Principles of Marketing

Eighteenth Edition

Chapter 3
Managing Marketing Information to
Gain Customer Insights

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Learning Objectives
4.1 Explain the importance of information in gaining insights
about the marketplace and customers.
4.2 Define the marketing information system and discuss its
parts.
4.3 Outline the role of marketing research and the steps in
the marketing research process.
4.4 Explain how companies analyze and use marketing
information.
4.5 Discuss the special issues some marketing researchers
face, including public policy and ethics issues.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Information and Customer
Insights
• To create value for customers and build meaningful relationships with
them, marketers must first gain fresh, deep insights into what
customers need and want.
• Such customer insights come from good marketing information.
Companies use these customer insights to develop a competitive
advantage.
• Insights can be difficult to obtain; marketers must manage marketing
information from a wide range of sources

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Information and Customer
Insights
Marketing Information and Today’s “Big Data”
• Big data is the huge and complex data sets generated by today’s
sophisticated information generation, collection, storage, and analysis
technologies
• Big data comes from marketing research, internal transaction data,
and real-time data flowing from its social media monitoring, connected
devices, and other digital sources

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Information and Customer
Insights
• A marketing information system (M I S): people and procedures
dedicated to assessing information needs, developing the needed
information, and helping decision makers to use the information to
generate and validate actionable customer and market insights.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Information and Customer
Insights
Figure 4.1 The Marketing Information System

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

1. Assessing Marketing Information
Needs
• The marketing information system primarily serves the
company’s marketing and other managers.
• However, it may also provide information to external
partners, such as suppliers, resellers, or marketing service
agencies.
• Eg., Walmart's Retail Link system gives key suppliers
access to information on everything from customers’ buying
patterns and store inventory levels to how many items
they’ve sold in which stores in the past 24 hours.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2. Developing Marketing Information
Marketers obtain information from:
• Internal data
• Marketing intelligence
• Marketing research

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2. Developing Marketing Information
2.1. Internal Data

Internal databases are collections of consumer and market information

obtained from data sources within the company network.
• Information in the database may include:
 information on customer characteristics
 sales transactions
 website visits
 customer satisfaction and service records
 records of sales, costs, and cash flows
 reports on production, shipments, and inventories
 reports on reseller reactions and competitor activities
 point-of-sale transaction data
• Internal databases usually can be accessed more quickly and cheaply
than other information sources, but they also present some problems.
Copyright © 2021, 2018, 2016 Pearson Education, Inc.
2. Developing Marketing Information
2.2. Competitive Marketing Intelligence
• Competitive marketing intelligence is the systematic collection and analysis
of publicly available information about consumers, competitors, and
developments in the marketing environment.

• The goal of competitive marketing intelligence is to improve strategic decision

making by understanding the consumer environment, assessing and tracking
competitors’ actions, and providing early warnings of opportunities and threats.

• For example, Amazon’s Competitive Intelligence arm routinely purchases

merchandise from competing sites to analyze and compare their assortment,
speed, and service quality.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2. Developing Marketing Information
2.3. Marketing research is the systematic design,
collection, analysis, and reporting of data relevant to a
specific marketing situation facing an organization.
• Companies use marketing research in a wide variety of situations. For example:
– gain insights into customer motivations, purchase behavior, and satisfaction.
– assess market potential and market share
– measure the effectiveness of pricing, product, distribution, and promotion activities.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Information and Customer
Insights
Figure 4.1 The Marketing Information System

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2.3. Marketing Research
Figure 4.2 The Marketing Research Process

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2.3.1. Defining the problem and
Research objectives
• Marketing managers and researchers must work together closely to define the problem
and agree on research objectives.

• Defining the problem and research objectives is often the hardest step in the research
process. The manager may know that something is wrong without knowing the specific
causes.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2.3. Marketing Research
2.3.1. Defining the Problem and Research Objectives
• Exploratory research: gathers preliminary information that
will help define the problem and suggest hypotheses.
• Descriptive research: describes marketing problems,
situations, or markets, such as the market potential for a
product or the demographics and attitudes of consumers.
• Causal research: tests hypothesis about cause-and-effect
relationships.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2.3. Marketing Research
2.3.2. Developing the Research Plan
• determine the exact information needed, develop a plan for
gathering it efficiently, and present the plan to
management.
• The research plan outlines sources of existing data and
spells out the specific research approaches, contact methods,
sampling plans, and instruments to gather data

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2.3. Marketing Research
2.3.3. Research plan
Written proposal
• Management problem
• Research objectives
• Information needed
• How the results will help management decisions
• Budget

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2.3. Marketing Research
Developing the Research Plan
Secondary data is information that already exists
somewhere, having been collected for another purpose.
Primary data is information collected for the specific
purpose at hand.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2.3. Marketing Research
Gathering Secondary Data
• Advantages
– Lower cost
– Obtained quickly
– Cannot collect otherwise
• Disadvantages: Data may not be
– Relevant
– Accurate
– Current
– Impartial

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2.3. Marketing Research
Primary Data Collection
• Research Approaches
• Contact Methods
• Sampling Plan
• Research Instruments

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Research
Table 4.1 Planning Primary Data Collection

Research Contact Sampling Plan Research

Approaches Methods Instruments
Observation Mail Sampling unit Questionnaire
Survey Telephone Sample size Mechanical instruments
Experiment Personal Sampling procedure
Online

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Research
Primary Data Collection Ethnographic research: Under
Research Approaches Intuit’s “follow me home” program,
teams of Intuit employees visit
• Observational research customers in their homes or
involves gathering primary offices to watch them use the
data by observing relevant company’s products in real life.
people, actions, and
situations.
• Ethnographic research
involves sending trained
observers to watch and
interact with consumers in
their “natural environments.”

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Research
Primary Data Collection
Research Approaches
• Survey research involves gathering primary data by
asking people questions about their knowledge, attitudes,
preferences, and buying behavior.
• Experimental research involves gathering primary data
by selecting matched groups of subjects, giving them
different treatments, controlling related factors, and
checking for differences in group responses.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Research
Experimental Research: Online experiments can be simple
and inexpensive. For example, an online “A/B test” for
Microsoft’s Bing search engine formatting yielded
performance-enhancing results in only hours.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Research
Primary Data Collection: Contact Methods
• Mail, telephone, and personal
interviewing
– Mail questionnaires
– Telephone interviewing
– Personal interviewing
 Individual interviewing
 Group interviewing
• Focus Group Interviewing

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Research
Primary Data Collection:
Contact Methods
Online marketing research
• Internet and mobile surveys
• Online focus groups
• Consumer tracking
• Experiments
• Online panels and brand
communities

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Research
Primary Data Collection
Online behavioral and social tracking and targeting

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing research

Sampling Plan

• Sample

A segment of the population selected for marketing research to represent the population as
a whole.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Research
Table 4.2 Types of Samples
Probability Sample
Simple random sample Every member of the population has a known and equal
chance of selection.
Stratified random sample The population is divided into mutually exclusive groups
(such as age groups), and random samples are drawn from
each group.
Cluster (area) sample The population is divided into mutually exclusive groups
(such as blocks), and the researcher draws a sample of the
groups to interview.

Nonprobability Sample
Convenience sample The researcher selects the easiest population members from
which to obtain information.
Judgment sample The researcher uses his or her judgment to select population
members who are good prospects for accurate information.
Quota sample The researcher finds and interviews a prescribed number of
people in each of several categories.
Copyright © 2021, 2018, 2016 Pearson Education, Inc.
Marketing Research
Primary Data Collection
Research Instruments
• Questionnaires
– Open-ended questions
– Closed-ended questions
• Mechanical instruments

Biological and neurological measures:

Online travel giant Expedia’s
“Usability Lab” uses biometrics and
observation to learn about the deep-
down tensions and delights
customers experience during their
trip-planning journeys.
Copyright © 2021, 2018, 2016 Pearson Education, Inc.
Using neuroscience methods,
Nielsen charted how people’s
brains responded to an
existing Shelter Pet Project
public service ad and the ad’s
canine star, Jules the dog.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

2.3. Marketing Research
2.3.3. Implementing the Research Plan
– Collecting the information
– Processing the information
– Analyzing the information
2.3.4. Interpreting and Reporting Findings
– Interpret findings
– Draw conclusions
– Report to management

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Information and Customer
Insights
Figure 4.1 The Marketing Information System

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

3. Analyzing and Using Marketing
Information
Information gathered from internal databases, competitive marketing intelligence, and
marketing research usually requires additional analysis.

Once the information has been processed and analyzed, it must be made available to the
right decision makers at the right time.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

3. Analyzing and Using Marketing
Information
Customer Relationship Management (CRM)
CRM involves managing detailed information about
individual customers and carefully managing customer touch
points to maximize customer loyalty.

These touch points include customer purchases, sales force

contacts, service and support calls, web and social media
site visits, satisfaction surveys, credit and payment
interactions, market research studies—every contact
between a customer and a company.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

• CRM consists of sophisticated software and analysis tools from companies such as
Salesforce.com, Oracle, Microsoft, and SAS that integrate customer and marketplace in-
formation from all sources, analyze it, and apply the results to build stronger customer
relationships. CRM integrates everything that a company’s sales, service, and marketing
teams know about individual customers, providing a 360-degree view of the customer
relationship.

• By using CRM to understand customers better, companies can provide higher levels of
customer service and develop deeper customer relationships.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Marketing Information and Customer
Insights
Figure 4.1 The Marketing Information System

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Analyzing and Using Marketing
Information
Big Data, Marketing Analytics, and Artificial Intelligence
Marketing analytics involves analysis tools, technologies,
and processes by which marketers dig out meaningful
patterns in big data to gain customer insights and gauge
marketing performance.
Some analytics employ artificial intelligence (AI), technology
by which machines think and learn in a way that looks and
feels human but with a lot more analytic capacity.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

 Analyzing and Using Marketing Information
Distributing and using marketing information

• Marketing information has no value until it is used to make better marketing decisions.
Thus, the marketing information system must make information readily available to
managers and others who need it, when they need it. In some cases, this means
providing managers with regular performance reports, intelligence updates, and reports
on the results of research studies.

• But marketing managers may also need access to nonroutine information for special
situations and on-the-spot decisions.

• Many firms use company intranet and internal CRM systems to facilitate this process.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Other Marketing Information
Considerations
• Marketing Research in Small
Businesses and Nonprofit
Organizations
• International Market
Research
• Public Policy and Ethics
– Customer privacy
– Misuse of research
findings

GoldieBlox creates awesome toys, games and

entertainment for girls, designed to develop early
interest in engineering and confidence in
Copyright © 2021, 2018, 2016 Pearson Education, Inc.
problem-solving.
Marketing Research in small Businesses
and non profit organizations
Just like larger firms, small businesses and not-for-profit
organizations need market information and the customer
insights that it can provide. However, largescale research
studies are beyond the budgets of most small organizations.
Thus, small businesses and not-for-profit organizations can
obtain good marketing insights through observation or
informal surveys using small convenience samples.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Many associations, local media, and government agencies
provide special help to small organizations. For example, the
Small Business Administration offers dozens of free
publications and a website that give advice on topics
ranging from starting, financing, and expanding a small
business to ordering business cards.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

International Marketing Research
International researchers follow the same steps as domestic
researchers, from defining the research problem and
developing a research plan to interpreting and reporting the
results.
However, these researchers often face more and different
problems.
Whereas domestic researchers deal with fairly
homogeneous markets within a single country, international
researchers deal with diverse markets in many different
countries. These markets often vary greatly in their levels of
economic development, cultures and customs, and buying
patterns.
Copyright © 2021, 2018, 2016 Pearson Education, Inc.
Public Policy and Ethics in Marketing
Research
Through marketing research, companies gain insights into
consumers’ needs, resulting in more satisfying products and
services and stronger customer relationships.
However, the misuse of marketing research can also harm or
annoy consumers. Two major public policy and ethics issues
in marketing research are intrusions on consumer privacy
and the misuse of research findings.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

- Intrusions on Consumer Privacy
Many consumers feel positive about marketing research and
believe that it serves a useful purpose. Some actually enjoy
being interviewed and giving their opinions.
However, others strongly resent or even mistrust marketing
research. They don’t like being interrupted by researchers.
They worry that marketers are building huge databases full
of personal information about customers.
When mining customer information, marketers must be
careful not to cross over the privacy line.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

- Misuse of Research Findings
Research studies can be powerful persuasion tools;
companies often use study results as claims in their
advertising and promotion.
• Recognizing that marketing research can be abused,
several associations—including the American Marketing
Association, the Marketing Research Association, and the
Council of American Survey Research Organizations
(CASRO)—have developed codes of research ethics and
standards of conduct.
• For example, the CASRO Code of Standards and Ethics
for Survey Research outlines researcher responsibilities to
respondents, including confidentiality, privacy, and
avoidance of harassment. It also outlines major
responsibilities in reporting results to clients and the public.
Copyright © 2021, 2018, 2016 Pearson Education, Inc.