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1. To review the marketing concept and the marketing mix.
2. To comprehend the marketing environment within which
managers must make decisions.
3. To define marketing research.
4. To understand the importance of marketing research in shaping
marketing decisions.
5. To learn when marketing research should and should not be
6. To learn how the Internet is changing marketing research.
7. To examine marketing research ethics.

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The Monterey Bay Aquarium, considered a great family entertainment and educational
experience, was not achieving the growth in visitors it had targeted. Aquarium manage-
ment performed customer satisfaction market research to find out if there were service
problems that, if corrected, would increase attendance.
But that’s not what they found. People who visited actually rated their experi-
ences as excellent. Instead, the survey revealed an untapped potential group of future
visitors: It showed that the best future visitors were past visitors who lived within dri-
ving distance. The survey also showed that the more these people had visited in the
past, the more likely they were to visit in the future. In addition, ongoing surveys
show that Monterey Bay area residents are the most likely to return in a year, fol-
lowed in order by San Francisco Bay area residents, California residents, and visitors
from other states.
The aquarium then created marketing programs targeted at the potentially “best”
visitors. Efforts included building mailing lists, focusing on converting this segment
into aquarium members, and advertising with “come back” messages, rather than
“here’s what we are and where we are.” Since families typically rate their experience
higher than adult-only groups, advertising focused specifically on families in the Bay
The aquarium achieved its targets by offering incremental benefits to “average” local
visitors to convert them into “excellent” repeat advocates.1 This was made possible through
marketing research. So what exactly is marketing research? And how important is it in
shaping marketing decisions? When should marketing research be conducted? These are
some of the questions we will address in Chapter 1.
Nature of Marketing
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
The process of planning
society at large.2 Good customer relationships often result in exchanges; that is, a good
and executing the con-
or service is exchanged for money. The potential for exchange exists when there are at
ception, pricing, promo-
least two parties and each has something of potential value to the other. When the two
tion, and distribution of
parties can communicate and deliver the desired goods or services, exchange can take
ideas, goods, and ser-
vices to create exchanges
place. How do marketing managers attempt to stimulate exchange? They follow the
that satisfy individual and
“right” principle. They attempt to get the right goods or services to the right people at
organizational objectives.
the right place at the right time at the right price, using the right promotion techniques.
The “right” principle describes how marketing managers control the many factors that
marketing concept
ultimately determine marketing success. To make the “right” decisions, management
A business philosophy
must have timely decision-making information. Marketing research is a primary channel
based on consumer orien-
for providing that information.
tation, goal orientation,
and systems orientation.
The Marketing Concept
consumer orientation
The identification
To efficiently accomplish their goals, firms today have adopted the marketing concept,
of and focus on the peo-
which requires (1) a consumer orientation, (2) a goal orientation, and (3) a systems ori-
ple or firms most likely to
entation. A consumer orientation means that firms strive to identify the people (or
buy a product and the
firms) most likely to buy their product (the target market) and to produce a good or
production of a good or
offer a service that will meet the needs of target customers most effectively in the face of
service that will meet their
needs most effectively.

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The Role of Marketing Research in Management Decision Making
goal orientation
competition. The second tenet of the marketing concept is goal orientation; that is,
A focus on the accom-
a firm must be consumer-oriented only to the extent that it also accomplishes corpo-
plishment of corporate
rate goals. The goals of profit-making firms usually center on financial criteria, such
goals; a limit set on con-
as a 15 percent return on investment.
sumer orientation.
The third component of the marketing concept is a systems orientation. A system
is an organized whole—or a group of diverse units that form an integrated whole—
systems orientation
functioning or operating in unison. It is one thing for a firm to say it is consumer oriented
The creation of systems
and another actually to be consumer oriented. First, systems must be established to find
to monitor the external
environment and deliver
out what consumers want and to identify market opportunities. As you will see later, iden-
the desired marketing mix
tifying target market needs and finding market opportunities are the tasks of marketing
to the target market.
research. Next, this information must be fed back to the firm. Without feedback from the
marketplace, a firm is not truly consumer oriented.
Opportunistic Nature of Marketing Research
Marketing research is an excellent tool for discovering opportunities in the market place.
For example, DVD recorders have enabled consumers to zap commercials as they watch
their favorite programs. Moreover, as people get more of their news from the Internet,
newspaper readership has gone into a free fall. The plethora of cable channels has splin-
tered and reduced viewership at the traditional television networks. Blogs and podcasts
have further confused the advertising picture. Marketers are asking, “How can we effi-
ciently and effectively reach our target audience?”
Marketing research recently found that frequent moviegoers say commercials before
the flick starts are more acceptable than commercials on television. According to an
Arbitron study, over half (53 percent) of frequent moviegoers (people who attended
more than five movies in the past three months) find advertising before the movie to be
acceptable versus 46 percent who find television advertising to be acceptable.
The study also revealed that 59 percent of moviegoers recall having watched on-screen
commercials before the movie began on their most recent trip to the theater. This is a
particularly impressive number considering that not all movie theaters run on-screen ads.
One of the central themes that arose from the national survey of Americans age 12
or older is that a significant number of moviegoers accept on-screen commercials as part
of the total entertainment experience.
Cinema advertising connects with the youth market. Advertising in movie theaters
reaches over 124 million or 45 percent of Americans 12 or older in a month. Eighty-one
percent of teens and 67 percent of young adults age 18–24 have been to the movies in the
past 30 days. Not only do movie theaters reach a high concentration of young people, but
these consumers are also more likely to embrace cinema commercials than ads targeting
them on the Internet, before programming on DVDs, and embedded in video games.
Movie theater advertising can provide an antidote for commercial avoidance.
Moviegoers are more likely to use technology that allows them to avoid advertising such
as digital video recorders (DVR) for television or pop-up blockers on the Internet.
Moviegoers are more than twice as likely to use a DVR, such as TiVo, compared to
nonmoviegoers (26 percent vs. 11 percent).
The modern cinema environment provides advertisers with multiple opportunities to
connect with consumers. Eighty percent of moviegoers looked at posters while in the lobby
or concession area on their most recent trip to the theater, and 54 percent noticed advertis-
ing on concession stand food and drink containers regardless of whether or not they
consumed any of the items. Forty percent of moviegoers heard music playing overhead, and
28 percent saw video programming in the lobby or concession area. These multiple touch-
points open the door for advertisers and marketers to create complete brand experiences

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Marketing Research and Decision Making
within the theater setting.3 Thus, marketing research has uncovered an opportunity for
marketers to get their messages across in the radically changing promotional environment.
External Marketing Environment
Over time, the marketing mix must be altered because of changes in the environment in
marketing mix
which consumers and businesses exist, work, compete, and make purchasing decisions.
The unique blend of
Some new consumers and businesses will become part of the target market, while others
product/service, pricing,
will drop out of the market; those who remain may have different tastes, needs, incomes,
promotion, and distribution
lifestyles, and purchase habits than the original target consumers.
strategies designed to
Although managers can control the marketing mix, they cannot control elements in
meet the needs of a spe-
cific target market.
the external environment that continually mold and reshape the target market. Unless
management understands the external environment, the firm cannot intelligently plan its
future, and organizations are often unaware of the forces that influence their future.
Marketing research is a key means for understanding the environment. Knowledge
of the environment helps a firm not only to alter its present marketing mix, but also to
identify new opportunities. For example, when Ann Arbor, Michigan-based Domino’s
Pizza introduced its pizza delivery in Japan, a major change in Japanese consumers’ be-
havior was needed as well. Yet Domino’s managed to rise to the challenge successfully. If
Domino’s had merely tested the acceptability of the service it delivered in other parts of
the world, it never would have entered Japan. Japanese consumers typically don’t eat
tomato-based food, and Asians tend to have allergies to milk products. Home delivery
was not widely accepted, housewives were reluctant to give up cooking, houses were
small, and finding customers in the labyrinthine streets of Tokyo seemed impossible. A
market for pizza didn’t exist, nor did any sign of hope in creating one.
Instead of trying to sell its existing product and service to the market, Domino’s
used its marketing research about customers to design a new product and service offering
for Japan. It introduced toppings such as fish and sushi. To sustain its 30-minute deliv-
ery, Domino’s developed a complex address database and small scooters to navigate the
narrow streets in Tokyo. Through this research process this pizza-delivery service that no
one asked for became a big hit in Japan.4
Marketing Research and Decision Making
Marketing research plays two key roles in the marketing system. First, as part of the
marketing intelligence feedback process, marketing research provides decision makers with
data on the effectiveness of the current marketing mix and offers insights into necessary
changes. Second, marketing research is the primary tool for exploring new opportunities in
the marketplace. Segmentation research and new product research help identify the most
lucrative opportunities for a firm.
Marketing Research Defined
Now that you have an understanding of how marketing research fits into the overall mar-
keting system, we can proceed with a formal definition of the term, as stated by the
American Marketing Association:
Marketing research is the function that links the consumer, customer, and public to the
marketer through information—information used to identify and define marketing oppor-
tunities and problems; generate, refine, and evaluate marketing actions; monitor marketing

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The Role of Marketing Research in Management Decision Making
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.

marketing research
We prefer another definition: Marketing research is the planning, collection, and
The planning, collection,
analysis of data relevant to marketing decision making and the communication of the
and analysis of data rele-
results of this analysis to management.
vant to marketing decision
making and the communi-
cation of the results of this
Importance of Marketing Research to Management
analysis to management.
Marketing research can be viewed as playing three functional roles: descriptive, diagnos-
descriptive function
tic, and predictive. Its descriptive function includes gathering and presenting statements
The gathering and presen-
of fact. What is the historic sales trend in the industry? What are consumers’ attitudes
tation of statements of fact.
and beliefs toward a product? Opening a pack of bacon is a messy job. Bacon lovers have
to reach into the package, and if they only pull out a few slices, there’s no easy way to
store the remainder. Oscar Mayer marketing researchers hear plenty from consumers
about what they disliked about its former bacon packaging. So marketers figured the best
solution would be a packaging innovation that eliminated the chore of placing the
opened pack in a resealable plastic bag or wrapping it in plastic or foil. This unwanted
task was done so that the last piece of bacon would be as fresh as the first.
Recently, Oscar Mayer Center Cut Bacon was introduced in a new “Stay-Fresh Reclos-
able Tray.” The flip top lid allows easy access to the bacon inside. The top snaps closed,
making it readily resealable. The flat tray makes for simplified storage in the refrigerator.5
diagnostic function
The second role of research is the diagnostic function, wherein data and/or actions
The explanation of data or
are explained. For example, what was the impact on sales when the Oscar Mayer package
design was changed? How can product/service offerings be altered to better serve cus-
tomers and potential customers? Since kids eat over 5 billion ounces of ketchup each
year, Heinz decided that the heavy users (kids) should have a lot to say (via marketing
research) about how to make ketchup fun. Heinz listened and watched children using
ketchup, which resulted in a new bottle design, name selection, and color. The true
ketchup connoisseurs helped create Heinz EZ Squirt green ketchup! More than 10 mil-
lion bottle were sold in the first seven months! This was followed up a year later with
“Funky purple” ketchup.
predictive function
The final role of research is the predictive function. How can the firm best take
Specification of how to
advantage of opportunities as they arise in the ever-changing marketplace? Kraft Foods
use descriptive and diag-
noticed that consumers were flocking to “low-carb” diets. The company used marketing
nostic research to predict
research to determine if this was a fad or long-term trend. Determining that “low carb”
the results of a planned
was more than a fad, it entered into an alliance with Arthur Agatston, the creator of The
marketing decision.
South Beach Diet. The result was certain Kraft products being labeled “South Beach Diet
Recommended.” Further marketing research led to a broad line of products entitled
“The South Beach Diet” brand. Products include cereal, meal replacement and cereal
bars, refrigerated sandwich wraps, frozen entrees, and frozen pizza.
The Unrelenting Drive for Quality and Customer Satisfaction Quality
and customer satisfaction have become the key competitive weapons of the decade. Few
organizations can prosper in today’s environment without a focus on quality, continual
improvement, and customer satisfaction. Corporations across the globe have imple-
mented quality improvement and satisfaction programs in an effort to reduce costs,
retain customers, increase market share, and, last but not least, improve the bottom line.
Ritz-Carlton is the only service company to have won the prestigious Malcolm
Baldrige National Quality Award twice. The chain placed first in guest satisfaction among

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Marketing Research and Decision Making
luxury hotels in the most recent J.D. Power and Associates hotel survey. Ritz-Carlton
spends about $5,000 to train each new hire. First is a two-day introduction to company
values (it’s all about the service) and the 20 Ritz-Carlton “basics.” (Basic 13 is “Never lose
a guest.”) Next comes a 21-day course focused on job responsibilities, such as a bellman’s
28 steps to greeting a guest. Each employee carries a plastic card imprinted with the credo
and the basics, as well as the “employee promise” and the three steps of service. Step 1:
“A warm and sincere greeting. Use the guest’s name, if and when possible.”
Porters and doormen wear headsets, so when they spot your name on luggage tags,
they can radio the information to the front desk. In addition, an in-house database called
the Customer Loyalty Anticipation Satisfaction System stores guest preferences, such as
whether an individual likes Seagram’s ginger ale or Canada Dry. The software also alerts
front-desk clerks when a guest who’s stayed at other Ritz-Carltons has a habit of inquir-
ing about the best sushi in town.6
Where does marketing research come into play at Ritz-Carlton? The company con-
tinually measures customer satisfaction to make certain that it is meeting the high stan-
dards that the firm has set. And delighted customers typically means repeat customers in
high-end hotel chains.
Quality that means little to customers usually doesn’t produce a payoff in improved
sales, profits, or market share; it represents wasted effort and expense. Today, the new
mantra is return on quality, which means that (1) the quality being delivered is the qual-
return on quality
ity desired by the target market and (2) the added quality must have a positive impact
Management objective
on profitability. For example, banking giant NationsBank Corporation measures every
based on the principles
improvement in service quality, from adding more tellers to offering new mortgage prod-
that (1) the quality being
ucts, in terms of added profitability.
delivered is at a level de-
The passion to drive down costs can destroy the delicate balance between efficiency
sired by the target market
and (2) that level of qual-
and service. For example, the University of Michigan annual marketing research survey
ity must have a positive
entitled the American Customer Satisfaction index revealed that Home Depot slipped to
impact on profitability.
dead last among major U.S. retailers.7 Cost cutting, including replacing many full-time
workers with part-timers and reducing the profit-sharing pool for all workers, created a
customer service disaster. As a result, same-store sales at Home Depot now lag far behind
the much better liked Lowe’s.
Paramount Importance of Keeping Existing Customers An inextricable
link exists between customer satisfaction and customer loyalty. Long-term relationships
don’t just happen; they are grounded in the delivery of service and value. Customer reten-
tion pays big dividends for firms. Powered by repeat sales and referrals, revenues and
market share grow. Costs fall because firms spend less funds and energy attempting to re-
place defectors. Steady customers are easy to serve because they understand the
modus operandi and make fewer demands on employees’ time. A firm’s ability to retain
customers also drives job satisfaction and pride, which leads to higher employee retention.
In turn, long-term employees acquire additional knowledge that increases productivity.
A Bain & Company study estimates that a 5 percent decrease in the customer defection
rate can boost profits by 25 to 95 percent.8 Another study found that the customer reten-
tion rate has a major impact on the value of the firm.9
The ability to retain customers is based on an intimate understanding of their needs.
This knowledge comes primarily from marketing research. For example, British Airways
recast its first-class transatlantic service based on detailed marketing research. Most airlines
stress top-of-the-line service in their transatlantic first-class cabins. However, British Air
research found that most first-class passengers simply want to sleep. British Air now gives
premium flyers the option of dinner on the ground, before takeoff, in the first-class
lounge. Then, once on board, they can slip into British Air pajamas, put their heads on
real pillows, slip under blankets, and enjoy an interruption-free flight. On arrival at their

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The Role of Marketing Research in Management Decision Making
destination, first-class passengers can have breakfast, use comfort-
able dressing rooms and showers, and even have their clothes
pressed before they set off. These changes in British Air’s first-class
service were driven strictly by marketing research.
Understanding the Ever-Changing Marketplace
Marketing research also helps managers to understand trends in
the marketplace and to take advantage of opportunities. Market-
ing research has been practiced for as long as marketing has
existed. The early Phoenicians carried out market demand studies
as they traded in the various ports on the Mediterranean Sea.
Marco Polo’s diary indicates he was performing a marketing
research function as he traveled to China. There is evidence that
the Spanish systematically conducted marketing surveys as they
explored the New World, and examples exist of marketing re-
search conducted during the Renaissance.
All during the 1990s, the market share for Campbell soups
slipped. Soup wasn’t “cool,” and consumers turned to other
foods. Campbell’s turned to marketing research to better under-
stand consumers’ fast-paced lifestyles. The first new product was
Soup at Hand, a “shippable” product that was easily portable.
Soon after, changes began inside the test kitchen. The flavor pro-
files of nearly every soup in the portfolio got an upgrade. Building
on last year’s launch of Campbell’s Select Gold Label, the com-
pany began touting a top-tier line of restaurant-style soups to in-
troduce the notion that soup will actually make a sophisticated
meal. Its new choices included Golden Butternut Squash and
Creamy Portobello Mushroom. “We want to start to create a pre-
mium tier for people who want to trade up,” said Denise Morri-
Asking the right questions in
son, president of U.S. soup, sauce and beverages. “We’re bringing luxury to the soup
marketing research can be
aisle.”10 Thanks to marketing research and Campbell’s creativity, sales are now growing
as important as getting good
answers. UPS found that
customers wanted more
Proactive Role of Marketing Research
interaction with their UPS
driver. Go to
Understanding the nature of the marketing system is a necessity for a successful market-
com to find out how UPS
ing orientation. By having a thorough knowledge of factors that have an impact on the
uses marketing research to
target market and the marketing mix, management can be proactive rather than reactive.
better serve its customers.
Proactive management alters the marketing mix to fit newly emerging patterns in
economic, social, and competitive environments, whereas reactive management waits for
change to have a major impact on the firm before deciding to take action. It is the
difference between viewing the turbulent marketing environment as a threat (a reactive
stance) and as an opportunity (a proactive stance). Companies like UPS, Apple, and
FedEx were largely proactive in Internet marketing and customer service. A proactive po-
sition would have been to become cutting-edge Internet marketers. Marketing research
marketing strategy
plays a key role in proactive management by allowing managers to anticipate changes in
A plan to guide the long-
the market and customer desires and then design goods and services to meet those
term use of a firm’s re-
changes and needs.
sources based on its
A proactive manager not only examines emerging markets but also seeks, through
existing and projected
internal capabilities and
strategic planning, to develop a long-run marketing strategy for the firm. A marketing
on projected changes in
strategy guides the long-term use of the firm’s resources based on the firm’s existing and
the external environment.
projected internal capabilities and on projected changes in the external environment.

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Marketing Research and Decision Making
A good strategic plan is based on good marketing research. It helps the firm meet long-
term profit and market share goals.
Applied Research versus Basic Research
Virtually all marketing research is conducted to better understand the market, to find
out why a strategy failed, or to reduce uncertainty in management decision making. All
research conducted for these purposes is called applied research. For example, should
applied research
the price of DiGiorno frozen pizza be raised 40 cents? What name should Toyota select
Research aimed at solv-
for a new sedan? Which commercial has a higher level of recall: A or B? On the other
ing a specific, pragmatic
hand, basic, or pure, research attempts to expand the frontiers of knowledge; it is not
problem—better under-
aimed at a specific pragmatic problem. Basic research is conducted to validate an existing
standing of the market-
theory or learn more about a concept or phenomenon. For example, basic marketing re-
place, determination of
why a strategy or tactic
search might test a hypothesis about high-involvement decision making or consumer
failed, or reduction of un-
information processing. In the long run, basic research helps us understand more about
certainty in management
the world in which we live. The findings of basic research usually cannot be imple-
decision making.
mented by managers in the short run. Most basic marketing research is now conducted
in universities; the findings are reported in such publications as The Journal of Marketing
basic, or pure, research
Research and The Journal of Marketing. In contrast, most research undertaken by busi-
Research aimed at ex-
nesses is applied research because it must be cost-effective and of demonstrable value to
panding the frontiers of
the decision maker.
knowledge rather than
solving a specific, prag-
matic problem.
Nature of Applied Research
Marketing research studies can be classified into three broad categories: programmatic, se-
lective, and evaluative. Programmatic research is conducted to develop marketing op-
programmatic research
tions through market segmentation, market opportunity analysis, or consumer attitude
Research conducted to
and product usage studies. Selective research is used to test decision alternatives. Some
develop marketing
examples are testing concepts for new products, advertising copy testing, and test market-
options through market
ing. Evaluative research is done to assess program performance; it includes tracking ad-
vertising recall, doing organizational image studies, and examining customer attitudes on
market opportunity
analyses, or consumer
a firm’s quality of service.
attitude and product
Programmatic research arises from management’s need to obtain a market overview
usage studies.
periodically. For example, product management may be concerned that the existing mar-
ket information base is inadequate or outdated for present decision making, or market-
selective research
ing plans may call for the introduction of new products, ad campaigns, or packaging.
Research used to test
Whatever the specific situation, current information is needed to develop viable market-
decision alternatives.
ing options. Typical programmatic research questions include the following:
evaluative research
Has its target market changed? How?
Research done to assess
Does the market exhibit any new segmentation opportunities?
program performance.
Do some segments appear to be more likely candidates than others for the firm’s
marketing efforts?
What new product or service opportunities lie in the various segments?
Equidistant between Los Angeles and San Francisco in the Eastern Sierra Nevada
Mountains, Mammoth Mountain has been serving the skiers and snowboarders of cen-
tral California for 50 years. With the summit reaching above 11,000 feet and average
annual snowfall hitting 400 inches, thousands of customers flock to the slopes and the
lodges annually.
Yet, the resort’s longstanding direct-mail program just wasn’t driving the traffic. While the
resort wasn’t losing visitors (most resort traffic industrywide comes from existing skiers and

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The Role of Marketing Research in Management Decision Making
snowboarders rather than those new to the sports), executives hoped
to gain some ground in an overall stable market by injecting some life
into what had become an out-of-date marketing campaign—and to
increase the frequency of visits by the 900,000 customers in its data-
Resort executives used programmatic research collected from
an annual survey, the National Skier and Snowboarder Opinion
Survey conducted on behalf of resorts across the country, and
found that 94 percent of Mammoth’s users in particular ac-
knowledge using the Internet to find information about every-
thing from weather advisories to checking room rates at one of
Mammoth’s lodges.
This information led to the creation of an e-mail marketing
system that reaches 18,000 subscribers. The format is chatty and
informing. For example, “The weather has been beautiful here
lately, and with a 12- to 14-foot base you can’t go wrong any-
where on the mountain. At 1:15 p.m. the temperature is 34 degrees at Main Lodge with
clear skies and moderate to gusty winds. It’s extremely windy and cold on top at 17 de-
grees, so be sure to bundle up.” Skier visit numbers have been increasing 5 percent or
more annually as a result of the programmatic research!11
Selective research typically is conducted after several viable options have been identi-
fied by programmatic research. If no one alternative is clearly superior, product manage-
ment usually will wish to test several alternatives. However, selective research may be
required at any stage of the marketing process, such as when advertising copy is being
developed, various product formulations are being evaluated, or an entire marketing
program is being assessed, as in test marketing.
The need for evaluative research arises when the effectiveness and efficiency of mar-
keting programs must be evaluated. Evaluative research may be integrated into program-
matic research when program changes or entirely new options are demanded because of
present performance such as at Mammoth Mountain.
Decision to Conduct Marketing Research
A manager who is faced with several alternative solutions to a particular problem should
not instinctively call for applied marketing research. In fact, the first decision to be made
is whether to conduct marketing research at all. In a number of situations, it is best not
to conduct research.
Resources are lacking. There are two situations in which a lack of resources should
preclude marketing research. First, an organization may lack the funds to do the re-
search properly. If a project calls for a sample of 800 respondents but the budget al-
lows for only 50 interviews, the quality of the information would be highly suspect.
Second, funds may be available to do the research properly but insufficient to imple-
ment any decisions resulting from the research. Small organizations in particular
sometimes lack the resources to create an effective marketing mix. In one case, for
example, the director of a performing arts guild was in complete agreement with the
recommendations that resulted from a marketing research project. However, two
years after the project was completed, nothing had been done because the money
was not available.
Research results would not be useful. Some types of marketing research studies measure
lifestyle and personality factors of steady and potential customers. Assume that a study
finds that introverted men with a poor self-concept, yet a high need for achievement,

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Marketing Research and Decision Making
are most likely to patronize a discount brokerage service. The management of Charles
Schwab discount brokerage service might be hard-pressed to use this information.
The opportunity has passed. Marketing research should not be undertaken if the
opportunity for successful entry into a market has already passed. If the product is
in the late maturity or decline stage of the product life cycle (such as cassette
recorders or black-and-white television sets), it would be foolish to do research on
new product entry. The same may be true for markets rapidly approaching satura-
tion, such as super-premium ice cream (Háagen-Dazs, Ben and Jerry’s). For prod-
ucts already in the market, however, research is needed to modify the products as
consumer tastes, competition, and other factors change.
The decision already has been made. In the real world of management decision making
and company politics, marketing research has sometimes been used improperly. Several
years ago, a large marketing research study was conducted for a bank with over $800
million in deposits. The purpose of the research project was to guide top management in
mapping a strategic direction for the bank during the next five years. After reading the
research report, the president said, “I fully agree with your recommendations because
that was what I was going to do anyway! I’m going to use your study tomorrow when
I present my strategic plan to the board of directors.” The researcher then asked, “What
if my recommendations had been counter to your decision?” The bank president
laughed and said, “They would have never known that I had conducted a marketing
research study!” Not only was the project a waste of money, but it also raised a number
The super-premium ice
of ethical questions in the researcher’s mind.
cream market is reaching
Managers cannot agree on what they need to know to make a decision. Although it may
saturation. At this point, it
seem obvious that research should not be undertaken until objectives are specified, it
might not be wise to enter
sometimes happens. Preliminary or exploratory studies are commonly done to better
this market. However,
understand the nature of the problem, but a large, major research project should not
marketing research is
be. It is faulty logic to say “Well, let’s just go ahead and do the study and then we will
necessary to keep products
better understand the problem and know what steps to take.” The wrong phenomena
already in the market ahead
might be studied or key elements needed for management decision making may not
of the competition.
be included.
Decision-making information already exists. Some compa-
nies have been conducting research in certain markets for
many years. They understand the characteristics of their
target customers and what they like and dislike about exist-
ing products. Under these circumstances, further research
would be redundant and a waste of money. Procter &
Gamble, for example, has extensive knowledge of the cof-
fee market. After it conducted initial taste tests, P&G
went into national distribution with Folger’s Instant Cof-
fee without further research. The Sara Lee Corporation
did the same thing with its frozen croissants, as did
Quaker Oats with Chewy Granola Bars. This tactic, how-
ever, does not always work. P&G thought it understood
the pain reliever market thoroughly, so it bypassed mar-
keting research for Encaprin, encapsulated aspirin. The
product failed because it lacked a distinct competitive ad-
vantage over existing products and was withdrawn from
the market.
The costs of conducting research outweigh the benefits.
There are rarely situations in which a manager has such