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Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
Mk0013– marketing research
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Mk0013– marketing research

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complete MBA 3rd SEM Assignments on MK0013 Marketing Research

complete MBA 3rd SEM Assignments on MK0013 Marketing Research

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  • 1. Cover PageName || ROHIT S. MISHRARegistration Number || 571120477Learning Center Name || HALO TECHNOLOGYLearning Center Code || 1976Course || M.B.A. (MARKETING)Semester || 3RDSubject || MARKETING RESEARCH (MK0013)SET No. || 1&2Date of Submission at Learning Center || 20TH SEPT, 2012Marks Awarded || Directorate of Distance Learning Sikkim Manipal University II Floor, Syndicate Building Manipal – 576 104
  • 2. Signature of the Coordinator Signature of the LC Signature of EvaluatorHalo Technologies and Training Pvt. Ltd. || 65260303 || 9870050750 ||academics@halo.co.in Master of Business Administration Semester III MK0013- Marketing Research Assignment Set- 1Q.1. Distinguish between product research and new product research. Explain withexamples.Answer. Product Research & New Product ResearchEffective product market research -- for new products and existing products -- is well integratedwith R&D and technical product design functions. For consumer or business B2B productmarket research, we take a global approach, incorporating appropriate market research at eachdesign stage: The goal is to align astute technical product R&D, product innovation and designwith market demand. We include in our services the following new product development andresearch services:
  • 3. New Product Development StagesFor new product development market research, the question becomes one of matching the stageof new product development with the right creative or product market research method. We usethe 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 newproduct research market research capabillities at each new product development stage.Product development market research methods and tools used may vary according to the producttype, the extent of incremental change from other products, the investment and risk factors, andthe costs of seeding the new product in the marketplace.Product development is a sequential decision process. Its a series of decisions, not one. It iskey, therefore, to concentrate attention on the precise new product decision at hand, and thinkthrough the market research and creative tools needed for that stage.
  • 4. Marketing Strategy ConsultantsAs marketing strategy consultants, our consulting firm will work with you and your companyand management team in a professional product launch, branding research, or market sizing andtargeting engagement. Since each client company or firm is unique with its own set of issues andopportunities, we often begin our relationship with a decision identification and clarificationengagement – 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 thisis a crucial step to ensure as consultants to your company, that our research or marketing strategyengagement meets your specific management requirements. Further, Decision saves both timeand money as it sharpens focus as to the exact work which needs to be accomplished in ourremaining consulting or market research work for your company.Experts in Marketing StrategyAs experts and specialists in marketing and market research, we are well qualified in thesestrategy arenas: positioning, segmentation, product launch, new product development advertisingstrategy, corporate and product naming, company branding, brand equity measurement, pricing,brand development, brand strategy, product concept testing, identifying opportunities, andtargeting positioning.Functional Marketing Research ExperienceOur consulting company has deep experience working with large and small firms, althoughtypical clients include Fortune 500, Fortune 100, or middle market companies. Our teammembers 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 ExperienceFirst, we are not industry specialists or experts. Our philosophy is that we bring a tool kit ofanalytical and management skills to the table. You bring deep industry knowledge of yourbusiness. The blending of our functional and management expertise, and your knowledge of yourown business and industry, makes for a productive decision-focused engagement.Here are some examples from industries weve served with management strategyconsulting and marketing research... Financial Services→ Weve 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
  • 5. 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. Weve 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.
  • 6. Q.2 How to write a marketing report and what quality is to be ensured?Answer: Marketing ReportA marketing report, also commonly referred to as a marketing plan, lays out the marketingstrategy for a company’s product, brand or business unit. The report describes how differentelements of the marketing mix—product, price, promotion and placement—will work together toachieve your company’s goals and objectives. Most marketing departments rely heavily on theseplans and use them as road maps to successfully navigate through and execute a variety ofprograms and sales campaigns.InstructionsStep 1:Developing a Marketing ReportBegin with an executive summary. The executive summary functions as a high-level overviewand allows top managers to easily recognize the goals and suggestions proposed in the report. Atable of contents usually follows the executive summary.Step 2:Describe the current market environment, product, competition and distribution channels for theproduct or service. This analysis details the company’s brand or products, sales and pricing, as
  • 7. well as distribution trends, partnerships and major competitors. Conducting a StrengthsWeaknesses Opportunities Threats (SWOT) analysis also helps identify any market forces orevents that can potentially threaten sales or boost profitability.PM Certification from PMIGet PM Certification to Fast Track Your Career & Maximize Your Growth!www.PMI.org.in/CertificationStep 3:Clearly state the marketing goals and issues surrounding your product or brand. For example, ifone of your goals is to acquire 15 new customers, then the marketing report should explore whatissues might impact those objectives.Step 4:Outline your company’s marketing strategy. The marketing strategy is the methodology you willuse 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 yourcustomers. This section also elucidates how each part of the marketing mix will respond to themarket 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 foreach program.Step 6:Create a budget, and estimate the costs for running a successful campaign. The budget shouldinclude the expected revenues, costs and projected profit. This is an important component of themarketing plan and usually must pass management approval.Step 7:Research and determine what computer applications you will use to track and monitor eachcampaign’s progress. Some companies use automated software applications that link salesactivities with marketing programs and provide intricate dashboards. Other companies work offof simple Excel sheets. Whatever you decide to use, be sure it provides an accurate snapshot ofyour marketing activities and how it affects the sales and opportunity pipeline. Tips & Warnings
  • 8. • 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 ensuredFor example:Abbott Global Citizenship Ensuring Manufacturing QualityAbbott has numerous processes in place to ensure that we meet the highest safety and qualitystandards in the design, development, manufacture, delivery and labeling of our products. Westrive to make important enhancements to these processes each year. As industry and availabletechnology continue to advance, we incorporate information management tools into ourprocesses that allow us to identify and react to potential issues before they become qualityconcerns. 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 tounderstand and follow. Abbott also continues to expand and implement our global internalcertification programs – helping to ensure that employees have the necessary skills to performkey quality and safety activities.Our product quality assurance programs are led by the Abbott Quality and Regulatoryorganization, which reports directly to our Chairman and CEO and also is accountable to thePublic Policy Committee of our Board of Directors.We have a rigorous audit program to ensure that policies are implemented correctly and closelyfollowed. Regular audits of our suppliers ensure that Abbott’s quality standards and health andsafety policies are implemented correctly and followed closely. We also employ a “quality bydesign” approach, focusing on improving manufacturing efficiencies and consistent delivery ofproducts that fulfill customer needs. Additionally, we use “human factors” engineering toanticipate the mistakes people are most likely to make in using a product, and then design theproduct in a way that minimizes the risk of such mistakes.Abbott also employs and adheres to robust manufacturing quality standards at sites around theworld. We use a common quality management system throughout the company, and when we
  • 9. acquire new businesses, we use due diligence and rigorous analysis to ensure that their qualitystandards and requirements quickly conform to our expectations.Our quality system is supported by policies, processes, procedures, training and resources thatensure the safety and efficacy of the products we design, manufacture and distribute. Weregularly monitor all of our processes and assess our products against approved specificationsbefore distribution. A risk-based audit program ensures that we conduct regular audits at ourglobal manufacturing sites. The Abbott Quality and Regulatory organization is itself routinelychallenged and assessed through internal audits and regulatory inspections. We also carefullymonitor and audit our suppliers to ensure that they meet high standards of quality, safety andethical behavior.Addressing ConcernsAbbott takes potential quality and safety concerns about our products very seriously, and wework 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, andwe communicate findings and lessons learned to the appropriate regulators, to industry peers, ifappropriate, and across our global business. In addition, Abbott continuously monitors globalinformation to identify emerging issues and significant events with the potential to impactproduct quality or availability. Abbott is prepared to implement the appropriate actions to ensurean uninterrupted supply of high-quality, effective products to our customers.Serious Adverse Events ConsortiumBecause of individual differences in biology and genetics, the very medicines intended toalleviate illness may instead trigger a serious adverse event (SAE) for a handful of patients. TheAbbott-sponsored SAE Consortium, comprised of industry and academic research partners aswell as the U.S. Food and Drug Administration, works to reduce SAEs by identifying geneticmarkers – 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 ourability to identify and address potential safety issues before new medicines become available tothe public. It helps identify which medicines certain patients should avoid and provides doctorsand patients with high-quality safety and warning information.
  • 10. 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 aresultant 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 responsesof respondents such as those related to their feelings, perception, likes, dislikes, interests andpreferences.Types of ScalesMost frequently used Scales 1. Nominal Scale 2. Ordinal Scale 3. Interval Scale 4. Ratio ScaleSelf-Rating Scales
  • 11. 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 ScaleThis is a very simple scale. It consists of assignment of facts/choices to various alternativecategories which are usually exhaustive as well mutually exclusive. These scales are justnumerical and are the least restrictive of all the scales. Instances of Nominal Scale are - creditcard numbers, bank account numbers, employee id numbers etc. It is simple and widely usedwhen relationship between two variables is to be studied. In a Nominal Scale numbers are nomore than labels and are used specifically to identify different categories of responses. Followingexample illustrates -What is your gender?[ ] Male[ ] FemaleAnother example is - a survey of retail stores done on two dimensions - way of maintainingstocks and daily turnover.How do you stock items at present?[ ] By product category[ ] At a centralized store[ ] Department wise[ ] Single warehouseDaily turnover of consumer is?
  • 12. [ ] Between 100 – 200[ ] Between 200 – 300[ ] Above 300A 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 300Mode is frequently used for response category.Ordinal ScaleOrdinal scales are the simplest attitude measuring scale used in Marketing Research. It is morepowerful than a nominal scale in that the numbers possess the property of rank order. Theranking of certain product attributes/benefits as deemed important by the respondents is obtainedthrough the scale.Example 1: Rank the following attributes (1 - 5), on their importance in a microwave oven. • Company Name • Functions • Price • Comfort • DesignThe 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 scalemakes 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 ofquality as Grade A, Grade B, Grade C, Grade D is again an Ordinal Scale.
  • 13. Example 3 - If there are 5 different brands of Talcum Powder and if a respondent ranks thembased on say, “Freshness” into Rank 1 having maximum Freshness Rank 2 the second maximumFreshness, and so on, an Ordinal Scale results.Median and mode are meaningful for ordinal scale.Interval ScaleHerein the distance between the various categories unlike in Nominal, or numbers unlike inOrdinal, 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. Avery 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 SatisfiedSuch a scale permits the researcher to say that position 5 on the scale is above position 4 and alsothe distance from 5 to 4 is same as distance from 4 to 3. Such a scale however does not permitconclusion that position 4 is twice as strong as position 2 because no zero position has beenestablished. The data obtained from the Interval Scale can be used to calculate the Mean scoresof each attributes over all respondents. The Standard Deviation (a measure of dispersion) canalso be calculated.Ratio ScaleRatio Scales are not widely used in Marketing Research unless a base item is made available forcomparison. In the above example of Interval scale, a score of 4 in one quality does not
  • 14. necessarily mean that the respondent is twice more satisfied than the respondent who marks 2 onthe scale. A Ratio scale has a natural zero point and further numbers are placed at equallyappearing 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 ratioscale analytically are the most versatile. Ratio scale possess all he characteristics of an internalscale, and the ratios of the numbers on these scales have meaningful interpretations. Data oncertain 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? ______ MilesAnswers to these questions have a natural, unambiguous starting point, namely zero. Sincestarting point is not chosen arbitrarily, computing and interpreting ratio makes sense. Forexample we can say that a respondent with an annual income of $ 40,000 earns twice as much asone with an annual income of $ 20,000.Self-rating scalesGraphic Rating ScaleThe respondents rate the objects by placing a mark at the appropriate position on a line that runs from one extremeof the criterion variable to another. Example 0 1 5 7 (poor (bad (neither good nor (good quality) quality) bad) quality)Itemized Rating ScalesThese scales are different from continuous rating scales. They have a number of brief descriptions associated witheach category. They are widely used in Marketing Research. They essentially take the form of the multiple categoryquestions. The most common are - Likert, Semantic, Staple and Multiple Dimension. Others are - Thurston andGuttmann.Likert Scale
  • 15. It was developed Rensis Likert. Here the respondents are asked to indicate a degree of agreement anddisagreement with each of a series of statement. Each scale item has 5 response categories ranging fromstrongly agree and strongly disagree. 5 4 3 2 1 Strongly agree Agree Indifferent Disagree Strongly disagreeEach statement is assigned a numerical score ranging from 1 to 5. It can also be scaled as -2 to +2. -2 -1 0 1 2Semantic Differential ScaleThis is a seven point scale and the end points of the scale are associated with bipolar labels. 1 2 3 4 5 6 7Suppose we want to know personality of a particular person. We have options- • Unpleasant/Submissive • Pleasant/DominantBi-polar means two opposite streams. Individual can score between 1 to 7 or -3 to 3. On the basisof these responses profiles are made. We can analyses for two or three products and by joiningthese profiles we get profile analysis. It could take any shape depending on the number ofvariables.Profile Analysis---------------/-------------------------/----------------------------/----------------------Mean and median are used for comparison. This scale helps to determine overall similarities anddifferences among objects.
  • 16. When Semantic Differential Scale is used to develop an image profile, it provides a good basisfor 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 methodis easy and fast to administer, but it is also sensitive to small differences in attitude, highlyversatile, reliable and generally valid.Stapel’s ScaleIt 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 ScalingIt consists of a group of analytical techniques which are used to study consumer attitudes relatedto perceptions and preferences. It is used to study-The major attributes of a given class of products perceived by the consumers in considering theproduct 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 characteristicsnot 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 intodifferent groups like similar, very similar, not similar, and so on. A goodness of fit is traded offon a large number of attributes. Then a lack of fit index is calculated by computer program. Thepurpose is to find a reasonably small number of dimensions which will eliminate most of thestress. After the configuration for the consumer’s preference has been developed, the next step isto determine the preference with regards to the product under study. These techniques attempt toidentify the product attributes that are important to consumers and to measure their relativeimportance.This scaling involves a unrealistic assumption that a consumer who compares different brandswould perceive the differences on the basis of only one attribute. For example, what are the
  • 17. 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 basedecision 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 consumersinvolve different attributes and any one consumer perceives each brand as a composite of anumber of different attributes. This is a shortcoming of this scale.Whenever we choose from a number of alternatives, go for multi- dimensional scaling. There aremany possible uses of such scaling like in market segmentation, product life cycle, vendorevaluations and advertising media selection.The limitation of this scale is that it is difficult to clearly define the concept of similarities andpreferences. Further the distances between the items are seen as differentThurston ScalesThese are also known as equal appearing interval scales. They are used to measure the attitudetowards a given concept or construct. For this purpose a large number of statements are collectedthat relate to the concept or construct being measured. The judges rate these statements along an11 category scale in which each category expresses a different degree of favorableness towardsthe concept. The items are then ranked according to the mean or median ratings assigned by thejudges and are used to construct questionnaire of twenty to thirty items that are chosen more orless evenly across the range of ratings. The statements are worded in such a way so that a personcan agree or disagree with them. The scale is then administered to assemble of respondentswhose 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 isthat it is an interval measurement scale. But it is the time consuming method and labourintensive. They are commonly used in psychology and education research.Guttman Scales / Scalogram AnalysisIt is based on the idea that items can be arranged along a continued in such a way that a personwho agrees with an item or finds an item acceptable will also agree with or find acceptable allother items expressing a less extreme position. For example - Children should not be allowed towatch indecent programmes or government should ban these programmes or they are notallowed to air on the television. They all are related to one aspect.
  • 18. In this scale each score represents a unique set of responses and therefore the total score of everyindividual 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 andpsychologyQ.4 Explain the types of hypothesis and the steps involved in hypothesis testing.Answer: HypothesisA statistical hypothesis is an assumption about a population parameter. This assumption may ormay not be true. Hypothesis testing refers to the formal procedures used by statisticians toaccept or reject statistical hypotheses.Statistical HypothesesThe best way to determine whether a statistical hypothesis is true would be to examine the entirepopulation. Since that is often impractical, researchers typically examine a random sample fromthe population. If sample data are not consistent with the statistical hypothesis, the hypothesis isrejected.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.
  • 19. For example, suppose we wanted to determine whether a coin was fair and balanced. A nullhypothesis might be that half the flips would result in Heads and half, in Tails. The alternativehypothesis 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 ≠ 0.5Suppose we flipped the coin 50 times, resulting in 40 Heads and 10 Tails. Given this result, wewould be inclined to reject the null hypothesis. We would conclude, based on the evidence, thatthe coin was probably not fair and balanced.Hypothesis TestsStatisticians follow a formal process to determine whether to reject a null hypothesis, based onsample 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 ErrorsTwo 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.
  • 20. Decision RulesThe 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 withreference 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 TestingNow we can put what we have learned together to complete a hypothesis test. The steps willremain the same for each subsequent statistic we learn, so it is important to understand how onestep 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 togrow faster than the general population? Set alpha = .05.Step 1: Write the hypotheses in words and symbolsH1: 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 generalpopulation.H1: µgen.alt. > 2.3H0: µgen.alt < 2.3Step 2: Find the critical value for the test
  • 21. Since alpha is .05, and it is a one-tail test because we think our treatment will produceplants that grow “faster” than the general population:Z critical=1.64Step 3: Run the testHere we find out how “likely” the value is by computing the z-score.30.30.90.33.22.3Z=Step 4: Make a decision about the NullReject 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 theNull.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 researchhypothesis, even thought that is our intent. Instead, if we disprove the null, we indirectly supportthe research hypothesis. This is true, because you will notice that our decision is based on thestatistical test that the treatment value is not likely to have come from the same population. Weinfer it is a different population, but we actually prove that it is not from the same population. Itmay seem like a matter of semantics, but indulge me on this one.
  • 22. Step 5: Write a conclusionFor this example, we conclude: “The population of genetically altered plants grows at a differentrate than the general population.”Although we have a conclusion in step 4, write a conclusion here in plain language without anystatistical jargon. What did our test show? If you reject the null, then the then there was adifference (treatment had an effect). The research hypothesis is your conclusion (you can simplyrestate 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 SamplingThe 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, thesampling technique will be very hazardous. It is not scientific to extend the conclusions derivedfrom 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, theconclusions derived from them will become misleading if extended to all units.
  • 23. For example, in assessing the monthly expenditure of university students we select for samplestudy 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 theselection. 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 veryshort 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 beused if the material is of a heterogeneous nature.Characteristics of Ideal SampleA good sample has following qualities:Representativeness:An ideal sample must be such that it represents adequately the whole populations. We wouldselect those units which have the same set of qualities and features as are found in the wholedata. 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 unitshould be available to be included in the sample.Adequacy:The number of units included in a sample should be sufficient to enable derivation ofconclusions applicable to the whole population. A sample having 10% of the whole population isgenerally adequate.Homogeneity:
  • 24. The units included in the sample must bear likeness with order units, otherwise the sample willbe unscientific.Q.6 Considering Indian consumers and Indian market trends, mention the ways throughwhich a marketing researcher can carry out research? If you were to research a marketsegment, 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 theproject from its conception through the final analysis, recommendation, and ultimate action. Theresearch process provides a systematic, planned approach to the research project and ensures thatall aspects of the research project are consistent with each other. It is especially important thatthe research design and implementation be consistent with the research purpose and objectives.Otherwise, the results will not help the client.
  • 25. The research process is described in this chapter and Chapter 4. This chapter provides anoverview 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 aspositive ones. In fact, they are often more revealing, as they provide valuable insight intocustomers’ psyches.Today, the research process has evolved to encompass decision making. This combined processtransforms mundane marketing research to marketing intelligence. Chapter 4 gives an overviewof the research design and its implementation. Together, these two chapters are the foundationfor the rest of the book.OVERVIEW OF THE MARKETING RESEARCH PROCESSResearch 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 managementteam that will be using the results. This step requires understanding the decisions to be made andthe problems or opportunities to be diagnosed.2. What research should be done? Here the management purpose is translated into objectives thattell the managers exactly what questions need to be answered by the research study or project.3. RESEARCH PROCESSJWCL214_c03_050-078.qxd 9/19/09 11:40 AM Page 503. Is it worth doing the research? Thedecision has to be made here about whether the value of the information that will likely beobtained 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 includethe choice of research approach—reliance on secondary data versus conducting a survey orexperiment—and the specifics of how to collect the data. Chapter 4 deals with how to approachthese issues.5. What will we do with the research? Once the data have been collected, how will it beanalyzed, 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
  • 26. Planning system Information system• Strategic plans• Tactical plans• Databases• DSSMARKETING PLANNING AND INFORMATION SYSTEM1. AGREE ON RESEARCH PROCESS• Problems or opportunities• Decision alternatives• Research users2. ESTABLISH RESEARCH OBJECTIVES• Research questions• Hypotheses• Boundaries of study3. DESIGN THE RESEARCH• Choose among alternative research approaches• Specify the sampling plan• Design the experiment• Design the questionnaire
  • 27. 4. ESTIMATETHE VALUE OFINFORMATIONIs benefit > cost?5. COLLECT THE DATA6. PREPARE AND ANALYZE THE DATA7. REPORT THE RESEARCH RESULTS AND PROVIDE STRATEGICRECOMMENDATIONSDO NOT CONDUCT MARKETING RESEARCH.
  • 28. Set - 2Q.1 What are the nature, scope and features of Marketing Research?Answer:The Role of Marketing Research in Strategic Planning and Decision MakingOur primary focus is on the role of marketing research in marketing strategy decisions.A. Identifying Marketing Opportunities and ConstraintsIdentifying marketing opportunities and constraints is a logical starting point for developingmarketing strategies. 1. Embracing the Marketing ConceptConducting marketing research to understand customers is becoming widespread as anincreasing number of firms embrace the marketing concept (the philosophy of customerorientation urging firms to uncover customer needs first and then coordinate all their activities tosatisfy those needs).2. Understanding the Competitive EnvironmentMarketing research is vital to maintaining and improving a companys overall Competitiveness.
  • 29. • Unless managers understand the external environment, they cannot intelligently plan forthe future.• Many organizations continually collect and evaluate environmental information toidentify future market opportunities and threats.B. Developing and Implementing Marketing StrategiesTo benefit fully from the opportunities uncovered in the marketplace, a firm must developan 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 themGood marketing research will identify whether the marketing mix is effective enough tomaximize the benefits to the firm from available opportunities (sales, profits, customersatisfaction, and value.Some of the most successful new-product introductions have been preceded by extensivemarketing research that helped develop one or more elements of their marketing mixes.C. Evaluating the Effectiveness of Marketing PlansGetting feedback from the marketplace and taking corrective action for elements of products orservices that need fixing is often referred to as controlling or the control function. Controlling isan important component of the planning and decision-making process and another area in whichmarketing 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 ourexpectations (goals)? If not, why not?Only marketing research, not marketers intuition, can yield accurate answers to such questions.
  • 30. Nature of Marketing ResearchMarketing research is systematic and objective collection of data, its analysis and evaluation, anddecision making in respect of specific aspects of a marketing problem.Marketing Research and Market Research:- The nature of marketing research cannot beproperly understood without knowing the meaning of market research. Market research is thegathering, recording and analyzing of market data to identify the present and potential customersand their motives and buying habits. It is the discovery of the capacity of the market to absorbthe products of a firm. It is a part of the marketing research. It is worthwhile to quote RichardD. Crips to identify clearly the scope of Marketing research and market research. “Marketingresearch is the systematic, objective and exhaustive search for the study of the facts relevant toany problem in the field of marketing. Market research is restricted to the study of actual andpotential buyers, their location, their actual and potential value of purchases and their motivesand 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 ResearchMarketing research covers different aspects of marketing of goods, services and ideas. There aremany 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.
  • 31. • 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 findingmethod for the purpose of improved decision-making, with a view to control the marketing ofgoods 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 definemarketing opportunities and problems, refine and evaluate marketing actions, monitor marketingperformance and improve understanding of marketing as a process.Marketing research specifies the information required to address these issues, design the methodfor collecting information, manages and implements the data collection process, analyses theresult and communicates the findings and their implications.All the above definitions of marketing research emphasize the need for evaluating the problemand information in a more comprehensive and exhaustive manner. You can say that marketingresearch is a systematic and objective process of identifying and formulating the marketingproblems, 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 ResearchApart from being systematic and objective in nature, the main characteristic features thatcharacterize 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:
  • 32. • Links the consumer, customer, and public to the market through information used toidentify and define marketing.• Generates, refines, and evaluates marketing actions• Monitors marketing performance• Underlines the understanding of marketing as a processMarketing research is often partitioned into two sets of categorical pairs, either by targetmarket: 1. Consumer marketing research, and 2. Business-to-business (B2B) marketing researchOr, alternatively, by methodological approach: 1. Qualitative marketing research, and 2. Quantitative marketing researchConsumer marketing research is a form of applied sociology that concentrates on understandingthe preferences, attitudes, and behaviors of consumers in a market-based economy, and it aims tounderstand the effects and comparative success of marketing campaigns. The field of consumermarketing research as a statistical science was pioneered by Arthur Nielsen with the founding ofthe 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 indecision making related to the identification and solution of problems and opportunities inmarketing.Scope of Marketing ResearchMarketing research provides the right information at the right time in the right place and to theright 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 businessenvironment can be studied in four parts: • Technology changes • Research and development • Product changes
  • 33. • Information technology changesQ.2 What are client ethics and field service ethics? Explain with example.Answer: Client ethics & Field service ethicsTalk to the ethics experts, and theyll tell you the best defense against an ethical problems is agood offense. By looking out for foreseeable conflicts and discussing them frankly withcolleagues and clients, practitioners can evade the misunderstandings, hurt feelings and stickysituations that lead to hearings before ethics boards, lawsuits, loss of license or professionalmembership, or even more dire consequences.However, being vigilant doesnt mean psychologists should spend their days worrying aboutwhere the next pitfall could be, says Robert Kinscherff, JD, PhD, former chair of APAs EthicsCommittee, which adjudicates ethics complaints. "Instead of worrying about the ways [they] canget in trouble, psychologists should think about ethics as a way of asking How can I be evenbetter in my practice?" he explains. "Good ethical practice is good professional practice, whichis good risk management practice."When psychologists do end up in ethical quandaries, its often because they unwittingly slid toofar down a slippery slope--a result of ignorance about their ethical obligations or thinking theycould 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 professionalboundaries. Although each step seemed harmless at the time, many practitioners later realize thatthey have landed themselves in deep trouble.
  • 34. The Monitor interviewed some of psychologys leading ethics experts to talk about howpractitioners can avert common ethical dilemmas, from multiple relationships to whether tobreach confidentiality, to terminating treatment. Heres their advice, boiled down to 10 ways tohelp avoid ethical pitfalls.1. Understand what constitutes a multiple relationshipIs it ethical to volunteer at your daughters softball team fund-raiser if you know a client is goingto be there? Can you buy a car from a client who owns the only dealership in your small, ruraltown? 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 APAs Ethics Office, which advises psychologists onethical dilemmas. "Whenever the answer is the needs of the psychologist, thats a time when thepsychologist needs to take great care and get a consultation."According to the Ethics Code, psychologists should avoid relationships that could reasonablyimpair their professional performance, or could exploit or harm the other party. Behnkeemphasizes, however, that multiple relationships that are not reasonably expected to have sucheffects are not unethical.Thats because sometimes its impossible for psychologists to completely avoid multiplerelationships, explains Steven Sparta, PhD, immediate past-chair of APAs Ethics Committee.For example, the psychologist in a rural town may decide to buy a car from his client becausegoing elsewhere could signal that the car dealer was in therapy.2. Protect confidentialityPsychologists 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 obligationsto protect their patients confidentiality.Indeed, because the public puts their trust in psychologists promises of confidentiality, itsessential 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 thatmandates the disclosure? Is there a law that permits me to disclose? Has my client consented tothe disclosure?"APAs 2002 Ethics Code stipulates that psychologists may only disclose the minimuminformation necessary to provide needed services, obtain appropriate consultations, protect theclient, psychologist or others from harm, or obtain payment for services from a client.
  • 35. "If you wait and nothing bad happens, youve still violated the law," he says. "[But] if you waitand something bad happens, not only have you violated the law, but you have injured a potentialvictim who could have been protected." 3. Respect peoples autonomyPsychologists need to provide clients with information they need to give their informed consentright at the start.When they fail to give details, sticky situations can arise. For example, when psychologists failto 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 doesnt want reported.For psychologists providing services, the experts suggest they discuss: • Limits of confidentiality, such as mandatory reporting. • Nature and extent of the clinicians record-keeping. • The clinicians expertise, experience and training as well as areas where the therapist lacks training. • Estimated length of therapy. • Alternative treatment or service approaches. • The clinicians fees and billing practices. • Whom to contact in case of emergency. • Clients right to terminate sessions and any financial obligations if that occurs. • Not only what services the psychologist will provide, but what they cant or wont do.If individuals are not competent to make decisions for themselves, then the person whos givingpermission must have access to that same information. Moreover, a signed consent form does notsubstitute for the informing process, which should occur first, say ethics experts--and thatincludes situations where informed consent is implied, such as in an employee evaluation. 4. Know your supervisory responsibilitiesPsychologists may be responsible for the acts of those who perform work under their watch,whether its interns providing therapy or administrative assistants helping with record-keepingand billing.That means supervising psychologists should continually assess their supervisees competenceand make sure they are managing them appropriately, say experts. Such supervision should covereverything from ensuring that supervisees conduct the informed-consent process correctly to
  • 36. prohibiting them from using the supervisors signature stamp on any bill or letter that the supervisor hasnt reviewed. "If it goes out under your name, youre responsible," says APA Ethics Committee Chair Michael D. Roberts, PhD. "If they release medical files without proper consent, theyre not going to sue the receptionist, theyre 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 its 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 cant provide an objective evaluation, psychologists who are therapists for one of the parties shouldnt 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 its important to know who it is that youre 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 APAs Ethics Committee. However, lack of documentation--or the wrong kind of documentation--can be detrimental. For specific guidance for practitioners, see APAs 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
  • 37. 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 arent clear standards. "The problem is that, many times, how does the psychologist know when theres something they dont know?" says Sparta. "If you dont know from the professional literature that there are certain guidelines...you may be well-intentioned, but not realize youre 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 shes never met one of the boys 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 dont know which others to use, that means you havent 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, APAs Ethics Office fields calls from psychologists who want to end treatment with a patient, but are anxious because they fear theyre 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:• Arent 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 arent 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 dont know and what your sources of information have been," says Kinscherff. 10. Be accurate in billing
  • 38. Theres 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 theyve 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, its 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, dont 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, dont 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 isnt 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 isnt good for either partys 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.
  • 39. Lastly, theres one, best strategy that psychologists can take to minimize their exposure to ethicaland legal problems, says Behnke: "Be the best psychologist you can be."Q.3 Discuss different types of information applicable in market research and mention theiruses.Answer: In social marketing, key sources of information include technical and professionaljournals; national public opinion polls, health and consumer surveys; past coverage of the issuein newspapers, trade journals and consumer magazines; census statistics and other demographicsurveys; government health departments; radio and television stations and local advertisingagencies and market research firms. Each can provide different types of information, so it isdesirable to be as thorough as possible in the research review.This method of information-gathering can be a relatively quick and inexpensive way to becomefamiliar with the market and identify areas requiring further primary research. However, datafrom these sources may not always be current or accurate. In addition, the questions investigatedin someone elses study may not be relevant to the program.Focus GroupsFocus groups are an excellent method for obtaining information about the target audiencesperceptions, beliefs and language regarding a particular topic. It is a qualitative method, whichprobes into the reasons that people feel and act the way they do. Focus groups give more depthof information than do surveys or other quantitative methods. By bringing together a group ofsimilar people, a forum is provided for them to discuss a particular issue and react to each others
  • 40. comments in a directed way that is not possible through individual interviews or participantobservation.Focus groups are used often throughout the social marketing process, from the planning stages todevelopment and refinement of the message and materials. In situations where time and cost areimportant 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 productpositioning, message concepts or pre finished communication materials.A focus group generally consists of eight to ten unacquainted participants, who are fairly similarto each other in terms of sex, age, ethnic background, risk factors and other relevantcharacteristics related to the target audience. The group is led by a trained moderator, who posesopen-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 tospeak whats on their minds, especially if it is different than what other people are saying. Thediscussion 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 fromseveral respondents at once, there are some disadvantages to the method. First, people may bereticent to discuss sensitive subjects, such as sexual behavior, in front of a group. For certaintopics, it may be more appropriate to conduct individual in-depth interviews, which use thequalitative 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 targetpopulation (i.e., one cant report that "2 out of 5 gay men dont want to practice safer sex...").However, after hearing the same thing from a number of participants, it is likely that their viewsare common to many in the target audience. The qualitative nature of the research and smallsample sizes preclude the use of focus group results as baseline data for program evaluation.Baseline KAP StudyBased upon the information unearthed by the secondary research review and/or focus groups, itshould be possible to narrow down the scope of the problem. Prior to the implementation of aprogram, data are needed regarding audience awareness, knowledge, attitudes and behaviorsrelated to the program issue. In order to guide the development of the marketing strategy and toprovide 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 anyother problems with its design. As with any survey, the interviewers must be trained, interviewsmust 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 andunderstanding the audience better in terms of their demographics, psychographics and behaviors.
  • 41. Depending upon the validity of the technique used, the survey can help estimate how many in thepopulation are "users" of the product (e.g., how many practice safer sex), identify their attitudestoward 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 issueis the consumers readiness to adopt the product. Within the population, there are many segmentsof people who have different levels of awareness, knowledge or adoption of the behavior. InProchaskas "Stages of Change" model, consumers are thought to move along a "readinesscontinuum," 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 beused for the program depends upon the point on the continuum at which the majority of thetarget audience is located. For example, gay males in San Francisco who may need help inmaintaining their safer sex behavior would merit a much different approach than that used tocreate awareness among heterosexual females in the midwest. Depending upon the extensivenessof the study, other factors which can be identified may include the level of consumer demand forthe social marketing product, insight into how to position the product, benefits and barriers to useof the product and the media habits of the target audience.A thorough qualitative analysis of the potential target audience should be conducted either aspart of the development of the KAP survey or to further explore issues that arose from thesurvey. Once the target audience has been identified, the next step is to learn as much about themas possible. If this is done before the KAP questionnaire is developed, the information can beused 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 issueswhich the researchers might not have recognized themselves. The most common methods used togather this qualitative information are focus groups and marketing databases.Marketing DatabasesIn addition to information about attitudes and behaviors related to a particular topic, socialmarketers need to know about their target audiences other habits in order to reach them mosteffectively and efficiently. Major marketing surveys, such as the DDB Needham Lifestyle Study,MRI (Mediamark Research, Inc.), Simmons Market Research Bureaus Study of Media andMarkets (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 consumersurveys. They provide extensive information on demographics, consumer buying habits and useof media. Another database, PRIZM, clusters similar types of consumers demographically, basedupon their zip codes. Once the target audience has been identified, the database can be used toprovide additional information about those people.
  • 42. 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 / UsesOnce each element of the social marketing mix is considered ready to go, the full program is put intoeffect and monitored to assure that it stays on target. It is essential that feedback systems are in placein order to catch any problems, especially those that could escalate into major ones. These indicatorsof implementation success may include media monitoring and analysis, evaluation of program
  • 43. activities and issues/marketing monitoring.Media Monitoring/AnalysisWhen marketing programs seek mass media coverage for their promotional activities--whetherpublic relations efforts (e.g., press conferences, community events) or public serviceannouncements--they need to be able to evaluate the success of these activities. The most effectiveway to discover media "hits" (coverage) is by subscribing to a clippings service, such as Burrelles orLuce. These organizations scan tens of thousands of newspapers and watch hundreds of televisionnews programs daily, clipping articles and transcribing stories that deal with the marketingprograms specified topics. These clips are sent out within a couple of days, and have attached tothem 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 eachcontains and the accuracy or desirability of those messages. Ideally, all of the available informationabout each clip should be entered into a database, from which a statistical analysis can be drawn. Evaluation and Feedback Process Evaluation
  • 44. While the social marketing program is in effect, process evaluation should take placeintermittently in each part of the program. As detailed in the implementation phase, it includesmedia 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, andideally should be conducted at least annually. If possible, the methodology and wording of thequestions 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 ofawareness, trial and continued/repeat usage. The interpretation of these measures providedirection for improvements and areas upon which to concentrate in the future. If the surveyindicates low levels of awareness of the product or campaign, the program should investigatewhether the media vehicles are, in fact, reaching the target audience effectively andappropriately, and whether the communications materials are memorable, understandable andconsistent with the program objectives. If there is high awareness, but low trial, this indicatesthat the message is reaching the audience, but other elements of the mix may be weak. Theseproblems may be with the distribution system, price, product image or packaging, poorlyconceived promotion activities or competition from other sources. Finally, both awareness andtrial may be high, but the target audience does not sustain the behavior. In this case, there may beproblems with the product itself, or consumers may be unmotivated to continue usage. This typeof process evaluation can be very helpful in diagnosing problems or indicating success.Outcome EvaluationThe follow-up survey will help to identify the extent of attitude and behavior change in the targetpopulation, and tie it to their exposure to the campaign or use of the product. A "user profile" canbe compiled, either from the KAP survey or from additional studies of users and non-users. Forexample, those who use condoms can be compared with those who do not on a number ofattributes. These would include demographics, contraceptive history, lifestyle factors, sexualbehavior, brand use, advertising awareness and attitudes toward the particular social marketingproduct. Evaluation efforts can also utilize secondary sources to determine changes in behavioralmeasures. These include the annual National Health Interview Survey (NHIS) and the state-based Behavioral Risk Factor Surveillance System (BRFS) conducted by the Centers for DiseaseControl. However, these general studies do not necessarily contain the information that isrelevant to a particular social marketing program. If the organization is a government agency, itmay be possible to add one or two relevant questions to the surveys.Impact EvaluationThe actual impact of the social marketing program is often difficult to assess accurately. Can onepublic service announcement cause a drop in morbidity and mortality from heart disease?
  • 45. Probably not, but many such efforts combine synergistically and may be a contributing factor inhealth improvements. Educational efforts are relatively transient, and gone long before changescan be seen. Because campaigns change so quickly, it is impossible to determine the effect of aparticular spot on overall trends. However, we can at least compare mortality and morbidity ratesbefore and after implementation of the program in many cases.The most effective way of establishing a cause-and-effect relationship between health marketingefforts and the changes in behavior and health outcomes is to conduct an intervention study inone or more communities, with matched communities as controls. Assuming that there are nosignificant differences between the intervention and control communities, marketing activitiesmay be linked to changes in the communities with precision and reliability. If conducting thestudy in a number of communities, the effectiveness of various elements of the program can betested by including them or excluding them from certain markets. Without this type of scientificmethodology, it is not possible to claim that improvements were a direct result of the socialmarketing program.Ethical EvaluationKotler and Roberto give strong emphasis to the importance of ethics in social marketing.Whenever marketing behavior change, it is imperative to acknowledge the need forresponsibility and accountability to the people in the target audience. Although in the end, theresults of the program are the final measure of success, the means to that end are just asimportant. People should never be coerced into a behavior, even though it may be "for their owngood." Programs may also have side effects and unintended consequences, which can be harmfulin the long run. For example, a program intended to empower minority women to use condomsresulted in a number of beatings by their male partners, who perceived their insistence oncondoms as an insult. Programs which offer incentives for behavior change may encouragematerialistic values and a disinclination to do anything without an extrinsic reward. Ethicalcriteria must be considered from the beginning in selecting the target audience, designingresearch and determining a social marketing mix, and must also be used in evaluation throughouta program to make sure that it "does no harm." Every element of the program must be ethicallysound.Q. 4 What is SPSS? How does SPSS help in marketing research?Answer: SPSS
  • 46. SPSS is a computer program used for survey authoring and deployment (IBM SPSS DataCollection), data mining (IBM SPSS Modeler), text analytics, statistical analysis, andcollaboration and deployment (batch and automated scoring services).SPSS Data Analysis ExamplesOrdinal Logistic RegressionVersion 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. Itdoes not cover all aspects of the research process which researchers are expected to do. Inparticular, it does not cover data cleaning and checking, verification of assumptions, modeldiagnostics and potential follow-up analyses.Examples of ordered logistic regressionExample 1: A marketing research firm wants to investigate what factors influence the size ofsoda (small, medium, large or extra large) that people order at a fast-food chain. These factorsmay include what type of sandwich is ordered (burger or chicken), whether or not fries are alsoordered, and age of the consumer. While the outcome variable, size of soda, is obviouslyordered, the difference between the various sizes is not consistent. The differece between smalland 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 Olympicswimming. Relevant predictors include at training hours, diet, age, and popularity of swimmingin the athletes home country. The researcher believes that the distance between gold and silver islarger than the distance between silver and bronze.Example 3: A study looks at factors that influence the decision of whether to apply to graduateschool. College juniors are asked if they are unlikely, somewhat likely, or very likely to apply tograduate school. Hence, our outcome variable has three categories. Data on parental educationalstatus, whether the undergraduate institution is public or private, and current GPA is alsocollected. The researchers have reason to believe that the "distances" between these three pointsare not equal. For example, the "distance" between "unlikely" and "somewhat likely" may beshorter than the distance between "somewhat likely" and "very likely".Description of the dataFor our data analysis below, we are going to expand on Example 3 about applying to graduateschool. We have simulated some data for this example and it can be obtained here. Thishypothetical data set has a three level variable called apply (coded 0, 1, 2), that we will use asour outcome variable. We also have three variables that we will use as predictors: pared, whichis a 0/1 variable indicating whether at least one parent has a graduate degree; public, which is a
  • 47. 0/1 variable where 1 indicates that the undergraduate institution is public and 0 private, and gpa,which is the students grade point average.Lets 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 considerBelow is a list of some analysis methods you may have encountered. Some of the methods listedare quite reasonable while others have either fallen out of favor or have limitations. • Ordered logistic regression: the focus of this page.
  • 48. • 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 isnt 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 regressionBefore 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 cando this. The first way is to make simple crosstabs. The second way is to use the cellinfo optionon the /print subcommand. You should use the cellinfo option only with categorical predictorvariables; 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 syntaxbelow, we have included the link = logit subcommand, even though it is the default, just toremind ourselves that we are using the logit link function. Also note that if you do not includethe 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 levelof our response variable. These numbers look fine, but we would be concerned if one level hadvery few cases in it. We also see that all 400 observations in our data set were used in theanalysis. 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 ModelFitting Information table, which gives the -2 log likelihood for the intercept-only and finalmodels. The -2 log likelihood can be used in comparisons of nested models, but we wont showan example of that here.In the Parameter Estimates table we see the coefficients, their standard errors, the Wald test andassociated 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 thatfor a one unit increase in pared (i.e., going from 0 to 1), we expect a 1.05 increase in the orderedlog odds of being in a higher level of apply, given all of the other variables in the model are held
  • 49. constant. For gpa, we would say that for a one unit increase in gpa, we would expect a 0.62increase in the log odds of being in a higher level of apply, given that all of the other variables inthe model are held constant. The thresholds are shown at the top of the parameter estimatesoutput, and they indicate where the latent variable is cut to make the three groups that weobserve in our data. Note that this latent variable is continuous. In general, these are not used inthe 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 Statasparameterization 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 parameterestimates and exponentiate them, or you can calculate them by hand. Please see OrdinalRegression by Marija J. Norusis for examples of how to do this. The commands for using OMSand calculating the proportional odds ratios is shown below. For more information on how to useOMS, please see our SPSS FAQ: How can I output my results to a data file in SPSS? Please notethat the single quotes in the square brackets are important, and you will get an error message ifthey 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.
  • 50. In the column expb we see the results presented as proportional odds ratios (the coefficientexponentiated). We have also calculated the lower and upper 95% confidence interval. Wewould 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 ofhigh apply versus the combined middle and low categories are 2.85 greater, given that all of theother variables in the model are held constant. Likewise, the odds of the combined middle andhigh categories versus low apply is 2.85 times greater, given that all of the other variables in themodel are held constant. For a one unit increase in gpa, the odds of the low and middlecategories of apply versus the high category of apply are 1.85 times greater, given that the othervariables in the model are held constant. Because of the proportional odds assumption (see belowfor more explanation), the same increase, 1.85 times, is found between low apply and thecombined categories of middle and high apply.One of the assumptions underlying ordered logistic (and ordered probit) regression is that therelationship between each pair of outcome groups is the same. In other words, ordered logisticregression assumes that the coefficients that describe the relationship between, say, the lowestversus all higher categories of the response variable are the same as those that describe therelationship between the next lowest category and all higher categories, etc. This is called theproportional odds assumption or the parallel regression assumption. Because the relationshipbetween all pairs of groups is the same, there is only one set of coefficients (only one model). Ifthis was not the case, we would need different models to describe the relationship between eachpair of outcome groups. We need to test the proportional odds assumption, and we can usethe tparallel option on the print subcommand. The null hypothesis of this chi-square test is thatthere is no difference in the coefficients between models, so we hope to get a non-significantresult.We we use these formulae to calculate the predicted probabilities for each level of theoutcome, apply. Predicted probabilities are usually easier to understand than the coefficients orthe 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 asan example with a categorical predictor. Here we will see how the probabilities of membership toeach category of apply change as we vary pared and hold the other variable at their means. Asyou can see, the predicted probability of being in the lowest category of apply is 0.59 if neitherparent has a graduate level education and 0.34 otherwise. For the middle category of apply, the
  • 51. 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 respondents parents have a graduate level education, the predictedprobability of applying to graduate school decreases. Note that the intercepts are the negatives ofthe 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 01 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
  • 52. The marketing audit has certain similarities to a financial audit in that it is a review or appraisalof your existing marketing activities. Carrying out the marketing audit provides the opportunityto review and appraise your whole marketing activity, enabling you to assess past and presentperformance 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 asa reference tool, with constant updates reflecting changes in the external environment and yourown internal business experiences.1. External AuditExternal factors can be split broadly into three groups, the economic environment, thecompetitive environment and your own market environment. Consider these areas from yourown businesss point of view - will any changes have an impact on your business, will they affectyour competitors, will they allow you to compete where you could not, or inhibit your ability tocompete. 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 competitorsand your environment. You may also be surprised how much business information is availablefrom your nearest city library. And remember, Company Reports are a good source ofcompetitive 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
  • 53. Environmental Affect of your business on environment, green credentialsCompetitive EnvironmentHow competitive is your market? What are your competitors doing, likely to be doing? Evaluatethe 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 practices2. Internal Audit
  • 54. This is your opportunity to put your own business under the microscope - do you know as muchabout 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 mixKey outcomes from this audit can then be summarised in the Current Market Position andMarket Overview sections of your marketing plan.Q.6 What do you mean by sales forecasting? Explain the steps involved in it
  • 55. Answer: Sales forecastingSales forecasting is a difficult area of management. Most managers believe they are good atforecasting. However, forecasts made usually turn out to be wrong! Marketers argue aboutwhether sales forecasting is a science or an art. The short answer is that it is a bit of both.Reasons for undertaking sales forecastsBusinesses 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 criticalone for most businesses. Key decisions that are derived from a sales forecast include:Employment levels requiredPromotional mixInvestment in production capacityTypes of forecastingThere 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 theexisting level of Market Demand and considering what will happen to market demand in thefuture.Micro forecasting is concerned with detailed unit sales forecasts. This is about determining aproduct’s market share in a particular industry and considering what will happen to that marketshare 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 thesales forecast have high risks attached to them, then it stands to reason that the forecast should beprepared as accurately as possible. However, this involves more cost(2) The availability of data and information - in some markets there is a wealth of availablesales information (e.g. clothing retail, food retailing, holidays); in others it is hard to findreliable, up-to-date information(3) The time horizon that the sales forecast is intended to cover. For example, are weforecasting next weeks’ sales, or are we trying to forecast what will happen to the overall size ofthe market in the next five years?
  • 56. (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 availablethan for products at the “maturity” stage when time series can be a useful forecasting method.Creating the Sales Forecast for a ProductThe 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 customergroup, in a defined geographical area, in a defined time period, in a given marketingenvironment. This is sometimes referred to as the Market Demand Curve.For example, consider the UK Overseas Mass Market Package Holiday Industry. What is MarketDemand?Using the definition above, market demand can be defined as:Defined Customer Group: Customers Who Buy an Air-Inclusive Package HolidayDefined Geographical Area: Customers in the UKDefined Time Period: A calendar yearDefined Marketing Environment: Strong consumer spending in the UK but overseas holidaysaffected by concerns over international terrorismRecent data for the UK Overseas Mass Market Package Holiday market suggests that marketdemand can be calculated as follows:Number of Customers in the UK: 17.5 million per calendar yearAverage Selling Price per Holiday: £450Estimate of market demand: £7.9 billion (customers x average price)Stage two in the forecast is to estimate Company DemandCompany demand is the company’s share of market demand.
  • 57. This can be expressed as a formula:Company Demand = Market Demand v Company’s Market ShareFor example, taking our package holiday market example; the company demand for First ChoiceHolidays in this market can be calculated as follows:First Choice Holidays Demand = £7.9 billion x 15% Market Share = £1.2 billionA company’s share of market demand depends on how its products, services, prices, brands andso on are perceived relative to the competitors. All other things being equal, the company’smarket share will depend on the size and effectiveness of its marketing spending relative tocompetitors.Step Three is then to develop the Sales ForecastThe Sales Forecast is the expected level of company sales based on a chosen marketing plan andan 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 saleseffort. Sales targets are often set some way higher than estimated sales to “stretch” the efforts ofthe sales force.A sales budget is a more conservative estimate of the expected volume of sales. It is primarilyused for making current purchasing, production and cash-flow decisions. Sales budgets need totake into account the risks involved in sales forecasting. They are, therefore, generally set lowerthan the sales forecast.Obtaining information on existing market demandAs a starting point for estimating market demand, a company needs to know the actual industrysales taking place in the market. This involves identifying its competitors and estimating theirsales.An industry trade association will often collect and publish (sometime only to members) totalindustry sales, although rarely listing individual company sales separately. By using thisinformation, 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 risingat 10% per year. However, it finds out that overall industry sales are rising by 15% per year. Thismust 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 ACNeilsen, 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 usefulin industrial markets which usually rely on distributors.
  • 58. Estimating Future DemandSo far we have identified how a company can determine the current position:Current Company Demand = Current Market Demand x Current Market ShareHow can future market demand and company demand be forecast?Very few products or services lend themselves to easy forecasting . These tend to involve aproduct whose absolute level or trend of sales is fairly constant and where competition is eithernon-existent (e.g. monopolies such as public utilities) or stable (pure oligopolies). In mostmarkets, total demand and company demand are not stable – which makes good sales forecastinga 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 therelevant economies in which a product is to be sold.(2) Prepare an industry sales forecast – what will happen to overall sales in an industry basedon the issues that influence the macroeconomic forecast;(3) Prepare a company sales forecast – based on what management expect to happen to thecompany’s market shareSales 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 marketThere are many market research businesses that undertake surveys of customer intentions – andsell this information to businesses that need the data for sales forecasting purposes. The value ofa customer intention survey increases when there are a relatively small number of customers, thecost of reaching them is small, and they have clear intentions. An alternative way of measuringcustomer intentions is to sample the opinions of the sales force or to consult industry expertsTime Series AnalysisMany businesses prepare their sales forecast on the basis of past sales.
  • 59. 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 aparticular industry). Seasonal and cyclical factors occur in a regular pattern;(3) Erratic events; these include strikes, fashion fads, war scares and other disturbances to themarket which need to be isolated from past sales data in order to be able to identify the morenormal pattern of sales(4) Responses: the results of particular measures that have been taken to increase sales (e.g. amajor 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 variationIdentify and estimate the effect of specific marketing responses.
  • 60. THANK YOU

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