Priciples of Marketing

by Philip Kotler and Gary Armstrong

Chapter 4
Managing Marketing Information to
Gain Customer Insights
PEARSON

Objective Outline
Marketing Information and Customer Insights
1

Explain the importance of information in gaining

insights about the marketplace and customers.

Assessing Marketing Information Needs

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

Objective Outline

Marketing Research
Outline the steps in the marketing research process.

Analyzing and Using Marketing Information

4

Explain how companies analyze and use marketing

information.

Objective Outline

Other Marketing Information Considerations

5

Discuss the special issues some marketing researchers

face, including public policy and ethics issues.

Marketing Information and Customer Insi

ghts
To
Tocreate
createvalue
valuefor
forcustomers
customersand
andbuild
buildmeaningful
meaningful
relationships
relationshipswith
withthem,
them,marketers
marketersmust
mustfirst
firstgain
gain
fresh,
fresh,deep
deepinsights
insightsinto
intowhat
whatcustomers
customersneed
needand
and
want.
want.
Such
Suchcustomer
customerinsights
insightscome
comefrom
fromgood
goodmarketing
marketing
information.
information.
Companies
Companiesuse
usethese
thesecustomer
customerinsights
insightsto
todevelop
developaa
competitive
competitiveadvantage.
advantage.
To
Togain
gaingood
goodcustomer
customerinsights,
insights,marketers
marketersmust
must
effectively
effectivelymanage
managemarketing
marketinginformation
informationfrom
fromaa
wide
widerange
rangeof
ofsources.
sources.

Marketing Information and Customer In

sights
The customer insights is the fresh understanding
Customer
insights teamsderived from
s of customers and
the marketplace
marketing information that become the basis or cr
Customer
eatinginsights
customer
groupsvalue
collectand
customer
relationships.
and market information from
a wide variety of sources, ranging from traditional marketing research
studies to mingling with and observing consumers to monitoring
consumer online conversations about the company and its products.

Then they use this information to develop important customer insights

from which the company can create more value for its customers.

Marketing Information and Customer Insi

ghts
A marketing information system (MIS) consists of peo
ple and procedures dedicated to assessing information ne
eds, developing the needed information, and helping deci
sion makers use the information to generate and validate
actionable customer and market insights.

Assessing Marketing Information Needs

The marketing information system primarily serves the c
ompanys marketing and other managers.
A good MIS balances the information users would like to
have against what they really need and what is feasible to
offer.
The company must decide whether the value of insights g
ained from additional information is worth the costs of pr
oviding it, and both value and cost are often hard to asses
s.

Developing Marketing Information

Marketing
intelligence

Marketing
research

Internal data
Developing
marketing
information

Internal Data
Many companies build extensive internal datab
ases, electronic collections of consumer and mark
et information obtained from data sources within
the companys network.
f
Sources o
on
informati
ting
e
k
r
a
M
ment
t
r
a
p
e
d
es
furnish n
atio
m
r
o
f
in

Consumer
characteristics

Sales
transactions

Web s
ite
visits

Competitive Marketing Intelligence

Clearly, companies
should take advantage
resellers
of
publicly available information.
KeyHowever,
Suppliers
they should not stoop to snoop.
customers
With all the legitimate intelligence
sources
now available, a company does not need to
Information
executives
break the law or accepted codes of ethics
to
We can collect competitors
on the Web
get Information
good intelligence.
by using above ways.

Marketing Research
Marketing research is the systematic design, col
lection, analysis, and reporting of data relevant to
a specific marketing situation facing an organizat
ion.

Defining the Problem and Research Obj

ectives
A marketing research project might have one of three typ
es of objectives:
Exploratory
Exploratory
research
research
Descriptive
Descriptive
research
research

Causal
Causal
research
research

Gather
Gather preliminary
preliminary information
information that
that will
will help
help
define
define problems
problems and
and suggest
suggest hypotheses.
hypotheses.
Describe
Describe marketing
marketing problems,
problems, such
such as
as the
the
market
market potential
potential for
for aa product
product or
or the
the
demographics
demographics and
and attitudes
attitudes of
of consumers.
consumers.
Test
Test hypotheses
hypotheses about
about cause-and-effect
cause-and-effect
relationships.
relationships.

Developing the Research Plan

The research plan outlines sources of existing dat
a and spells out the specific research approaches,
contact methods, sampling plans, and instruments
that researchers will use to gather new data.

Developing the Research Plan

The research plan should be presented in a written propos
al.
A written proposal is especially important when the resea
rch project is large and complex or when an outside firm
carries it out.
Secondary data:
Primary
data:
the managers
information
needs,
the
ConsistTo
of meet
information
that
of information
plan can call forConsist
gathering
secondary
alreadyresearch
exists somewhere,
collected
for the specific
date,
primary
date,
or
both.
having been collected for
purpose at hand
another purpose

Gathering Secondary Data

The companys internal database provides a good starting point.
However, the company can also tap into a wide assortment of
external information sources.
Marketing researchers who use commercial online databases and
internet search engines conduct their own searches of secondary
data sources.
The researcher must evaluate secondary information carefully to
make certain it is relevant (fits the research projects needs),
accurate (reliably collected and reported), current (up-to-date
enough for current decisions), and impartial (objectively
collected and reported).

Primary Data Collection

Research Approaches
Observational Research.
It involves gathering primary data by observing relevant
people, actions, and situations.
Researchers often observe consumer behavior to glean c
ustomer insights they cant obtain by simply asking cust
omers questions.

Research Approaches
Ethnographic research.
It is a form of observational research that involves sendi
ng trained observers to watch and interact with consume
rs in their natural environments.
Observational and ethnographic research often yield the
kinds of details that just dont emerge from traditional re
search questionnaires or focus groups.

Research Approaches
Survey Research.
It gathers primary data by asking people questions about
their knowledge, attitudes, preferences, and buying beha
vior.
It is the best suited for gathering descriptive information.
The major advantage of survey research is its flexibility;
it can be used to obtain many different kinds of informati
on in many different situations.
Surveys addressing almost any marketing question or de
cision can be conducted by phone or mail, in person, or
online.

Research Approaches
Experimental Research.
It gathers primary data by selecting matched groups of s
ubjects, giving them different treatments, controlling rela
ted factors, and checking for differences in group respon
ses.
It is best suited for gathering casual information.

Contact Methods
Personal
Interviewing
Online
Marketing
Research
Mail
Questionnaires
Telephone
Interviewing

Individual
interviewing
is flexible.
The
growthinterviewing
of the Internet
has of
had
impact
Telephone
is one
thea dramatic
best methods
foron
Trained
interviewers
can
guide
interviews,
explain
how
marketing
research
is
conducted.
Mail
questionnaires
can
be
used
to
collect
large
gathering information quickly, and it provides greater

difficultinformation
questions,
and
as thedata
situation
Increasingly,
researchers
collecting
through
amounts
atare
aexplore
low
costissues
perprimary
respondent.
flexibilityofthan
mail questionnaires.
requires.
online
marketing
research:
Internet
However,
mail
are not surveys,
very
with questionnaires
telephone
interviewing,
the flexible;
costonline
per allpanels,
However,and
individual
personal
interviews
may order.
cost three
experiments,
online
focus
groups
respondents
the
same
in abrand
fixed
respondent isanswer
higher
than
withquestions
mail orand
online
questionnaires.
to four times
as much
as telephone
interviews.the
communities.
Mail
usually
to complete,
Also,surveys
people may
nottake
wantlonger
to discuss
personaland
questions
Group
interviewing
consists
of
inviting
six
to
ten
people
to
The
is especially
suited to
quantitative
research
response
ratethe
numberwell
of people
returning
withInternet
an interviewer.
meet with
aquestionnairesis
trained
moderator
to talkvery
about
a product,
for
example,
conducting
marketing
surveys
and collecting
completed
often
low.
The method
introduces
interviewer
biasthe
way
service, or organization.
data.
interviewers talk, how they ask questions, and other
Participants normally are paid a small sum for attending.
differences that may affect respondents answers.

Sampling Plan
Three decisions of
segment
of the
population
designing
sample
:

Sample is a
selected f
or marketing research to represent the population
who is to be studied
as a whole.
(what sampling unit)?
how many people
should be included
(what sample size)?
how should the people in the
sample be chosen (what
sampling procedure)?

Research Instruments

Questionnaires
Mechanical Instruments

Questionnaires are very flexiblethere are

Researchers use mechanical instruments to
many ways to ask questions.
monitor consumer behavior.
Closed-end questions include all the
Nielsen Media Research attaches people
possible answers, and subjects make
meters to television sets, cable boxes, and
choices among them.
satellite systems in selected homes to
Open-end questions allow respondents to
record who watches which programs.
answer in their own words.

Implementing the Research Plan

Data collection can be carried out by the companys mark
eting research staff or outside firms.
Researchers should watch closely to make sure that the pl
an is implemented correctly.
They must guard against problems of interacting with res
pondents, with the quality of participants responses, and
with interviewers who make mistakes or take shortcuts.

Interpreting and Reporting the Findings

The researcher should not try to overwhelm managers wit
h numbers and fancy statistical techniques.
Similarly, managers may be biased. They might tend to ac
cept research results that show what they expected and rej
ect those that they did not expect or hope for.
In many cases, findings can be interpreted in different wa
ys, and discussions between researchers and managers wi
ll help point to the best interpretations.

Analyzing and Using Marketing Informati

on
This help may include advanced statistical analys
is to learn more about the relationships within a s
et of data.
Information analysis might also involve the appli
cation of analytical models that will help markete
rs make better decisions.

Customer Relationship Management

To overcome such problems, many companies are now tu
rning to customer relationship management (CRM) to
manage detailed information about individual customers
and carefully manage customer touch points to maximize
customer loyalty.
By using CRM to understand customers better, companie
s can provide higher levels of customer service and devel
op deeper customer relationships.

Distributing and Using Marketing Inform

ation
Information distribution involves entering inform
ation into databases and making it available in a t
ime-useable manner
Intranet provides information to employees and o
ther stakeholders.
Extranet provides information to key customers a
nd suppliers.

Other Marketing Information Considerati

ons
This section discusses marketing information in t
wo special contexts:

Small
businesses and
nonprofit
organizations

International
marketing
research

Marketing Research in Small Businesses a

nd Nonprofit Organizations
Managers of small businesses and nonprofit organizations
often think that marketing research can be done only by e
xperts in large companies with big research budgets.
Small
Thus, small businesses and
not-for-profit organizations ca
organizations
n obtain good marketing insights through observation or i
nformal surveys using small convenience samples.
Also,
many associations, local media, and government ag
Secondary
encies data
provide special
help to smallsurveys
organizations.
observation
experiments
collection

International Marketing Research

A difficult time
finding good
secondary data

Domestic researchers
Deal with fairly
homogeneous markets
within a single country

International researchers
Deal with diverse markets in many
different countries. These markets
often vary greatly in their levels of
economic development, cultures
and customs, and buying patterns.

International Marketing Research

Cultural differences from country to country cause additi
onal problems for international researchers. Language is t
he most obvious obstacle.
Responses then must be translated back into the original l
anguage for analysis and interpretation. This adds to rese
arch costs and increases the risks of error.

International Marketing Research

Although the costs and problems associated with internati
onal research may be high, the costs of not doing itin te
rms of missed opportunities and mistakesmight be even
higher.
Once recognized, many of the problems associated with i
nternational marketing research can be overcome or avoid
ed.

Public Policy and Ethics in Marketing Res

earch
Intrusions on Consumer Privacy.
Many consumers feel positive about marketing research and b
elieve that it serves a useful purpose.
Some consumers fear that researchers might use sophisticated
techniques to probe our deepest feelings, peek over our shoul
ders as we shop, or track us as we browse and interact on the I
nternet and then use this knowledge to manipulate our buying.
The best approach is for researchers to ask only for the inform
ation they need, use it responsibly to provide customer value,
and avoid sharing information without the customers permiss
ion.

Public Policy and Ethics in Marketing Res

earch
Misuse of Research Findings.
Today, however, many research studies appear to be littl
e more than vehicles for pitching the sponsors products.
In fact, in some cases, research surveys appear to have b
een designed just to produce the intended effect.
Few advertisers openly rig their research designs or blata
ntly misrepresent the findingsmost abuses tend to be
more subtle stretches.

The End