The Marketing Research Process

[■flcctive marketing research Involves ihesix steps shown in Figure 44, We will illustrate tliesii steps with the following situation:

American Airlines (AA) is constantly looking fur new ways to serve its passengers; it was one oil lie lirst companies to install phone ha tic I sets. Now it is reviewing many new ideas, especially to cater to its lirst-class passengeison very long flights, many nl whom are business people whose high-priced tickets pay most of ihe freight. Among these ideas are: (1) lo supply an Internet coil u eel inn with limited access lo Web pages and e-mail messaging; {2) to offer 24 channels of satellile cable W; and (3) to offer a 50-CD audio system that lets each passenger create a customised play lisi of music and movies Io enjoy during the flighj. The inarkct ing research manager was assigned to Investigate bow first -class passengers would rate these services and how much extra I hey would be willing to pay if a charge was mude. He was asked to focus specifically on the intemd connection. One estimate says that aii lines might realize revenues of $7Q billion Over the next decade from in flight [ulernet access, if enough first-class nasse tigers would he willing to pay S25 for ii, AA could thus recover its costs in a reasonable lime. Making ihe connection available would cost (he airline S90,ÜÜÜ per plane.13

Step 1; Define the Problem, the Decision Alternatives, and the Research Objectives

Marketing management nuisi be careful not m define the problem too broadly or too narrowly for the nielrkt;iLmresearcher, A marketing manager who instructs the marketing researcher lo "Find otit everything you c;m about first-class air Iravelers* needs," will collect li lot ol' unnecessary infoimalion. One who says, "I ind out if enough passengers aboard a H74 7 flying direct between Chicago and Tokyo would be willing to pay S25 for an internet connection so tftit American Airlines would break even in Otic year on the cosi of offering tliis service,"1 is taking ton narrow a view of the problem. The marketing researcher might evi-ti raise [his tpjesrioii: "Why does the Internet connect inn have to he priced at S25 as opposed to $10, $SO. or some other price? Why does American have to breakeven on the cost of the service, especially If it aitiacis new users to AAV"

lti discussing the problem. American's managers discover another issue, If the new service were successful, hoiv fast could other airlines copy it? Airline marketing research is replete witli examples of new series thai have been so quickly copied by competitors that no aliiine has gained a sustainable competitive advantage, i low important is it so be first, and how Ipng cotfld the lead be sustained?

The Hftarkeiing manager and marketing researcher agreed to define the problem as follow: ' Will uG^rmgan in-Tight Internet service create enough incrementEil preference and profit for American Airliue$tO justify iisuosi against oilier ;>ossible investments \mcrtcan might make/" To help in designing the research, management should lirst spell out the decisions ii might fate and ihen work backward. Suppose management spells out these decisions: <L) Should American otter an Iniernei connection? \ 2) If so, should the service be offered to fttst-clnss only, or include business class, and possibly economy cktss? {;!) What price (s) should be charged? [4) On wha i types of pianes and lengths of trips stipidd it be offeree

Now management and marketing; researchers are ready to se; specific research objectives: (1) What types offirsi-class passengers would respond most to using an in-flight Internet servfee? (2) I Ion many first-cLiss passengers are likely to usft tbe Internet service at <1 iI'll:rent price levels? (3) How many exttfc first-class, passengers might choose American because of this new service? (4) Mow much long-term goodwill will this service add to American Airlines' image? (EiJ Hoto important is Internet service to first-class passengers relative to providing other services suet as a power plug, or enhanced enienaiiuneni?

Not all rcsetffch projects can be this specilic. Some research is exploratory—its goal is in shed iighi on the real nature of the problem and to sijtggesi po&lble solutions or new ideas. Some research is descriptive—II seeks in ascertain certain magnitudes, Such as how niany fiI'st-class passengers would purchase in-flight Internet service at ?2fi. Some research in causal—its purpose is to tesl a cause-¡tini-effect relationship.

Step 2: Develop the Research Plan

The second stage of marketing research calls for developing ihe most efficient plan forgathering ihe needed in formal ion. The marketing manager needs to know the cost of the research plan before approving it. Suppose i lie company made a prior estimate thai launching the in-flight Internet service would yield a long-term profit of S[)U.I)UO. The manager believes that doing lite research Would lead to an improved pricing and promotlontd |ilan and a long-term profit Of ^10,000. fn this case, liie manager should lie willing to spend up tu SI 0.0(10 on this research, [f tbe research would cost more than $4U,OOU. it is not worth doing7 Designing a research plan calls for decisions on ihe data sources, research approaches, research instrument^ sampling plan, and contact methods.

"flic resea rc her can gal lie rsecortdnrv data, primary data, or both. Secondary dam arc data that were collected for another purpose and already exist sometvhere. Primary data are data freshly gathered for a specific purpose or for a specific research project

Researchers ust tally si an their investigation by examining some of tbe rich variety of secondary data to see whether the problem can l?e partly or wholly solved Without collecting costly primary data. Secondary data provide a siarthij> point and offer die advantages of low cosi and ready availability. When the needed data do not exisi or are dated, inaccurate, incomplete, or unreliable, the researcher will have to collect primary data. Most marketing research projects involve some primary-data collectitjii. fhc normal pro-

ceilure i.i to interview sonic people individually or in groups, [<} gel a sense of how people Teel About [lie topic 111 question. And then ¡develop a formal research instrument, debug it,¿nd carry ii into the field.

ES EARC l-l AP P RQAC ■ 1 i S Primary data can t>e collided In five main ways: through observation, focus groups, surveys, behavioral tlata, and experiments,

Observational Research J'iesh data tun he gathered by observing the relevant actors and settings.*1 Consumers can he wioh-lmsively observed as they shop or as they Consume products., Qgilvy & Mather's Discovery Croup creates documentary-style videos by sending researchers into consumers' homes with handheld video cameras. Hours of footage are edited to a ¿0-mi mite "highlight reel" rihidh the group uses to analyze consumer behavior, Oilier researchers equip consumers With pagers and instruct them to write down what ilicy are doing whenever prompted^ or hold more informal interview sessions at a cttfe or bar. T he American Airlines researchers might meander around first-class lounges to hear how travelers talk about the different carriers and their features. Tlicy can fly on competitors' planes to observe in-flight service-

Fscus Group Research A focus group is a gathering of six to ten people who aie eniefully selected based Oil certain demographic, psychngraphic, or other considerations and brought together to discuss at length various topics of ii it ere si. Participants are normally paid a small sum for attending. A professional research moderator provides questions and probes based 011 a discussion guide or agenda prepared by the responsible marketing managers 10 ensure that the right material gets covered.

Moderators a Mr: nipt to track down potentiallv useful insights as they try In discern the real mot I vat tons of consumers and why they are saying and doing certain things, The sessions are typically recorded in some fashion, and marketing managers often remain behind two-way mirrors in the nest room- In the American Airlines research, the moderator might start with a broad questjtui, such as, "How du you feel about first-class air travel?" Questions then move to how people view the different airlines, different existing services, different proposed services, and specifically, Internet service. Although FocUs-£TOUj> research has been shown lu he a useful exploratory step, researchers jftust avoid generalizing the reported feelings of the focus-group participants 10 the whole market, because ihe sample size is ton small and the sample is not drawn randomly. "Marketing insight: Conducting inform a ihe Focus Croups" has some practical tips to improve the quality of focus groups.

Survey Research Companies undertake surveys u> learn about people's, knowledge, hcliefs, preferences, and satisfaction, ntul to measure these magnitudes in the general pop ti hit ion. A company such as American Airlines j night p rep a re iis own survey instrument to gather the information it needs, or it might add. questions to an Omnibus survey 1 hat carries the questions of several companies, at a much lower cost, [t can also ¡tut I tie questions ¡0 an ongoing consumer panel run by itself or ¡mother com pan}', it may a mall intercept study by having researchers approach people in a shopping mail and ,isk them questions.

Beh a\i i oral Data Customers leave traces of their purchasing behavior in store scanning dam, catalog purchases, and customer databases. Much can he teamed hy analyzing iliese data, Customers' actual purchases reflect preferences and often are more reliable than statement* they offer to market research era. ¡People may report preferences for popular brands, and yet the data show thenn actually buying other brands. For example, grocery


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