Priciples of Marketing

by Philip Kotler and Gary Armstrong

Chapter 4
Managing Marketing Information to
Gain Customer Insights

PEARSON
Objective Outline

Marketing Information and Customer Insights

Explain the importance of information in gaining
1
insights about the marketplace and customers.

Assessing Marketing Information Needs

Developing Marketing Information
2 Define the marketing information system and discuss
its parts.
Objective Outline

Marketing Research
3
Outline the steps in the marketing research process.

Analyzing and Using Marketing Information

4 Explain how companies analyze and use marketing
information.
Objective Outline

Other Marketing Information Considerations

Discuss the special issues some marketing researchers
5 face, including public policy and ethics issues.
Marketing Information and Customer
Insights
•• To
Tocreate
createvalue
valuefor
forcustomers
customersandandbuild
buildmeaningful
meaningful
relationships
relationshipswith
withthem,
them,marketers
marketersmust
mustfirst
firstgain
gain
fresh,
fresh,deep
deepinsights
insightsinto
intowhat
whatcustomers
customersneed
needandand
want.
want.
•• Such
Suchcustomer
customerinsights
insightscome
comefrom
fromgood
goodmarketing
marketing
information.
information.
•• Companies
Companiesuse usethese
thesecustomer
customerinsights
insightsto
todevelop
developaa
competitive
competitiveadvantage.
advantage.
•• To
Togain
gaingood
goodcustomer
customerinsights,
insights,marketers
marketersmust
must
effectively
effectivelymanage
managemarketing
marketinginformation
informationfrom
fromaa
wide
widerange
rangeofofsources.
sources.
Marketing Information and Customer
Insights
 The customer insights is the fresh
understandings Customer
of customers andteams
insights the marketplace
derived from marketing information that become
the basis
Customer or creating
insights customer
groups collect customervalue and information from
and market
a wide variety of sources, ranging from traditional marketing research
relationships.
studies to mingling with and observing consumers to monitoring
consumer online conversations about the company and its products .

Then they use this information to develop important customer insights

from which the company can create more value for its customers.
Marketing Information and Customer
Insights
 A marketing information system (MIS) 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.
Assessing Marketing Information Needs
 The marketing information system primarily serves the
company’s marketing and other managers.
 A good MIS balances the information users would like to
have against what they really need and what is feasible to
offer.
 The company must decide whether the value of insights
gained from additional information is worth the costs of
providing it, and both value and cost are often hard to
assess.
Developing Marketing Information

Marketing
Marketing
research
intelligence

Internal data
Developing
marketing
information
Internal Data
 Many companies build extensive internal
databases, electronic collections of consumer
and market information obtained from data
sources within the company’s network.
f
Sources o
on
informati

a r k e ting Co n su m er Sales
M
e p a r tment characteristics transactions Web s
d
es ite
furnish n visits
f o r m atio
in
Competitive Marketing Intelligence

Competitive marketing intelligence

The systematic collection and analysis of publicly available information about
consumers, competitors, and developments in the marketing environment

 Clearly, companies should take advantage

resellers
of publicly available information.
Suppliers KeyHowever,
they Good
shouldmarketing
not stoop tointelligence
snoop.
customers
gain
Help marketers With all the
insights into legitimate intelligence
how consumers talk about andsources
connect with their
brands
now available, a company does not need to
executives
break the law or accepted codes of ethics Information
to
We can collect competitor’s on the Web
get Information
good intelligence.
by using above ways.
Companies monitor competitors’ activities
Firms use competitive marketing intelligence to gain early warnings of competitor
moves and strategies, new-product launches, new or changing markets, and potential
competitive strengths and weaknesses.
Marketing Research
 Marketing research is the systematic design,
collection, analysis, and reporting of data
relevant to a specific marketing situation facing
an organization.
Defining the Problem and Research
Objectives
 A marketing research project might have one of three
types of objectives:

Exploratory
Exploratory Gather
Gather preliminary
preliminary information
information that
that will
will help
help
research
research define
define problems
problems and
and suggest
suggest hypotheses.
hypotheses.

Describe
Describe marketing
marketing problems,
problems, such
such as
as the
the
Descriptive
Descriptive market
market potential
potential for
for aa product
product or
or the
the
research
research demographics
demographics and
and attitudes
attitudes of
of consumers.
consumers.

Causal
Causal Test
Test hypotheses
hypotheses about
about cause-and-effect
cause-and-effect
research
research relationships.
relationships.
Developing the Research Plan
 The research plan outlines sources of existing
data and spells out the specific research
approaches, contact methods, sampling plans,
and instruments that researchers will use to
gather new data.
Developing the Research Plan
 The research plan should be presented in a written
proposal.
 A written proposal is especially important when the
research project is large and complex or when an outside
firm carries it out.

Secondary data:
Primary data:
ConsistTo meet the manager’s
of information that information needs, the
alreadyresearch plan can call forConsist
exists somewhere,
of information
gathering secondary
date, primary collected
date, or for the specific
both.
having been collected for
purpose at hand
another purpose
Gathering Secondary Data

The company’s internal database provides a good starting point.

However, the company can also tap into a wide assortment of
external information sources.

Marketing researchers who use commercial online databases and

internet search engines conduct their own searches of secondary
data sources.

The researcher must evaluate secondary information carefully to

make certain it is relevant (fits the research project’s needs),
accurate (reliably collected and reported), current (up-to-date
enough for current decisions), and impartial (objectively
collected and reported).
Primary Data Collection
Research Approaches
 Observational Research.
• It involves gathering primary data by observing relevant
people, actions, and situations.
• Researchers often observe consumer behavior to glean
customer insights they can’t obtain by simply asking
customers questions.
Research Approaches
 Ethnographic research.
• It is a form of observational research that involves
sending trained observers to watch and interact with
consumers in their “natural environments.”
• Observational and ethnographic research often yield the
kinds of details that just don’t emerge from traditional
research questionnaires or focus groups.
Research Approaches
 Survey Research.
• It gathers primary data by asking people questions about
their knowledge, attitudes, preferences, and buying
behavior.
• It is the best suited for gathering descriptive information.
• The major advantage of survey research is its flexibility;
it can be used to obtain many different kinds of
information in many different situations.
• Surveys addressing almost any marketing question or
decision can be conducted by phone or mail, in person,
or online.
Research Approaches
 Experimental Research.
• It gathers primary data by selecting matched groups of
subjects, giving them different treatments, controlling
related factors, and checking for differences in group
responses.
• It is best suited for gathering casual information.
Contact Methods

Personal
Online
Mail Interviewing
Marketing Research
Questionnaires
Telephone Interviewing
••• The
Individual
Telephone
interviewing
growthinterviewing is flexible.
of the Internet has of
is one had thea dramatic impact
best methods foron
• how• Trained
Mailmarketinginterviewers
research
questionnaires can can
isbe guideto itinterviews,
conducted.
used collect largeexplain
gathering information quickly, and provides greater
• difficultinformation
Increasingly,
amounts questions,
researchers and aexplore
atare costissues
collecting as thedata
perprimary situation
through
flexibilityofthan low
mail questionnaires. respondent.
• requires.
online marketing research: Internet
are not surveys,
However, mail
with questionnaires
telephone interviewing, very costonline
per allpanels,
the flexible;
• However,and
experiments, individual
online personal
focus interviews
groups may order.
cost three
respondents
respondent isanswer
higher the same
than mail orand
withquestions in abrand
online fixed
questionnaires.
to four times
communities.
Mail as much as telephone interviews.the
• Also,surveys
people mayusually
nottake
wantlonger to complete,
to discuss personaland questions
•• Group
The interviewing consists of inviting six to ten people to
withInternet
response is especially
rate—the
an interviewer. numberwell suited to
of people quantitative
returning research
meet with
—for aquestionnaires—is
example,
completed trained moderator
conducting to talkvery
marketing
often about
surveys
low.a product,
and collecting
• The method introduces interviewer bias—the way
service, or organization.
data.
interviewers talk, how they ask questions, and other
• Participants normally are paid a small sum for attending.
differences that may affect respondents’ answers.
Sampling Plan
Three decisions of
 Sample is a segment of the
designing population
sample : selected
for marketing research to represent the
who is to be studied
population as a whole.
(what sampling unit)?

how many people

should be included
(what sample size)?

how should the people in the

sample be chosen (what
sampling procedure)?
Research Instruments

Questionnaires
Mechanical Instruments
• Questionnaires are very flexible—there are
• Researchers use mechanical instruments to
many ways to ask questions.
monitor consumer behavior.
• Closed-end questions include all the
• Nielsen Media Research attaches people
possible answers, and subjects make
meters to television sets, cable boxes, and
choices among them.
satellite systems in selected homes to
• Open-end questions allow respondents to
record who watches which programs.
answer in their own words.
Implementing the Research Plan
 Data collection can be carried out by the company’s
marketing research staff or outside firms.
 Researchers should watch closely to make sure that the
plan is implemented correctly.
 They must guard against problems of interacting with
respondents, with the quality of participants’ responses,
and with interviewers who make mistakes or take
shortcuts.
Interpreting and Reporting the Findings
 The researcher should not try to overwhelm managers
with numbers and fancy statistical techniques.
 Similarly, managers may be biased. They might tend to
accept research results that show what they expected and
reject those that they did not expect or hope for.
 In many cases, findings can be interpreted in different
ways, and discussions between researchers and managers
will help point to the best interpretations.
Analyzing and Using Marketing
Information
 This help may include advanced statistical
analysis to learn more about the relationships
within a set of data.
 Information analysis might also involve the
application of analytical models that will help
marketers make better decisions.
Customer Relationship Management
 To overcome such problems, many companies are now
turning to customer relationship management (CRM)
to manage detailed information about individual
customers and carefully manage customer touch points to
maximize customer loyalty.
 By using CRM to understand customers better,
companies can provide higher levels of customer service
and develop deeper customer relationships.
Distributing and Using Marketing
Information
 Information distribution involves entering
information into databases and making it
available in a time-useable manner
 Intranet provides information to employees and
other stakeholders.
 Extranet provides information to key customers
and suppliers.
Other Marketing Information
Considerations
 This section discusses marketing information in
two special contexts:

Small
International
businesses and
marketing
nonprofit
research
organizations
Marketing Research in Small Businesses
and Nonprofit Organizations
 Managers of small businesses and nonprofit organizations
often think that marketing research can be done only by
experts in large companies with big research budgets.
Small
 Thus, small businesses and not-for-profit organizations
organizations
can obtain good marketing insights through observation
or informal surveys using small convenience samples.
Secondary
 Also, many associations, local media, and government
data
agencies observation
provide special surveys
help to small experiments
organizations.
collection
International Marketing Research
A difficult time
finding good
secondary data

Domestic researchers International researchers

Deal with fairly Deal with diverse markets in

homogeneous markets many different countries. These
within a single country markets often vary greatly in
their levels of economic
development, cultures and
customs, and buying patterns.
International Marketing Research
 Cultural differences from country to country cause
additional problems for international researchers.
Language is the most obvious obstacle.
 Responses then must be translated back into the original
language for analysis and interpretation. This adds to
research costs and increases the risks of error.
International Marketing Research
 Although the costs and problems associated with
international research may be high, the costs of not doing
it—in terms of missed opportunities and mistakes—
might be even higher.
 Once recognized, many of the problems associated with
international marketing research can be overcome or
avoided.
Public Policy and Ethics in Marketing
Research
 Intrusions on Consumer Privacy.
• Many consumers feel positive about marketing research and
believe that it serves a useful purpose.
• Some consumers fear that researchers might use sophisticated
techniques to probe our deepest feelings, peek over our
shoulders as we shop, or track us as we browse and interact
on the Internet and then use this knowledge to manipulate our
buying.
• The best approach is for researchers to ask only for the
information they need, use it responsibly to provide customer
value, and avoid sharing information without the customer’s
permission.
Public Policy and Ethics in Marketing
Research
 Misuse of Research Findings.
• Today, however, many research studies appear to be
little more than vehicles for pitching the sponsor’s
products.
• In fact, in some cases, research surveys appear to have
been designed just to produce the intended effect.
• Few advertisers openly rig their research designs or
blatantly misrepresent the findings—most abuses tend to
be more subtle “stretches.”