Mk0013– marketing research

Master of Business Administration

Semester III

MK0013- Marketing Research

Assignment

Set- 1

Q.1. Distinguish between product research and new product research. Explain with
examples.

Answer.

Product Research & New Product Research

Effective product market research -- for new products and existing products -- is well integrated
with R&D and technical product design functions. For consumer or business B2B product
market research, we take a global approach, incorporating appropriate market research at each
design stage: The goal is to align astute technical product R&D, product innovation and design
with market demand. We include in our services the following new product development and
research services:

New Product Development Stages

For new product development market research, the question becomes one of matching the stage
of new product development with the right creative or product market research method. We use
the Marketing Intelligence Platform to guide the use of the three forms of Intelligence --Ideas,
Data, & Drivers -- to the product development process. We provide consulting and specific new
product research market research capabillities at each new product development stage.
Product development market research methods and tools used may vary according to the product
type, the extent of incremental change from other products, the investment and risk factors, and
the costs of seeding the new product in the marketplace.

Product development is a sequential decision process. It's a series of decisions, not one. It is
key, therefore, to concentrate attention on the precise new product decision at hand, and think
through the market research and creative tools needed for that stage.

Marketing Strategy Consultants

As marketing strategy consultants, our consulting firm will work with you and your company
and management team in a professional product launch, branding research, or market sizing and
targeting engagement. Since each client company or firm is unique with its own set of issues and
opportunities, we often begin our relationship with a decision identification and clarification
engagement – what we call Decision Mapping. This identifies the most relevant problems,
opportunities, and issues most relevant, and serves to clarify the decision agenda. We believe this
is a crucial step to ensure as consultants to your company, that our research or marketing strategy
engagement meets your specific management requirements. Further, Decision saves both time
and money as it sharpens focus as to the exact work which needs to be accomplished in our
remaining consulting or market research work for your company.

Experts in Marketing Strategy
As experts and specialists in marketing and market research, we are well qualified in these
strategy arenas: positioning, segmentation, product launch, new product development advertising
strategy, corporate and product naming, company branding, brand equity measurement, pricing,
brand development, brand strategy, product concept testing, identifying opportunities, and
targeting positioning.

Functional Marketing Research Experience

Our consulting company has deep experience working with large and small firms, although
typical clients include Fortune 500, Fortune 100, or middle market companies. Our team
members have been involved as executives and board members of technology venture start-ups,
conducting research and assessments used by private equity, and venture capital firms.

Industry Consulting and Market Research Experience

First, we are not industry specialists or experts. Our philosophy is that we bring a tool kit of
analytical and management skills to the table. You bring deep industry knowledge of your
business. The blending of our functional and management expertise, and your knowledge of your
own business and industry, makes for a productive decision-focused engagement.

Here are some examples from industries we've served with management strategy
consulting and marketing research...

Financial Services
→
We've conducted studies for brokerage firms, savings institutions, banks, and companies
that serve them. Financial services marketing studies include: major market entry studies
and consulting for large mega-bank; brand image studies , new product development market
research; price-positioning of online, ATM and credit card services, upscale services; site
location analyses; and advertising research We understand the financial services
marketplace. Our clients include Wells Fargo, Key Banks, Golden West, US Banks, BNP-
Bank of the West, Meritor, Alaska Pacific, North rim, and others.

Business-to-Business: B2B
→
B2B marketing studies are focused, practical research efforts to enhance the fast-paced
decision-making requirements of the B2B marketing environment. Industrial and B2B
manufacturing and wholesale marketing research studies are designed to be practical,
accurate, and reflective of the particular client needs and the nature of the targeted market.
We've conducted scores of industrial B2B studies for manufacturing firms engaged in sales
of chemicals, heavy equipment, technology products, software systems, plant processing

equipment, computer systems, farm equipment and implements. Industrial B2B market
research, as in consumer research, requires decision-clarification up front, tight goal
definition, rigorous research design, and meticulous field research data collection.

Software Market Research & Consulting
→
We understand software markets, customer satisfaction issues, Software assignments
include new product development, usability testing, customer satisfaction research, and
brand naming, and brand development. Our work in software marketing includes clients in
business intelligence analytics, mortgage banking accounting software, and enterprise
software.

Q.2 How to write a marketing report and what quality is to be ensured?

Answer:
Marketing Report

A marketing report, also commonly referred to as a marketing plan, lays out the marketing
strategy for a company’s product, brand or business unit. The report describes how different
elements of the marketing mix—product, price, promotion and placement—will work together to
achieve your company’s goals and objectives. Most marketing departments rely heavily on these
plans and use them as road maps to successfully navigate through and execute a variety of
programs and sales campaigns.

Instructions

Step 1:
Developing a Marketing Report

Begin with an executive summary. The executive summary functions as a high-level overview
and allows top managers to easily recognize the goals and suggestions proposed in the report. A
table of contents usually follows the executive summary.

Step 2:

Describe the current market environment, product, competition and distribution channels for the
product or service. This analysis details the company’s brand or products, sales and pricing, as
well as distribution trends, partnerships and major competitors. Conducting a Strengths
Weaknesses Opportunities Threats (SWOT) analysis also helps identify any market forces or
events that can potentially threaten sales or boost profitability.
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Step 3:

Clearly state the marketing goals and issues surrounding your product or brand. For example, if
one of your goals is to acquire 15 new customers, then the marketing report should explore what
issues might impact those objectives.
Step 4:
Outline your company’s marketing strategy. The marketing strategy is the methodology you will
use in order to achieve your marketing goals and respond to market threats and opportunities.
Explain what tools you will use to develop, promote, price and position the product for your
customers. This section also elucidates how each part of the marketing mix will respond to the
market threats, opportunities and issues mentioned earlier in the report.

Step 5:

Draft the marketing campaigns and programs that will be used to execute the marketing strategy.
Divvy responsibilities between departments and team members, and determine a timeline for
each program.

Step 6:

Create a budget, and estimate the costs for running a successful campaign. The budget should
include the expected revenues, costs and projected profit. This is an important component of the
marketing plan and usually must pass management approval.

Step 7:

Research and determine what computer applications you will use to track and monitor each
campaign’s progress. Some companies use automated software applications that link sales
activities with marketing programs and provide intricate dashboards. Other companies work off
of simple Excel sheets. Whatever you decide to use, be sure it provides an accurate snapshot of
your marketing activities and how it affects the sales and opportunity pipeline.

Tips & Warnings

• Marketing planning usually starts at the beginning of the fiscal year. Start writing
the marketing report at least two to four months before it is due. You will need to
schedule time to meet with your management team and clarify your company’s
overall vision and goals. Make sure those goals are clearly stated and reflected in
the plan’s proposals.
• Ask your boss for permission to work remotely or at a quiet place outside of the
office so that you can clearly think and develop an accurate picture of your
company’s business.

• Once finalized, consider circulating a truncated version of your marketing report to
your entire company. It is important to not just marketing people, but also
employees in sales, operations, IT and human resources to know the company’s
overall strategy and goals for success.
Quality is to be ensured

For example:

Abbott Global Citizenship Ensuring Manufacturing Quality

Abbott has numerous processes in place to ensure that we meet the highest safety and quality
standards in the design, development, manufacture, delivery and labeling of our products. We
strive to make important enhancements to these processes each year. As industry and available
technology continue to advance, we incorporate information management tools into our
processes that allow us to identify and react to potential issues before they become quality
concerns. We also continue to harmonize our quality and compliance processes on a global basis,
and we have simplified our company’s quality policies to make them easier for employees to
understand and follow. Abbott also continues to expand and implement our global internal
certification programs – helping to ensure that employees have the necessary skills to perform
key quality and safety activities.
Our product quality assurance programs are led by the Abbott Quality and Regulatory
organization, which reports directly to our Chairman and CEO and also is accountable to the
Public Policy Committee of our Board of Directors.
We have a rigorous audit program to ensure that policies are implemented correctly and closely
followed. Regular audits of our suppliers ensure that Abbott’s quality standards and health and
safety policies are implemented correctly and followed closely. We also employ a “quality by
design” approach, focusing on improving manufacturing efficiencies and consistent delivery of
products that fulfill customer needs. Additionally, we use “human factors” engineering to
anticipate the mistakes people are most likely to make in using a product, and then design the
product in a way that minimizes the risk of such mistakes.
Abbott also employs and adheres to robust manufacturing quality standards at sites around the
world. We use a common quality management system throughout the company, and when we
acquire new businesses, we use due diligence and rigorous analysis to ensure that their quality
standards and requirements quickly conform to our expectations.
Our quality system is supported by policies, processes, procedures, training and resources that
ensure the safety and efficacy of the products we design, manufacture and distribute. We
regularly monitor all of our processes and assess our products against approved specifications
before distribution. A risk-based audit program ensures that we conduct regular audits at our
global manufacturing sites. The Abbott Quality and Regulatory organization is itself routinely
challenged and assessed through internal audits and regulatory inspections. We also carefully
monitor and audit our suppliers to ensure that they meet high standards of quality, safety and
ethical behavior.

Addressing Concerns

Abbott takes potential quality and safety concerns about our products very seriously, and we
work quickly to address questions from customers, patients, consumers and the general public.
We investigate each instance in accordance with our corrective and preventive action plans, and
we communicate findings and lessons learned to the appropriate regulators, to industry peers, if
appropriate, and across our global business. In addition, Abbott continuously monitors global
information to identify emerging issues and significant events with the potential to impact
product quality or availability. Abbott is prepared to implement the appropriate actions to ensure
an uninterrupted supply of high-quality, effective products to our customers.

Serious Adverse Events Consortium

Because of individual differences in biology and genetics, the very medicines intended to
alleviate illness may instead trigger a serious adverse event (SAE) for a handful of patients. The
Abbott-sponsored SAE Consortium, comprised of industry and academic research partners as
well as the U.S. Food and Drug Administration, works to reduce SAEs by identifying genetic
markers – patterns in a person’s DNA that may contribute to the risk of such events.
Collaboration is vital to our consortium’s success. Each individual partner in the coalition,
including Abbott, contributes its own data on serious adverse events. Because SAEs are rare,
answers can be found only by pooling data and expertise. This universal resource improves our
ability to identify and address potential safety issues before new medicines become available to
the public. It helps identify which medicines certain patients should avoid and provides doctors
and patients with high-quality safety and warning information.

Q.3 Which are the various types of scales in marketing research and its applications?

Answer:

Scales in marketing research

The term scaling is applied to the attempts to measure the attitude objectively. Attitude is a
resultant of number of external and internal factors. Depending upon the attitude to be measured,
appropriate scales are designed. Scaling is a technique used for measuring qualitative responses
of respondents such as those related to their feelings, perception, likes, dislikes, interests and
preferences.

Types of Scales

Most frequently used Scales

1. Nominal Scale

2. Ordinal Scale

3. Interval Scale

4. Ratio Scale

Self-Rating Scales

1. Graphic Rating Scale

2. Itemized Rating Scales

• Likert Scale

• Semantic Differential Scale

• Stapel’s Scale

• Multi Dimensional Scaling

• Thurston Scales

• Guttman Scales / Scalogram Analysis

Four types of scales are generally used for Marketing Research.

• Nominal Scale

This is a very simple scale. It consists of assignment of facts/choices to various alternative
categories which are usually exhaustive as well mutually exclusive. These scales are just
numerical and are the least restrictive of all the scales. Instances of Nominal Scale are - credit
card numbers, bank account numbers, employee id numbers etc. It is simple and widely used
when relationship between two variables is to be studied. In a Nominal Scale numbers are no
more than labels and are used specifically to identify different categories of responses. Following
example illustrates -

What is your gender?

[ ] Male
[ ] Female

Another example is - a survey of retail stores done on two dimensions - way of maintaining
stocks and daily turnover.

How do you stock items at present?

[ ] By product category
[ ] At a centralized store
[ ] Department wise
[ ] Single warehouse

Daily turnover of consumer is?

[ ] Between 100 – 200
[ ] Between 200 – 300
[ ] Above 300

A two way classification can be made as follows:

Daily/Stock Turnover Product Department Centralized Single
Method Category wise Store Warehouse

100 – 200

200 – 300

Above 300

Mode is frequently used for response category.

Ordinal Scale

Ordinal scales are the simplest attitude measuring scale used in Marketing Research. It is more
powerful than a nominal scale in that the numbers possess the property of rank order. The
ranking of certain product attributes/benefits as deemed important by the respondents is obtained
through the scale.

Example 1: Rank the following attributes (1 - 5), on their importance in a microwave oven.

• Company Name
• Functions
• Price
• Comfort
• Design

The most important attribute is ranked 1 by the respondents and the least important is ranked 5.
Instead of numbers, letters or symbols too can be used to rate in a ordinal scale. Such scale
makes no attempt to measure the degree of favorability of different rankings.

Example 2:- If there are 4 different types of fertilizers and if they are ordered on the basis of
quality as Grade A, Grade B, Grade C, Grade D is again an Ordinal Scale.

Example 3 - If there are 5 different brands of Talcum Powder and if a respondent ranks them
based on say, “Freshness” into Rank 1 having maximum Freshness Rank 2 the second maximum
Freshness, and so on, an Ordinal Scale results.

Median and mode are meaningful for ordinal scale.

Interval Scale

Herein the distance between the various categories unlike in Nominal, or numbers unlike in
Ordinal, is equal in case of Interval Scales. The Interval Scales are also termed as Rating Scales.
An Interval Scale has an arbitrary Zero point with further numbers placed at equal intervals. A
very good example of Interval Scale is a Thermometer.

Illustration 1 - How do you rate your present refrigerator for the following qualities?

Well
Company Name Less Known 1 2 3 4 5
Known

Functions Few 1 2 3 4 5 Many

Price Low 1 2 3 4 5 High

Design Poor 1 2 3 4 5 Good

Very
Overall Satisfaction Very Dis-Satisfied 1 2 3 4 5
Satisfied

Such a scale permits the researcher to say that position 5 on the scale is above position 4 and also
the distance from 5 to 4 is same as distance from 4 to 3. Such a scale however does not permit
conclusion that position 4 is twice as strong as position 2 because no zero position has been
established. The data obtained from the Interval Scale can be used to calculate the Mean scores
of each attributes over all respondents. The Standard Deviation (a measure of dispersion) can
also be calculated.

Ratio Scale

Ratio Scales are not widely used in Marketing Research unless a base item is made available for
comparison. In the above example of Interval scale, a score of 4 in one quality does not
necessarily mean that the respondent is twice more satisfied than the respondent who marks 2 on
the scale. A Ratio scale has a natural zero point and further numbers are placed at equally
appearing intervals. For example scales for measuring physical quantities like - length, weight,
etc.

The ratio scales are very common in physical scenarios. Quantified responses forming a ratio
scale analytically are the most versatile. Ratio scale possess all he characteristics of an internal
scale, and the ratios of the numbers on these scales have meaningful interpretations. Data on
certain demographic or descriptive attributes, if they are obtained through open-ended questions,
will have ratio-scale properties. Consider the following questions :

Q 1) what is your annual income before taxes? ______ $

Q 2) How far is the Theater from your home? ______ Miles

Answers to these questions have a natural, unambiguous starting point, namely zero. Since
starting point is not chosen arbitrarily, computing and interpreting ratio makes sense. For
example we can say that a respondent with an annual income of $ 40,000 earns twice as much as
one with an annual income of $ 20,000.

Self-rating scales

Graphic Rating Scale

The respondents rate the objects by placing a mark at the appropriate position on a line that runs from one extreme
of the criterion variable to another. Example

0 1 5 7
(poor (bad (neither good nor (good
quality) quality) bad) quality)

Itemized Rating Scales

These scales are different from continuous rating scales. They have a number of brief descriptions associated with
each category. They are widely used in Marketing Research. They essentially take the form of the multiple category
questions. The most common are - Likert, Semantic, Staple and Multiple Dimension. Others are - Thurston and
Guttmann.

Likert Scale

It was developed Rensis Likert. Here the respondents are asked to indicate a degree of agreement and
disagreement with each of a series of statement. Each scale item has 5 response categories ranging from
strongly agree and strongly disagree.

5 4 3 2 1
Strongly agree Agree Indifferent Disagree Strongly disagree

Each statement is assigned a numerical score ranging from 1 to 5. It can also be scaled as -2 to +2.

-2 -1 0 1 2

Semantic Differential Scale

This is a seven point scale and the end points of the scale are associated with bipolar labels.

1 2 3 4 5 6 7

Suppose we want to know personality of a particular person. We have options-

• Unpleasant/Submissive

• Pleasant/Dominant

Bi-polar means two opposite streams. Individual can score between 1 to 7 or -3 to 3. On the basis
of these responses profiles are made. We can analyses for two or three products and by joining
these profiles we get profile analysis. It could take any shape depending on the number of
variables.

Profile Analysis

---------------/---------------
----------/--------------------
--------/----------------------

Mean and median are used for comparison. This scale helps to determine overall similarities and
differences among objects.

When Semantic Differential Scale is used to develop an image profile, it provides a good basis
for comparing images of two or more items. The big advantage of this scale is its simplicity,
while producing results compared with those of the more complex scaling methods. The method
is easy and fast to administer, but it is also sensitive to small differences in attitude, highly
versatile, reliable and generally valid.

Stapel’s Scale

It was developed by Jan Stapel. This scale has some distinctive features:-

Each item has only one word/phrase indicating the dimension it represents.

Each item has ten response categories.

Each item has an even number of categories.

Multi-Dimensional Scaling

It consists of a group of analytical techniques which are used to study consumer attitudes related
to perceptions and preferences. It is used to study-

The major attributes of a given class of products perceived by the consumers in considering the
product and by which they compare the different ranks.

To study which brand competes most directly with each other.

To find out whether the consumers would like a new brand with a combination of characteristics
not found in the market.

What would be the consumer’s ideal combination of product attributes?

What sales and advertising messages are compatible with consumers brand perceptions?

It is a computer based technique. The respondents are asked to place the various brands into
different groups like similar, very similar, not similar, and so on. A goodness of fit is traded off
on a large number of attributes. Then a lack of fit index is calculated by computer program. The
purpose is to find a reasonably small number of dimensions which will eliminate most of the
stress. After the configuration for the consumer’s preference has been developed, the next step is
to determine the preference with regards to the product under study. These techniques attempt to
identify the product attributes that are important to consumers and to measure their relative
importance.

This scaling involves a unrealistic assumption that a consumer who compares different brands
would perceive the differences on the basis of only one attribute. For example, what are the
attributes for joining M.Com course? The responses may be -to do PG, to go into teaching line,
to get knowledge, appearing in the NET. There are a number of attributes; you cannot base
decision on one attribute only. Therefore, when the consumers are choosing between brands,
they base their decision on various attributes. In practice, the perceptions of the consumers
involve different attributes and any one consumer perceives each brand as a composite of a
number of different attributes. This is a shortcoming of this scale.

Whenever we choose from a number of alternatives, go for multi- dimensional scaling. There are
many possible uses of such scaling like in market segmentation, product life cycle, vendor
evaluations and advertising media selection.

The limitation of this scale is that it is difficult to clearly define the concept of similarities and
preferences. Further the distances between the items are seen as different

Thurston Scales

These are also known as equal appearing interval scales. They are used to measure the attitude
towards a given concept or construct. For this purpose a large number of statements are collected
that relate to the concept or construct being measured. The judges rate these statements along an
11 category scale in which each category expresses a different degree of favorableness towards
the concept. The items are then ranked according to the mean or median ratings assigned by the
judges and are used to construct questionnaire of twenty to thirty items that are chosen more or
less evenly across the range of ratings. The statements are worded in such a way so that a person
can agree or disagree with them. The scale is then administered to assemble of respondents
whose scores are determined by computing the mean or median value of the items agreed with.
A person who disagrees with all the items has a score of zero. So, the advantage of this scale is
that it is an interval measurement scale. But it is the time consuming method and labour
intensive. They are commonly used in psychology and education research.

Guttman Scales / Scalogram Analysis

It is based on the idea that items can be arranged along a continued in such a way that a person
who agrees with an item or finds an item acceptable will also agree with or find acceptable all
other items expressing a less extreme position. For example - Children should not be allowed to
watch indecent programmes or government should ban these programmes or they are not
allowed to air on the television. They all are related to one aspect.

In this scale each score represents a unique set of responses and therefore the total score of every
individual is obtained. This scale takes a lot of time and effort in development.

They are very commonly used in political science, anthropology, public opinion, research and
psychology

Q.4 Explain the types of hypothesis and the steps involved in hypothesis testing.

Answer:

Hypothesis

A statistical hypothesis is an assumption about a population parameter. This assumption may or
may not be true. Hypothesis testing refers to the formal procedures used by statisticians to
accept or reject statistical hypotheses.

Statistical Hypotheses

The best way to determine whether a statistical hypothesis is true would be to examine the entire
population. Since that is often impractical, researchers typically examine a random sample from
the population. If sample data are not consistent with the statistical hypothesis, the hypothesis is
rejected.

There are two types of statistical hypotheses.

 Null hypothesis. The null hypothesis, denoted by H0, is usually the hypothesis that
sample observations result purely from chance.

 Alternative hypothesis. The alternative hypothesis, denoted by H1 or Ha, is the
hypothesis that sample observations are influenced by some non-random cause.

For example, suppose we wanted to determine whether a coin was fair and balanced. A null
hypothesis might be that half the flips would result in Heads and half, in Tails. The alternative
hypothesis might be that the number of Heads and Tails would be very different. Symbolically,
these hypotheses would be expressed as

H0: P = 0.5
Ha: P ≠ 0.5

Suppose we flipped the coin 50 times, resulting in 40 Heads and 10 Tails. Given this result, we
would be inclined to reject the null hypothesis. We would conclude, based on the evidence, that
the coin was probably not fair and balanced.

Hypothesis Tests

Statisticians follow a formal process to determine whether to reject a null hypothesis, based on
sample data. This process, called hypothesis testing, consists of four steps.

• State the hypotheses. This involves stating the null and alternative hypotheses. The
hypotheses are stated in such a way that they are mutually exclusive. That is, if one is
true, the other must be false.

• Formulate an analysis plan. The analysis plan describes how to use sample data to
evaluate the null hypothesis. The evaluation often focuses around a single test
statistic.

• Analyze sample data. Find the value of the test statistic (mean score, proportion, t-
score, z-score, etc.) described in the analysis plan.

• Interpret results. Apply the decision rule described in the analysis plan. If the value of
the test statistic is unlikely, based on the null hypothesis, reject the null hypothesis.

Decision Errors

Two types of errors can result from a hypothesis test.

 Type I error. A Type I error occurs when the researcher rejects a null hypothesis when it
is true. The probability of committing a Type I error is called the significance level. This
probability is also called alpha, and is often denoted by α.

 Type II error. A Type II error occurs when the researcher fails to reject a null hypothesis
that is false. The probability of committing a Type II error is called Beta, and is often
denoted by β. The probability of not committing a Type II error is called the Power of
the test.

Decision Rules

The analysis plan includes decision rules for rejecting the null hypothesis. In practice,
statisticians describe these decision rules in two ways - with reference to a P-value or with
reference to a region of acceptance.

 P-value. The strength of evidence in support of a null hypothesis is measured by the P-
value. Suppose the test statistic is equal to S. The P-value is the probability of observing
a test statistic as extreme as S, assuming the null hypotheis is true. If the P-value is less
than the significance level, we reject the null hypothesis.
 Region of acceptance. The region of acceptance is a range of values. If the test statistic
falls within the region of acceptance, the null hypothesis is not rejected. The region of
acceptance is defined so that the chance of making a Type I error is equal to the
significance level.

Steps in Hypothesis Testing

Now we can put what we have learned together to complete a hypothesis test. The steps will
remain the same for each subsequent statistic we learn, so it is important to understand how one
step follows from another now.

Let’s continue with the example we have already started:

Suppose some species of plants grows at 2.3 cm per week with a standard deviation of 0.3 (µ =
2.3 σ = 0.3). I take a sample plant and genetically alter it to grow faster.

The new plant grows at 3.2 cm per week (X = 3.2). Did the genetic alteration cause the plant to
grow faster than the general population? Set alpha = .05.

Step 1: Write the hypotheses in words and symbols

H1: The population of genetically altered plants grows faster than the general population.

H0: The population of genetically altered plants grows at the same or lower rate as the general
population.

H1: µgen.alt. > 2.3

H0: µgen.alt < 2.3

Step 2: Find the critical value for the test

Since alpha is .05, and it is a one-tail test because we think our treatment will produce
plants that grow “faster” than the general population:

Z critical

=1.64

Step 3: Run the test

Here we find out how “likely” the value is by computing the z-score.

3

0.3

0.9

0.3

3.2

2.3

Z=

Step 4: Make a decision about the Null

Reject the Null or Fail to Reject the Null (retain the null) are the only two possible answers here.
Since the value we computed for the z-test is more extreme than the critical value, we reject the
Null.
Graphically, though not required for the answer, we have:

Note that we are testing the Null. It is either proven or disproven. We never prove the research
hypothesis, even thought that is our intent. Instead, if we disprove the null, we indirectly support
the research hypothesis. This is true, because you will notice that our decision is based on the
statistical test that the treatment value is not likely to have come from the same population. We
infer it is a different population, but we actually prove that it is not from the same population. It
may seem like a matter of semantics, but indulge me on this one.

Step 5: Write a conclusion

For this example, we conclude: “The population of genetically altered plants grows at a different
rate than the general population.”

Although we have a conclusion in step 4, write a conclusion here in plain language without any
statistical jargon. What did our test show? If you reject the null, then the then there was a
difference (treatment had an effect). The research hypothesis is your conclusion (you can simply
restate it from Step 1). If you fail to reject the null, then the null hypothesis is your conclusion
(again, you can just rewrite it from Step 1).

Q.5 What are the limitations of sampling? What are the indicators for an ideal sample?

Answer:

Limitations of Sampling

The limitations of sampling are:

Less Accuracy:

In comparison to census technique the conclusions derived from sample are more liable to error.
Therefore, sampling technique is less accurate than the census technique.

Changeability of Units:

If the units in the field of survey are liable to change or if these are not homogeneous, the
sampling technique will be very hazardous. It is not scientific to extend the conclusions derived
from one set of sample to other sets which are dissimilar or are changeable.

Misleading Conclusions:

If due care is not taken in the selection of samples or if they are arbitrarily selected, the
conclusions derived from them will become misleading if extended to all units.

For example, in assessing the monthly expenditure of university students we select for sample
study only rich students, our results will be highly erroneous if extended to all students.

Need for Specialized Knowledge:

The sample technique can be successful only if a competent and able scientist makes the
selection. If this is done by an average scientist, the selection is liable to be wrong.

When Sampling is not Possible:

Under certain circumstances it is very difficult to use the sampling technique. If the time is very
short and it is not possible to make selection of the sample, the technique cannot be used.
Besides, if we need 100% accuracy the sampling technique cannot be used. It can also not be
used if the material is of a heterogeneous nature.

Characteristics of Ideal Sample

A good sample has following qualities:

Representativeness:

An ideal sample must be such that it represents adequately the whole populations. We would
select those units which have the same set of qualities and features as are found in the whole
data. It should not lack in any characteristic of the population.

Independence:

The second feature of a sample is independence, that is interchangeability of units. Every unit
should be available to be included in the sample.

Adequacy:

The number of units included in a sample should be sufficient to enable derivation of
conclusions applicable to the whole population. A sample having 10% of the whole population is
generally adequate.

Homogeneity:

The units included in the sample must bear likeness with order units, otherwise the sample will
be unscientific.

Q.6 Considering Indian consumers and Indian market trends, mention the ways through
which a marketing researcher can carry out research? If you were to research a market
segment, how would you go about it?

Answer:

• Be familiar with the various stages of the marketing research process.

• Highlight the importance of the problem/opportunity identification stage of the research
process.

• Understand the issues related to hypotheses development.

• Explain the concept of value of information, and its role in deciding when marketing
research is beneficial.

• Introduce the international marketing research process.

How is the market research project conceived, planned, and executed?

The answer, in part, is through a research process, consisting of stages or steps that guide the
project from its conception through the final analysis, recommendation, and ultimate action. The
research process provides a systematic, planned approach to the research project and ensures that
all aspects of the research project are consistent with each other. It is especially important that
the research design and implementation be consistent with the research purpose and objectives.
Otherwise, the results will not help the client.

The research process is described in this chapter and Chapter 4. This chapter provides an
overview of the research process, a discussion of the research purpose and research objectives,

and a consideration of the value of research information. Negative ﬁndings are as valuable as
positive ones. In fact, they are often more revealing, as they provide valuable insight into
customers’ psyches.

Today, the research process has evolved to encompass decision making. This combined process
transforms mundane marketing research to marketing intelligence. Chapter 4 gives an overview
of the research design and its implementation. Together, these two chapters are the foundation
for the rest of the book.

OVERVIEW OF THE MARKETING RESEARCH PROCESS

Research studies evolve through a series of steps, each representing the answer to a key question.

1. Why should we do research? This establishes the research purpose as seen by the management
team that will be using the results. This step requires understanding the decisions to be made and
the problems or opportunities to be diagnosed.

2. What research should be done? Here the management purpose is translated into objectives that
tell the managers exactly what questions need to be answered by the research study or project.

3. RESEARCH PROCESS

JWCL214_c03_050-078.qxd 9/19/09 11:40 AM Page 503. Is it worth doing the research? The
decision has to be made here about whether the value of the information that will likely be
obtained is going to be greater than the cost of collecting it.

4. How should the research be designed to achieve the research objectives? Design issues include
the choice of research approach—reliance on secondary data versus conducting a survey or
experiment—and the speciﬁcs of how to collect the data. Chapter 4 deals with how to approach
these issues.

5. What will we do with the research? Once the data have been collected, how will it be
analyzed, interpreted, and used to make recommendations for action?

The necessary steps are linked in a sequential process (see Figure 3-1).

Although the steps usually occur in this general order, we must emphasize that

Planning system Information system

• Strategic plans

• Tactical plans

• Databases

• DSS

MARKETING PLANNING AND INFORMATION SYSTEM

1. AGREE ON RESEARCH PROCESS

• Problems or opportunities

• Decision alternatives

• Research users

2. ESTABLISH RESEARCH OBJECTIVES

• Research questions

• Hypotheses

• Boundaries of study

3. DESIGN THE RESEARCH

• Choose among alternative research approaches

• Specify the sampling plan

• Design the experiment

• Design the questionnaire

4. ESTIMATE

THE VALUE OF

INFORMATION

Is benefit > cost?

5. COLLECT THE DATA

6. PREPARE AND ANALYZE THE DATA

7. REPORT THE RESEARCH RESULTS AND PROVIDE STRATEGIC
RECOMMENDATIONS

DO NOT CONDUCT MARKETING RESEARCH.

Set - 2

Q.1 What are the nature, scope and features of Marketing Research?

Answer:

The Role of Marketing Research in Strategic Planning and Decision Making

Our primary focus is on the role of marketing research in marketing strategy decisions.

A. Identifying Marketing Opportunities and Constraints

Identifying marketing opportunities and constraints is a logical starting point for developing
marketing strategies.

1. Embracing the Marketing Concept

Conducting marketing research to understand customers is becoming widespread as an
increasing number of firms embrace the marketing concept (the philosophy of customer
orientation urging firms to uncover customer needs first and then coordinate all their activities to
satisfy those needs).

2. Understanding the Competitive Environment

Marketing research is vital to maintaining and improving a company's overall Competitiveness.

• Unless managers understand the external environment, they cannot intelligently plan for
the future.

• Many organizations continually collect and evaluate environmental information to
identify future market opportunities and threats.

B. Developing and Implementing Marketing Strategies

To benefit fully from the opportunities uncovered in the marketplace, a firm must develop
an effective marketing strategy with an effective marketing mix:

• the nature of its product
• ways to promote the product
• the price charged to potential customers
• the means used to make the product available to them

Good marketing research will identify whether the marketing mix is effective enough to
maximize the benefits to the firm from available opportunities (sales, profits, customer
satisfaction, and value.

Some of the most successful new-product introductions have been preceded by extensive
marketing research that helped develop one or more elements of their marketing mixes.

C. Evaluating the Effectiveness of Marketing Plans

Getting feedback from the marketplace and taking corrective action for elements of products or
services that need fixing is often referred to as controlling or the control function. Controlling is
an important component of the planning and decision-making process and another area in which
marketing research provides solutions.

To succeed in the marketplace, a firm must at least periodically monitor market conditions,
usually by obtaining feedback from customers, and answer control-related questions such as:

• What is the market share of our product?
• Is its share increasing, decreasing, or staying the same?
• Who are its users?
• Are the nature of the users and the volume of their purchases consistent with our
expectations (goals)? If not, why not?

Only marketing research, not marketers' intuition, can yield accurate answers to such questions.

Nature of Marketing Research

Marketing research is systematic and objective collection of data, its analysis and evaluation, and
decision making in respect of specific aspects of a marketing problem.

Marketing Research and Market Research:- The nature of marketing research cannot be
properly understood without knowing the meaning of market research. Market research is the
gathering, recording and analyzing of market data to identify the present and potential customers
and their motives and buying habits. It is the discovery of the capacity of the market to absorb
the products of a firm. It is a part of the marketing research. It is worthwhile to quote Richard
D. Crips to identify clearly the scope of Marketing research and market research. “Marketing
research is the systematic, objective and exhaustive search for the study of the facts relevant to
any problem in the field of marketing. Market research is restricted to the study of actual and
potential buyers, their location, their actual and potential value of purchases and their motives
and habits.”

Market research may be conducted for the following reasons:

• To identify the present and potential customers and their needs.
• To forecast the demand of a product.
• To determine customers preferences with regard to packaging, design, size, price and
other features of a product.
• To locate the demand for products with regard to time and place, such as festival
demand.
• To explore new markets for existing products.

Scope of Marketing Research

Marketing research covers different aspects of marketing of goods, services and ideas. There are
many areas of marketing management where marketing research has special branches.

• Product Research:- Product research is associated with the conversion of customer
needs into tangible product offer. This includes development and testing of new
products, improving the existing products, and a tab on the changing customer
preferences, habits, tastes, etc. Packaging design, branding, and labeling decisions are
also included here.

• Customer Research:- This research type includes investigation into the customer buying
behavior – the economic, social, cultural, personal and psychological influences.

• Sales Research:- Sales research involves decisions concerning selection of store
location, channels, territories, sales force motivation and compensation, etc. The purpose
is to reach the target customer more effectively, efficiently and timely.

• Promotion Research:- Promotion research encompasses all efforts by the marketers to
communicate the company’s offer. This includes advertising, publicity, public
relations, salespromotion, etc.

Marketing Research (MR) is the systematic problem analysis, model building and fact finding
method for the purpose of improved decision-making, with a view to control the marketing of
goods and services.

The American Marketing Association defined MR as the function which links the consumer,
customer and public to the marketer through information information used to identify and define
marketing opportunities and problems, refine and evaluate marketing actions, monitor marketing
performance and improve understanding of marketing as a process.

Marketing research specifies the information required to address these issues, design the method
for collecting information, manages and implements the data collection process, analyses the
result and communicates the findings and their implications.

All the above definitions of marketing research emphasize the need for evaluating the problem
and information in a more comprehensive and exhaustive manner. You can say that marketing
research is a systematic and objective process of identifying and formulating the marketing
problems, settingresearch objectives and methods for collecting, editing, coding, tabulating,
evaluating, analyzing, interpreting the data in order to find justified solutions for these problems.

Nature of Marketing Research

Apart from being systematic and objective in nature, the main characteristic features that
characterize the nature of MR are:

• Applied/Problem solving research
• Often based on cost-benefit analysis
• Vital for implementation of marketing concept
• Value of information declines with time
• Dynamic (ongoing)

Marketing research is one of the principal tools for answering questions because it:

• Links the consumer, customer, and public to the market through information used to
identify and define marketing.

• Generates, refines, and evaluates marketing actions
• Monitors marketing performance

• Underlines the understanding of marketing as a process

Marketing research is often partitioned into two sets of categorical pairs, either by target
market:

1. Consumer marketing research, and
2. Business-to-business (B2B) marketing research

Or, alternatively, by methodological approach:

1. Qualitative marketing research, and
2. Quantitative marketing research

Consumer marketing research is a form of applied sociology that concentrates on understanding
the preferences, attitudes, and behaviors of consumers in a market-based economy, and it aims to
understand the effects and comparative success of marketing campaigns. The field of consumer
marketing research as a statistical science was pioneered by Arthur Nielsen with the founding of
the ACNielsen Company in 1923.

Thus, marketing research may also be described as the systematic and objective identification,
collection, analysis, and dissemination of information for the purpose of assisting management in
decision making related to the identification and solution of problems and opportunities in
marketing.

Scope of Marketing Research

Marketing research provides the right information at the right time in the right place and to the
right person which is important in decision-making. It helps the decision maker in various ways.

The Increased Complexity of Business Environment: The study of complexity of business
environment can be studied in four parts:

• Technology changes
• Research and development
• Product changes
• Information technology changes

Q.2 What are client ethics and field service ethics? Explain with example.

Answer:

Client ethics & Field service ethics

Talk to the ethics experts, and they'll tell you the best defense against an ethical problems is a
good offense. By looking out for foreseeable conflicts and discussing them frankly with
colleagues and clients, practitioners can evade the misunderstandings, hurt feelings and sticky
situations that lead to hearings before ethics boards, lawsuits, loss of license or professional
membership, or even more dire consequences.

However, being vigilant doesn't mean psychologists should spend their days worrying about
where the next pitfall could be, says Robert Kinscherff, JD, PhD, former chair of APA's Ethics
Committee, which adjudicates ethics complaints. "Instead of worrying about the ways [they] can
get in trouble, psychologists should think about ethics as a way of asking 'How can I be even
better in my practice?'" he explains. "Good ethical practice is good professional practice, which
is good risk management practice."

When psychologists do end up in ethical quandaries, it's often because they unwittingly slid too
far down a slippery slope--a result of ignorance about their ethical obligations or thinking they
could handle a situation that spiraled out of control.

Many problems are what Ethics Committee member Anne Hess, PhD, calls "stealth" dilemmas:
situations that develop gradually, moving step by small step beyond once-firm professional
boundaries. Although each step seemed harmless at the time, many practitioners later realize that
they have landed themselves in deep trouble.

The Monitor interviewed some of psychology's leading ethics experts to talk about how
practitioners can avert common ethical dilemmas, from multiple relationships to whether to
breach confidentiality, to terminating treatment. Here's their advice, boiled down to 10 ways to
help avoid ethical pitfalls.

1. Understand what constitutes a multiple relationship

Is it ethical to volunteer at your daughter's softball team fund-raiser if you know a client is going
to be there? Can you buy a car from a client who owns the only dealership in your small, rural
town? Can you ask an intern to drive you to the airport?

"A central question in any multiple relationship situation is whose needs are being met here?"
says Stephen Behnke, JD, PhD, director of APA's Ethics Office, which advises psychologists on
ethical dilemmas. "Whenever the answer is the needs of the psychologist, that's a time when the
psychologist needs to take great care and get a consultation."
According to the Ethics Code, psychologists should avoid relationships that could reasonably
impair their professional performance, or could exploit or harm the other party. Behnke
emphasizes, however, that multiple relationships that are not reasonably expected to have such
effects are not unethical.

That's because sometimes it's impossible for psychologists to completely avoid multiple
relationships, explains Steven Sparta, PhD, immediate past-chair of APA's Ethics Committee.

For example, the psychologist in a rural town may decide to buy a car from his client because
going elsewhere could signal that the car dealer was in therapy.

2. Protect confidentiality

Psychologists are often asked to provide information about their clients to employers, spouses,
school administrators, insurance companies and others. While such requests may be well-
intentioned, psychologists need to carefully balance the disclosure with their ethical obligations
to protect their patients' confidentiality.

Indeed, because the public puts their trust in psychologists' promises of confidentiality, it's
essential for psychologists to be clear on whether and why they are releasing information.

"Ask yourself, 'On what basis am I making this disclosure?'" advises Behnke. "Is there a law that
mandates the disclosure? Is there a law that permits me to disclose? Has my client consented to
the disclosure?'"

APA's 2002 Ethics Code stipulates that psychologists may only disclose the minimum
information necessary to provide needed services, obtain appropriate consultations, protect the
client, psychologist or others from harm, or obtain payment for services from a client.

"If you wait and nothing bad happens, you've still violated the law," he says. "[But] if you wait
and something bad happens, not only have you violated the law, but you have injured a potential
victim who could have been protected."

3. Respect people's autonomy

Psychologists need to provide clients with information they need to give their informed consent
right at the start.

When they fail to give details, sticky situations can arise. For example, when psychologists fail
to explain their duty to report abuse and neglect to an adolescent client before therapy begins,
they may be unsure what to do if abuse is later revealed that the client doesn't want reported.

For psychologists providing services, the experts suggest they discuss:

• Limits of confidentiality, such as mandatory reporting.
• Nature and extent of the clinician's record-keeping.
• The clinician's expertise, experience and training as well as areas where the therapist
lacks training.
• Estimated length of therapy.
• Alternative treatment or service approaches.
• The clinician's fees and billing practices.
• Whom to contact in case of emergency.
• Client's right to terminate sessions and any financial obligations if that occurs.
• Not only what services the psychologist will provide, but what they can't or won't do.

If individuals are not competent to make decisions for themselves, then the person who's giving
permission must have access to that same information. Moreover, a signed consent form does not
substitute for the informing process, which should occur first, say ethics experts--and that
includes situations where informed consent is implied, such as in an employee evaluation.

4. Know your supervisory responsibilities

Psychologists may be responsible for the acts of those who perform work under their watch,
whether it's interns providing therapy or administrative assistants helping with record-keeping
and billing.

That means supervising psychologists should continually assess their supervisees' competence
and make sure they are managing them appropriately, say experts. Such supervision should cover
everything from ensuring that supervisees conduct the informed-consent process correctly to
prohibiting them from using the supervisor's signature stamp on any bill or letter that the
supervisor hasn't reviewed.

"If it goes out under your name, you're responsible," says APA Ethics Committee Chair Michael
D. Roberts, PhD. "If they release medical files without proper consent, they're not going to sue
the receptionist, they're going to sue you."

5. Identify your client and role

When practicing psychologists work with organizations or groups of individuals, they should
understand from the start who they were hired to help and what is expected of them. Dilemmas
crop up in a variety of settings:

• In couples therapy. For example, when one partner wants a better marriage but the other
wants a "painless" divorce, psychologists should clarify at the beginning that they cannot decide
whether the couple should stay together or offer expert opinions later on during a divorce suit.

• In court, when it's not clear whether the psychologist is serving as an expert witness or
advocate for one side. Court-appointed evaluators should express well-balanced, objective
opinions, says Ethics Committee member Linda F. Campbell, PhD, while advocates are often
therapists for one party who have had little direct contact with the other. Because they can't
provide an objective evaluation, psychologists who are therapists for one of the parties shouldn't
serve as expert witnesses.

• When psychologists provide services to a person or entity at the request of a third party,
such as a parent requesting therapy for their child or a police department requesting an
evaluation of an officer. "You may have one legal client, but several ethical clients," cautions
Kinscherff. "In each case it's important to know who it is that you're serving and what your role
is in providing that service."

6. Document, document, document

Documentation can be psychologists' best ally if they ever face ethical charges, says Ed
Nottingham, PhD, an associate member of APA's Ethics Committee. However, lack of
documentation--or the wrong kind of documentation--can be detrimental.

For specific guidance for practitioners, see APA's Record Keeping Guidelines. Some specifics to
include in documenting therapeutic interactions, according to the guidelines and ethics experts
such as Nottingham:

7. Practice only where you have expertise

Every psychologist knows they are obligated by the Ethics Code to practice only where they are
competent. But sometimes difficulties arise when, for example, they practice in emerging areas
where there aren't clear standards.

"The problem is that, many times, how does the psychologist know when there's something they
don't know?" says Sparta. "If you don't know from the professional literature that there are
certain guidelines...you may be well-intentioned, but not realize you're going beyond the
boundaries of your competence."

Competence issues also come into a play in child-custody ethics, when psychologists are
unfamiliar with the nuances of working with courts. Take the case of a psychologist who is asked
to write a letter to a judge about the relationship of a boy in treatment to his parents. If she has
little forensic training, the psychologist could land in ethical hot water if, for example, she failed
to include the limitations of her opinion, such as that she's never met one of the boy's parents.
Another area to keep in mind is assessment, says Campbell: "If you find yourself falling back on
instruments because you feel confident with them and you don't know which others to use, that
means you haven't kept up with the advances in that particular area and need to re-examine what
needs to be done to be proficient."
8. Know the difference between abandonment and termination

Every year, APA's Ethics Office fields calls from psychologists who want to end treatment with
a patient, but are anxious because they fear they're abandoning their client.

"Abandonment is not the same as treatment termination," Behnke tells them, pointing to the 2002
Ethics Code, which says in Standard 10.10 that psychologists can discontinue treatment when
clients:

• Aren't benefiting from therapy.
• May be harmed by the treatment.
• No longer need therapy.
• Threaten the therapist, themselves or others.

9. Stick to the evidence

When you give your expert opinion or conduct an assessment, base your evaluation only on the
data available. For example, psychologists in child-custody cases should be sure they aren't being
biased in favor of the parent who is more financially secure.
"The best approach is to stay mindful about what you know, what you don't know and what your
sources of information have been," says Kinscherff.

10. Be accurate in billing

There's nothing more important than accuracy when it comes to billing patients and insurers for
psychological services, say ethics experts.
While sloppy bookkeeping can land some psychologists in hot water, others find themselves in
predicaments because they've worked the system to get clients more benefits than a third-party
payor entitles them to.

To avoid such ethical problems, a psychologist should:

• Bill only for services you have provided using correct procedure codes. Never bill an
insurer for a service that is covered instead of the treatment actually provided. For example, it's
improper to bill for individual therapy instead of couples therapy, for therapy instead of
psychological testing or for psychoeducational tests as if they were health-related. Moreover,
don't bill the insurance company when clients miss appointments; bill the client.
"Be accurate, conservative, and consult when in doubt," advises Ethics Committee associate
Peter Mayfield, PhD.

• Only list the dates you treated the patient. While it may be tempting to tell an insurer
that only pays for one session a week that you saw a client two Mondays in a row instead of the
Monday and Friday you actually met, psychologists should never "fudge" a treatment date.

• Call it as you see it. Occasionally, a patient might ask for a less damaging diagnosis for
fear that employers or others might find out. Or psychologists may consider exaggerating
diagnoses to justify more visits to insurers. No matter what, don't do it: "Honesty is the best
policy," says Mayfield.

• Discuss billing practices up front. "All of the financial policies need to be told to the
client at the beginning of therapy," says Eric Harris, JD, EdD, a risk management consultant for
the APA Insurance Trust. In fact, Harris recommends that psychologists ask clients to sign
informed-consent contracts that outline the financial arrangements, such as that clients will be
billed for skipped sessions and they must pay for the services if the insurer refuses coverage.

• Be conscientious about collecting fees. "When a client isn't paying their fees, you need
to raise it with them as early as possible," says Harris. "You need to set appropriate limits."
Allowing clients to run large balances isn't good for either party's finances. One solution is to
accept credit cards.

• Take caution in pursuing delinquent accounts. When psychologists use small claims
court or a collection agency to pursue debtors, they are ethically obligated to first inform the
client of their intent and give them the chance to pay. If the client does not pay, psychologists are
ethically permitted to provide only the minimum information necessary to pursue their claim.

• Watch your paperwork. Because psychologists are accountable for everything that their
offices bill, regardless of whether they ever saw the paperwork, Mayfield encourages
psychologists to personally review any document that goes out under their name.

Lastly, there's one, best strategy that psychologists can take to minimize their exposure to ethical
and legal problems, says Behnke: "Be the best psychologist you can be."

Q.3 Discuss different types of information applicable in market research and mention their
uses.

Answer:

In social marketing, key sources of information include technical and professional
journals; national public opinion polls, health and consumer surveys; past coverage of the issue
in newspapers, trade journals and consumer magazines; census statistics and other demographic
surveys; government health departments; radio and television stations and local advertising
agencies and market research firms. Each can provide different types of information, so it is
desirable to be as thorough as possible in the research review.

This method of information-gathering can be a relatively quick and inexpensive way to become
familiar with the market and identify areas requiring further primary research. However, data
from these sources may not always be current or accurate. In addition, the questions investigated
in someone else's study may not be relevant to the program.

Focus Groups

Focus groups are an excellent method for obtaining information about the target audience's
perceptions, beliefs and language regarding a particular topic. It is a qualitative method, which
probes into the reasons that people feel and act the way they do. Focus groups give more depth
of information than do surveys or other quantitative methods. By bringing together a group of
similar people, a forum is provided for them to discuss a particular issue and react to each other's
comments in a directed way that is not possible through individual interviews or participant
observation.

Focus groups are used often throughout the social marketing process, from the planning stages to
development and refinement of the message and materials. In situations where time and cost are
important considerations, focus groups may be the most efficient method of data collection.
Among their many uses are: generating ideas about services or products, and pretesting product
positioning, message concepts or pre finished communication materials.

A focus group generally consists of eight to ten unacquainted participants, who are fairly similar
to each other in terms of sex, age, ethnic background, risk factors and other relevant
characteristics related to the target audience. The group is led by a trained moderator, who poses
open-ended questions from a discussion outline and tries to involve everyone in the discussion.
This occurs in a comfortable, non-threatening environment where participants are encouraged to
speak what's on their minds, especially if it is different than what other people are saying. The
discussion is usually recorded on audio or video tape, and lasts one to two hours.

Although focus groups are an excellent technique for obtaining qualitative information from
several respondents at once, there are some disadvantages to the method. First, people may be
reticent to discuss sensitive subjects, such as sexual behavior, in front of a group. For certain
topics, it may be more appropriate to conduct individual in-depth interviews, which use the
qualitative probing questions of focus groups, but afford more privacy to the respondent.
Another disadvantage is that focus group results are not directly projectable back to the target
population (i.e., one can't report that "2 out of 5 gay men don't want to practice safer sex...").
However, after hearing the same thing from a number of participants, it is likely that their views
are common to many in the target audience. The qualitative nature of the research and small
sample sizes preclude the use of focus group results as baseline data for program evaluation.

Baseline KAP Study

Based upon the information unearthed by the secondary research review and/or focus groups, it
should be possible to narrow down the scope of the problem. Prior to the implementation of a
program, data are needed regarding audience awareness, knowledge, attitudes and behaviors
related to the program issue. In order to guide the development of the marketing strategy and to
provide a baseline from which to determine whether the program accomplishes its goals, a KAP
(knowledge, attitudes and practices) study should be conducted. Using the preliminary research,
the survey is drafted and pre-tested in order to evaluate its validity, reliability and to identify any
other problems with its design. As with any survey, the interviewers must be trained, interviews
must be conducted and data must be entered and analyzed. This can be an expensive and time-
consuming undertaking. However, this type of survey can be very useful for identifying and
understanding the audience better in terms of their demographics, psychographics and behaviors.
Depending upon the validity of the technique used, the survey can help estimate how many in the
population are "users" of the product (e.g., how many practice safer sex), identify their attitudes
toward the product and learn other quantitative information on the attributes of users and non-
users.

Many other important facts can be determined from the results of the KAP study. A crucial issue
is the consumer's readiness to adopt the product. Within the population, there are many segments
of people who have different levels of awareness, knowledge or adoption of the behavior. In
Prochaska's "Stages of Change" model, consumers are thought to move along a "readiness

continuum," consisting of different stages--from being unaware to aware, to knowledgeable,
interested, motivated, ready-to-try, users, and then possibly non-users. The strategy that will be
used for the program depends upon the point on the continuum at which the majority of the
target audience is located. For example, gay males in San Francisco who may need help in
maintaining their safer sex behavior would merit a much different approach than that used to
create awareness among heterosexual females in the midwest. Depending upon the extensiveness
of the study, other factors which can be identified may include the level of consumer demand for
the social marketing product, insight into how to position the product, benefits and barriers to use
of the product and the media habits of the target audience.

A thorough qualitative analysis of the potential target audience should be conducted either as
part of the development of the KAP survey or to further explore issues that arose from the
survey. Once the target audience has been identified, the next step is to learn as much about them
as possible. If this is done before the KAP questionnaire is developed, the information can be
used to make the survey even more useful by giving insight into the consumers' lives,
determining the language used by the target audience about the topic and identifying key issues
which the researchers might not have recognized themselves. The most common methods used to
gather this qualitative information are focus groups and marketing databases.

Marketing Databases

In addition to information about attitudes and behaviors related to a particular topic, social
marketers need to know about their target audience's other habits in order to reach them most
effectively and efficiently. Major marketing surveys, such as the DDB Needham Lifestyle Study,
MRI (Mediamark Research, Inc.), Simmons Market Research Bureau's Study of Media and
Markets (SMRB) and the Mendelsohn Research Survey of Adults and Markets of Affluence,
provide a more in-depth understanding of target markets than standard demographic or consumer
surveys. They provide extensive information on demographics, consumer buying habits and use
of media. Another database, PRIZM, clusters similar types of consumers demographically, based
upon their zip codes. Once the target audience has been identified, the database can be used to
provide additional information about those people.

In some cases, social marketers may want to better understand other groups who may influence
those in the target audience. These may include spouses, parents, in-laws, doctors, policymakers
or other influentials in their lives. For example, the parents of asthmatic children or husbands of
women with breast cancer may be just as important to understand and target. This can be done
through any of the methodologies described above.
Media Analysis

If the social marketing campaign will be using mass media to promote the message (as most
will), it is crucial to identify the optimal media channels for placement efforts. Media planning

and analysis are an important investment, even if relying upon stations to run public service
announcements. If messages miss the target audience, the effort is wasted and will not be
successful. Two ways to increase the chances of reaching the target audience are: first,
identifying the appropriate media vehicles and second, understanding the media "gatekeepers"
who control the content and flow of information that reaches the target audience.

In order to plan a successful media campaign, social marketers must know how best to reach the
target audience. There are many sources of information on consumer media habits. Among these
are the aforementioned marketing databases, along with the Scarborough Ratings Study and
Arbitron/Nielsen Ratings. These databases provide information on demographics and media
habits: television viewing (types of shows, dayparts, networks), radio listening (networks,
formats and dayparts), magazines and newspapers read. These services can help to compare
which types of media, and specifically which vehicles, are used most by the target audience.
Based upon the cost of each, and the estimated gross impressions for the target audience (how
many people it will reach), the most effective and efficient vehicles for the campaign can be
determined.

All of these databases vary, however, in terms of geographic breakdown, income levels sampled
and information beyond bare demographics. For example, the Mendelsohn Research Survey of
Adults and Markets of Influence samples only people with household incomes above $60,000.
These databases may not be a very good source of information on lower-SES audiences, for they
are difficult to reach through phone surveys, and are not of much interest to marketers because of
their low amount of expendable income. There are a couple of sources that focus on minority
media habits, such as the US Hispanic Market, from Strategy Research Corporation.

Implementation / Uses

Once each element of the social marketing mix is considered ready to go, the full program is put into
effect and monitored to assure that it stays on target. It is essential that feedback systems are in place
in order to catch any problems, especially those that could escalate into major ones. These indicators
of implementation success may include media monitoring and analysis, evaluation of program
activities and issues/marketing monitoring.

Media Monitoring/Analysis

When marketing programs seek mass media coverage for their promotional activities--whether
public relations efforts (e.g., press conferences, community events) or public service
announcements--they need to be able to evaluate the success of these activities. The most effective
way to discover media "hits" (coverage) is by subscribing to a clippings service, such as Burrelle's or
Luce. These organizations scan tens of thousands of newspapers and watch hundreds of television

news programs daily, clipping articles and transcribing stories that deal with the marketing
program's specified topics. These clips are sent out within a couple of days, and have attached to
them a tag noting the source, date and circulation (or viewership) of that source.

The next step is for the researcher to analyze the clips qualitatively, assessing the messages each
contains and the accuracy or desirability of those messages. Ideally, all of the available information
about each clip should be entered into a database, from which a statistical analysis can be drawn.
This analysis should include information about placement volume, target audience impressions,
message content and quality measures. If a communications strategy was devised prior to the
activity, this analysis can help to assess its effectiveness. The results can provide implications for
placement activities in the future.

Another method of evaluating use of PSAs, for radio or television, is through bounceback cards.
These are short questionnaires on the back of business reply cards that are packaged with the PSA,
and meant to be completed and returned by the station's public service director. The questions could
include rating the importance of the issue compared with other issues, and rating the quality of the

Evaluation and Feedback

Process Evaluation

While the social marketing program is in effect, process evaluation should take place
intermittently in each part of the program. As detailed in the implementation phase, it includes
media monitoring and analysis, as well as evaluation of program activities. Most important,
however, is tracking the same population that was surveyed in the initial baseline KAP study.
The first wave of tracking should occur six months to a year after the product introduction, and
ideally should be conducted at least annually. If possible, the methodology and wording of the
questions should be identical to the first survey in order to maintain comparability of the results.

Based upon the standards set in the program objectives, the results should focus on levels of
awareness, trial and continued/repeat usage. The interpretation of these measures provide
direction for improvements and areas upon which to concentrate in the future. If the survey
indicates low levels of awareness of the product or campaign, the program should investigate
whether the media vehicles are, in fact, reaching the target audience effectively and
appropriately, and whether the communications materials are memorable, understandable and
consistent with the program objectives. If there is high awareness, but low trial, this indicates
that the message is reaching the audience, but other elements of the mix may be weak. These
problems may be with the distribution system, price, product image or packaging, poorly
conceived promotion activities or competition from other sources. Finally, both awareness and
trial may be high, but the target audience does not sustain the behavior. In this case, there may be
problems with the product itself, or consumers may be unmotivated to continue usage. This type
of process evaluation can be very helpful in diagnosing problems or indicating success.

Outcome Evaluation

The follow-up survey will help to identify the extent of attitude and behavior change in the target
population, and tie it to their exposure to the campaign or use of the product. A "user profile" can
be compiled, either from the KAP survey or from additional studies of users and non-users. For
example, those who use condoms can be compared with those who do not on a number of
attributes. These would include demographics, contraceptive history, lifestyle factors, sexual
behavior, brand use, advertising awareness and attitudes toward the particular social marketing
product. Evaluation efforts can also utilize secondary sources to determine changes in behavioral
measures. These include the annual National Health Interview Survey (NHIS) and the state-
based Behavioral Risk Factor Surveillance System (BRFS) conducted by the Centers for Disease
Control. However, these general studies do not necessarily contain the information that is
relevant to a particular social marketing program. If the organization is a government agency, it
may be possible to add one or two relevant questions to the surveys.

Impact Evaluation

The actual impact of the social marketing program is often difficult to assess accurately. Can one
public service announcement cause a drop in morbidity and mortality from heart disease?

Probably not, but many such efforts combine synergistically and may be a contributing factor in
health improvements. Educational efforts are relatively transient, and gone long before changes
can be seen. Because campaigns change so quickly, it is impossible to determine the effect of a
particular spot on overall trends. However, we can at least compare mortality and morbidity rates
before and after implementation of the program in many cases.

The most effective way of establishing a cause-and-effect relationship between health marketing
efforts and the changes in behavior and health outcomes is to conduct an intervention study in
one or more communities, with matched communities as controls. Assuming that there are no
significant differences between the intervention and control communities, marketing activities
may be linked to changes in the communities with precision and reliability. If conducting the
study in a number of communities, the effectiveness of various elements of the program can be
tested by including them or excluding them from certain markets. Without this type of scientific
methodology, it is not possible to claim that improvements were a direct result of the social
marketing program.

Ethical Evaluation

Kotler and Roberto give strong emphasis to the importance of ethics in social marketing.
Whenever marketing behavior change, it is imperative to acknowledge the need for
responsibility and accountability to the people in the target audience. Although in the end, the
results of the program are the final measure of success, the means to that end are just as
important. People should never be coerced into a behavior, even though it may be "for their own
good." Programs may also have side effects and unintended consequences, which can be harmful
in the long run. For example, a program intended to empower minority women to use condoms
resulted in a number of beatings by their male partners, who perceived their insistence on
condoms as an insult. Programs which offer incentives for behavior change may encourage
materialistic values and a disinclination to do anything without an extrinsic reward. Ethical
criteria must be considered from the beginning in selecting the target audience, designing
research and determining a social marketing mix, and must also be used in evaluation throughout
a program to make sure that it "does no harm." Every element of the program must be ethically
sound.

Q. 4 What is SPSS? How does SPSS help in marketing research?

Answer:

SPSS

SPSS is a computer program used for survey authoring and deployment (IBM SPSS Data
Collection), data mining (IBM SPSS Modeler), text analytics, statistical analysis, and
collaboration and deployment (batch and automated scoring services).

SPSS Data Analysis Examples

Ordinal Logistic Regression

Version info: Code for this page was tested in IBM SPSS 20.

Please note: The purpose of this page is to show how to use various data analysis commands. It
does not cover all aspects of the research process which researchers are expected to do. In
particular, it does not cover data cleaning and checking, verification of assumptions, model
diagnostics and potential follow-up analyses.

Examples of ordered logistic regression

Example 1: A marketing research firm wants to investigate what factors influence the size of
soda (small, medium, large or extra large) that people order at a fast-food chain. These factors
may include what type of sandwich is ordered (burger or chicken), whether or not fries are also
ordered, and age of the consumer. While the outcome variable, size of soda, is obviously
ordered, the difference between the various sizes is not consistent. The differece between small
and medium is 10 ounces, between medium and large 8, and between large and extra large 12.

Example 2: A researcher is interested in what factors influence medaling in Olympic
swimming. Relevant predictors include at training hours, diet, age, and popularity of swimming
in the athlete's home country. The researcher believes that the distance between gold and silver is
larger than the distance between silver and bronze.

Example 3: A study looks at factors that influence the decision of whether to apply to graduate
school. College juniors are asked if they are unlikely, somewhat likely, or very likely to apply to
graduate school. Hence, our outcome variable has three categories. Data on parental educational
status, whether the undergraduate institution is public or private, and current GPA is also
collected. The researchers have reason to believe that the "distances" between these three points
are not equal. For example, the "distance" between "unlikely" and "somewhat likely" may be
shorter than the distance between "somewhat likely" and "very likely".

Description of the data

For our data analysis below, we are going to expand on Example 3 about applying to graduate
school. We have simulated some data for this example and it can be obtained here. This
hypothetical data set has a three level variable called apply (coded 0, 1, 2), that we will use as
our outcome variable. We also have three variables that we will use as predictors: pared, which
is a 0/1 variable indicating whether at least one parent has a graduate degree; public, which is a

0/1 variable where 1 indicates that the undergraduate institution is public and 0 private, and gpa,
which is the student's grade point average.

Let's start with the descriptive statistics of these variables.

get file "D:dataologit.sav".

freq var = apply pared public.

descriptives var = gpa.

Analysis methods you might consider

Below is a list of some analysis methods you may have encountered. Some of the methods listed
are quite reasonable while others have either fallen out of favor or have limitations.

• Ordered logistic regression: the focus of this page.

• OLS regression: This analysis is problematic because the assumptions of OLS are
violated when it is used with a non-interval outcome variable.
• ANOVA: If you use only one continuous predictor, you could "flip" the model around so
that, say, gpa was the outcome variable and apply was the predictor variable. Then you
could run a one-way ANOVA. This isn't a bad thing to do if you only have one predictor
variable (from the logistic model), and it is continuous.
• Multinomial logistic regression: This is similar to doing ordered logistic regression,
except that it is assumed that there is no order to the categories of the outcome variable
(i.e., the categories are nominal). The downside of this approach is that the information
contained in the ordering is lost.
• Ordered probit regression: This is very, very similar to running an ordered logistic
regression. The main difference is in the interpretation of the coefficients.

Ordered logistic regression

Before we run our ordinal logistic model, we will see if any cells are empty or extremely small.
If any are, we may have difficulty running our model. There are two ways in SPSS that we can
do this. The first way is to make simple crosstabs. The second way is to use the cellinfo option
on the /print subcommand. You should use the cellinfo option only with categorical predictor
variables; the table will be long and difficult to interpret if you include continuous predictors.

None of the cells is too small or empty (has no cases), so we will run our model. In the syntax
below, we have included the link = logit subcommand, even though it is the default, just to
remind ourselves that we are using the logit link function. Also note that if you do not include
the print subcommand, only the Case Processing Summary table is provided in the output.

In the Case Processing Summary table, we see the number and percentage of cases in each level
of our response variable. These numbers look fine, but we would be concerned if one level had
very few cases in it. We also see that all 400 observations in our data set were used in the
analysis. Fewer observations would have been used if any of our variables had missing values.
By default, SPSS does a listwise deletion of cases with missing values. Next we see the Model
Fitting Information table, which gives the -2 log likelihood for the intercept-only and final
models. The -2 log likelihood can be used in comparisons of nested models, but we won't show
an example of that here.

In the Parameter Estimates table we see the coefficients, their standard errors, the Wald test and
associated p-values (Sig.), and the 95% confidence interval of the coefficients.
Both pared and gpa are statistically significant; public is not.& So for pared, we would say that
for a one unit increase in pared (i.e., going from 0 to 1), we expect a 1.05 increase in the ordered
log odds of being in a higher level of apply, given all of the other variables in the model are held

constant. For gpa, we would say that for a one unit increase in gpa, we would expect a 0.62
increase in the log odds of being in a higher level of apply, given that all of the other variables in
the model are held constant. The thresholds are shown at the top of the parameter estimates
output, and they indicate where the latent variable is cut to make the three groups that we
observe in our data. Note that this latent variable is continuous. In general, these are not used in
the interpretation of the results. Some statistical packages call the thresholds "cutpoints"
(thresholds and cutpoints are the same thing); other packages, such as SAS report intercepts,
which are the negative of the thresholds. In this example, the intercepts would be -2.203 and
-4.299. For further information, please see the Stata FAQ: How can I convert Stata's
parameterization of ordered probit and logistic models to one in which a constant is estimated?

As of version 15 of SPSS, you cannot directly obtain the proportional odds ratios from SPSS.
You can either use the SPSS Output Management System (OMS) to capture the parameter
estimates and exponentiate them, or you can calculate them by hand. Please see Ordinal
Regression by Marija J. Norusis for examples of how to do this. The commands for using OMS
and calculating the proportional odds ratios is shown below. For more information on how to use
OMS, please see our SPSS FAQ: How can I output my results to a data file in SPSS? Please note
that the single quotes in the square brackets are important, and you will get an error message if
they are omitted or unbalanced.

oms select tables
/destination format = sav outfile = "D:ologit_results.sav"
/if commands = ['plum'] subtypes = ['Parameter Estimates'].

plum apply with pared public gpa
/link = logit
/print = parameter.

omsend.

get file "D:ologit_results.sav".
rename variables Var2 = Predictor_Variables.
* the next command deletes the thresholds from the data set.
select if Var1 = "Location".
exe.
* the command below removes unnessary variables from the data set.
* transformations cannot be pending for the command below to work, so
* the exe.
* above is necessary.
delete variables Command_ Subtype_ Label_ Var1.
compute expb = exp(Estimate).
compute Lower_95_CI = exp(LowerBound).
compute Upper_95_CI = exp(UpperBound).
execute.

In the column expb we see the results presented as proportional odds ratios (the coefficient
exponentiated). We have also calculated the lower and upper 95% confidence interval. We
would interpret these pretty much as we would odds ratios from a binary logistic regression.
For pared, we would say that for a one unit increase in pared, i.e., going from 0 to 1, the odds of
high apply versus the combined middle and low categories are 2.85 greater, given that all of the
other variables in the model are held constant. Likewise, the odds of the combined middle and
high categories versus low apply is 2.85 times greater, given that all of the other variables in the
model are held constant. For a one unit increase in gpa, the odds of the low and middle
categories of apply versus the high category of apply are 1.85 times greater, given that the other
variables in the model are held constant. Because of the proportional odds assumption (see below
for more explanation), the same increase, 1.85 times, is found between low apply and the
combined categories of middle and high apply.

One of the assumptions underlying ordered logistic (and ordered probit) regression is that the
relationship between each pair of outcome groups is the same. In other words, ordered logistic
regression assumes that the coefficients that describe the relationship between, say, the lowest
versus all higher categories of the response variable are the same as those that describe the
relationship between the next lowest category and all higher categories, etc. This is called the
proportional odds assumption or the parallel regression assumption. Because the relationship
between all pairs of groups is the same, there is only one set of coefficients (only one model). If
this was not the case, we would need different models to describe the relationship between each
pair of outcome groups. We need to test the proportional odds assumption, and we can use
the tparallel option on the print subcommand. The null hypothesis of this chi-square test is that
there is no difference in the coefficients between models, so we hope to get a non-significant
result.

We we use these formulae to calculate the predicted probabilities for each level of the
outcome, apply. Predicted probabilities are usually easier to understand than the coefficients or
the odds ratios.

P(Y=2)=(11+e−(a2+b1x1+b2x2+b3x3))

P(Y=1)=(11+e−(a1+b1x1+b2x2+b3x3))−P(Y=2)

P(Y=0)=1−P(Y=1)−P(Y=2)

We will calculate the predicted probabilities using SPSS' Matrix language. We will use pared as
an example with a categorical predictor. Here we will see how the probabilities of membership to
each category of apply change as we vary pared and hold the other variable at their means. As
you can see, the predicted probability of being in the lowest category of apply is 0.59 if neither
parent has a graduate level education and 0.34 otherwise. For the middle category of apply, the

predicted probabilities are 0.33 and 0.47, and for the highest category of apply, 0.078 and 0.196.
Hence, if neither of a respondent's parents have a graduate level education, the predicted
probability of applying to graduate school decreases. Note that the intercepts are the negatives of
the thresholds.

Matrix.

* intercept1 intercept2 pared public gpa.
* these coefficients are taken from the output.
compute b = {-2.203 ; -4.299 ; 1.048 ; -.059 ; .616}.
* overall design matrix including means of public and gpa.
compute x = {{0, 1, 0; 0, 1, 1}, make(2, 1, .1425), make(2, 1, 2.998925)}.
compute p3 = 1/(1 + exp(-x * b)).
* overall design matrix including means of public and gpa.
compute x = {{1, 0, 0; 1, 0, 1}, make(2, 1, .1425), make(2, 1, 2.998925)}.
compute p2 = (1/(1 + exp(-x * b))) - p3.
compute p1 = make(NROW(p2), 1, 1) - p2 - p3.
compute p = {p1, p2, p3}.
print p / FORMAT = F5.4 / title = "Predicted Probabilities for Outcomes 0 1 2 for pared 0
1 at means".
End Matrix.

Run MATRIX procedure:

Predicted Probabilities for Outcomes 0 1 2 for pared 0 1 at means
.5900 .3313 .0787
.3354 .4687 .1959

------ END MATRIX -----

Q.5 Give a note on marketing audit.

Answer:

The Marketing Audit

The marketing audit has certain similarities to a financial audit in that it is a review or appraisal
of your existing marketing activities. Carrying out the marketing audit provides the opportunity
to review and appraise your whole marketing activity, enabling you to assess past and present
performance as well as to provide the basis for evaluating possible future courses of action.

Because the business environment is constantly changing, the marketing audit should be used as
a reference tool, with constant updates reflecting changes in the external environment and your
own internal business experiences.

1. External Audit
External factors can be split broadly into three groups, the economic environment, the
competitive environment and your own market environment. Consider these areas from your
own business's point of view - will any changes have an impact on your business, will they affect
your competitors, will they allow you to compete where you could not, or inhibit your ability to
compete. If the answer is yes, then the factors should be included in the audit.

With the advent of the internet, there are now many sources of information on your competitors
and your environment. You may also be surprised how much business information is available
from your nearest city library. And remember, Company Reports are a good source of
competitive information and can be found at www.companies-house.gov.uk.

The Economic Environment

Political Government actions, tax levels, privatisation, schools policy etc

Economic Income levels, employment levels, rate of inflation, rate of economic growth

Social and Demographics (population growth/distribution, age), lifestyles and cultural
Cultural values (changing beliefs, skills, family values)

Technological IT, internet, home shopping

Legal UK Law (health & safety, employment law, store opening etc), EU Law

Environmental Affect of your business on environment, 'green' credentials

Competitive Environment

How competitive is your market? What are your competitors doing, likely to be doing? Evaluate
the following:

• The threat of new entrants to your industry
• The threat of substitute products
• The bargaining power of customers
• The bargaining power of suppliers
• The rivalry amongst current competitors
• Who are your competitors?
• Who are your major competitors, how big are they, what is their market share?
• What reputation do they have?
• How do they distribute their products, what are their production capabilities?
• What is their marketing like - do they diversify?
• What are their key strengths and weaknesses?

The Market Environment

• Total market size growth and trends
• Market characteristics, growth and trends
• Products, prices
• Physical distribution channels
• Customers/consumers
• Industry practices
2. Internal Audit

This is your opportunity to put your own business under the microscope - do you know as much
about your own situation as you should?

• Sales (total, split by geography, industry, customer, product)
• Market shares
• Profit margins
• Costs
• Marketing information research
• Effectiveness of marketing mix

Key outcomes from this audit can then be summarised in the Current Market Position and
Market Overview sections of your marketing plan.

Q.6 What do you mean by sales forecasting? Explain the steps involved in it

Answer:

Sales forecasting

Sales forecasting is a difficult area of management. Most managers believe they are good at
forecasting. However, forecasts made usually turn out to be wrong! Marketers argue about
whether sales forecasting is a science or an art. The short answer is that it is a bit of both.

Reasons for undertaking sales forecasts

Businesses are forced to look well ahead in order to plan their investments, launch new products,
decide when to close or withdraw products and so on. The sales forecasting process is a critical
one for most businesses. Key decisions that are derived from a sales forecast include:

Employment levels required
Promotional mix
Investment in production capacity

Types of forecasting

There are two major types of forecasting, which can be broadly described as macro and micro:

Macro forecasting is concerned with forecasting markets in total. This is about determining the
existing level of Market Demand and considering what will happen to market demand in the
future.

Micro forecasting is concerned with detailed unit sales forecasts. This is about determining a
product’s market share in a particular industry and considering what will happen to that market
share in the future.

The selection of which type of forecasting to use depends on several factors:

(1) The degree of accuracy required – if the decisions that are to be made on the basis of the
sales forecast have high risks attached to them, then it stands to reason that the forecast should be
prepared as accurately as possible. However, this involves more cost

(2) The availability of data and information - in some markets there is a wealth of available
sales information (e.g. clothing retail, food retailing, holidays); in others it is hard to find
reliable, up-to-date information

(3) The time horizon that the sales forecast is intended to cover. For example, are we
forecasting next weeks’ sales, or are we trying to forecast what will happen to the overall size of
the market in the next five years?

(4) The position of the products in its life cycle. For example, for products at the
“introductory” stage of the product life cycle, less sales data and information may be available
than for products at the “maturity” stage when time series can be a useful forecasting method.

Creating the Sales Forecast for a Product

The first stage in creating the sales forecast is to estimate Market Demand.

Definition:

Market Demand for a product is the total volume that would be bought by a defined customer
group, in a defined geographical area, in a defined time period, in a given marketing
environment. This is sometimes referred to as the Market Demand Curve.

For example, consider the UK Overseas Mass Market Package Holiday Industry. What is Market
Demand?

Using the definition above, market demand can be defined as:

Defined Customer Group: Customers Who Buy an Air-Inclusive Package Holiday

Defined Geographical Area: Customers in the UK

Defined Time Period: A calendar year

Defined Marketing Environment: Strong consumer spending in the UK but overseas holidays
affected by concerns over international terrorism

Recent data for the UK Overseas Mass Market Package Holiday market suggests that market
demand can be calculated as follows:

Number of Customers in the UK: 17.5 million per calendar year

Average Selling Price per Holiday: £450

Estimate of market demand: £7.9 billion (customers x average price)

Stage two in the forecast is to estimate Company Demand

Company demand is the company’s share of market demand.

This can be expressed as a formula:

Company Demand = Market Demand v Company’s Market Share

For example, taking our package holiday market example; the company demand for First Choice
Holidays in this market can be calculated as follows:

First Choice Holidays Demand = £7.9 billion x 15% Market Share = £1.2 billion
A company’s share of market demand depends on how its products, services, prices, brands and
so on are perceived relative to the competitors. All other things being equal, the company’s
market share will depend on the size and effectiveness of its marketing spending relative to
competitors.

Step Three is then to develop the Sales Forecast

The Sales Forecast is the expected level of company sales based on a chosen marketing plan and
an assumed marketing environment.

Note that the Sales Forecast is not necessarily the same as a “sales target” or a “sales budget”.
A sales target (or goal) is set for the sales force as a way of defining and encouraging sales
effort. Sales targets are often set some way higher than estimated sales to “stretch” the efforts of
the sales force.

A sales budget is a more conservative estimate of the expected volume of sales. It is primarily
used for making current purchasing, production and cash-flow decisions. Sales budgets need to
take into account the risks involved in sales forecasting. They are, therefore, generally set lower
than the sales forecast.

Obtaining information on existing market demand
As a starting point for estimating market demand, a company needs to know the actual industry
sales taking place in the market. This involves identifying its competitors and estimating their
sales.

An industry trade association will often collect and publish (sometime only to members) total
industry sales, although rarely listing individual company sales separately. By using this
information, each company can evaluate its performance against the whole market.
This is an important piece of analysis. Say, for example, that Company A has sales that are rising
at 10% per year. However, it finds out that overall industry sales are rising by 15% per year. This
must mean that Company A is losing market share – its relative standing in the industry.
Another way to estimate sales is to buy reports from a marketing research firm such as AC
Neilsen, Mintel etc. These are usually good sources of information for consumer markets –
where retail sales can be tracked in great detail at the point of sale. Such sources are less useful
in industrial markets which usually rely on distributors.

Estimating Future Demand

So far we have identified how a company can determine the current position:

Current Company Demand = Current Market Demand x Current Market Share
How can future market demand and company demand be forecast?
Very few products or services lend themselves to easy forecasting . These tend to involve a
product whose absolute level or trend of sales is fairly constant and where competition is either
non-existent (e.g. monopolies such as public utilities) or stable (pure oligopolies). In most
markets, total demand and company demand are not stable – which makes good sales forecasting
a critical success factor.

A common method of preparing a sales forecast has three stages:

(1) Prepare a macroeconomic forecast – what will happen to overall economic activity in the
relevant economies in which a product is to be sold.

(2) Prepare an industry sales forecast – what will happen to overall sales in an industry based
on the issues that influence the macroeconomic forecast;

(3) Prepare a company sales forecast – based on what management expect to happen to the
company’s market share

Sales forecasts can be based on three types of information:

(1) What customers say about their intentions to continue buying products in the industry

(2) What customers are actually doing in the market

(3) What customers have done in the past in the market

There are many market research businesses that undertake surveys of customer intentions – and
sell this information to businesses that need the data for sales forecasting purposes. The value of
a customer intention survey increases when there are a relatively small number of customers, the
cost of reaching them is small, and they have clear intentions. An alternative way of measuring
customer intentions is to sample the opinions of the sales force or to consult industry experts

Time Series Analysis

Many businesses prepare their sales forecast on the basis of past sales.

Time series analysis involves breaking past sales down into four components:

(1) The trend: are sales growing, “flat-lining” or in decline?

(2) Seasonal or cyclical factors. Sales are affected by swings in general economic activity (e.g.
increases in the disposable income of consumers may lead to increase in sales for products in a
particular industry). Seasonal and cyclical factors occur in a regular pattern;

(3) Erratic events; these include strikes, fashion fads, war scares and other disturbances to the
market which need to be isolated from past sales data in order to be able to identify the more
normal pattern of sales

(4) Responses: the results of particular measures that have been taken to increase sales (e.g. a
major new advertising campaign)

Using time series analysis to prepare an effective sales forecast requires management to:
Smooth out the erratic factors (e.g. by using a moving average)

Adjust for seasonal variation

Identify and estimate the effect of specific marketing responses.

Mk0013– marketing research

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