BUS-M 300 1nd Edition Lecture 4 Outline of Last Lecture I. Consumer Purchase Decision Process and ExperienceII. Psychological Influences on Consumer BehaviorIII. Sociocultural Influences on Consumer Behavior Outline of Current Lecture I. The Role of Marketing ResearchA. Step One: Define the ProblemB. Step Two: Develop the Research PlanC. Step Three: Collect Relevant Information D. Step Four: Develop FindingsE. Step Five: Take Marketing Actions II. Sales Forecasting TechniquesCurrent LectureI. The Role of Marketing Research - Marketing research: the process of collecting and analyzing information inorder to recommend actions- A decision is a conscious choice from among two or more alternativesA. Step 1: Define the problemo Setting research objectives— research objectives are specific,measurable goals the decision maker seeks to achieve inconducting the marketing researcho Identifying possible marketing actions—different researchoutcomes lead to different marketing actions - Measures of success: criteria or standards used in evaluatingproposed solutions to a problem B. Step 2: Develop the research plano Requires that the researchers 1. Specify the constraints on the marketing research activityo Constraints: restrictions placed on potential solutions to aproblem2. Identify the data needed for marketing actionso Focus on collecting data that will help managers make a clearchoice 3. Determine how to collect the data o Two key elements are used- Concepts: ideas about products or services- New product concept: picture or verbal description of aproduct or service the firm might offer to sell - Methods: the approaches that can be used to collect data tosolve all or part of a problem C. Step 3: Collect Relevant Information o Collecting enough relevant information to make a rational, informed marketing decision sometimes simply means using one’s knowledge to decide immediatelyo Data: the facts and figures related to a problemo Secondary data: facts and figures that have already been recorded prior to the project at hand - Secondary data (Internal)— two parts o Marketing input data: relates to the effort expended to make saleso Marketing outcome data: relates to the results of the marketing efforts - Secondary data (External)—published data from outside the organization o Primary data: facts and figures that are newly collected for a project - Observational data: facts and figures obtained by watching, either mechanically or in person, how people behave- Mechanical methods—national TV ratings- Personal methods—watching consumers in person or recording them, neuromarkerting- Questionnaire data: facts and figures obtained by asking people about their attitudes, awareness, intentions, and behaviors- Open ended questions: allows for expression of opinions, ideas, or behaviors in their own words- Closed ended questions: requires one or more preselected response options - Other sources of prime data—social media, panels (sample of customer or stores from which researchers take a series of measurements) and experiments (obtaining data by manipulating factors under tightly controlled conditions to testcause and effect), information technology (involves operating computer networks that can store and process data), data mining (the extraction of hidden predictive information from large data bases to find statistical links between consumer purchasing patterns and marketing actionso Advantages of secondary data1. Tremendous time savings due to data already beingcollected and published2. Low costo Disadvantages of secondary data1. May be out of date2. Definitions or categories might not fit research project o Advantages of primary data1. More flexibility2. More specific to problemo Disadvantages of primary data1. Far more costly2. Time consuming D. Step 4: Develop findings o Analyze the datao Present the findingsE. Step 5: Take marketing actiono Three steps after marketing research is over1. Identify the marketing actions-Make recommendations2. Put them into effect-Implement the action recommendation3. Monitor how the decisions turn out -Evaluate the results III. Sales Forecasting Techniques - Sales forecast: the total sales of a product that a firm expects to sell during aspecified time period under specified conditions- Three main sales forecasting techniques1. Judgments of the decision makero Direct forecast: involves estimating the value to be forecastwithout any intervening steps o Lost horse forecast: involves starting with the last known value ofthe item being forecast, listing the factors that could affect theforecast and assessing their positive and negative impacts2. Surveys of knowledgeable groupso Survey of buyer’s intentions forecast: involves asking prospectivecustomers if they are likely to buy product during some futuretime periodo Salesforce survey forecast: involves asking the firm’s salespeopleto estimate sales during a coming period3. Statistical methodso Trend exploration: involves extending a pattern observed in pastdata into the future; assumes that the underlying relationshipsin the past will continue into the future - Judgment Approaches to Forecasting Sales1. Sales force composite approach: ask sales representativesto forecast sales for their areaso Advantages: have their finger on the pulse of the marketo Disadvantages: under pressure to perform well2. Buyer surveys: ask consumers or firms about theirintentions to buyo Advantages: find out what consumers are really thinking in themarket placeo Disadvantages: buyer tend to fill out survey’s quickly and often notaccurately 3. Manager surveys: ask the firm’s managers to forecast salesfor their areaso Advantages: they have macro view of the market more likely tosee trendso Disadvantages: they are under pressure to perform well - Three formulas to know1. Moving average model (MAM): to get sales forecast ina certain yearo Example: Use last (5, this number changesdepending on the question) years worth ofactual sales, add the actual sales for past 5years and divide by 52. Actual Percentage Error (APE): tells which forecastedsales is the besto Example: actual sales-forecasted sales/actualsales, after doing this for all actual andforecasted sales add the percentages together 3. Exponential Smoothing Model (ESM): helps to