Page 122 - Marketing Management

CONDUCTING MARKETING RESEARCH | CHAPTER 4 99

helpful. For example, to promote more shipping to China, UPS conducted several in-depth
surveys of the Chinese market to portray its complexities but also its opportunities for even
small and medium-sized businesses. 7
Most companies use a combination of marketing research resources to study their industries,
competitors, audiences, and channel strategies. Companies normally budget marketing research at
1 percent to 2 percent of company sales and spend a large percentage of that on the services of out-
side firms. Marketing research firms fall into three categories:
1. Syndicated-service research firms—These firms gather consumer and trade information, which
they sell for a fee. Examples include the Nielsen Company, Kantar Group, Westat, and IRI.
2. Custom marketing research firms—These firms are hired to carry out specific projects. They
design the study and report the findings.
3. Specialty-line marketing research firms—These firms provide specialized research services.
The best example is the field-service firm, which sells field interviewing services to other firms.
To take advantage of all these different resources and practices, good marketers adopt a formal
marketing research process.

The Marketing Research

Process

Effective marketing research follows the six steps shown in Figure 4.1. We illustrate them in
the following situation. 8
American Airlines (AA) was one of the first companies to install phone handsets on its
planes. Now it’s reviewing many new ideas, especially to cater to its first-class passengers
on very long flights, mainly businesspeople whose high-priced tickets pay most of the Define the problem
freight. Among these ideas are: (1) an Internet connection primarily for e-mail but with and research objectives
some limited access to Web pages, (2) 24 channels of satellite cable TV, and (3) a 50-CD
audio system that lets each passenger create a customized in-flight play list. The market-
ing research manager was assigned to investigate how first-class passengers would rate
these services, specifically the Internet connection, and how much extra they would be Develop the
research plan
willing to pay for it. One source estimates revenues of $70 billion from in-flight
Internet access over 10 years, if enough first-class passengers paid $25. AA could thus re-
cover its costs in a reasonable time. Making the connection available would cost the air-
line $90,000 per plane. 9 Collect the
information
Step 1: Define the Problem, the Decision Alternatives,
and the Research Objectives
Analyze the
Marketing managers must be careful not to define the problem too broadly or too narrowly for the information
marketing researcher. A marketing manager who says, “Find out everything you can about first-
class air travelers’ needs,” will collect a lot of unnecessary information. One who says, “Find out
whether enough passengers aboard a B747 flying direct between Chicago and Tokyo would be will-
Present the
ing to pay $25 for an Internet connection for American Airlines to break even in one year on the
findings
cost of offering this service,” is taking too narrow a view of the problem.
The marketing researcher might even ask,“Why does the Internet connection have to be priced
at $25 as opposed to $15, $35, or some other price? Why does American have to break even on the
cost of the service, especially if it attracts new customers?” Another relevant question to ask is, Make the
“How important is it to be first in the market, and how long can the company sustain its lead?” decision
The marketing manager and marketing researcher agreed to define the problem as follows:“Will
offering an in-flight Internet service create enough incremental preference and profit for American
Airlines to justify its cost against other possible investments in service enhancements American |Fig. 4.1|
might make?” To help in designing the research, management should first spell out the decisions it
might face and then work backward. Suppose management outlines these decisions: (1) Should The Marketing
American offer an Internet connection? (2) If so, should we offer the service to first-class only, or Research Process