall research

process, it is possible that there is a loss of objectivity. Therefore,

researcher should keep a tab on the aspects of objectivity of the overall

report.

Many times managers do not like to see the results which oppose their

judgmental beliefs however the researcher must have the courage to

present the findings without any slat to conform to the expectations and

beliefs of the managers.




11. In report writing, the jargons and technical terms should be kept at

__________.

12. Researcher should keep a tab on the aspects of __________ of the

overall report.

13.8 Responsibilities of a Market

Market Analysis identifies critical intelligence topics, investigates relevant

market research, and communicates significant market insights and

implications.

Market Analysis provides thought leadership and timely, actionable market

insights, derived from the analysis of market research, marketplace data,

and expert opinion, in order to drive informed executive decision-making,

both within and across business units and functions.

Using consultative techniques and working with decision makers, the Market

Analyst identifies critical intelligence topics, investigates relevant market

research and information, develops analytical work plans, and forms

appropriate work teams in order to identify and communicate, through

written and oral presentations and reports, significant market insights and

concepts, and their implications, and provides relevant recommendations to

those decision-makers.

Market Data Analysts are skilled in:

Project framing – the ability to clearly define the internal client issue that

leads to the appropriate project scope and planning

Understanding customer wants and needs

Analyzing the competitive landscape

Assessing the marketplace

Identifying emerging growth trends and opportunities across various

dimensions including: economic, technological, financial, cultural and

other market segments, competitive, partnerships and alliances, and

customer value attributes

Evaluating performance/execution gaps and the development of

actionable recommendations.

Success is measured on the timeliness, clarity, and utility of the

actionable insights and analysis delivered.




13. Market Analysis identifies __________ topics, investigates relevant

market research, and communicates significant __________ and

implications.

14. Success of a market analysis is measured on the __________ ,

__________ , and __________of the actionable insights and analysis

delivered.

13.9 Research Report Writer

After having prepared an outline of the report, the researcher has to write it

down. Report writing is a job that needs some skill which can be developed

with practice. However, some broad principles of writing a report may be

followed:

Reports must be written objectively. Objectively is a prerequisite of good

research work. Absolute words such as „always‟ and „never‟, for

example, should be avoided. The researcher should not impose his

viewpoint on the reader, he should narrate the facts and draw such

inferences as can be drawn.

The report must be written in a concrete style. It must contain necessary

statistics to support the thesis. One should avoid the use of such vague

words as „several people‟, „a large number of respondents‟, „a few

interviewees‟ and „often‟.

The report must be organized and coherent, which can be ensured by

formulating a research outline prior to writing the report. Different

sections of the report must be given in a paper sequence so that the

reader is taken logically from beginning to end.

A research report or any formal report should be written in a impersonal

style, avoiding the use of the first-person. This would also help the writer

to remain more objective.

There must be absolute clarity in the presentation of ideas. Clarity in

writing is not possible in just one draft. The writer may have to revise the

draft once, twice or even several times to make it lucid and

understandable. A point that needs emphasis is that writing a research

report is different from writing an essay or literary piece. As such, the

writing should be plain and simple as the use of elegant words and



syntax variation is not needed in a research report. However, the report

need not be dull.

The report should be neat and tidy. Wherever possible, charts and

diagrams should be given. The write-up should be divided into different

paragraphs and suitable headings should be provided. If necessary,

paragraphs may be numbered to facilitate easy reference.

At the time of writing a quality report remember three things:

The writer, i.e. sender of the message

The receiver of the message

The message itself

The writer should engage in clear thinking before he sits down to write. As

he rightly says that this clear thinking “does not come in the early period of

incubation of thoughts “but only after lots of trial and error and thinking and

re-thinking” As regards the receiver of the message.

A report that achieves the goal of communicating with its readers is

generally one that meets the specific criteria of completeness, accuracy,

clarity and conciseness. These criteria are intimately related. An accurate

report, for example, is also a complete report. For discussion purpose,

however, it is helpful to discuss the criteria as if they were distinct.


15. At the time of writing a quality report remember three things: the

__________, the __________ and the __________.

16. The writer should engage in clear ______ before he sits down to write.

13.10 Presentation of the Report

The presentation has become an integral part of most marketing research

projects. Most managers are finding it hard to read the entire report and so

prefer the researcher to present the report in an oral presentation.

Furthermore, the presentation provides an opportunity for the research and

management team to interact the issue of concern and in that way it

becomes an important exercise.

For any presentation, the most important aspect is preparation. Researcher

should first develop an outline of the presentation keeping the

audience in mind. Once the outline is developed, the researcher should



focus on the content management and decide as to what is relevant and

important and what is not. Use of various audio-visual aids as well as other

materials such as chalkboards or flipcharts should be planned out in

advance. While audio-visual presentation adds to the overall engagement,

chalkboards and flipcharts provide flexibility in presentation.

The rules regarding what to do and what not to do when writing reports also

apply to the presentation and researcher must keep in mind that the

presentation is being done for the managers to grasp the results.

Researcher must remember that the research was conducted for assistance

in decision-making and was not a statistical exercise. Therefore, the focus of

the presentation should be on how the research can help managers in

making a better informed decision.

There are several ways of making presentation of statistics in the research

report and four of them are most important. They are:

Textual explanation

Semi tabular form

Tabular form

Graphics.

Textual explanation

Textual presentations are used when there are only a few statistics. The

drawback is that the reader has to read the entire text before finding or

locating the meaning.

Semi tabular form

This method is used when there are just a few figures. Whenever there is a

comparison, this method is used.

Items Annual Sales growth Net profit (2008) in millions

Men‟s wear 3% 200

Women‟s wear 4% 312

Kid‟s wear 0.8% 430



Tabular presentation

These are superior to text for presenting statistics. Tables enable

quantitative comparison and provide a precise way to present the data.

Year Annual Sales growth Net profit in Rs millions

2008 3% 200

2009 4% 312

2010 0.8% 202

Graphics

Graphics presentation is the only way to present quantitative information

effectively. There are two basic kinds of graphics namely charts which show

„how much‟, and diagrams that show „how‟. Charts are generally the most

useful for research reports and diagrams are the least useful.

The various charts used in report writing are given below:

Line Chart

Bar Chart

Pie Chart

Stratum Charts

Scatter diagram

Pictogram

Line Chart

Line Chart shows information over a period of time. Figure 13.1 shows a

Line Chart.

Figure 13.1: Circulation of News Paper



Time change is shown from left to right (X axis) and change in the quantity

(circulation) on the Y-axis.

A line chart is a two dimensional chart, when more than one variable is

presented, it is preferable to use two different color for one each type of Line

chart. The greatest disadvantage of line chart is that the number of items

that can be compared on one line chart is limited.

Figure 13.2: Stock Prices Index (BSE)

Figure 13.2 above is a line chart that shows a range of data for a particular

time. This is called hi-low chart or variance chart. This type of line chart is

extensively used to analyze stock market indices or to analyze high/low of a

stock during intraday trading. Chart in the Figure 13.3 will indicate high and

low points and also opening and closing of stock prices.

Figure 13.3: Movement of Individual Stock



Bar chart

This is a very popular method form of graphical representation, because it is

very easy to interpret. They show magnitude or comparison between

groups.

Vertical or horizontal bars are used to represent frequencies and percentage

numbers. In bar chart, the length of the bars represents the quantities that

they stand for in Figure 13.4. If 2 or more quantities are to be represented in

a single chart, Clustered bar chart as in Figure 13.5 is used. In this type of

chart, bars show the values of the quantities compared cross hatching or

different colors may be used to distinguish different kinds of information.

Transport used to commute to the place of work in a metro.

Figure 13.4: Bar Chart

Reasons for part time working

Figure 13.5: Clustered Bar Chart



When the researcher want to show plus and minus differences, bilateral

column charts are used as in Figure 13.6.

Titles of the bar will appear either up or down. Bilateral column charts are

good for showing percentage change.

In Figure 13.6 Bilateral column chart showing vote swing in general election.

Figure 13.6: Bilateral Column Chart

Sometimes subdivisions of the column need to be compared. In this case

Stacked column chart is used as in figure 13.7.

Figure 13.7: Stacked Column Chart

Pie Chart

In pie chart, a circle is divided into sections. Each section represents a

portion of the total. The advantage of pie chart is that the area represented

is proportional to the size of the item. Pie chart is excellent for showing the



decomposition of a total quantity into its components. For example,

contribution of company‟s product line to its sales or profits, income

distribution of households, allocation of budget to various expense

categories or brand available within a product category. This is shown in

Figure 13.8.

In figure 13.8, Pie diagram showing the market share for various brands.

Figure 13.8: Pie Chart

Stratum Chart

Figure 13.9: Strain Chart



It is a two dimensional graph with time along the horizontal axis and values

of the item plotted on the vertical axis. The area of the graph is divided into

several horizontal layers, or strata, one layer corresponding to each item.

The width of each stratum represents the relative magnitude of the

corresponding item at that time (Refer Figure 13.9).

The lowest stratum of Figure 13.9 represents Brand A. The second lowest

stratum corresponds to Brand B. The line representing the upper boundary

of this stratum represents the sum of the market shares of Brand A and

Brand B. Similarly, the upper boundary of the third lowest stratum

represents the combined shares of A, B and Brand C.

Scatter Diagram

This diagram shows whether any relationship exists between the two

variables under consideration. Example, price and sales. In a scatter

diagram if the points are closer to the straight line to be drawn, we can

conclude that there is a strong relationship between the variables. Scatter

Diagram gives 2 types of information. Visually, we can find out if the 2

variables are related. Secondly, if it is related what kind of line describes the

relationship is linear or curvilinear, etc. (Refer Figure 13.10)

Figure 13.10: Scatter Diagram

Pictogram

This is a special type of bar chart. It uses pictures instead of rectangular

bars. A Pictograph (also called pictogram) is an ideogram that conveys its

meaning through its pictorial resemblance to a physical object. The

advantage of a pictogram is that, it is more appealing and interesting to the



reader. Pictographs can often transcend languages in that they can

communicate to speakers of a number of tongues and language families

equally effectively, even if the languages and cultures are completely

different. This is why road signs and similar pictographic material are often

applied as global standards expected to be understood by nearly all.

Pictograph is given in figure 13.11.

Figure 13.11: Pictograph/Pictogram

Activity 3:

Would you suggest the exact presentation criteria of a research

report.


17. Scatter Diagram shows whether any relationship exists between the

__________ under consideration.

18. In pie chart, a circle is divided into __________ , each representing a

__________ of the total.



13.11 Presentation Plan

The presentation plan of the report shown in figure 13.12

Pre-report

Writing

Activities

Report

Writing

Activities

Post

Report

Writing

Problem Definition, Research Design and Methodology

Data Analysis

Interpretation of Research findings

Report Preparation

Oral Presentattion

Reading of the Report by the

client

RESEARCH FOLLOW-UP

Figure: 13.12


19. Data analysis is a __________ activity.

20. Report preparation is a __________ activity.

13.12 Summary

As discussed in this unit, the prime objective of any marketing research

report is to communicate in an effective manner, the results of the research,

so the manager can take informed decisions. Marketing research report

provides the communication bridge between the researcher and the

manager and that is why it is an important aspect if the overall research

process.

It is very important for the researcher to remember that the report is being

prepared for the manager and therefore researcher must empathize with the

manager in the writing process. The report must be logically structured and

easy to follow. The objectivity of the research is also a supreme concern



and researcher should oppose inclusion of any judgment beliefs which

cannot be supported. The researcher should make sure that the report is

well written and looks professional.

Glossary

Research Report: a written document or oral presentation based on a

written document that communicates the purpose, scope, objectives,

hypothesis, methodology, findings, limitations and recommendations of a

research project to others.

Pie Chart: A circular graph having radii dividing the circle into sectors

proportional in angle and area to the relative size of the quantities.

Bibliography: A list of the works of a specific author or publisher. A list of

writings relating to a given subject

Written Report: A written document describing the findings of some

individual or group.


1. What are the criteria for an oral report?

2. What is meant by “consider the audience” when writing a research

report.

3. Why are visual aids used in oral presentation?

4. What are the various criteria used for classification of written report?

5. What are the essential content of the following parts of research report?

(a) Table of contents

(b) Title page

(c) Executive summary

(d) Introduction

(e) Conclusion

(f) Appendix

6. Oral presentation requires the researcher to be good public speaker.

Explain.

13.14 Answers


1. oral, written



2. Short

3. Informal

4. effectively communicate

5. inputs

6. Why, What, Who, When, Where, How

7. target audience

8. omitting

9. attractive, clearly organised

10. research

11. minimum

12. objectivity

13. critical intelligence, market insights

14. timeliness, clarity, utility

15. writer, receiver, message itself

16. thinking

17. variables

18. sections, portion

19. Pre-report writing

20. report writing


1. Refer to 13.2 – Explain briefly

2. Refer to 13.3.

3. Refer to 13.2 – Discuss reasons.

4. Refer to 13.2 – Discuss criteria in short.

5. Refer to 13.5.

6. Refer to 13.2 – Discuss with logical examples

Mini-case

India is a country comprising over 6 lakh villages and 741 million people

dwelling in rural areas. The main occupation of Indians is agriculture. More

than half of the Indians depend on agriculture. During the early 80‟s, Indian

farmers, especially those who were growing tomatoes on a large scale

encountered a major problem in the area of harvesting. Tomato is a labour

intensive crop and large scale tomato growers were depending on labourers

for harvesting and transporting it to the market. Tomato is a perishable

product, so tomato growers need large number of labourers at a time.

Availability of labour was a problem.



To aid the farmers, harvesting machines were introduced into the market.

Large scale growers of tomatoes were very happy because the machine

was introduced to overcome the problem of non-availability of labourers.

Their happiness was short lived, because farmers found that there was a

massive wastage of tomatoes while harvesting in machines.

It was felt that, the wastage was due to the layout of plantation and the

distance between the rows in planting. So farmers were asked to follow the

guidelines given by concerned authorities (i.e. agriculture department) in

plantation to minimise the wastage during the harvesting time. Farmers

followed the guidelines given by agricultural department. Even then they

could not decrease the wastage of tomatoes.

Subsequently, joint study was conducted by agriculture department and

farmers to identify the problem. This time, they felt that wastage was due to

improper handling in the operation of machine. To overcome this, machine

operators were trained to handle the machine. Despite this, the wastage did

not decrease. The government was quite serious and asked the authorities

to take appropriate steps to solve the problem at the earliest. The

investigation team defined the problem differently. They stated that the

harvesting machine was the problem. Based on this statement, the machine

was altered and tested. The problem could still not be solved. It was now

obvious that the mistake was in problem identification. As a management

student, could you analyse and answer the following issues.

Question

What are the possible solutions to the problem of tomato growers?

Hint: Discuss on the basis of the research report written by you in the this

case.



Unit 14 Ethics in Marketing Research

Structure

14.1 Introduction

Objectives

14.2 Ethical Theories

14.3 Ethics in MR

14.4 Research Supplier Ethics

14.5 Client Ethics

14.6 Field Service Ethics

14.7 Data-collection Code of Ethics

14.8 Summary


14.10 Answers

14.1 Introduction

In the earlier units, you came to know about the research reporting. In this

unit you will study about the ethics in marketing research.

In this unit you know the two most important factors for research clients in

their relationships with research departments/suppliers are client

confidentiality and honesty. Each is a question of ethics. Ethics are moral

principles or values generally governing the conduct of an individual or

group. Ethical behavior is not, however, a one-way relationship. Clients,

suppliers, as well as field services, must also act in an ethical manner.

Ethical questions range from practical, narrowly defined issues, such as a

researcher’s obligation to be honest with its customers, to broader social

and philosophical questions, such as a company’s responsibility to preserve

the environment and protect employee rights. Many ethical conflicts develop

from conflicts between the differing interests of company owners and their

workers, customers, and surrounding community. Managers must balance

the ideal against the practical the need to produce a reasonable profit for the

company’s shareholders with honesty in business practices, and larger

environmental and social issues.

This unit on ethics in marketing research will help you get familiar with some

ethics in the field of marketing research.



Objectives


Explain ethical theories

Describe ethics in marketing research

Define client ethics

Explain field service ethics

14.2 Ethical Theories

People usually base their individual choice of ethical theory on their life

experiences. The following are some of the ethical theories that apply to

business and marketing research.

Deontology: The deontological theory states that people should adhere to

their obligations and duties when analyzing an ethical dilemma. This means

that a person will follow his or her obligations to another individual or society

because upholding one’s duty is what is considered ethically correct. For

instance, a deontologist will always keep his promises to a friend and will

follow the law. A person who follows this theory will produce very consistent

decisions since they will be based on the individual’s set duties. Note that

this theory is not necessarily concerned with the welfare of others. Say, for

example, a research supplier has decided that it’s his ethical duty (and very

practical!) to always be on time to meetings with clients. Today he is running

late. How is he supposed to drive? Is the deontologist supposed to speed,

breaking his duty to society to uphold the law, or is the deontologist

supposed to arrive at his meeting late, breaking his duty to be on time? This

scenario of conflicting obligations does not lead us to a clear ethically

correct resolution, nor does it protect the welfare of others from the

deontologist’s decision.

Utilitarianism: The utilitarian ethical theory is founded on the ability to

predict the consequences of an action. To a utilitarian, the choice that yields

the greatest benefit to the most people is the choice that is ethically correct.

One benefit of this ethical theory is that the utilitarian can compare similar

predicted solutions and use a point system to determine which choice is

more beneficial for more people. This point system provides a logical and

rational argument for each decision and allows a person to use it on a case-

by-case context.



There are two types of utilitarianism: act utilitarianism and rule utilitarianism.

Act utilitarianism adheres exactly to the definition of utilitarianism as

described in the above section. In act utilitarianism, a person performs the

acts that benefit the most people, regardless of personal feelings or the

societal constraints such as laws. Rule utilitarianism, however, takes into

account the law and is concerned with fairness. A rule utilitarian seeks to

benefit the most people but through the fairest and most just means

available. Therefore, added benefits of rule utilitarianism are that it values

justice and doing good at the same time.

As is true of all ethical theories, however, both act and rule utilitarianism

contain numerous flaws. Inherent in both are the flaws associated with

predicting the future. Although people can use their life experiences to

attempt to predict outcomes, no human being can be certain that his

predictions will be true. This uncertainty can lead to unexpected results,

making the utilitarian look unethical as time passes because his choice did

not benefit the most people as he predicted.

Another assumption that a utilitarian must make is that he has the ability to

compare the various types of consequences against each other on a similar

scale. However, comparing material gains such as money against intangible

gains such as happiness is impossible since their qualities differ so greatly.

Casuist: The casuist ethical theory compares a current ethical dilemma with

examples of similar ethical dilemmas and their outcomes. This allows one to

determine the severity of the situation and to create the best possible

solution according to others’ experiences. Usually, one will find examples

that represent the extremes of the situation so that a compromise can be

reached that will hopefully include the wisdom gained from the previous

situations.

One drawback to this ethical theory is that there may not be a set of similar

examples for a given ethical dilemma. Perhaps that which is controversial

and ethically questionable is new and unexpected. Along the same line of

thinking, this theory assumes that the results of the current ethical dilemma

will be similar to results in the examples. This may not be necessarily true

and would greatly hinder the effectiveness of applying this ethical theory.



Understanding ethical theories will help us better decide how certain

unethical practices in marketing research should be resolved.


1. To a _____________ the choice that yields the greatest benefit to the

most people is the choice that is ethically correct.

2. The ____________ ethical theory compares a current ethical dilemma

with examples of similar ethical dilemmas and their outcomes.

3. The _____________ theory states that people should adhere to their

obligations and duties when analyzing an ethical dilemma.

14.3 Ethics in MR

Ethics is nothing but the accepted codes of conduct. Ethics in marketing

research is very much required and relevant in today’s industrial scenario.

The ethical issues involved in marketing research can be studied from three

different angles.

1. Ethics in the treatment of the respondent.

2. Ethics in the treatment of buyers and clients.

3. Ethics in the treatment of researchers.

Ethics in the Treatment of the Respondent: An ethical code of conduct

must consider the following things:

Information that should not be disclosed and made public, i.e.,

participants name and secrecy must be protected.

Data collected from respondents must be correct and should not be

manipulated.

The rights of the respondents must be protected:

Right to privacy: The researcher should convince the customer that

the survey does not involve unethical things and it is being

conducted for mutual benefit. Eg. Skin care products should not

mislead the user.

Right to choose: The customer must be allowed to choose what he

wants. No force should be exerted by sellers on the buyer.

Right to safety: The researcher must not inflict psychological harm

by putting the respondents under pressure to answer.

Right to be informed: The researcher must inform the customer in

advance about the purpose of gathering the information.



The Respondent’s Ethics and Rights: A respondent who of his or her own

free will agrees to participate in a marketing research project has the ethical

obligation to provide the supplier, and hence the client with honest and

truthful answers. The respondent can abstain from answering a sensitive

questions but falsifying the answer is ethically improper.

Respondents in a marketing research project typically give their time and

opinions and receive little or nothing in return. These individuals, however,

do have certain rights that should be upheld by all marketing researchers.

All potential participants in a research project have the right to choose, the

right to safety, the right to be informed, and the right to privacy.

Right to Choose: Everyone has the right to determine whether or not to

participate in a marketing research project. Some people, such as poorly

educated individuals or children may not fully appreciate this privilege. A

person who would like to terminate an interview or experiment may give

short, incomplete answers or even false data.

The fact that a person has consented to be part of an experiment or to

answer a questionnaire does not give the researcher carte blanche to do

whatever she or he wants. The researcher still has an obligation to the

respondent. For example, if a person participating in a taste test

involving a test product and several existing products prefers the test

product, the researcher does not have the right to use the respondent’s

name and address in a promotion piece, saying that ―Ms. Jones prefers

new Sudsies to Brand X.‖

Right to Safety: Research participants have the right to safety from

physical or psychological harm. While it is unusual for a respondent to

be exposed to physical harm, there have been cases of persons

becoming ill during food taste tests. Also, on a more subtle level,

researchers rarely warn respondents that a test product contains, say, a

high level of salt. An unwitting respondent with hypertension could be

placed in physical danger if the test ran several weeks.

It is much more common for a respondent to be placed in a

psychologically damaging situation. Individuals might experience stress

when an interviewer presses them to participate in a study. Others might

experience stress when they cannot answer questions or are given a

time limit to complete a task (for example, ―You have five minutes to



browse through this magazine, and then I will ask you a series of

questions‖).

Right to be informed: Research participants have the right to be

informed of all aspects of a research task. Knowing what is involved,

how long it will take, and what will be done with the data, a person can

make an intelligent choice as to whether to participate in the project.

Often, it is necessary to disguise the name of the research sponsor to

avoid biasing the respondent. For example, it is poor research practice

to say, ―We are conducting a survey for Pepsi; which brand of soft drink

do you consume most often?‖ In cases in which disguising the sponsor

is required, a debriefing should take place following the completion of

the interview. The debriefing should cover the study’s purpose, the

sponsor, what happens next with the data, and any other pertinent

information. A debriefing can reduce respondent stress and build

goodwill for the research industry. Unfortunately, taking the time to

debrief a respondent is a cost that most companies are unwilling to

incur.

In some business and academic research, the researcher may offer to

provide the respondent with a copy of the research results as an

incentive to obtain his or her participation in the project. When a

commitment has been made to disseminate the findings to survey

respondents, it should be fulfilled. On more than one occasion, we have

participated in academic surveys where the carrot of research results

was offered but never delivered.

Right to Privacy: All consumers have the right to privacy. All major

research organizations, including the MRA (discussed above), the

Council of American Survey Research Organizations (CASRO), the

Internet Marketing Research Association (IMRO), the American

Marketing Association (AMA), and the Advertising Research Foundation

(ARF), have privacy codes. For example, with online research, lists of

potential respondents must have one of two characteristics. Potential

respondents must have either a prior opt-in for contact, or they must

have an existing business relationship with the sender through which an

e-mail contact would not be considered a random, unsolicited e-mail

(spam).



Consumer privacy can be defined in terms of two dimensions of control.

The first dimension includes control of unwanted telephone, mail, e-mail,

or personal intrusion in the consumer’s environment, and the second

concerns control of information about the consumer. Consumer privacy

can be viewed in the context of any interaction, profit or nonprofit,

between marketer and consumer, including (but not limited to) credit and

cash sales, consumer inquiries, and marketer-initiated surveys. The very

nature of the marketing research business requires interviewers to

invade an individual’s privacy. An interviewer calls or approaches

strangers, requests a portion of their limited free time, and asks them to

answer personal questions sometimes very personal questions.

Ethics in the treatment of buyers and clients

The method for conducting the research and the results obtained should

be accurate.

The researcher should keep the identity of the client confidential.

If the client request or demands an unethical research, the researcher

should refuse to take up the ill-advised research for his clients.

Maintaining confidentiality and secrecy is of utmost importance and it is

a part of the ethical code of conduct to be followed by the researcher.

Ethics in the treatment of researchers

Selecting the bidders: Sometimes firms, for the sake of formality, call

for quotations from a number of market research agencies, even though

they have already decided to whom the project should be given. This is

an unethical practice in the matter of selection of researchers.

Limited funds: Certain firms have limited funds allocated to carry out

the research. For example, the firm may have a budget to be conducted

on a regional basis but the firm does not make this clear to the

researcher while inviting proposals. It may so happen that such

ambiguity may cause the researcher to prepare his proposal for a

nationwide research, but upon bagging the project, the funds released

are sufficient only to conduct research on regional basis. This may

frustrate researchers besides, it is an unethical practice.

Non-availability of data: Some firms give projects to their researcher,

but do not provide him with required sales and cost data. Since this may

be the basis for carrying out the research, the researcher feels frustrated



at not receiving the basic promised data. This is an unethical on the part

of the client firm.

Pseudo-Pilot studies: Some clients ask the research agencies to

conduct pilot studies and promise that if the researcher does a good job

during the pilot study stages, there will be an additional major contract

immediately. Most often, this comprehensive study never materialises

and the research agencies absorb a huge loss. This is not an ethical

practice.

Political research: Political organizations hire some research

consultants to carry out a research. In such cases, there is all likelihood

that the consulting firm or organisation will be politically pressurised to

produce reports and forecast in favour of the party commissioning it.

This is also a very unethical practice.

Activity 1:

Every field of management have certain ethics. What kind of ethics plays

vital role in marketing research. Explain


4. All potential participants in a research project have the right to _____.,

the right to _______, the right to be _______, and the right to

_________

5. If the client request or demands an unethical research, the researcher

should __________.

14.4 Research Supplier Ethics

Unethical research supplier practices range from low-ball pricing to violating

client confidentiality.

The more common ethical issues for the research supplier are:

Violating client confidentiality

Improper execution of research

Low-Ball Pricing

Allowing Subjectivity into the Research

Abusing Respondents

Selling Unnecessary Research



Violating Client Confidentiality: Disclosing any information about the

client that the supplier has gathered from the research project amounts to a

violation of client confidentiality.

Improper Execution of Research: Suppliers are required to conduct

marketing research projects in an objective manner, free from personal

biases and motives. Improper execution also includes using biased

sampling, ignoring relevant data, or misusing statistics all of which lead to

erroneous and misleading results.

Low-Ball Pricing: A research supplier should quote a firm price based on a

specific incidence rate (percentage of the respondents in the sample that

will qualify to complete the survey) and questionnaire length (time to

complete). If either of the latter two items changes, then the client should

expect a change in the contract price. Low-ball pricing in any form is

unethical. In essence, low-ball pricing is quoting an unrealistically low price

to secure a firm’s business and then using some means to substantially

raise the price. For example, quoting a price based on an unrealistically high

incidence rate is a form of lowball pricing. Offering to conduct a focus group

at $6,000 a group and, after the client commits, saying, ―The respondents’

fees for participating in the group discussion are, of course, extra‖ is a form

of low-balling.

Allowing Subjectivity into the Research: Research suppliers must avoid

using biased samples, misusing statistics, ignoring relevant data, and

creating a research design with the goal of supporting a predetermined

objective. One area of research today is so-called advocacy studies. These

studies are commissioned by companies or industries for public relations

purposes or to advocate or prove a position. For example, Burger King once

used positive responses to the following question in an advocacy study in an

attempt to justify the claim that its method of cooking hamburgers was

preferred over that of McDonald’s: ―Do you prefer your hamburgers flame-

broiled or fried?‖ When another researcher rephrased the question—―Do

you prefer a hamburger that is grilled on a hot stainless-steel grill or cooked

by passing the meat through an open gas flame?‖ the results were reversed:

McDonald’s was preferred to Burger King.

Kiwi Brands, a shoe polish company, commissioned a study on the

correlation between ambition and shiny shoes. The study found that 97



percent of self-described ambitious young men believe polished shoes are

important. In many cases, advocacy studies simply use samples that are not

representative of the population. For example, a news release for a diet

products company trumpeted: ―There’s good news for the 65 million

Americans currently on a diet.‖ A company study had shown that people

who lose weight can keep it off – the sample consisted of 20 graduates of

the company’s program, who also endorsed its products in commercials.

When studies are released to the news media, the methodology should be

readily available to news reporters. Typically, this information is withheld,

often on the ground that the material is proprietary. A survey done for

Carolina Manufacturer’s Service, a coupon redemption company, found that

―a broad cross-section of Americans find coupons to be true incentives for

purchasing products.‖ The description of the methodology was available

only at a price: $2,000.

Abusing Respondents: Respondent abuse can take several forms.

Perhaps the most common is lengthy interviews. This problem stems in part

from the ―as long as you’re asking questions‖ mentality of many product

managers. It is not uncommon for clients to request additional ―nice to know‖

questions, or even exploratory questions on an entirely separate project.

This leads to lengthy questionnaires, 30-minute telephone or internet

interviews, and 40-minute mall-intercept interviews. As a result of long

interviews and telephone sales pitches, more and more Americans are

refusing to participate in survey research. The refusal rate for telephone

surveys now averages 60-plus percent, an increase of 10 percent over 10

years. Forty-nine percent of the people who do participate say the surveys

are ―too personal.‖

Predictive dialers are tremendous productivity tools for survey research

telephone call centers. They remove much of the idle time an interviewer

would otherwise spend manually dialing numbers and recording call

dispositions, such as no-answer and busy signals. By definition, predictive

dialers dial phone numbers ahead of available interviewers, predicting when

an interviewer will become available. Adjusting the pacing manually sets the

aggressiveness of this dial-ahead capability. Obviously, there is strong

motivation for call-center managers to increase the pacing and minimize the

time an interviewer spends between calls. However, this action has



undesirable consequences because some respondents are contacted

before an interviewer is available. In most cases, the dialer than places the

respondent on hold or disconnects the call. Both actions decrease

respondent goodwill.

Interest in a product or service is often discerned during the interviewing

process, and the researcher knows the interviewees’ potential purchasing

power from their answers to income and other pertinent financial questions.

Although the introduction phase of the questionnaire usually promises

confidentiality, some researchers have sold names and addresses of

potential customers to firms seeking sales leads. Individuals willing to

participate in the survey research process have a right to have their privacy

protected.

The state of New York sued Student Marketing Group for selling information

on a broad scale to direct marketers. The survey filled out by students

included age, gender, religious affiliation, career interests, and grade point

average. The company said that it was gathering the data to provide to

universities to help the students gain admission and financial aid. Direct

marketers used the information to sell credit cards, magazines, videos,

cosmetics, and other products.

Selling Unnecessary Research: A research supplier dealing with a client

who has little or no familiarity with marketing research often has the

opportunity to ―trade the client up.‖ For example, if a project called for four

focus groups and an online survey of approximately 350 consumers, the

research supplier might sell eight groups and 1,000 Internet interviews, with

a 400-interview telephone follow-up in 6 months.

It is perfectly acceptable to offer a prospective client several research

designs with several alternative prices when and if the situation warrants

alternative designs. The supplier should point out the pros and cons of each

method, along with sample confidence intervals. The client, in consultation

with the supplier, then can decide objectively which design best suits the

company’s needs.


6. Research suppliers must ___________ using biased samples, misusing

statistics, ignoring relevant data.



7. Disclosing any information about the client that the supplier has

gathered from the research project amounts to a violation of

___________.

14.5 Client Ethics

Like research suppliers, clients (or users) also have a number of ethical dos

and don’ts. Some of the more common client problems are requesting bids

when a supplier has been predetermined, requesting bids to obtain free

advice and methodology, making false promises, and issuing unauthorized

RFPs.

Requesting bids when a supplier has been predetermined: It is not

uncommon for a client to prefer one research supplier over another. Such a

preference may be due to a good working relationship, cost considerations,

ability to make deadlines, friendship, or quality of the research staff. Having

a preference per se is not unethical. It is unethical, however, to

predetermine which supplier will receive a contract and yet ask for proposals

from other suppliers to satisfy corporate requirements. Requiring time, effort,

and money from firms that have no opportunity to win the contract is very

unfair. Why more than a single RFP? Some corporations require more than

one bid.

Requesting Bids to Obtain Free Advice and Methodology: Client

companies seeking bargain basement prices have been known to solicit

detailed proposals, including complete methodology and a sample

questionnaire, from a number of suppliers. After ―picking the brains‖ of the

suppliers, the client assembles a questionnaire and then contracts directly

with field services to gather the data. A variation of this tactic is to go to the

cheapest supplier with the client’s own proposal, derived by taking the best

ideas from the other proposals. The client then attempts to get the supplier

to conduct the more elaborate study at the lower price.

Making False Promises: Another technique used by unethical clients to

lower their research costs is to hold out a nonexistent carrot. For example, a

client might say, ―I don’t want to promise anything, but we are planning a

major stream of research in this area, and if you will give us a good price on

this first study, we will make it up to you on the next one.‖ Unfortunately, the



next one never comes – or if it does, the same line is used on another

unsuspecting supplier.

Requesting Proposals without Authorization: In each of the following

situations, a client representative sought proposals without first receiving the

authority to allocate the funds to implement them:

A client representative decided to ask for proposals and then go to

management to find out whether she could get the funds to carry them

out.

A highly regarded employee made a proposal to management on the

need for marketing research in a given area. Although managers were

not too enthused about the idea, they told the researcher to seek bids so

as not to dampen his interest or miss a potentially (but, in their view,

highly unlikely) good idea.

A client representative and her management had different ideas on what

the problem was and how it should be solved. The research supplier

was not informed of the management view, and even though the

proposal met the representative’s requirements, management rejected it

out of hand.

Without consulting with the sales department, a client representative

asked for a proposal on analyzing present sales performance. Through

fear of negative feedback, corporate politics, or lack of understanding of

marketing research, the sales department blocked implementation of the

proposal.

Activity 2:

How clients ethics create problem sometime? Explain.


8. A ____________ may prefer one research supplier over another due to

a good working relationship, cost considerations and ability to make

deadlines.

9. After ―picking the brains‖ of the suppliers, the client assembles a

_______ and then contracts directly with field services to gather the

data.



14.6 Field Service Ethics

Marketing research field services are the production arm of the research

industry requiring telephone or face-to-face interviews. They are the critical

link between the respondent and the research supplier. It is imperative that

they properly record information and carefully follow sampling plans.

Otherwise, even the best research design will produce invalid information

(garbage in; garbage out). Maintaining high ethical standards will aid a field

service in procuring good raw data for the research firm.

Using Professional Respondents: The problem of professional

respondents arises most often in the recruitment of focus group participants.

Virtually all field services maintain a database of people willing to participate

in qualitative discussion groups, along with a list of their demographic

characteristics. Maintaining such a list is good business and quite ethical.

When qualifications for group participants are easy (for example, pet

owners, persons who drive SUVs), there is little temptation to use

professional respondents. However, when a supplier wants, for example,

persons who are heavy users of Oxydol detergent or who own a Russian

Blue cat, it is not unheard of for a group recruiter to call a professional

respondent and say, ―I can get you into a group tomorrow with a $75

respondent fee and all you need to say is that you own a Russian Blue cat.‖

In an attempt to weed out professional respondents, a research supplier

may specify that the participant must not have been a member of a

qualitative discussion group within the past 6 months. However, dishonest

field services will simply tell the professional respondent to deny having

participated in a group within the past 6 months.


10. Marketing research field services are the critical link between the

__________and the __________

11. Dishonest field services will simply tell the____________ to deny having

participated in a group within the past 6 months.

14.7 Data-collection Code of Ethics

The Marketing Research Association (MRA) is an association to which may

field services belong. The organization is dedicated to promoting excellence in

data collection. To this end, it recently enacted the following code of ethics:



Will treat the respondent with respect and not influence a respondent’s

opinion or attitude on any issue through direct or indirect attempts,

including the framing of questions.

Will conduct themselves in a professional manner and ensure privacy

and confidentiality.

Will ensure that all formulas used during bidding and reporting during

the data collection process conform with the MRA/CASRO Incidence

Guidelines.

Will make factually correct statements to secure cooperation and will

honor promises made during the interview to respondents, whether

verbal or written.

Will give respondents the opportunity to refuse to participate in the

research when there is a possibility they may be identifiable even

without the use of their name or address (e.g., because of the size of the

population being sampled).

Will not use information to identify respondents without the permission of

the respondent except to those who check the data or are involved in

processing the data. If such permission is given, the interviewer must

record it, or a respondent must do so, during all Internet studies, at the

time the permission is secured.

Will adhere to and follow these principles when conducting online

research:

Respondents’ rights to anonymity must be safeguarded.

Unsolicited e-mail must not be sent to those requesting not to

receive any further e-mail.

Researchers interviewing minors must adhere to the Children’s

Online Privacy Protection Act (COPPA).

Before collecting, using, or disclosing personal information from a

child, the researcher must obtain verifiable parental consent from the

child’s parent.

For Internet research, will not use any data in any way contrary to the

provider’s published privacy statement without permission from the

respondent.

Will respect the respondent’s right to withdraw or refuse to cooperate at

any stage of the study and will not use any procedure or technique to

coerce or imply that cooperation is obligatory.



Will obtain and document respondent consent when it is known that the

personally identifiable information of the respondent may be passed by

audio, video, or Interactive Voice Response to a third party for legal or

other purposes.

Will obtain permission and document consent of a parent, legal

guardian, or responsible guardian before interviewing children 13 years

of age or younger. Prior to obtaining permission, the interviewer should

divulge the subject matter, length of interview, and other special tasks

that may be required of the respondent.

Will ensure that all interviewers comply with any laws or regulations that

may be applicable when contacting or communicating to any minor (18

years old or younger) regardless of the technology or methodology

utilized.

Will not reveal any information that could be used to identify clients

without their written authorization.

Will ensure that companies, their employees, and subcontractors

involved in the data-collection process adhere to reasonable precautions

so that multiple surveys are not conducted at the same time with a

specific respondent without explicit permission from the sponsoring

company or companies.

Will consider all research materials provided by the client or generated

as a result of materials provided by the client to be the property of the

client. These materials will not be disseminated or disposed of without

the verbal or written permission of the client.

Will, as time and availability permit, give their client the opportunity to

monitor studies in progress to ensure research quality.

Will not represent a non-research activity to be opinion and marketing

research, such as:

The compilation of lists, registers, or data banks of names and

addresses for any non-research purposes (e.g., canvassing or fund

raising).

Industrial, commercial, or any other form of espionage.

The acquisition of information for use by credit rating services or

similar organizations.

Sales or promotional approaches to the respondent.

The collection of debts.




12. MRA is an organization is dedicated to promoting excellence in

_____________

13. In an online research, respondents’ rights to ___________ must be

safeguarded.

14.8 Summary

Ethics is accepted code of conduct. Ethical issues of business research can

be studied under three different entities. Maintaining integrity is important in

research. Acts such as lack of confidentiality, falsifying, holding back the

information, etc., should be avoided.

Ethics are moral principles or values generally governing the conduct of an

individual or group. The deontology theory says that a person will follow his

or her obligations to another individual or society because upholding one’s

duty is what is considered ethically correct. In contrast, utilitarian ethical

theory maintains that a choice yielding the greatest benefit to the greatest

number of people is the choice that is ethically correct. The casuist theory

holds that a decision should be made by comparing a current ethical

dilemma with examples of similar ethical dilemmas and their outcomes.

Unethical practices by some suppliers include low-ball pricing, allowing

subjectivity into the research, abusing respondents, selling unnecessary

research, violating client confidentiality, and using black box branding.

Unethical practices performed by some research clients include requesting

bids when a supplier has been predetermined, requesting bids to gain free

advice or methodology, making false promises, and issuing unauthorized

requests for proposals. Marketing research field services have used

professional respondents which is unethical.

Glossary

Ethics: branch of philosophy that addresses questions about morality – that

is, concepts such as good and bad, noble and ignoble, right and wrong,

justice, and virtue.

Utilitarianism: the idea that the moral worth of an action is determined

solely by its utility in providing happiness or pleasure as summed among all

sentient beings.

Low-Ball: To underestimate or understate deliberately.




1. Explain ethics in market research.

2. Describe the researcher and supplier ethics in detail.

3. What do you mean by data collection code of ethics?

4. Describe one theory of MR ethics.

14.10 Answers


1. utilitarian

2. casuist

3. deontological

4. choose, safety, informed, privacy

5. refuse

6. avoid

7. client confidentiality

8. client

9. questionnaire

10. respondent, research supplier

11. professional respondent

12. data collection

13. anonymity


1. Refer to 14.3 – Discuss with reasons.

2. Refer to 14.4 – Discuss with examples.

3. Refer to 14.7.

4. Refer to 14.2.

Mini-case

A reputed two-wheeler agency located in North India needed a decision

about whether to import or not, a relatively unknown brand of bike to

supplement its domestic product. To facilitate the decision-making, the

agency approached a reputed market research firm. The main purpose is to

conduct a study, to determine potential consumer interest and demand for

imported bikes. The result of the survey showed that, not only were



respondents aware of the bike, there was a positive interest among the

respondents. Consequently the agency took a decision to import the bike.

A press conference was held involving media, such as newspapers,

magazine, TV, etc. Important personalities were invited. The company also

expressed interest in inviting the survey participants, who had expressed

their interest. This was proposed by the agency to have better interaction

with respondents. Keeping this in mind, the company asked the research

firm to furnish the names, addresses and phone numbers of the

respondents. The research firm refused to comply with this request. They

argued that to do this is a violation of respondents promised anonymity.

Question

What could be some of the consequences of providing respondents’ detail

to the agency?

Hint: Discuss with respect to the various rights enjoyed by the respondent.



Unit 15 Marketing Research in Indian Context

Structure

15.1 Introduction

Objectives

15.2 Growing Importance of Marketing Research in India

15.3 Expenditure on Marketing Research in India and Major Users

15.4 Ways of Conducting Marketing Research in India

15.5 Increased Demand for Outside Research Services

15.6 Common Applications of Marketing Research in India

15.7 Problems in Conducting Marketing Research in India

15.8 Challenges in Carrying Out Marketing Research

15.9 New Trends in Marketing Research

15.10 Summary


15.12 Answers

15.1 Introduction

In this unit, you will learn the role and organization of marketing research in

India. More specifically, you know why marketing research is becoming

important in India and what organizational arrangements firms have for

conducting researches. Major users and uses of marketing research in the

country shall be identified. The unit shall also examine the problems which

the researchers face while doing researches in India.

This unit on marketing research in Indian context will help you get familiar

with the improvement of marketing research in India and other concept of

marketing research in the context of India.

Objectives


Explain growing factor of marketing research in India.

Describe various problems faced by Indian researchers

Describe challenges of marketing research in India



15.2 Growing Importance of Marketing Research in India

Use of marketing research in India has been considerably low in the past.

Only a few large firms, especially those having linkages with foreign firms,

were making use of marketing research during the fifties and sixties. Even

among such firms, only a select ones were conducting researches on a

regular basis and/or having a marketing research department within the

organization. A number of reasons can be put forward to explain this

phenomenon. Highly protected nature of the Indian market during the fifties

and sixties is amongst the most important reasons. A highly restrictive

industrial licensing policy coupled with a ban on capacity expansion led to

constant shortages of goods and services in the country. With demand

always exceeding supply and a virtual absence of competition in the market,

the firms were able to easily push to the consumers all those products they

produced. The focus of the firms at that time was primarily on procuring the

licenses and raw materials. They hardly had any concern for the product

improvements or satisfaction of their customers' needs and wants. In a way,

a sort of sellers' market prevailed at that time, and availability of an assured

market to the producers did not provide any incentive to them to make use

of marketing research for becoming more efficient, innovative and

competitive in the market place.

Moreover, the firms during those times operated on small scales and that

too within the peripheries of the local markets. Since they were very close to

their customers and had personal knowledge about them, they did not feel

the need for conducting marketing researches. Even a few of the firms that

were desirous of making use of marketing research could not do so because

of the paucity of funds. Lack of professional approach to management and

decision-making was another important reason for the neglect of marketing

research among the business firms in India.

Of late, however, the situation has undergone considerable changes. With

successive deregulation of the economy in the ensuing period and abolition

of the archaic industrial licensing system and other regulations especially in

the nineties, the competition has hot up in the market. Many a new firms -

both the Indian and foreign ones - have made a foray into the market.

Scalewise also, firms have expanded their businesses and they today

operate in the local as well as national and international markets. Due to fast

changing technological environment, product life cycles have been



shortened and many a new substitute have emerged. New methods of

communications and distribution channels have radically transformed the

Indian marketing scene, In many product categories, sellers' markets have

paved way to the buyers' markets. In the wake of these changes and

growing customer sophistication, it is no longer possible for the firms to

continue to base their marketing decisions solely upon gut feelings and past

experiences. Need for timely, accurate and relevant information about the

markets and buying behavior of the target market customers is fast

becoming sine qua non for improved decision-making.


1. Due to fast changing technological environment, product life cycles have

been ______________

2. Today everyone requires ___________ and ___________ information.

15.3 Expenditure on Marketing Research in India and Major

Users

Though no precise information is available; the guesstimate is that Indian

firms do not spend much money on marketing research. Consulting and

Research Enterprise (CORE), Hyderabad conducted a survey of the Indian

firms in 1986 to ascertain their expenditure on marketing research and

attitudes toward it. About 500 questionnaires were mailed out to the firms

selling industrial goods, consumer products and services, out of which 130

responded. Despite an overall favorable attitude towards marketing

research, the study found most of the firms spending low money on it. About

40 per cent of the firms were found spending less than Rs. 1 lakh.

Expenditure by the other 46 per cent of the firms ranged between Rs. 1 lakh

and Rs. 10 lakhs. Only about 14 per cent firms we spending more than

Rs. 10 lakhs, with highest figures being Rs. 1 crore (Table 15.1).



Table 15.1: Expenditure on Marketing Research by Indian Firms: 1985-86

CORE study also attempted an analysis of the marketing research

expenditure in relation to sales, and found that while 28 per cent of the

surveyed firms were spending 0.01 per cent or even less of their sales

volume on marketing research during the year 1985-86, 63 per cent firms

had their expenditure on marketing research in the range of 0.02 per cent to

0.4 per cent of sales. Though the rest of the 9 per cent of the surveyed firms

were spending more than 0.4 per cent on marketing research, it was only

the firms producing consumer goods which had expenditure on marketing

research in excess of 1 per cent of their sales.

In the past, only big firms used to be major users of the marketing research.

But of late, medium and small size firms have also started showing interest

in marketing research. Little wonder that even the marketing research

agencies have started turning to them for securing research business from

them. The number of the firms using marketing research on a regular basis

is also on an increase.

Over time, a significant decline has occurred in the relative importance of

the multinational firms. Two decades ago, multinational corporations were

the major users of marketing research, and their share was as high as 67

per cent of the total commercially available research in-India. But their share

has now started declining, and is expected to fall to a level of 45 per cent by



the end of this century. In contrast, the Indian firms are fast emerging as the

major uses of the marketing research in the country.

Another noteworthy change is the increasing use of marketing research by

the industrial goods firms. Though the consumer goods firms continue to

dominate the scene even at present, the share of industrial goods firms is

likely to rise in future with increased competition in the industrial goods

market.


3. CORE conducts __________.

4. In India, __________ goods firms continue to dominate the market.

15.4 Ways of Conducting Marketing Research in India

Broadly speaking, a firm can get the researches conducted in two ways:

either through its own staff or by hiring the services of outside agencies.

Some firms make use of both the alternatives.

So far as the in-house research is concerned, it can be conducted by the

firm's sales and marketing staff of or else they can have specialized staff or

department for conducting marketing researches. Since the employment of

specialized research staff or setting up of a separate research department

entails huge expenditure, only large firms requiring researches on a frequent

basis go in for this type of organizational arrangement. Small firms and the

organizations not so frequently requiring researches prefer using their sales

or marketing staff for undertaking research studies. As and when the need

arises, some of the sales and marketing persons are picked up and

assigned the research tasks. Since these persons generally do not have

specialized knowledge of marketing research and, moreover, perform side

by side the routine sales and marketing activities quality of the studies

conducted by such persons remains under doubt.

The other important method of collecting information is the use of outside

agencies or experts such as marketing research organizations, advertising

agencies and consultants. Seeing the increased demand for research

services, many a marketing research organization have come up in the

country and help business films through provision of customized as well as

syndicated research services. When the research is tailor-made to meet the

information needs of one particular client, it is known as customized



research. Since the benefit of such a research accrues to a single firm, that

single firm alone bears the entire research cost. Syndicated research, on the

other hand, involves collection of a common pool of data for meeting the

information needs of a number of firms. As the results of such a study are

shared among several films, it costs pretty less to a single firm. Quite often,

these studies are undertaken on a regular basis by the research agencies

and the information so collected is made available to the films on a

subscription basis.

Table 15.2: Organizational Arrangements for Conducting Marketing Research

in India

Table 15.2 contains the information regarding usage of different modes of

conducting researches. It is evident that the majority of the Indian firms

(about 70 percent) depend upon their sales staff for doing researches. Use

of outside marketing research agencies conies next in order of importance,

with about one-half of the firms employing them. In-house marketing

research staff exists in the case of 44 percent of the firms, especially among

the large size firms and those engaged in marketing of industrial products

and services. About one-third each of the Indian films get their marketing

research studies done through advertising agencies and consultants.



Syndicated researches are not yet common among the Indian firms. Despite

their low costs to the clients and the advantage of such information in many

cases being available at regular intervals, only about one-fifth of the firms

make use of the syndicated research services.

Table 15.2 also provides information about the nature of the firms preferring

a particular arrangement. It can be observed that practice of using sales

staff for carrying out researches exists among the firms of all sizes. Use of

in-house marketing research staff, outside research agencies and marketing

research services is more often prevalent among the larger rather than

medium mid small size firms. Important differences also, exist among firms

selling different types of products. While industrial goods and services firms

show a greater reliance on their sales persons and in-house marketing

research staff, consumer goods firms depict a preference for marketing

research agencies and syndicated research services to meet their

information needs.

Activity 1:

How is marketing research activity organized in your firm'? List the

arrangements that your firm has for conducting researches both

within and outside the firm. (Alternatively you may approach some

other organization and complete this activity in respect of that

organization)


5. Employment of specialized research staff or setting up of a separate

research department entails _____________.

6. Syndicated researches are _________ common among the Indian firms

15.5 Increased Demand for Outside Research Services

The demand for outside marketing research services has phenomenally

increased during the eighties and nineties. This is evident from the increase

in turnover of the marketing research agencies during this period. The value

of marketing research conducted by the marketing research agencies was

just Pa. 1 crore during the seventies. It went up to a figure of Rs. 3 crore in

1983, and further tip to Rs. 10.06 crore in 1988-89. Currently, the turnover of

the research agencies is expected to be somewhere around Pa. 20 to 10.25

crore.



Seeing growth in demand for different kinds of outside marketing research

services, a number of marketing research agencies and other organizations

have mushroomed in the country to meet the information needs of the

business firms. A list of some of these organizations is provided in Table

15.3.

Table 15.3: Major Organizations Offering Marketing Research Services in India

Operation Research Group (ORG)

Indian Marketing Research Bureau (IMRB)

Marketing and Research Group (MARG)

Marketing Operations Design and Enquiry Service (MODES)

Pathfinders

Advertising Consultants (India) Pvt. Ltd.

Concept Marketing and Advisory Pvt. Ltd.

Marketing and Business Associates ( MBA)

Research Consultants and Marketing Services Pvt. Ltd.

Consulting and Research Enterprise (CORE)

Marketing Research and Data Processing Consultancy Tata Consultancy

Services

National Council of Applied Economic Research (NCAER)

Indian Institute of Public Opinion

Indian Institute of Foreign Trade (IIFT)

Feedback Marketing Services

Research Consultancy Group

C. Marck (India) Ltd.

Quantum Market research Pvt. Ltd.

Research International India

Indica Research

A break-up of the firms using services of marketing research agencies is

provided in Table 15.4. Manufacturing firms have been the single largest

users of such research services, with a share of 72 per cent of the total

commissioned marketing research in India. Though the advertising agencies

are themselves important research services providers, they also employ

marketing research agencies for getting researches conducted for them.

Share of the firms using syndicated research services has been just



6 per cent in 1989. Media owners, services industries, government

departments/organizations, and research/consultancy organizations are yet

to emerge as important users of the commissioned marketing research in

India.

Table 15.4: Clientwise Break-up of the Marketing Research Commissioned in

India during 1988-89


7. The demand for ______________ marketing research services has

phenomenally increased during the eighties and nineties.

8. Though the advertising agencies are themselves important research

services providers, they also employ ____________ agencies for getting

researches conducted for them.

15.6 Common Applications of Marketing Research in India

The most common application areas of marketing research in India are

listed in Table 15.5. New product decisions constitute the most frequent

usage of marketing research. The other important application areas include:

estimation of market share, collection of competitive information, demand

estimation, product modification decisions, measurement of customer

satisfaction, product positioning, diversification and market segmentation

decisions. Only about one-third of the firms reported the use of marketing

research for developing advertising theme/message and arriving at pricing

and customer service decisions.



Application of marketing research for product elimination and evaluation of

advertising effectiveness is prevalent only among 20 per cent firms.

Furthermore, only 9 per cent firms reported the incidence of marketing

research for channel modification decisions.

Table 15.5: Common Applications of Marketing Research in India

Areas in which marketing research is frequently/always used

Percentage of respondents*

New product decisions 58

Estimating market share 49

Gathering competitive information 47

Demand estimation 46

Product modification decisions 44

Measuring consumer satisfaction 43

Product positioning decisions 42

Diversification decisions 40

Market segmentation decisions 38

Advertising theme/message decisions 31

Pricing decisions 30

Customer service decisions 27

Product elimination decisions 21

Evaluating advertising effectiveness 20

Channel modification decisions 9

Activity 2:

Compile a list of the organizations that provide marketing research

services in your area. Also approach any two of them and find out

what type of research services they provide to the clients.


9. __________ decisions constitute the most frequent usage of

marketing research.

10. Application of marketing research for product elimination and

evaluation of advertising effectiveness is prevalent only among

___________ firms.



15.7 Problems in Conducting Marketing Research in India

Due to country's vast size, heterogeneous population and infrastructural and

attitudinal problems, it is not easy to conduct marketing research in India.

Some of the major problems that you as a researcher would face in

conducting marketing research in the country are discussed below.

India's large and heterogeneous population comes in a big way in

conducting marketing research. Being a big and diverse country,

national surveys require India to be divided into several hundred districts

and interviewing several thousands of people. This calls for enormous

time and money and a big fleet of field workers – well beyond the

capacity of any small or medium size company.

Cultural diversity and linguistic nuisances further compound the

researcher's problem. More than 14 languages are spoken in the

country, with dialects exceeding 1,400 in number. Any major survey in

the country requires translation of the questionnaire in a minimum of five

to six languages. Many a time, strict translation of certain technical

words or phrases is not possible, thus giving rise to the problem of non-

comparability of data across the regions.

Accessibility to people living in the hinterland of the country is another

big problem. Only very few people own telephone. Postal system is also

not up to the mark: Because of low literacy level, mail interviews are of

limited application. Personal interviews seem to be the only viable

alternative, but even these are beset with transport problems and lack of

trained staff in the small towns and rural areas.

Secondary data available in the country also suffer on account of poor

coverage and redundancy of information. Data are at all not available for

many a variable of interest to the researchers. Though census is

conducted after every ten yews in the country, it is after a considerable

lapse of time that the full results are released. Even the trade and

industry associations: lack complete and up-to-date lists of the

manufacturers and trades. The industry and firms' production and sales

figures are also not complete, up-to-date and reliable.

Use of random and other elaborate sampling techniques presuppose the

existence of suitable sampling frames (i.e., list of the target market

population from which the samples are drawn). Non-availability of such

lists in the country complicates the research tasks and forces the



researcher to use non-probability sampling methods, thus adversely

affecting the reliability and validity of the survey results.

Attitudinal problems also restrict the use of marketing research in India,

The study by, Consulting and Research Enterprise (CORE) group, for

instance, found that only two-third of the executives of the surveyed

firms had the opinion that marketing research findings represent the real

world, and marketing research data are reliable cough to be of use iii,

decision-making. In response to the question whether costs incurred on

marketing research are low relative to the benefits that accrue from it,

about 58 per cent firms indicated disagreement, implying low utility of

marketing research. Further only 57 per cent of the executives refuted

the statement that "gut feeling is more important than marketing

research". Rest were either ambivalent or in agreement with the

statement.

The managers also appeared quite concerned with the time involved in

completing the marketing research studies. Only 42 per cent of the

respondents did not feel that " market research often takes too long to

be of any real use". In terms of quality and sophistication too, marketing

research in India in the opinion of many executives is far below the

expectations.

Not only the business firms, but advertising agencies also do not hold

favorable attitudes towards marketing research. Advertising executives

view it as a hindrance to their -creative work and hence do not like

spending much money on it. In 1988, about Rs. 1078 crores were spent

on advertising in the country. Had even 1 per cent of this amount been

spent on marketing research, the expenditure on advertising research

alone would have been Rs. 10.78 crore. But its is not due as the total

expenditure on commissioned marketing research itself in India was just

of the order of Rs. 10.06 crore in 1988-89.

Self Assessment Question

11. In India, cultural ___________ and ____________ differences further

compound the researcher's problem.

15.8 Challenges in Carrying Out Marketing Research

The various challenges in carrying out in marketing research are:

Be clear about the purpose of the marketing research.



Decide what you want to find out. A golden rule is that you should not try

to cover too much in one exercise.

Be clear about who your customers are. The key stage of any marketing

research is to decide whom it is you want to question.

Develop a brief. The brief is a clear statement of what is expected, by

when and at what price.

Decide who's going to carry out the marketing research.

If your organisation does not have a marketing research department (or

sometimes, even if it does), you may need to bring in a specialist

organisation to help you.

Select an external agency. Find the names of suitable agencies through

the trade press or trade association, directories, or contacts and

recommendations. Circulate your brief and shortlist candidates from their

responses.

Choose your method.

Think about data analysis.

Activity 3:

For what purposes has your organization in the last two years conducted

or commissioned marketing researches'? List the major applications.

(Alternatively you may approach another organization and complete this

activity in respect of that organization).


12. The ____________ is a clear statement of what is expected, by when

and at what price.

13. The key stage of any marketing research is to decide _________ you

want to question.

15.9 New Trends in Marketing Research

The various new trends in marketing research are:

Personal Interview

Field Trials

Online Survey



Personal Interviews

Like focus groups, personal interviews include unstructured, open-ended

questions. They usually last for about an hour and are typically recorded.

Focus groups and personal interviews provide more subjective data than

surveys. The results are not statistically reliable, which means that they

usually don't represent a large enough segment of the population.

Nevertheless, focus groups and interviews yield valuable insights into

customer attitudes and are excellent ways to uncover issues related to new

products or service development.

Field Trials

Placing a new product in selected stores to test customer response under

real-life selling conditions can help you make product modifications, adjust

prices, or improve packaging. Small business owners should try to establish

rapport with local store owners and Web sites that can help them test their

products.

Online Survey

Online surveys usually generate unpredictable response rates and

unreliable data, because you have no control over the pool of respondents.

But an online survey is a simple, inexpensive way to collect anecdotal

evidence and gather customer opinions and preferences.


14. A ____________ product should be placed in selected stores to test

customer response under real-life selling conditions.

15. ___________ surveys usually generate unpredictable response rates

and unreliable data.

15.10 Summary

Because of excessive regulations and lack of competition in the market in

the past, not much need was felt for marketing research in India. However,

with the dismantling of the licensing system and other regulatory measures

during the last two decades or so, and increasing competition in the market,

fast changing technology and growing consumer sophistication, it is no

longer possible for the marketing managers to solely make decisions on the

bias of met gut feeling and past experiences. They have come to

increasingly rely upon the information collected through the process of



marketing research. The Indian firms make use of both the in-house staff

and outside research organizations, advertising agencies and consultants

for getting researches conducted. Seeing the growth in demand for outside

research services, a large number of marketing research organizations have

come up in the country to provide both the customized and syndicated

research services.

In view of the country's large size, heterogeneous population, language

diversity, infrastructural bottlenecks and lack of secondary data, it becomes

a uphill task for the researcher to carry out researches in India. Unfavorable

attitudes of the managers also come in a big way in the widespread

acceptance of marketing research in India.

Glossary

CORE: Consulting and Research Enterprise

Demand: desire to own anything and the ability to pay for it and willingness

to pay

Cultural Diversity: of human societies or cultures in a specific region, or in

the world as a whole.


1. What are the major reasons for growing importance of Marketing

Research in India'?

2. What are the different ways of conducting marketing research'?

Describe the scope for outsourcing of marketing research services in

India?

3. Suggest some possible areas where marketing research would find

increasing application in India'?

4. Briefly comment on the problems faced by researchers in conducting

marketing research in India?

15.12 Answers


1. shortened

2. accurate, relevant

3. marketing surveys



4. consumer

5. huge expenditure

6. not yet

7. outside

8. marketing research

9. New product

10. 20 per cent

11. diversity, linguistic

12. brief

13. whom

14. new

15. Online


1. Refer to 15.2

2. Refer to 15.5

3. Refer to 15.6

4. Refer to 15.7

Mini-case

K.S.T.D.C is a premier organisation to promote tourism in the State of

Karnataka. People from all parts of the country and abroad visit different

parts of Karnataka every year. Soon after the capital of Karnataka,

Bangalore was identified as the Silicon Valley of India, the number of

tourists visiting Karnataka is on the rise. Both domestic and foreign tourists

are drawn here.

It is the opinion of global travellers that India is a top holiday destination.

The important aspect to be remembered is to remove all impediments or

barriers to tourists. K.S.T.D.C is considering a detailed study on those who

visited Karnataka during the last 3 years. It is intended towards answering

the following.

1. Profile of tourist based on important attributes/characteristics.

2. What people want from the tourist department vs what is currently

offered.

3. What are the difficulties or hardship tourists face?



4. Opinion/Suggestion by the tourist which will enable K.S.T.D.C to woo

more tourists by improving its services.

Question

Prepare a report giving proper explanation for each of the above questions.

Hint: Prepare the report based on the methods learnt but apply them in

Indian context.



Acknowledgements, References & Suggested Readings

Alexander Nicolas and Doherty Anne Marie, International Retailing,

Oxford University Press.

Bajaj Chetan, Retail Management, Oxford University Press.

Berman Barry, Retail Management, Prentice Hall of India.

Biyani Kishore and Baishya Dipayan, It happened in India, Rupa

Publications.

Dion Jim and Topping Ted, Start and Run a Retail Business, Jaico

Books.

Dunne Patrick M, Retailing, Thomson South Western.

Gilbert David, Retail Marketing Management, Pearson Education.

Lamba A J, Art of Retailing, Tata McGraw Hill.

Levy Michael, Retailing Management, McGraw Hill.

E-references:

dspace.iimk.ac.in/bitstream/2259/392/1/17-27.pdf

http://retail.about.com/od/marketingsalespromotion/Marketing_Sales_Pr

omotion.htm

http://tutor2u.net/business/marketing/segmentation-psychographic.html

http://www.emergingretailtrends.com/blog/

http://www.netmba.com/marketing/market/segmentation/

http://www.pwc.com/gx/en/retail-consumer/index.jhtml

retail.about.com/od/merchandisingbuying/Merchandising.htm

www.helium.com/.../164933-the-importance-of-a-retail-stores-design-

and-atmosphere

www.hinduonnet.com/businessline/praxis/pr0301/03010440.pdf

www.ibef.org/industry/retail.aspx

www.jimnovo.com/Relationship-Marketing-more.htm

www.lapointerosenstein.com/fichier/listelibrary/.../ako-franchising.pdf

www.people.umass.edu/debevec/.../Retail%20Pricing%20Strategies.pdf

mk0013.pdf

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