Marketing ResearchMarketing Research

Scope of Business ResearchScope of Business Research

nn What is your definition of What is your definition of business?business?

ll For profit corporationsFor profit corporations

ll Not for profit organizationsNot for profit organizations

ll Government DepartmentsGovernment Departments

DefinitionDefinition

Marketing Research is defined as Marketing Research is defined as the the systematic systematic and and objective objective

process process of of gathering, recordinggathering, recording, , and and analyzing analyzing data for aid in data for aid in making Marketing decisionsmaking Marketing decisions..

Basic vs. AppliedBasic vs. Applied

nn Basic / Pure ResearchBasic / Pure Research

ll Research that is intended to expand the Research that is intended to expand the boundaries of knowledge itself or to boundaries of knowledge itself or to verify the acceptability of a given theory.verify the acceptability of a given theory.

nn Applied ResearchApplied Research

ll Research undertaken to answer Research undertaken to answer questions about specific problems or to questions about specific problems or to make decisions about a particular make decisions about a particular course of action or policy decision.course of action or policy decision.

When is Business Research When is Business Research Needed?Needed?

nn Time ConstraintsTime Constraintsll Urgency of situation precludes the Urgency of situation precludes the

use of researchuse of research

nn Availability of dataAvailability of datall Many African nations have never Many African nations have never

conducted population censusconducted population census

nn Nature of DecisionNature of Decisionll Tactical vs. StrategicTactical vs. Strategic

nn Benefits vs. CostsBenefits vs. Costs

nn Data Data ll Recorded measures of certain Recorded measures of certain

phenomenonphenomenon

nn InformationInformationll A body of facts that in a format suitable A body of facts that in a format suitable

for decision makingfor decision making

nn KnowledgeKnowledgell A blend of information, experience and A blend of information, experience and

insight that provide a framework that insight that provide a framework that can be thoughtfully applied when can be thoughtfully applied when assessing new information or evaluating assessing new information or evaluating relevant situationsrelevant situations

Types of Business ResearchTypes of Business Research

nn ExploratoryExploratory

ll Initial research conducted to clarify and Initial research conducted to clarify and define the nature of a problemdefine the nature of a problem

ll “Absenteeism is increasing and we don’t “Absenteeism is increasing and we don’t know why”know why”

ll “Would people be interested in our new “Would people be interested in our new product idea?”product idea?”

ll “What task conditions influence the “What task conditions influence the leadership process in our organization?”leadership process in our organization?”

Types of Business ResearchTypes of Business Research

nn DescriptiveDescriptive

ll Research designed to describe Research designed to describe characteristics of a population or a characteristics of a population or a phenomenonphenomenon

ll “What kind of people favor our “What kind of people favor our services?”services?”

ll “Did last year’s product recall have an “Did last year’s product recall have an impact on our company’s stock price?”impact on our company’s stock price?”

ll “Has the average rate of savings and “Has the average rate of savings and loans increased in the past decade?”loans increased in the past decade?”

Types of Business ResearchTypes of Business Research

nn Causal ResearchCausal Researchll Research conducted to identify cause Research conducted to identify cause

and effect relationships among variables and effect relationships among variables when the research problem has been when the research problem has been narrowly defined.narrowly defined.

ll “Which of the two training programs is “Which of the two training programs is more effective?”more effective?”

ll “Can I predict the value of energy stocks “Can I predict the value of energy stocks if I know the current dividends growth if I know the current dividends growth rates of dividends?”rates of dividends?”

ll “Will buyers purchase more of our “Will buyers purchase more of our product in a new package?”product in a new package?”

Which Type of Research?Which Type of Research?

nn Establishing the functional Establishing the functional relationship between advertising and relationship between advertising and salessales

nn Identifying targetIdentifying target--market market demographics for a shopping centredemographics for a shopping centre

nn Learning the extent of job Learning the extent of job satisfaction in a companysatisfaction in a company

nn Investigating reactions to the idea of Investigating reactions to the idea of a new telecom policya new telecom policy

You work for CHILDCO, a corporation that is considering the acquisition of a toy manufacturer.

The senior vice president for development asks you to head a task force to investigate six companies that are

potential candidates.

You assemble a team composed of representatives from the relevant functional areas. Pertinent data are

collected from public sources because of the sensitive nature of the project.

You examine all of the following: company annual reports; articles in business journals, trade magazines, andnewspapers; financial analysts’ assessments; and company advertisements. The team members then

develop summary profiles of the candidate firms based on the characteristics gleaned from the sources.

The final report highlights the opportunities and problemsthat acquisition of the target firm would bring to all areas

of the business.

nn What is the dilemma facing the What is the dilemma facing the manager?manager?

ll the senior vice president for the senior vice president for development must make a proposal to development must make a proposal to the president or possibly the board of the president or possibly the board of directors about whether to acquire a toy directors about whether to acquire a toy manufacturer and, if one is to be manufacturer and, if one is to be acquired, which one of the six under acquired, which one of the six under consideration is the best candidate. consideration is the best candidate.

nn What must the research accomplish?What must the research accomplish?ll the researcher needs to know what information the researcher needs to know what information

should be evaluated in order to value a should be evaluated in order to value a company. company.

ll In the study of management, this knowledge In the study of management, this knowledge would be acquired primarily in courses in would be acquired primarily in courses in financial management, accounting, and financial management, accounting, and marketing. marketing.

ll Knowing the type of information needed, the Knowing the type of information needed, the researcher in CHILDCO identifies sources of researcher in CHILDCO identifies sources of information, like trade press articles and annual information, like trade press articles and annual reports. reports.

ll Because of the possible effect of the toy Because of the possible effect of the toy manufacturer evaluation on the stock prices of manufacturer evaluation on the stock prices of the conglomerate instigating the study and each the conglomerate instigating the study and each toy company, only public sources are used. toy company, only public sources are used.

Case 2Case 2

ColorSplash, a paint manufacturer, is having trouble maintaining profits. The owner believes inventory

management is a weak area of the company’s operations.

In this industry, the many paint colors, types of paint, and container sizes make it easy for a firm to

accumulate large inventories and still be unable to fill customer orders. The owner asks you to make

recommendations.

You look into the present warehousing and shipping operations and find excessive sales losses and

delivery delays because of out-of-stock conditions. An informal poll of customers confirms your

impression.

You suspect the present inventory database and reporting system do not provide the prompt, usable

information needed for appropriate production decisions.

Based on this supposition, you familiarize yourself with the latest inventory management techniques in a

local college library. You ask the warehouse manager to take an accurate inventory, and you

review the incoming orders for the last year.

In addition, the owner shows you the production runs of the last year and his method for assessing the

need for a particular color or paint type.

Modeling the last year of business using production, order, and inventory management techniques, you

choose the method that provides the best theoretical profit.

You run a pilot line using the new control methodology. After two months, the data show a much lower

inventory and a higher order fulfillment rate. You recommend that the owner adopt the new inventory

method.

nn What is the dilemma facing the What is the dilemma facing the manager?manager?

ll the owner of the paint the owner of the paint manufacturer must decide manufacturer must decide whether to implement a new whether to implement a new inventory management system. inventory management system.

nn What must the research accomplish?What must the research accomplish?ll believing the problem with paint stockouts is the believing the problem with paint stockouts is the

result of inventory management, the owner asks result of inventory management, the owner asks the researcher to detail warehousing and the researcher to detail warehousing and shipping processes. This would be a descriptive shipping processes. This would be a descriptive study if it had stopped here. study if it had stopped here.

ll But if problems in the processes could be linked But if problems in the processes could be linked with sales losses due to an inability to make with sales losses due to an inability to make timely deliveries to retail or wholesale timely deliveries to retail or wholesale customers, then an explanatory study would customers, then an explanatory study would emerge. emerge.

ll The researcher tests this hypothesis by The researcher tests this hypothesis by modeling the last year of business using the modeling the last year of business using the relationships between processes and results. relationships between processes and results.

Research ProcessResearch Process

Clarifying the Research Question

ResearchProposal

Research DesignStrategy

Data Collection Design

Sampling Design

Instrument Design & Testing

Data Collection & Preparation

Data Analysis & Interpretation

Research Reporting / Management Decision

Management Research Question Management Research Question HierarchyHierarchy

1

2

3

4

5

6

Management Dilemma

Management Question

Research Question(s)

Investigative Questions

Measurement Questions

Management Decision

What symptoms cause management concern?

How can management eliminate the negative symptoms?

What plausible courses of action are available to management?

What does the manager need to know to select the best alternative?

What should be asked or observed to obtain the information the manager needs?

Recommended course of Action

Problem DiscoveryProblem Discovery

nn “A problem well defined is a problem “A problem well defined is a problem half solved”half solved”

nn “The formulation of problem is often “The formulation of problem is often more essential than its solution”more essential than its solution”

nn Most important and frequently Most important and frequently neglected area of researchneglected area of research

nn Exploratory research to transform Exploratory research to transform the discovered problem into defined the discovered problem into defined ones, incorporating specific research ones, incorporating specific research objectivesobjectives

Research DesignResearch Design

nn A master plan specifying the A master plan specifying the methods and procedures for methods and procedures for collecting and analyzing the collecting and analyzing the needed informationneeded information

ll SurveysSurveys

ll ExperimentsExperiments

ll Secondary Data StudiesSecondary Data Studies

ll Observation TechniquesObservation Techniques

Survey ResearchSurvey Research

nn A method of gathering A method of gathering primary primary data data based on communication based on communication with a with a representative sample representative sample of of individuals.individuals.

ClassificationClassification

StructuredStructured

UndisguisedUndisguised

UnstructuredUnstructured

UndisguisedUndisguised

StructuredStructured

DisguisedDisguised

UnstructuredUnstructured

DisguisedDisguised

Temporal BasisTemporal Basis

nn Cross Sectional StudiesCross Sectional Studies

ll Various segments of a population Various segments of a population are sampled at a single point in are sampled at a single point in time.time.

nn Longitudinal StudiesLongitudinal Studies

ll Respondents are questioned at Respondents are questioned at different moments of timedifferent moments of time

Methods of CommunicationMethods of Communication

nn Human Interactive MediaHuman Interactive Media

ll Personal InterviewPersonal Interview

ll DoorDoor--toto--Door InterviewsDoor Interviews

ll Mall Intercept InterviewsMall Intercept Interviews

nn Electronic Interactive MediaElectronic Interactive Media

ll Telephone InterviewTelephone Interview

ll Computer Assisted Telephone Computer Assisted Telephone Interviewing (CATI)Interviewing (CATI)

Methods of CommunicationMethods of Communication

nn Non Interactive MediaNon Interactive Media

ll Self Administered QuestionnairesSelf Administered Questionnaires

ll Mail QuestionnairesMail Questionnaires

ll Email SurveysEmail Surveys

ll Internet SurveysInternet Surveys

ll Kiosk SurveysKiosk Surveys

Errors in Survey Research

Total Error

Random Sampling Error

Systematic Error (Bias)

RespondentError

AdministrativeError

RespondentError

RespondentError

Data Processing Error

Sample SelectionError

InterviewerError

InterviewerCheating

SamplingSampling

nn Process of using a small Process of using a small number of items or parts of a number of items or parts of a larger population to make larger population to make conclusions about the whole conclusions about the whole populationpopulation

Stages in Selection of SampleStages in Selection of Sample

nn Define the target populationDefine the target population

ll The specific, complete group The specific, complete group relevant to the research projectrelevant to the research project

nn The Sampling FrameThe Sampling Frame

ll Working populationWorking population

nn Sampling UnitSampling Unit

nn Sampling TechniqueSampling Technique

Sampling MethodsSampling Methods

nn Probability SamplingProbability Sampling

ll In which every member of the In which every member of the population has a known, non zero population has a known, non zero probability of selectionprobability of selection

nn Non Probability SamplingNon Probability Sampling

ll In which units of the sample are In which units of the sample are selected on the basis of personal selected on the basis of personal judgment or conveniencejudgment or convenience

Non Probability SamplingNon Probability Sampling

nn Convenience SamplingConvenience Sampling

nn Judgment or Purposive Judgment or Purposive SamplingSampling

nn Quota SamplingQuota Sampling

nn Snowball SamplingSnowball Sampling

Probability SamplingProbability Sampling

nn Simple Random SamplingSimple Random Sampling

nn Systematic SamplingSystematic Samplingll Every 5Every 5thth name from the list would name from the list would

be drawnbe drawn

nn Stratified SamplingStratified Samplingll Simple random sub samples are Simple random sub samples are

drawn from within different strata’sdrawn from within different strata’s

nn Cluster SamplingCluster Sampling

nn Multistage Area SamplingMultistage Area Sampling

Sampling ErrorSampling Error

nn The absolute value of the The absolute value of the difference between an unbiased difference between an unbiased estimate and the corresponding estimate and the corresponding population parameter.population parameter.

ll Because sample results Because sample results (statistics) are based on partial or (statistics) are based on partial or incomplete analysis of population incomplete analysis of population features (or characterstics)features (or characterstics)

nn Population ParameterPopulation Parameter

ll An exact, but generally unknown An exact, but generally unknown measure (or value) which measure (or value) which describes the entire population or describes the entire population or process characteristicprocess characteristic

nn Sample StatisticSample Statistic

ll A measure (or value) found from A measure (or value) found from analyzing sample data.analyzing sample data.

Principles of SamplingPrinciples of Sampling

nn Principle of Statistical RegularityPrinciple of Statistical Regularity

ll That moderately large number of That moderately large number of items chosen at random from a items chosen at random from a large group are almost sure on the large group are almost sure on the average to process the average to process the characteristics of a large groupcharacteristics of a large group

nn Principle of Inertia of Large Principle of Inertia of Large NumbersNumbers

Sampling DistributionSampling Distribution

nn A probability distribution A probability distribution consisting of all possible values consisting of all possible values of a sample statisticof a sample statistic

nn Standard Error of Statistic Standard Error of Statistic ––Standard Deviation of sampling Standard Deviation of sampling distribution of sampling statisticdistribution of sampling statistic

Central Limit TheoremCentral Limit Theorem

nn When a random sample of When a random sample of observations are drawn from a nonobservations are drawn from a non--normal population with finite mean normal population with finite mean µ, µ, and as the sample size and as the sample size nn is is increased, the sampling distribution increased, the sampling distribution of the sample mean is approximately of the sample mean is approximately normally distributed, with mean and normally distributed, with mean and standard deviation asstandard deviation as

nn Mean = µ and Mean = µ and

nn Standard Deviation = Standard Deviation = ss / vn/ vn

Value of Value of nn

nn If the sampled population is normal, If the sampled population is normal, then the sampling distribution of then the sampling distribution of mean will also be normal regardless mean will also be normal regardless of the size of the sampleof the size of the sample

nn If the sampled population is not If the sampled population is not normal or is skewed, the sample size normal or is skewed, the sample size must be larger, with atleast 30 before must be larger, with atleast 30 before the sampling distribution of mean the sampling distribution of mean becomes approximately normalbecomes approximately normal

I) Population I) Population -- NormalNormal

nn (A) (A) –– Population Standard Population Standard Deviation Deviation ss is knownis known

nn Standard Normal VariateStandard Normal Variate

nn Z = (xZ = (x--µ)/(µ)/(ss /vn)/vn)

nn (B) (B) –– Population Standard Population Standard Deviation is not knownDeviation is not known

nn t= (xt= (x--µ)/(s/vn), where µ)/(s/vn), where

nn s= v( (xs= v( (x--mean)mean)22 /(n/(n--1)1)

Case ICase I

nn A motorcycle manufacturing A motorcycle manufacturing company claims that its particular company claims that its particular brand of motorcycle gave an brand of motorcycle gave an average highway km per litre rating average highway km per litre rating of 90. of 90.

nn An independent agency tested it to An independent agency tested it to verify the claim. Under controlled verify the claim. Under controlled conditions, the motor cycle was conditions, the motor cycle was driven for a distance of 100 km on driven for a distance of 100 km on each of 25 different occasions.each of 25 different occasions.

Case ICase I

nn The actual km per litre achieved The actual km per litre achieved during the trip were recorded on during the trip were recorded on each occasion.each occasion.

nn Over 25 trials, the average and the Over 25 trials, the average and the standard deviation turned out to be standard deviation turned out to be 87 and 5 respectively87 and 5 respectively

nn If the rating of 90 km is correct, find If the rating of 90 km is correct, find the probability that the average kms the probability that the average kms per litre over a random sample of 25 per litre over a random sample of 25 trials would be 87 or less.trials would be 87 or less.

Case IICase II

nn The strength of wire produced by The strength of wire produced by company A has a mean of 4500 Kg company A has a mean of 4500 Kg and a standard deviation of 200 Kg. and a standard deviation of 200 Kg. Company B has a mean of 4000 Kg Company B has a mean of 4000 Kg and a standard deviation of 300 Kgand a standard deviation of 300 Kg

nn If 50 wires of company A and 100 If 50 wires of company A and 100 wires of company B are selected at wires of company B are selected at random, what is the probability that random, what is the probability that the sample mean strength of A will the sample mean strength of A will be atleast 600 Kg more than that of be atleast 600 Kg more than that of B?B?

Case IIICase III

nn A manufacturer of watches has A manufacturer of watches has determined from experience that determined from experience that 3 percent of the watches he 3 percent of the watches he produces are defective. If a produces are defective. If a random sample of 300 watches random sample of 300 watches is examined, what is the is examined, what is the probability that the proportion probability that the proportion defective is between 0.02 and defective is between 0.02 and 0.035?0.035?

Standard ValuesStandard Values

ConfidenceConfidence

LevelLevel

(1(1--aa)%)%

AcceptableAcceptable

ErrorError

Level (Level (aa))

aa/2/2 ZZ

90%90% 0.100.10 0.050.05 +/+/-- 1.641.64

95%95% 0.050.05 0.0250.025 +/+/-- 1.961.96

98%98% 0.020.02 0.010.01 +/+/-- 2.332.33

99%99% 0.010.01 0.0050.005 +/+/-- 2.582.58

Confidence IntervalConfidence Interval

Z Z --distributiondistribution ZZ--distributiondistribution

Z Z –– distributiondistribution

((ss is estimated by s)is estimated by s)

tt--distributiondistribution

((ss is estimated by s)is estimated by s)

Large n>=30 Small n<30

sis

not

kno

wn

sis

kn

ow

n

CaseCase

nn The following data have been The following data have been collected for a sample of normal collected for a sample of normal population : 5,10, 8, 11, 12, 6, population : 5,10, 8, 11, 12, 6, 15, 1315, 13ll What is the point estimate of What is the point estimate of

population mean and standard population mean and standard deviation?deviation?

ll What is the confidence interval for What is the confidence interval for population mean at 95% population mean at 95% confidence interval?confidence interval?

CaseCase

nn The HRD department of a company The HRD department of a company developed an aptitude test for screening developed an aptitude test for screening potential employees. The person who potential employees. The person who devised the test asserted that the mean devised the test asserted that the mean mark attained would be 100. mark attained would be 100.

nn The following results were obtained with a The following results were obtained with a random sample of applications (mean = 96, random sample of applications (mean = 96, s=5.2, n=13). s=5.2, n=13).

nn Calculate a 95% confidence interval for the Calculate a 95% confidence interval for the mean mark for all candidates and use it to mean mark for all candidates and use it to see if the mean mark could be 100see if the mean mark could be 100

CaseCase

nn In a survey carried out in a large city, In a survey carried out in a large city, 170 households out of a random 170 households out of a random sample of 250 owned at least one sample of 250 owned at least one pet. pet.

nn Find the 95% confidence interval for Find the 95% confidence interval for the percentage of households in the the percentage of households in the city who own at least one pet.city who own at least one pet.

nn Does the result support a pet Does the result support a pet manufacturer claim that 75 percent manufacturer claim that 75 percent of all households have at least one of all households have at least one petpet

Hypothesis TestingHypothesis Testing

nn A statistical hypothesis is a A statistical hypothesis is a claim (assertion, statement, claim (assertion, statement, belief or assumption) about an belief or assumption) about an unknown population parameterunknown population parameter

nn The process that enables a The process that enables a decision maker to test the decision maker to test the validity of his claim is called validity of his claim is called hypothesis testinghypothesis testing

Formats of HypothesisFormats of Hypothesis

nn If inflation rate has decreased, then If inflation rate has decreased, then wholesale price index will also wholesale price index will also decreasedecrease

nn If employees are healthy, then they If employees are healthy, then they will take sick leave less frequentlywill take sick leave less frequently

nn Greater the stress experienced in the Greater the stress experienced in the job, lower the job satisfaction to job, lower the job satisfaction to employeesemployees

nn Directional HypothesisDirectional Hypothesis

Formats of HypothesisFormats of Hypothesis

nn There is relationship between There is relationship between age and job satisfactionage and job satisfaction

nn There is difference between There is difference between average pulse rates of men and average pulse rates of men and womenwomen

nn NonNon--Directional HypothesisDirectional Hypothesis

General ProcedureGeneral Procedure

nn State the Null Hypothesis (HState the Null Hypothesis (H00) and ) and Alternative Hypothesis (HAlternative Hypothesis (H11))

nn State the Level of Significance (State the Level of Significance (aa))

nn Establish Critical or Rejection RegionEstablish Critical or Rejection Region

nn Select the suitable test of Select the suitable test of significance or Test statisticsignificance or Test statistic

nn Formulate the Decision Rule to Formulate the Decision Rule to Accept Null HypothesisAccept Null Hypothesis

Errors in Hypothesis TestingErrors in Hypothesis Testing

DecisionDecision State of NatureState of Nature

HH0 0 is trueis true HH0 0 is Falseis False

Accept HAccept H00 CorrectCorrect Type II Type II Error (Error (ßß))

Reject HReject H00 Type I ErrorType I Error

((aa))

CorrectCorrect

CaseCase

nn The mean life of a sample of 400 The mean life of a sample of 400 bulbs produced by a company is bulbs produced by a company is found to be 1600 hours, with a found to be 1600 hours, with a standard deviation of 150 hoursstandard deviation of 150 hours

nn Test the hypothesis that the mean Test the hypothesis that the mean life time of the bulbs produced in life time of the bulbs produced in general is higher than the mean life general is higher than the mean life of 1570 hours at 1% level of of 1570 hours at 1% level of significancesignificance