Managing Marketing Information
Previewing the Concepts—Chapter Objectives
1. Explain the importance of information to the company and its understanding of the marketplace.
2. Define the marketing information system and discuss its parts.
3. Outline the steps in the marketing research process.
4. Explain how companies analyze and distribute marketing information.
5. Discuss the special issues some marketing researchers face, including public policy and ethics issues.
Just the Basics
As the textbook points out, to be successful, marketing managers must on a daily basis deal with mountains of marketing information. They need to understand what they need to know, when they need to know it, and how to find the information they need. And they must do all this cost-effectively.
This chapter reviews marketing information systems that work to get the right information, in the right form, at the right time to marketing managers so that they can make effective decisions. The marketing research process is also considered and outlined, as well as the use of marketing intelligence and internal data. Finally, other marketing information considerations are discussed. These include how small business and non-profit organizations use market research, the special problems encountered in performing international marketing research, and public policy and ethical considerations that need to be considered in marketing research.
a. In 1985, Coca-Cola made a major marketing blunder by dropping Classic Coke after creating New Coke.
b. Coke learned very quickly that you don’t mess with a winning formula—they received sacks of mail and more than 1,500 calls per day from angry customers.
c. Classic Coke was brought back after only 3 months and regained its leading position in the marketplace.
d. Experts blame poor marketing research for Coke’s blunder. Although Coke was leading in the market, Pepsi was gaining ground.
e. Coke performed a massive marketing research effort, conducting 200,000 taste tests before finalizing the new formula. In blind tests, 60% of consumers had chosen New Coke over Classic Coke, and 52% chose New Coke over Pepsi.
f. The problem was in the definition of the market research—it did not take into account any of the intangibles, such as Coke’s name, history, packaging, cultural heritage, and image.
g. As this story illustrates, successful products and marketing programs begin with good information, a thorough understanding of consumer wants and needs.
h. Information is rapidly becoming the primary competitive weapon. Products, processes, and equipment can be duplicated, but information and intellectual capital often cannot.
i. Yet brand managers can be bombarded by anywhere from 1 million to 1 billion new numbers every week because of all the information available. Data overload can be a big problem.
j. A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. An MIS begins and ends with information users, as exhibited in Figure 4-1.
Use Key Term Marketing Information System here.
Use Chapter Objectives 1 and 2 here.
Use Figure 4-1 here.
k. The MIS interacts with information users to assess information needs. Next, it develops needed information from internal databases, marketing intelligence activities, and marketing research. Then it helps analyze information to put it in the right form, and finally it distributes the information and helps managers use it to make good decisions.
2. Assessing Marketing Information Needs
a. A good marketing information system must balance what users would like to have against what they really need and what is feasible to offer.
b. This process begins by asking information users what they want. The MIS monitors the marketing environment so that it can provide decision makers with information they should have to make key decisions.
c. Sometimes the information wanted cannot be provided, either because it is simply not available or because the MIS has limitations.
d. Companies must monitor what it costs to obtain, process, store, and deliver information, because these costs can be quite high. The company must decide what the benefits are of obtaining additional information.
3. Developing Marketing Information
a. There are several sources of marketing information; these include internal data, marketing intelligence, and marketing research.
b. Internal databases are electronic collections of information from data sources within the company. Marketing managers can readily access this information to identify marketing opportunities and problems, and to plan programs and evaluate performance.
Use Key Term Internal Database here.
c. There are many sources of internal data.
1. The accounting department keeps records of sales, costs, and cash flows.
2. The operations department has information on production schedules, shipments, and inventories.
3. The marketing department may have information about customer demographics, psychographics, and buying behavior.
4. The customer service department keeps records of customer satisfaction or service problems.
d. Internal data is usually easy to get access to, but has limitations. It was collected for other uses, so it may be incomplete or not in the form needed.
Let’s Discuss This
How might a marketing manager combine data on sales from the accounting department with information about service problems and returns from customer service to increase sales?
e. Marketing intelligence is the systematic collection and analysis of publicly available information about competitors and developments in the market place.
Use Key Term Marketing Intelligence here.
f. The goal of marketing intelligence is to improve decision making, assess and track competitors’ actions, and provide early warning of opportunities and threats.
g. You can gather intelligence by talking to your own company employees, benchmarking competitors’ products, researching the Internet, walking around trade show floors, and going through rivals’ trash.
h. Companies can also get marketing intelligence from their suppliers, resellers, and key customers.
i. Companies can buy competitive products, monitor their sales, keep an eye out for new patents, and examine other physical evidence.
j. Reading competitors’ annual reports and other SEC filings can provide a lot of information, as do business publications, trade show exhibits, press releases, advertisements, and web pages.
k. Online databases, many of which are free, are also a good source of information. The SEC website has all public company filings available, and the Patent Office has all patents and patent applications available online.
Use Key Term Online Databases here.
Applying the Concept
Why might a manufacturer of snowboards want to track any patents filed with the U.S. Patent and Trademark Office?
l. Subscription-based databases include Dialog, DataStar, LEXIS-NEXIS, Dow Jones News Retrieval, UMI ProQuest, and Dun & Bradstreet’s Online Access.
m. Many companies are providing competitive intelligence training to their employees to prevent the release of information.
n. Ethical questions come into play in gathering marketing intelligence. There is much available publicly, so there are no reasons today to “snoop.” No one needs to break the law or the accepted code of ethics.
o. Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.
Use Key Term Marketing Research here.
Use Chapter Objectives 3 here.
p. Marketing research can be used to understand customer satisfaction and purchase behavior, assess market potential and market share, or to measure effectiveness of pricing, product, distribution, and promotional activities.
q. The marketing research process has four steps: defining the problem and research objectives; developing the research plan; implementing the research plan; and interpreting and reporting the findings.
Use Figure 4-2 here.
Use Discussing the Issues 1 here.
1. Defining the Problem and Research Objectives
a. This is often the hardest step in the research process. The problem must not be defined too narrowly, as was the case with New Coke, or too broadly.
b. The objectives of the research are defined next. The three types of research objectives include exploratory research, which gathers preliminary information that helps define the problem and suggests hypotheses; descriptive research, which, simply, describes things such as market potential for a product, or demographics of the customer base; and causal research, to test hypotheses about cause-and-effect relationships.
Use Key Terms Exploratory Research, Descriptive Research, and Causal Research here.
Use Discussing the Concepts 2 here.
c. The statement of the research problem and objectives guides the entire research process.
2. Developing the Research Plan
a. Researchers now must define the exact information needed, develop the plan for gathering it, and present the plan to management.
b. The research plan outlines sources of existing data, and then spells out the specific research approaches, contact methods, sampling plans, and instruments that will be used. This plan should be in the form of a written proposal. It can call for gathering secondary data, primary data, or both.
3. Gathering Secondary Data
a. Gathering secondary data should start with the company’s internal data. There are also data reports that can be purchased (see Table 4-1) and commercial online databases.
Use Key Term Secondary Data here.
Use Table 4-1 here.
Use Application Questions 3 here.
b. Secondary data can be obtained quickly and at lower cost than primary data. Some data available from secondary sources would not be available to or would be too expensive to collect for a single company.
c. There are problems with secondary data. The data needed may not exist, or it may not be usable. The researcher must make certain that it is relevant, accurate, current, and impartial.
4. Primary Data Collection
a. Primary data must often be collected. The same concerns about relevancy, accurateness, currency, and impartiality exist.
Use Key Term Primary Data here.
Use Table 4-2 here.
Use Discussing the Issues 5 here.
b. Table 4-2 summarizes research approaches, contact methods, sampling plans, and research instruments that are available.
c. Research approaches include observational research, which involves gathering primary data by observing people, actions, and situations, as well as ethnographic research, which observes people in the natural environment. Observational research can use mechanical methods of observation, such as Neilsen’s people meters and checkout scanners.
Use Key Term Observational Research here.
Use Marketing at Work 4-1 here.
Use Discussing the Issues 6 here.
d. Survey research is the most widely used method for primary data collection and is the best approach for descriptive research. Single-source data systems start with surveys of consumer panels and continue with electronically monitoring their purchases and exposure to various marketing activities.
Use Key Terms Survey Research and Single-Source Data Systems here.
e. Survey research is very flexible but also presents problems. People may be unwilling or unable to answer questions for a variety of reasons; they may answer even if they don’t know an answer to appear smart; or they may try to give pleasing answers.
f. Experimental research is suited for gathering causal information. Experiments involve selecting matched groups of subjects, giving them different treatments, controlling unrelated factors, and checking for differences in responses.
Use Key Term Experimental Research here.
Use Application Questions 1 here.
g. There are many methods of contacting respondents to gather information. Mail questionnaires are used to gather large amounts of data. They are not very flexible, they may take longer to complete, and the response rate is usually low. On the other hand, respondents may give more honest answers, and no interviewers are present to potentially bias answers.
Use Table 4-3 here.
h. Telephone interviewing is a very good method of gathering information quickly and is more flexible than mail questionnaires. Response rates tend to be higher. But the cost per respondent is very high, and people may not want to discuss personal questions with an interviewer. There is also the potential for interviewer bias. Interviewers could also record responses differently.
i. Personal interviewing can be done individually or in groups. Individual interviewing can be very flexible, but can cost three to four times as much as telephone interviews. Group interviewing is also called focus group interviewing. This involves inviting six to ten people to talk with a trained moderator. It has become one of the major methods of research, but it is hard to generalize from the results. The potential for interviewer bias is also big.
Use Key Terms Focus Group Interviewing and Online (Internet) Marketing Research here.
Use Marketing at Work 4-2 here.
Use Application Questions 2 here.
j. Focus groups can be held via teleconferencing, or even online.
Let’s Discuss This
When is it appropriate to use a survey? A personal interview? A focus group? What are the considerations that must be taken into account to make that decision?
k. A sample is a segment of the population selected to represent the population as a whole. The sample should be representative of the entire population so that the researcher can make accurate estimates of the thoughts and behaviors of the larger population.
Use Key Term Sample here.
l. Designing the sample involves three decisions: Who is to be surveyed? (called the sampling unit); how many people should be surveyed? (the sample size); and how should the people in the sample be chosen? (sampling procedure). Table 4-4 describes the different kinds of samples, which are probability sample and nonprobability samples.
Use Table 4-4 here.
m. There are two main research instruments—the questionnaire and mechanical devices.
n. The questionnaire is the most common instrument used; it can be administered in person, by phone, or online.
o. Closed-end questions include all possible answers from which subjects have to choose their response. Open-end questions allow respondents to answer in their own words.
p. Researchers need to be careful of the wording and ordering of questions. Simple, direct, and unbiased wording should be used, and questions should be in a logical order. Table 4-5 shows the many errors that can crop up.
Use Table 4-5 here.
q. Mechanical instruments include supermarket scanners and people meters. Other mechanical instruments measure physical responses of subjects.
5. Implementing the Research Plan
a. Implementing the plan involves collecting, processing, and analyzing the information.
b. The data collection phase of marketing research is usually the most expensive and most subject to error of any of the phases.
c. Researchers need to process the data to isolate important information. Data needs to be checked for accuracy and completeness. Results are tabulated and statistical measures are developed.
6. Interpreting the Research Findings
a. The findings need to be interpreted, conclusions drawn, and reports made to management. Researchers should present findings that are useful in making decisions rather than focusing on raw data or statistical techniques.
b. Managers and researchers should work together to interpret research results.
4. Analyzing Marketing Information
a. Information analysis might involve analytical methods that will help marketers make decisions.
b. These models will help answer the questions of “what if” and “which is best.”
Use Chapter Objectives 4 here.
Customer Relationship Management (CRM)
c. Smart companies collect information at every customer touch point. These touch points include customer purchases, sales force contacts, service and support calls, website visits, satisfaction surveys, credit and payment interactions, market research studies—every time a customer and the company are in contact.
d. Customer Relationship Management consists of sophisticated software and analytical techniques that integrate customer information from all sources, analyze it in depth, and apply the results to build stronger customer relationships.
Use Key Term Customer Relationship Management (CRM) here.
e. CRM analysts develop data warehouses and use data mining techniques. A data warehouse is a companywide electronic storehouse of customer information. The purpose of a data warehouse is to integrate information the company already has. Data mining techniques are used to sift through the data to dig out interesting relationships and findings about customers.
f. Companies can use CRM to understand customers better, provide higher levels of customer service, and develop deeper customer relationships. They can also use it to note high-value customers, target them more effectively, cross-sell the company’s products, and create offers tailored to specific customer requirements.
g. CRM systems can be very expensive to implement—U.S. companies will spend from $10 billion to $20 billion on software alone, yet more than half the CRM efforts fail to meet objectives. Most commonly, the failure occurs because companies see this as just a software or technology issue.
h. When it works, CRM benefits far outweigh the risks and costs.
Use Under the Hood / Focus on Technology here.
5. Distributing and Using Marketing Information
a. The marketing information system must make the information available to managers and others who make marketing decisions or deal with customers.
b. Many companies use an intranet to facilitate information distribution. The intranet provides ready access to data, stored reports, and so forth.
c. Companies are increasingly allowing key customers and value-network members to access account and product information, along with other information. The systems that do this are called extranets.
Applying the Concept
Many auto companies have extranets with their suppliers; they also can include their dealerships, which are their product delivery channels. What kind of information might be shared among suppliers, the manufacturer, and the dealer? Why is it important that they share this information?
6. Other Marketing Information Considerations
a. This section looks at marketing research in small businesses and non-profits, international marketing research, and public policy and ethics issues in marketing research.
Use Chapter Objectives 5 here.
Marketing Research in Small Businesses and Non-profit Organizations
b. Small organizations have the same information needs as larger firms. Start-up businesses need information about their markets, their industries, competitors, potential customers, and reactions to new offers. Existing small businesses need to track customer needs and wants, reactions to new products, and changes in the competitive environment.
c. Many marketing research techniques can be used in a less-formalized manner and at little or no expense.
d. Small businesses can gather good information by observing what is around them. Retailers can watch vehicle and pedestrian traffic to find areas in which to locate; companies can watch for competitor ads in local media; companies can visit competitor locations.
e. Small companies can conduct surveys using convenience samples; for instance, companies can invite small groups to lunch to discuss topics of interest. Retail salespeople can talk to customers in stores.
f. Small companies and non-profits can also perform simple experiments by changing themes in mailings and watching results.
g. Most of the secondary information available to large companies is also available to small companies and non-profits. Many associations publish data, and the U.S. Small Business Administration publishes a large number of reports.
Use Discussing the Issues 3 here.
International Marketing Research
h. International researchers follow the same steps as domestic researchers, but they face more and different problems. International researchers have to deal with differing markets in different countries.
i. Secondary data is often difficult to obtain. Most research firms that do international research operate in only a few countries.
j. When collecting primary data, it may be difficult to develop good samples outside the U.S. Data, and lists such as telephone directories, census information, and other data may be lacking in other countries.
k. Reaching respondents in other parts of the world can also be difficult. In some countries, few people have telephones; in others, the mail system is unreliable. Poor roads and transportation systems can make people difficult to reach, and few people in developing countries can access the Internet.
l. Cultural differences, such as language, can be problematic. Translating questionnaires is difficult. Questionnaires should be re-translated back to English before being administered to be sure idioms, phrases, and statements don’t take on unintended meanings.
m. Consumers also differ in their attitudes toward marketing research. Some countries’ customs prohibit talking to strangers; in others, research questions can be considered too personal.
n. There can also be high illiteracy rates that keep people from responding.
Use Discussing the Issues 4 here.
Public Policy and Ethics in Marketing Research
o. Most research benefits both companies and consumers. However, the misuse of marketing data can harm or annoy consumers.
p. Intrusions on Consumer Privacy
1. Most consumers feel positively about market research, but others resent it or even mistrust it.
2. Sometimes consumers are “taken in” by market research that turns out to be attempts to sell them something. Other consumers confuse market research with telemarketing and say “no” before the interviewer can get started.
3. A recent poll showed that 82% of Americans worry about losing control over how businesses use their information, and 41% said that businesses had invaded their privacy. These concerns have led to lower response rates.
4. The research industry is attempting to educate consumers about the benefits of marketing research and has adopted broad standards outlining researchers’ responsibilities to respondents and the general public.
5. Some companies are appointing a “Chief Privacy Officer” to safeguard privacy of consumers.
q. Misuse of Research Findings
1. In some cases, research surveys appear to be designed to produce the wanted effect. Most of this seems to be unintended rather than blatant misrepresentation. Researchers’ choice of wording can have an effect on survey outcomes and conclusions.
2. In other cases, supposedly independent research turns out to have been paid for by companies with an interest in the outcome.
3. Each company must be responsible for policing their conduct and reporting of marketing research.
Use Focus on Ethics here.
Discussing the Issues
1. Distinguish between internal databases, marketing intelligence, and marketing research as methods for developing marketing information. How does each of these three sources assist an organization differently in meeting its information needs?
Internal databases are electronic collections of information obtained from data sources within the company. Marketing intelligence is the systematic collection and analysis of publicly available information about competitors and developments in the marketplace. Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.
2. Taking the role of a brand manager for Hawaiian Tropic suntan lotion, create an exploratory research objective, a descriptive research objective, and a causal research objective. How does the nature of each research objective guide data collection?
Student responses will vary for this question. Instructors can use this question to assist students in understanding how the company’s information objective and the method of data collection are intricately linked together. For example, exploratory research might be accomplished through focus groups, but a focus group would be inappropriate for casual objectives.
3. Small businesses face budget constraints that can limit the type and scope of research conducted. In a small group, brainstorm what a small furniture retailer might be able to do to gain competitor and consumer information on a limited budget.
Instructors can use this question to get students to think about research on different levels. Many research project examples that students are aware of focus on large companies and massive studies (both in time and money). Small businesses can creatively uncover the information they need. Much of the same methods large companies use, such as observation, surveys, and experiments, can be performed on a smaller scale.
4. Discuss some of the unique challenges U.S. researchers may encounter in conducting research in other countries. How might these obstacles be overcome?
Some of the challenges include the difficulty in dealing with differing market conditions in different countries (their levels of economic development, cultures and customs, and buying patterns), difficulty in finding good secondary data, difficulty in developing good samples, difficulty in reaching respondents, and difficulty due to language issues.
5. What advantages do secondary data have over primary data? What advantages do primary data have over secondary data? Why is secondary data typically the starting point for marketing researchers?
Secondary data can usually be obtained more quickly and at a lower cost than primary data. However, the needed information may not exist (researchers can rarely obtain all the data they need from secondary sources). Even when data can be found, they might not be very usable (wrong format, inaccurate, out of date, etc.). Primary data often has the advantage of more specifically being able to address the company’s research needs, but firms still need to be make sure that primary data is relevant, accurate, current, and unbiased.
6. How might observational research be used to understand a consumer’s decision process in selecting greeting cards? What other information that is not observable might you want to know about a consumer’s greeting card choices and how would you get it?
Companies could have individuals or cameras in place to monitor consumers as they browse the racks in a greeting card store. Examples of information that could be gathered include what they look at first, how many cards they read before selecting one, what areas they avoid, how long they spend searching. What observational methods do not get at is the decision-making process going on inside a consumer’s head. For example, why was one particular card selected over other alternatives?
1. It has been reported that more than 7 million people have discontinued their regular home phone line in favor of using a cell phone at home to place and receive calls. Assume you work for one of the land-based telephone companies that is losing customers to cell phones. Describe both an experiment and a survey that would aid your company in understanding how to reverse this trend. Which approach makes the most sense for this research question?
Student responses will vary for this question. Instructors can use this question to highlight the idea that multiple research approaches can be taken to provide relevant information for a given question. However, one approach may be more appropriate from a cost, time, or validity standpoint.
2. You and three other students work for United Airlines and serve on a committee making decisions about an upcoming customer satisfaction questionnaire. Each team member is to be an advocate for one of the following contact methods: mail, telephone, personal, and online. Debate the pros and cons of the different contact methods and then have the group vote for using one of the four methods.
Instructors should encourage the students to be strong advocates for their position, but to not let that bias their vote in the final selection. This assignment will bring out the strengths and weaknesses of different data collection alternatives and help students understand how the context of the study and the specific question being asked will influence the selection of the data collection method.
3. Browse through the list of external information sources provided in Table 4-1. Pick one website to visit from the business data section, government data section, and Internet data section of Table 4-1. What type of data can be found that would be useful to a Toyota car dealer interested in finding a location for a new dealership?
Student responses will vary depending on the websites they select. Instructors may wish to point out that a variety of data would be useful for addressing this research question including population data, income data, car ownership data, and competitive data.
Under the Hood / Focus on Technology
SAP is the leading enterprise software company claiming the majority of Fortune 500 companies among its clients. Its products are used to manage sales and distribution, production, inventory, and accounting, among other things. One of its products is a customer relationship management module that is designed to help companies manage the vast amounts of data associated with individual customers. Visit the SAP website (www.sap.com) and read about the customer relationship management tools under the solutions link.
1. Based on information available at the SAP website, describe some of the capabilities of CRM.
Capabilities include personalization of product offers, sales lead generation, customer self-help capabilities, and information sharing among partners.
2. If you were creating a customer database to use individual customer data for CRM in a hotel chain, what type of information would you capture about the customer?
Relevant information to capture would include basic demographic information, spending levels, frequency of stays, personal preferences with regard to amenities and room attributes, and financial data.
3. How would you collect information about the hotel customer and how could a marketing manager use it to improve the relationship with that customer?
Hotels could capture some of this information without the customer even realizing it through the hotel check-in procedures. Other information could be captured from guest surveys or information asked during the application for affinity programs.
Focus on Ethics
Survey research, either by phone or on the Internet, has become more difficult because even legitimate survey efforts are often viewed as thinly veiled sales calls by suspicious consumers who have been burned once too often. Furthermore, consumers are concerned with privacy and do not want their personal information misused. In addition, given the volume of unsolicited email (SPAM) received (some estimates suggest that SPAM will account for more than half of all email in the near future), many people don’t have time to try to separate legitimate research requests from unsolicited product advertisements, and end up deleting them all.
1. What ways might legitimate survey researchers overcome growing public resistance to online surveys and telephone surveys?
Promotional campaigns by the research industry highlighting the benefits consumers receive from survey data (e.g., products and services designed more in line with their preferences) would be one way to address this issue.
2. How have you responded in the past when asked to participate in a survey on the phone or Internet? Did you participate? Why or why not?
Student responses will vary based on their experience. It may be interesting to ask what a researcher would have to do (e.g., monetary offer) to get them to participate.
3. What methods might a company conducting an online survey use to distinguish its email from SPAM?
Some online advertisers are now using the “ADV:” prefix in the subject line of messages. Discuss the potential for a subject line designation that researchers might use.
Barriers to Effective Learning
1. While today’s students have grown up with computers, the idea of an “information system” may be very new to them. They typically will not have had to do any research, and any jobs they’ve held to this point in their lives will most likely have entailed very basic, entry-level type work. To get them past this, you could talk about the type of information the university will hold on each student—their major, the courses they’ve taken, the grades they’ve gotten, their current address, their home address, their parents’ names, whether they are paying full tuition or are on any kind of scholarship, what high school they attended and their grade point average there, what sports they play or activities they participate in, and so forth. Then talk about how the university might use that information to understand their current student population to help them figure out how to target future students while they are still in high school. This should help them grasp how data gets turned into information, and from that point to knowledge.
2. Virtually no one in class will be at all familiar with the market research process. They have not had to worry about collecting information in any large-scale process, although they might have been involved with collecting information from members of a student organization as to what activities the members would like to participate in. One effective way of discussing this issue is to talk about the course evaluations that are completed at the end of the semester. Explaining that this is not to rate the instructors but to provide valuable feedback to the university, the department and the instructor on course offerings, content within the courses, and only lastly to get an idea of the competence of instructors should help. Also, give examples of poorly designed surveys and show how they lead the respondent to answer in a given way. Especially helpful are questionnaires that use leading or loaded questions, or double-barreled questions that are difficult to answer.
3. A final barrier is the lack of understanding of commercial and/or online databases. Showing a database in class, such as the U.S. Census data or state information, both of which are available for free, will help them see the amount of data that is available. If possible, it would then be helpful to “find the story” in the data—that is, to apply the data to a small problem, such as where to locate a new Starbucks outlet. Using the data to show population clusters of mid- to upper-level income areas, the kind of consumer most likely to pay a premium for coffee, will help them internalize the power of using effective and relevant data in marketing decision making.
1. Go to the library and do a search of the Wall Street Journal, BusinessWeek, and Fortune for information regarding one selected company. Show how using this kind of marketing intelligence would help a company keep abreast of their competitors.
2. Describe how Amazon.com uses customer relationship management to retain their customers and increase their purchases.
3. Describe a small research project that could be instituted to increase membership in a selected student organization.
Classroom Exercise/Homework Assignment
NPD Group is a research company that provides both consumer panel information as well as retail sales tracking services to a wide range of companies. Go to their website at www.npd.com to review their products and services, as well as their client list.
1. How might a retail clothing company use the data that NPD has already collected? What sort of ad-hoc or customized research could NPD perform for such a company?
NPD has some basic research results available free online in the form of trend reports. A retailer could use these to inform their ordering for the upcoming season as well as to develop effective ads that will reach their target customers. Given that NPD also offers retail sales tracking services, a clothing store or chain could track their own sales versus their competitors and see how the trend forecasting from NPD stacks up against results at the end of the season. Finally, customized research from NPD could be used to decide whether to bring in a new clothing line, for instance a line with a more inner-city or ethnic slant, by using NPD’s online panels to find out preferences and intentions to buy this type of clothing.
2. NPD claims to have a total of 2.5 million panelists, with 600,000 forming a core that are chosen to respond to surveys. Why is it important to have such a large base of consumers, when for instance, political surveys discussed on TV news will talk about the fact that about 500 people were interviewed regarding a candidate or political issue?
There are many issues involved here. One of the first is that to draw a representative sample for a national consumer brand, the more people who are available to respond to a questionnaire, the more likely the results will be representative of the population as a whole. Also, with such a large number of people willing to participate, there is a much greater chance that NPD can reach the exact demographic and psychographic profile for a survey that is required or desired. Finally, even though all 2.5 million people have volunteered to be part of the NPD panel, only a small percentage of people who receive a survey will actually fill it out. To keep response rates in absolute numbers high, then, a very large number of questionnaires will need to be sent out.
3. In looking at the list of clients, virtually all of them are retail companies. International Flavors and Fragrances is one of the few business-to-business marketers on the list. Why would a company that sells to other businesses be interested in what consumers have to say?
Many more companies in the business market should care about what consumers are thinking and buying, because their demand is derived from consumer demand. But most companies in this market depend on their own customers to tell them what consumers will be doing and buying, without worrying about understanding the ultimate customer themselves. This may or may not be a smart thing to do; the farther away a company is from the end consumer, the less likely they will have the capability to understand consumer buying behavior and demand. But ignoring the consumer market can be detrimental to business marketers, because it will leave them at the mercy of their customers’ forecasting and knowledge, which could leave them unprepared for shifts in consumer tastes.
If you look at the International Flavors and Fragrances website (www.iff.com), you will see that they seem to very closely track consumer tastes and preferences. It may be worthwhile to go to the website during class or have students do it on their own, because very few, if any, of them will have heard of this company. Yet they have probably used their products, and it may be interesting for them to review what this company does and how it can market something so esoteric as an aroma.
Classroom Management Strategies
This chapter will be a first introduction into managing any kind of information for most students. It is also a very brief introduction to marketing research. Figure 4-1 should figure prominently in the discussion about this chapter so that students don’t lose track of all the varying sources of information marketers need.
1. Only 5 minutes should be spent on Assessing Marketing Information Needs. This is an introductory segment, and it also represents a topic that is necessarily company-driven rather than generic.
2. The majority of the class, probably 40 minutes, should be spent on Developing Marketing Information. This is the meat of the chapter, and not only covers information sources such as internal data and marketing intelligence, it goes into some detail on performing marketing research. Most of the key terms from marketing research are defined and explained in this section.
3. The time remaining can be used to cover the last three sections of this chapter: Analyzing Marketing Information; Distributing and Using Marketing Information; and Other Marketing Information Considerations. Customer Relationship Management is covered in the first of these sections. Of the topics listed here, that will be the most important for students to comprehend.