Chapter 4: Marketing Research and Marketing Insıght

The Importance of Marketing Information and Customer Insights

Companies have to learn about customers and competitors, and utilize that information to stay ahead of competition. New developments in the markets, increasing competition, changing customer preferences, rapidly advancing technology, shorter product life cycles, and expanding scope of marketing activities create uncertainty and risk in the business environment, and consequently generate a fundamental need for marketing information. Marketing information includes any verbal, written or visual data that is relevant to marketing decisions. Another essential objective of using marketing information besides acquiring information about markets, customers and competitors is to reduce the uncertainty and risk surrounding marketing decisions. Rapidly changing marketing environment allows competitors to respond to firms’ competitive advantage they acquired through differentiated marketing strategies or products. Typical problems that marketing managers encounter in terms of marketing information are:

1. The lesser amount of required and relevant information compared to larger amount of redundant information;
2. Reaching the required information as a result of dispersed information sources in the company;
3. Being unable to reach some vital marketing information since they are constrained by some managers;
4. Being unable to gather critical marketing information at the time they are needed;
5. Being unable to be sure of the accuracy and precision of the marketing information gathered.

in decision-making marketing managers do not need any form of information, but need current, reliable, accurate and relevant marketing information. Marketing information system are the systems for collecting, organizing and processing the information that businesses need in their marketing decisions.

Marketing Information System

A marketing information system is a way of systematically gathering and delivering effective and relevant marketing information to the right people on a continuous basis and at the right time. A marketing information system consists of people and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights. marketing information system has a few critical aspects;

• It comprises principles, processes, methods, people and necessary instruments for collecting, analyzing and storing information;
• Moreover, it is a planned and systematic effort for meeting the marketing information needs;
• Furthermore, it is a continuous effort. Continuity means that the system provides the information required for the marketing decisions not based on discrete research attempts but on the basis of regular and continuous information generation.

Functions of Marketing Information System

The marketing information system has three main functions.12 The first function of the system is to determine the information needed in marketing decisions. In order to be able to identify the information needed, it is necessary to ask the managers involved in marketing decisions what kind of information they need.

The second function of the marketing information system is to generate any kind of marketing information that might be needed in decision-making. While generating information, it is possible to deploy various sources; however, these sources could be classified under three major categories: (i) internal databases and sources, (ii) marketing intelligence, (iii) marketing research.

The third function of the marketing information system is to deliver the generated information to the people or managers who would use this information in marketing decisions when needed. If the information generated in the system is not delivered to the managers who need it, then it is not possible to say that the system works accurately.

Generating Marketing Information

Data consists of numbers, records, symbols, and the like about facts. Data could be obtained from events, changing circumstances, and developments that occur in the business environment; as well as from records and reports kept by the company itself. information is obtained by attributing meaning to the collected data. From this point of view, information is interpretation of numbers, records, symbols, situations, etc. that make up the data. Knowledge has a deeper, richer and broader meaning than information. Information is converted into knowledge; when information is synthesized and used in decisions, it transforms into knowledge.

Internal Sources of Information

Internal sources of information comprise several types of records and reports such as costs, sales and revenue records prepared by the accounting department; capital flow, revenue and investors’ relations reports prepared by the finance department; raw materials and capital goods inventory records and production rate reports generated by the production department; and the marketing department’s records on sales expenditures and expenditures related to customers, advertising and other marketing communication activities. Compared to other sources of information, it is easier to reach internal sources. However, there are still some problems with internal sources of information.

Market Intelligence

Market intelligence covers the data and information that marketing decision makers need about market changes. Information gathered about market conditions and changes, competitors, changes in macro factors of the marketing environment, circumstances affecting customer preferences and purchasing habits are generally considered under this heading. Market intelligence is largely used to assist strategic planning; marketing planning; developing sound marketing strategies; monitoring the actions and strategies of competitors; and identifying opportunities and threats in the marketing environment. ge. Like firm’s internally generated information, market intelligence needs to be organized and analyzed within the marketing information system for effective use. In addition, some of market intelligence is collected from open sources such as the Internet.

Marketing Research

Marketing research collects information only through projects or studies that are designed and carried out in order to respond to a specific marketing situations and decisions.

There are some types of data that form the basis of information to be used in marketing decisions: primary and secondary data. Secondary data can be described as data already collected for other specific purposes. Therefore, we can say that a large part of the information comprised within the marketing information system consists of secondary data. There is quite extensive amount of secondary data available from many sources. Secondary data can be used for collecting market intelligence as well as conducting certain types marketing research projects. Gathering secondary data is usually both easy and cost-effective compared to primary data. However, it is important to identify the available, relevant and appropriate secondary data sources and also to reach them with minimum time and labor costs. Secondary data can be obtained from two types of sources, internal and external sources. Primary data: Secondary data are often very useful, but in some occasions, they are insufficient. At that time primary data is used.

The Role and Definition of Marketing Research

Marketing research helps firms to reduce some of the risk related to marketing decisions by providing information that would form a part or the entire basis of decisionmaking. Marketing research basically involves the systematic collection and evaluation of decision-specific data in order to help firms to comprehend market trends and customer needs better; and draw actionable insights. In cases where the sources of secondary information are insufficient, this specific information is gathered through marketing research and relevant strategies are developed in accordance with this information.

Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation that the company encounters. Marketing research can be employed in all decisions concerning the marketing mix elements. The role of marketing research in supporting the marketing decisions can be summarized as helping to:

• Describe the nature and scope of target markets; • Understand the nature of influences that shape target markets
• Understand the influences that affect a firm’s ability to satisfy target markets;
• Assess singular and interactive marketing mix elements;
• Monitor past successes and failures in marketing decisions.

Marketing environment research can be conducted to identify the changes and trends in economic, political, social, cultural and technological factors of the marketing environment. Marketing managers can use target market research in order to acquire information on the market and market trends that can be used for future forecasting; calculate the market share of the brand and its competitors; and to define customers’ desires and expectations. Product research can be carried out for testing new product concepts and opportunities, revealing customer expectations on a new product’s content or design, and comparing the performance of an existing product with its competitors. Whereas sales research would help to evaluate the effectiveness of sales, sales area developing, and incentive and reward methods and techniques. Marketing managers can conduct distribution channel research to determine the most suitable distribution methods, the appropriateness of channel members, the best locations for warehouses and retail outlets. Promotional research would assist identifying the most appropriate method for promotion; the most suitable advertising and campaign materials; the most suitable media to be used; and also testing the effectiveness of communication in achieving the objectives.

Marketing Research Process

The steps that define the tasks to be accomplished in conducting a marketing research study are called the marketing research process; and includes six main steps as problem definition, developing an approach to the problem, research design formulation, fieldwork, data preparation and analysis, and report generation and presentation.

Step 1: Problem Definition

The most important, but perhaps the most difficult step of the marketing research process is to define the marketing problem to be answered, since only when a problem has been clearly and accurately identified can a research project be conducted properly. Problem definition involves expressing the general problem and identifying the specific components of the marketing research problem. While defining the problem of marketing research, which is a very challenging process, it is crucial (1) to provide the researcher information he/she needs to understand the situation accurately, and (2) to guide the researcher during the research study. This approach acknowledges the need for open and continuous communication between decision makers and researchers in defining the marketing research problem.

Step 2: Developing a Research Approach

Once the decision-maker and the marketing researcher clarify the research problem, it is time to determine the correct approach to the research problem. This step frequently involves developing a theoretical framework, analytical models, research questions and hypothesis. In other words, developing a research approach to the problem comprises identifying the factors that influence research design. Accordingly, this step begins with the selection, adaptation and development of a suitable theoretical framework that would support a research design.

Step 3: Developing a Research Design

Research design is a detailed guideline depicting necessary tasks to be accomplished for acquiring the relevant information. The research design shows the path that needs to be followed to find an answer to the research problem identified as well as doing it in the most efficient way. There may be many different research approaches depending on the variety of research problems. Nevertheless, a research design typically consists of the following tasks.

1. Defining the information needed
2. Identifying whether the overall design is to be exploratory, descriptive or causal
3. Devising the techniques for investigation or measurement
4. Organizing an appropriate form or questionnaire for data collection
5. Determining the sampling process and sample size
6. Elaborating the steps of qualitative or quantitative data analysis.

Exploratory research is a type of initial research that provides information to understand the scope of the current marketing problem. It is a flexible and progressive approach that helps apprehending marketing cases that are essentially difficult to measure, or cannot be measured in a quantitative manner, or the measurement would not genuinely characterize the marketing situation.

Conclusive research involves measuring clearly defined marketing concepts and problems. Therefore, conclusive research is more formal and structured compared to exploratory research; and also based on large, representative samples, and the data obtained are typically analyzed with quantitative techniques. Conclusive research designs may be either descriptive or causal.

Descriptive research is normally conducted in order to portray and identify the characteristics of the markets, customer expectations and similar issues. Descriptive research is structured and formal; therefore, it is conducted for testing certain hypotheses according to a pre-defined objective, in contrast to exploratory research Descriptive research allows

• Describing the characteristics of groups such as consumers, customers, sales representatives;
• Estimating the proportion of units that exhibit certain types of behavior within a specific group; and
• Demonstrating the relationship between marketing variables.
• The second branch of conclusive research is causal research. Causal research investigates cause-andeffect relationships. Marketing managers often make decisions based on causal relationships that would generate certain consequences. Since the assumptions underlying causal relations may not always be accurate, they need to be supported by research. Causal research helps
• Determining which variables are the cause and which variables are the effect or result;
• Defining the nature of causal relationship; and
• Predicting the possible consequences. As a result, similar to exploratory research, causal research is structured and formal. While descriptive research allows verifying the degree of relationship between variables, it would not provide information on the nature of causal relationships. On the other hand, causal researches examine the nature of these relationships, and are frequently designed as experiments performed in the most controlled environments.

There are three basic principles that should be taken into account, when deciding the research design.

First of all, the research design should be selected according to the marketing research problem at hand.

The second important principle is that the determined research design should be employed to provide accurate and required information. The third point is that each of the aforementioned basic research designs can be considered as a process of successive steps.

Step 4: Data Collection or Fieldwork

This step of the process is about collecting the necessary data to obtain the required information; therefore, it involves a number of phases. The first phase covers deciding which kind of data is required to provide a solution to the marketing research problem. If secondary data meet the information needs and provide a solution to the marketing research problem, then the researcher can use secondary data sources.

The researcher gathers and evaluates secondary data sources this time for the specified objective of the planned research. Secondary data sources may be internal sources, such as reports of previously conducted marketing research or organizational databases; they may be external sources as well, like trade publications. On the other hand, in some marketing research problems, secondary data is not sufficient for providing a solution so that the researcher needs to collect primary data in order to obtain the required information. Marketers often need data on demographic and socio-economic characteristics of customers, such as age, education, gender, income, occupation, social status and marital status. Then the second phase involves deciding on which primary data collection technique to be used. Various primary data collection techniques are available to the marketing researcher driven from diverse disciplines.

Interviews: One of the widely employed primary data collection technique, particularly in exploratory research is the interview, which takes two forms: Personal interviews and Focus group interviews. In personal interviews, a respondent and an interviewer converse face to face according to the outline prepared in line with the research objectives. Personal interviews are employed in research questions such as understanding consumers’ reactions to new product concepts; how they feel about an existing product; how they differentiate and position brands; their beliefs and attitudes about products and brands.

The second type, focus group interviews , on the other hand, involves six to twelve participants who are guided by a moderator in a comprehensive discussion about the research topic or issue. The purpose of focus group interviews is to comprehend what participants feel and have to say about the research topic, and to understand their contentions. Focus group technique is widely used in consumer marketing research.

Observation: In observational studies, primary data is collected through observation of people, actions and situations associated with the marketing problem.

Survey research, the most widely used approach for primary data collection in marketing research, is the most appropriate method for gathering descriptive information. Marketers, who want to know about consumers’ knowledge, attitudes, preferences, or buying behavior could easily find out by asking them relevant questions directly. In survey studies, data are collected primarily by asking questions to the participants in the target group. Participants are asked a number of questions about their demographic characteristics, lifestyles, feelings, attitudes, awareness, preferences and behaviors. In surveys data can be collected by filling in the data collection tool or the questionnaire by contacting the participants via mail, telephone, faceto-face or online. Mail questionnaires can be used to collect large amounts of information at a low cost per respondent.

Telephone interviewing is one of the best techniques for collecting information rapidly, and it provides greater flexibility compared to mail questionnaires. Interviewers can clarify complicated questions and sometimes elucidate by probing, and the response rates tend to be higher than mail questionnaires as well.

Face-to-face interviewing involves applying the questionnaire to people in their homes or offices, on the street, or in shopping malls. Such interviewing is flexible. Online questionnaires can be incorporated on the firms’ Web, or social media sites or used via e-mail to invite people to answer questions.

The third phase of designing the research involves determining the research sample and the sampling technique. When it is required to learn the attitudes, feelings, beliefs or habits of a group, it is necessary to ask each member of this group to participate in the study.

Step 5: Preparing and Analyzing the Data

This step of data preparation includes the editing, coding, transcription, verification, and analysis of data. Data analysis is an inherent part of developing the research approach, developing research design, and the execution of individual methods. If the data to be collected are qualitative, the analysis step simultaneously takes place as the data are being collected, well before all observations or interviews completed. If the data to be analyzed are quantitative, each questionnaire or observation form is checked or edited.

Step 6: Preparing the Research Report and Presentation

The entire marketing research study should be documented in a written report that addresses the research problem and objectives, and the research questions specified; describes the research approach and design, data collection and data analysis procedures employed; and presents the major findings. Research findings should be presented in a understandable and clear format so that they can be immediately directed to the decision-making process.

Limitations of Marketing Research

There are two areas of misapprehension about the role of marketing research:

1. Marketing research does not make decisions. The role of marketing research is not to make decisions; instead research supersedes intuition, impressions or lack of knowledge with relevant information.
2. Marketing research does not guarantee success. Since conducting marketing research would not reduce the possibility of failure, but risk and uncertainty surrounding decisions. The real value of research can be seen over a long period.