Principles of Marketing

Nineteenth Edition, Global Edition

Chapter 4
Managing Marketing Information
to Gain Customer Insights

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Marketing research

Marketing research is the function that links the consumer, customer,

and public to the marketer through information – information used to
identify and define marketing opportunities and problems; generate,
refine, and evaluate marketing actions; monitor marketing
performance; and improve understanding of marketing as a process.
Marketing research specifies the information required to address
these issues, designs the method for collecting information, manages
and implements the data collection process, analyzes the results, and
communicates the findings and their implications. (AMA)

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Marketing Information and Customer
Insights (1 of 4)
Customer insights
• Fresh and deep insights into customer needs and wants
• Companies use customer insights to develop a competitive advantage
• Insights can be difficult to obtain; marketers must manage marketing
information from a wide range of sources

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Question > research > insight
What is marketing?

• Company >M< Consumers

Information need:

• Consumers
• Other organizations (competitors and more...)
• Marketing environment (eg. society, governmental
policies, etc)

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Question > research > insight
• Customer insight (def): a non-obvious understanding about customers and markets,
which, if acted upon, has the potential to benefit both the organisation and
the customer.

• Information to insight:
• Descriptive info (What? Where? When? - eg. What knowledge do customers
have of a brand or range of products?)
– Comperative (How? In what way different? - eg. How did this service
performance differ from previous experiences?)
– Predictive (What will happen...? - eg. What would happen if the competitors
reduced their prices?)

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Limits to use of marketing research
• Research is not the holy grail of decision making. It helps reducing uncertainty – but
does not eliminate it

• Decisions still have to be taken based on the judgement of the managers concerned
(<-> data driven marketing)
– Sometimes decision-makers who ignore the research will be proved correct (see:
Sony Walkman)
– If the product concept (1) unique and/or (2) different from existing products,
consumers and certain research approaches may provide misleading feedback.

• Hence managers need to make judgements not only about the decisions that are to be
taken, but also with regard to the reliability of the information available.

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Marketing Information and Customer
Insights (2 of 4)
Marketing Information and Today’s “Big Data”
• Big data is the huge and complex data sets generated by
today’s sophisticated information generation, collection,
storage, and analysis technologies.
• Big data comes from marketing research, internal
transaction data, and real-time data flowing from its social
media monitoring, connected devices, and other digital
sources.

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New trends – big data
• Big data: 3Vs
– Volume: insanely large amount -or Volume- of data that is generated
– Velocity: the incoming flow of data and at the same time process it fast so that it
does not create bottlenecks
– Variety: all the structured (financial information, numbers&texts, social media
mentions, etc) and unstructured data (emails, voicemails, hand-written text, ECG
reading, audio recordings, etc) that has the possibility of getting generated either
by humans or by machines.

• Most common source (in marketing): customer databases, eg. loyalty programs /
webshop

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 Big data
# shops 10
# cash registers 25

Avg. # of transactions (/hour/register) 40 transactions

Avg size of shopping cart 20 items

Incoming data – hour 200.000

Incoming data – day 4.800.000
Incoming data – week 33.600.000
Incoming data – month ~140.000.000

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Not only transactions, but:

A grocery store operating a loyalty card scheme (or simple webshop

owner) will have details on each cardholder (shoppers) relating to:

• their home address; • the size of packages purchased;

• the frequency with which they visit the • the frequency with which they use
store; promotional coupons;

• the days and times they visit the store; • the consistency with which they
purchase specific brands;
• the value of their weekly grocery
shopping; • the extent to which they trial new
products; and
• the range of products purchased;
• the extent to which purchasing
behaviour is influenced by the timing
of advertising campaigns.

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Big data example # 2

US real estate database: n= 399.209 (¬600 Mb of

textual/descriptive data)

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Big data
• Experience shows: The main task isn’t so much the finding of information; it is more to
do with ensuring that the information is relevant and of a scale and format that is
manageable.

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Kahoot!

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Marketing Information and Customer
Insights (3 of 4)
Managing Marketing Information
• Customer insights teams
– Include all company functional areas
– Collect information from a wide variety of sources
– Use insights to create more value for their customers
• Marketing information ecosystem (MIE)
– People, processes, and assets dedicated to assessing
managers’ information needs, developing the needed
information, and helping managers and decision
makers apply that information to generate and validate
actionable customer and market insights

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Marketing Information and Customer
Insights (4 of 4)
Figure 4.1 The Marketing Information Ecosystem

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Assessing Marketing Information
Needs (1 of 2)
A marketing information system (MIS) provides information
to the company’s marketing and other managers and
external partners such as suppliers, resellers, and marketing
service agencies.

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Assessing Marketing Information
Needs (2 of 2)
Characteristics of a Good Marketing Information
Ecosystem
Balancing the information users would like to have against
what they need and what is feasible to offer
• User’s Needs
• Marketing Information Ecosystem Offerings

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Developing Marketing Information (1 of 3)
Marketers obtain information from:
• Internal data
• Marketing intelligence
• Marketing research

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Developing Marketing Information (2 of 3)
Internal Data
Internal databases are collections of consumer and market information obtained
from data sources within the company network.

Internal data: Nordstrom’s Trunk Club has built a loyal following by leveraging the
deep data about individual customer preferences and order histories stored in its
databases.

SHANNON STAPLETON/REUTERS/Alamy Stock Photo

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Developing Marketing Information (3 of 3)
Competitive Marketing Intelligence
Competitive marketing intelligence is the systematic
collection and analysis of publicly available information about
consumers, competitors, and developments in the marketing
environment.
In today’s highly competitive environment, companies can
use competitive marketing intelligence to gain early insights
into competitors’ strategies and to prepare quick responses.

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Marketing Research (1 of 19)
Marketing research is the systematic design, collection,
analysis, and reporting of data relevant to a specific
marketing situation facing an organization.

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Traditional Marketing Research in
Transition
Marketing research in transition: Traditional mainstays such as in-person
research surveys and focus groups, although still prevalent and powerful,
are now being complemented by newer, more agile, more immediate,
and less costly digital data gathering methods.

Andriy Popov/123RF

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Marketing Research (2 of 19)
Figure 4.2 The Marketing Research Process

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Marketing Research (3 of 19)
Defining the Problem and Research Objectives
• Exploratory research
• Descriptive research
• Causal research

Business problem > Research questions

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Case study #1
C....Travel is a large and well-known international travel company. It has several
subsidiaries including travel agencies, charter airlines and foreign currency bureaux.
Smaller and less well known is its profitable commercial foreign exchange business
(CFX), which, as the name suggests, provides foreign currency payment services for
businesses

CFX was expected to significantly increase the size of its share of the market. A quick
look at its existing customer profile soon revealed that a small number of top customers
accounted for a large amount of its total revenue. As it could not sell more to these
customers, it recognised that the most effective way to significantly increase revenue was
to get more top customers. But to do this effectively, it needed to improve its sales
prospecting.

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Question
• What is the main business problem here?

• What could be researched (research question)?

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Business problem vs. research
questions
• Business problem: develop growth strategy

• Research questions:
• What types of company offer the greatest potential?
– How do we target these companies?
– What messages should we communicate?
– What pricing offers should we employ to win their business?

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What messages should we
communicate?
• Possible research directions:
– Use of media chanels by consumer (secondary data, public/private databases)
– A/B testing
– ...

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Defining the problem
• (1) management decision problem (customer side)

• (2) marketing research problem (research agency side), that is broken down into:
– Brokenbroad statement and
– specific components of the marketing research problem

• The customer and agency need to agree on the scope and limits of research – the
form of communication is the brief

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Marketing Research (4 of 19)
Developing the Research Plan
• Outlines sources of existing data
• Spells out the specific research approaches, contact methods,
sampling plans, and instruments to gather data

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Marketing Research (5 of 19)
Defining the Problem and Research Objectives
Written proposal
• Management problem
• Research objectives
• Information needed
• How the results will help management decisions
• Budget

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Marketing Research (6 of 19)
Developing the Research Plan
Secondary data is information that already exists
somewhere, having been collected for another purpose.
Primary data is information collected for the specific
purpose at hand.

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Marketing Research (7 of 19)
Gathering Secondary Data
• Advantages
– Lower cost
– Obtained quickly
– Cannot collect otherwise
• Disadvantages: Data may not be
– Relevant
– Accurate
– Current
– Impartial

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Marketing Research (8 of 19)
Primary Data Collection
• Research Approaches
• Contact Methods
• Sampling Plan
• Research Instruments

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Marketing Research (9 of 19)
Table 4.1 Primary Data Collection Approaches
Research Approach Brief description
Observational research Gathering deep insights by carefully observing consumers’
relevant actions and activities.
Surveys and Gathering information about consumer knowledge,
questionnaires attitudes, preferences, and buying behavior by asking a
targeted set of respondents a pre-selected set of
questions.
Interviews Gaining insights from targeted participants by engaging
them in one-on-one conversations.
Focus groups Inviting small, carefully selected groups of people to meet
with a trained moderator for focused discussions about a
product, service, or organization to gain subtle and
interesting insights.
Customer insight Creating a panel of customers—usually hosted online—
communities that provides the company with insights and feedback on
an ongoing basis.

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Marketing Research (10 of 19)
Table 4.1 Planning Primary Data Collection (Continued)
Research Approach Brief description
Experimental research Subjecting two or more matched groups of randomly
chosen customers to different marketing stimuli and
learning which stimuli are most effective by comparing the
resulting behaviors across the groups.
Digital text analysis Using artificial intelligence and machine learning
techniques to automatically and continuously analyze the
huge amounts of text data posted by consumers on social
media, internet forums, company websites, and other
digital platforms.
Digital, mechanical, and Using smart digital and mechanical sensors to monitor
biosensors consumer behavior and market developments.
Online tracking and Monitoring consumers by actively mining the rich veins of
targeting unsolicited, unstructured, “bottom-up” customer
information coursing around the internet, then using that
information to target customers with customized
advertisements and offerings.

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Marketing Research (11 of 19)
Primary Data Collection Ethnographic research: Under
Intuit’s “follow-me-home”
Research Approaches program, teams of Intuit
• Observational research employees visit customers in their
involves gathering primary data homes or offices to watch them
by observing relevant people, use the company’s products in
actions, and situations. real life.
• Ethnographic research involves
sending trained observers to
watch and interact with
consumers in their “natural
environments.”

Pixel-Shot/Shutterstock

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Marketing Research (12 of 19)
Primary Data Collection Digital text analysis: Fitbit applies
digital text analysis to customers’
Research Approaches posts to identify and prioritize
• Survey research involves product improvement
gathering primary data by asking opportunities.
people questions about their
knowledge, attitudes,
preferences, and buying
behavior.
• Experimental research involves
gathering primary data by
selecting matched groups of
subjects, giving them different
treatments, controlling related
factors, and checking for Rohane Hamilton/Shutterstock
differences in group responses.

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Marketing Research (13 of 19)
Experimental research: Online experiments can be simple
and inexpensive. For example, an online “A/B test” for
Microsoft’s Bing search engine formatting yielded
performance-enhancing results in only hours.

One photo/Shutterstock

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Marketing Research (14 of 19)
Primary Data Collection: Contact Methods

• Mail, telephone, and

New focus group designs: Bizdaq
personal interviewing
utilizes focus group interviews to
– Mail questionnaires better understand and connect with
– Telephone their customers and establish
interviewing credibility.
– Personal interviewing
▪ Individual
interviewing
▪ Group interviewing
• Focus Group Interviewing

caia image/Alamy Stock Photo

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Marketing Research (15 of 19)
Primary Data Collection: Contact Methods

Online marketing research The use of internet-connected IoT

sensors and scanners has proliferated
• Internet and mobile surveys
in marketing research. AWM’s Smart
• Online focus groups Shelf can help retailers capture a range
• Consumer tracking of shopper-related information at the
• Experiments store shelf.
• Online panels and brand
communities

Courtesy of Adroit Worldwide Media, Inc.

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Marketing Research (16 of 19)
Primary Data Collection

Online behavioral and social tracking and targeting

• Behavioral targeting
• Online listening
• Social targeting

On today’s internet, a lot of

marketers know a lot about
you. Marketers use such
insights to personalize
offerings and online shopping
experiences. But is this “just
sophisticated marketing” or Rido/Shutterstock
“just a little creepy”?
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Marketing Research (17 of 19)
Online Marketing Survey Research
Collecting primary marketing research data through internet and mobile surveys,
online focus groups, and online panels and brand communities.
Online research: Survey services such as Snap Surveys allow almost any
business, large or small, to work with a range of survey templates—covering
topics ranging from customer satisfaction to employee feedback—to create,
publish, and distribute its own custom online or mobile surveys in minutes.

Reproduced with permission from Snap Surveys. www.snapsurveys.com

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Marketing Research (18 of 19)
Table 4.2 Types of Samples
Probability Sample Blank

Simple random sample Every member of the population has a known and equal chance of
selection.
Stratified random sample The population is divided into mutually exclusive groups or segments
(such as age groups) and random samples are drawn from each
group.
Cluster (area) sample The population is divided into mutually exclusive but similar groups
and the researcher draws a sample of the groups to interview. For
example, if a region contains 50 towns with similar demographic
compositions, the researcher surveys randomly chosen consumers
within a sample of 10 randomly chosen towns.

Nonprobability Sample Blank

Convenience sample The researcher selects the easiest population members from which to
obtain information.
Judgment sample The researcher uses his or her judgment to select population members
who are good prospects for accurate information.
Quota sample The researcher finds and interviews a prescribed number of people in
each of several categories or segments.

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Marketing Research (19 of 19)
• Implementing the Research Plan
– Collecting the information
– Processing the information
– Analyzing the information
• Interpreting and Reporting Findings
– Interpret findings
– Draw conclusions
– Report to management

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Analyzing and Using Marketing
Information (1 of 2)
Customer Relationship Management (CRM)
CRM involves managing detailed information about
individual customers and carefully managing customer touch
points to maximize customer loyalty.

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Analyzing and Using Marketing
Information (2 of 2)
Big Data, Marketing Analytics, and Artificial Intelligence
Marketing analytics involves analysis tools, technologies,
and processes by which marketers dig out meaningful
patterns in big data to gain customer insights and gauge
marketing performance.
Some analytics employ artificial intelligence (A I), technology
by which machines think and learn in a way that looks and
feels human but with a lot more analytic capacity.

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Big Data Analytics
Netflix and big data analytics: While members are busy
watching Netflix videos, Netflix is busy watching them—
watching them very, very closely. Then it uses the big data
insights to give customers exactly what they want.

Vantage_DS/Shutterstock

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Artificial Intelligence
Artificial intelligence (AI) Technology by which machines think
and learn in a way that looks and feels human but with a lot more
analytical capacity.
Artificial intelligence: The
Starbucks “Deep Brew” AI
program uses artificial
intelligence to create
personalized customer
experiences and manage real-
time customer interactions,
based on everything from
customers’ past transactions and Elias Stein Illustration
preferences to local traffic and
weather conditions.

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Other Marketing Information
Considerations
• Marketing Research in Small
Businesses and Nonprofit
Organizations
• International Market Research
• Public Policy and Ethics
– Customer privacy
– Misuse of research findings
Before starting GoldieBlox, in line
with her sparse self-funded budget, Courtesy of GoldieBlox

founder and CEO Debbie Sterling

(center) began with informal,
affordable marketing research.

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