International Advanced Diploma in Business Consumer Behaviour DBA205 Topics
Advanced Diploma in Business
Introduction to Module DBA205
This module is made up of 22 topics.
The information contained in each topic is an overview and should be used in
conjunction with the Assessment and Syllabus Guide and required textbook for
The required textbook is:
(1997) Understanding Customers 2nd ed. Elsevier Butterworth-
Specific Learning Outcomes (LOs) Demonstrable
LO 1 Knowledge and critical understanding of the
established concepts, principles and
techniques of market research and their
contribution to understanding consumer
LO 2 Evaluate and assess the application of
alternative techniques to real world market
research problems. Evaluation
LO 3 Apply a range of market research techniques
in novel situations to develop alternative
solutions to business programmes.
Application and problem
LO 4 Plan and carry out market research and
Research and enquiry
• The identification of customer needs through the use of available
research data and appreciation of the need for effective market
• Recognise the individuals who make up the DMU in any particular
buying situation (both for internal and external markets) and to identify
their role and needs in the buying process.
• Identify the range of economic, social, behavioural and cultural factors
which influence behaviour both domestically and abroad.
• Plan basic marketing research, analyse using appropriate statistical
methods and present findings.
• Use observational techniques effectively to help understand customer
• Analyse the behavioural differences encountered when dealing with
organisations (as opposed to individuals) and international markets (as
opposed to domestic ones), describe and make use of relevant
theoretical and research evidence on the motivational patterns of
customers, and generate justifiable predictions about future changes in
customer expectations, wants, attitudes and behaviour.
• The role of segmentation in marketing. Use a variety of approaches and
database systems to segment markets into meaningful and appropriate
categories or classes to enable tight and effective market targeting.
Topic 1 Identifying the Customer I –
1.1 Identifying the Customer
If we view marketing in a broad dimension asan exchange process
between a buyer and seller, then the buyer takes on the role of a customer.
In the exchange process, the buyer gives something of value (usually
money) to the seller in exchange for something of value (usually goods
and services). This exchange process is illustrated in the diagram below.
The terms customer and buyer are sometimes used interchangeably.
The term customer can, therefore, be used to describe broadly any
individual or organisation that buys goods and services.
Customers (from a manufacturer’s viewpoint) could include consumers,
wholesalers, retailers, industrial organisations, government bodies and
Consumers are end-users of a product or service.
• Example: A company that buys semiconductors can be called a
customer (industrial organisation customer), while the individual who
buys a personal computer for home use is a consumer.
In both a consumer marketing and an industrial marketing context, the
terms customer and user can be further distinguished.
• Example: In consumer marketing, the mother who buys a jar of peanutbutter
for the home is a customer, while the children who consume
them can be called the users.
• Example: In industrial marketing, an organisation that buys a machine
is called the customer, while the machine operator who uses the
machine is the user.
However, a large part of this course focuses on the consumer as the
customer. It is, therefore, appropriate to elaborate further on the behaviour
gives something of value (e.g. money)
receives something of value (e.g. goods and services)
Figure 1.1 The ExchangeProcess
For what reason(s) do the following categories of customers buy?
1.2 Consumer Behaviour
Definition – ‘The decision process and physical activity individuals
engage in when evaluating, acquiring, using, or disposing of goods and
Generally the study of consumer can help marketers understand:
• what goods and services people buy;
• how they buy them;
• why they buy them;
• where they buy them;
• how often they buy them.
Other reasons for studying consumer behaviour are listed velow.
• It makes us aware of the complexity of human motivation in general
and consumer motivation in particular.
• It enables us to appreciate marketing activities more by helping us
analyse how individual advertisements and commercials, sales
presentations and product designs attempt to persuade consumers.
• It makes us better consumers by giving us a better understanding of our
own decision processes.
1.3 Applying Consumer Behaviour Knowledge in
In formulating marketing mix strategies, a knowledge of consumer
behaviour can do the following.
• Product – Provide us with an insight into customer preferences on such
factors as the product’s size, shape, features and packaging.
• Price – Determine what the initial price should be. What sort of
discounts should be offered? How aware and sensitive are consumers
• Promotion – Determine the most appropriate means of
communicating with potential consumers. How do they perceive a
product? How do they learn? etc.
• Distribution – Helps marketers to determine where and when products
should be offered for sale, as seen in consumers’ shopping habits,
place, time, etc.
1.4 Problems in Studying Consumer Behaviour
It is difficult to make inferences about consumer behaviour. Consumer’s
perceptions may be quite different from those of people carrying out
A vast number of variables can influence consumer behaviour. These
include physiological, psychological and external factors. The past, the
present and expectations about the future affect consumer behaviour. The
diagram below illustrates this.
Variables may interact in such a way as to magnify, cancel, or redirect
each other’s influence.
Individual Psychological Factors
Product or Service
Figure 1.2 The Complex Pattern of Buying Influences
1.5 Contribution to the Study of Consumer Behaviour
The study of consumer behaviour is interdisciplinary in nature, with
contributions from the following disciplines:
Economics: The study of the manner in which men and nations
make and spend money. Economics is the parent
science of marketing since marketing emerges from
this discipline as an economic activity.
Economics provides insights into how consumers
spend their money, how they evaluate alternatives and
how they make decisions to maximise their
Psychology : The study of individual behaviour and the mental
processes of individuals, e.g. motivation, perception,
attitude, personality, learning and others.
The study enables marketers to understand various
consumption needs of individuals, to predict their actions
and reactions in response to different products and
promotional strategies, and to understand the impact of
the consumer’s personality and previous experience on
his or her product choices.
The study of how an individual operates in relation to
Social psychology shows how individuals influence, and
are influenced by groups, e.g., peer groups, family
influence, reference group, etc.
Sociology: Involves the study of the collective behaviour of people
in groups, e.g. social class, family life cycle, etc.
Sociology gives marketer insights into the influence that
group memberships, family structure and social class
have on the consumer’s purchase decisions.
Anthropology: The study of humankind in society which includes
culture, sub-cultures, race, religion, etc.
Anthropology shows the effects of society’s beliefs,
values, customs, etc., on consumers’ purchase behaviour.
The Behavioural Sciences such as:
teach us what behaviour?
Social Psychology teach us what behaviour?
Psychology teaches us what behaviour?
1.6 Total Quality Management
Traditionally, quality is seen in the physical aspects of a product. These
include such features as its durability, size, shape, ease of usage, etc.
As such, quality control (as in a manufactured product) has been assigned
to a quality control department in an organisation. It is the responsibility of
the quality control inspector to determine if the product’s physical quality
is of an acceptable standard and meets with customers’ needs.
However in today’s changing marketing environment, customers see
quality in a different perspective.
The quality provided by a company is viewed in an extended manner
• Reliability – Reflects the company’s ability to perform the promised
service dependably, accurately and consistently. This task requires the
company to do it right over a period of time.
• Responsiveness – In terms of prompt service provided and the
willingness of the company to help customers.
• Assurance – Knowledge and courtesy of the company’s employees and
their ability to inspire confidence and trust.
• Empathy – The provision of caring, individualised attention to
• Tangibles – Providing physical facilities, equipment, employee’s
appearance, etc. which can convey both functional and symbolic
The basic concept of quality, therefore, is simply the match between what
customers expect and what they experience when they buy a product or
service. This is what is commonly called perceived quality. Any mismatch
between these two factors results in a ‘quality gap’.
Perceived quality is always a judgement of a customer, and whatever a
customer thinks of the quality provided by a company is a reality.
Today’s approach to managing quality is called Total Quality Management
(TQM) which stresses that all functional departments within an
organisation are required to play their part in quality control. Quality
control is not seen in its traditional form.
If something goes wrong, the quality control department should not be the
only one to be blamed. The fault might originate in the purchasing
department, perhaps for buying inferior raw material; the marketing
department could also be at fault for providing the wrong information.
TQM recognises that everyone has an impact on the final product or
service and its delivery to the customer.
Topic 2 Identifying the Customer II –
2.1 What is Market Segmentation?
• Market segmentation is the process of dividing the total heterogeneous
market for a product into several segments, each of which tends to be
homogeneous in all significant aspects.
• Then select one or more market segments as a target market.
• Develop a separate marketing mix for each segment or group of
segments in this target market.
Figure 2.1 Market Segmentation
2.2 Conditions for Effective Segmentation
• The characteristics used to categorise customers must be:
− data accessible.
• Market segment is accessible through existing marketing institutions.
• Each segment should be large enough to be profitable.
• Identifies customers needs within a sub-market (segment) and then
satisfies those needs.
• Allows for tailoring marketing programs to individual market
segments, thus a firm can:
− do a better job;
− make more efficient use of marketing resources.
• Can be expensive due to producing and marketing multiple products in
• Costs which can increase are:
− inventory cost;
− administrative expenses.
2.2.3 Basis for Segmenting Consumer Markets
• Geographic segmentation:
− Examples: by region, city, urban or rural, etc.
• Demographic segmentation:
− Examples: by age, sex, family life cycle, etc.
• Psychographic segmentation:
− Examples: by social class, personality, life-style, etc.
• Behaviour towards products:
− Examples: by benefits desired, usage rate, etc.
2.2.4 Bases for Segmenting Industrial Market
• Type of customer.
• Size of customer.
• Type of buying situation.
2.2.5 Single Segment (Concentration) Strategy
• Select one homogeneous segment from within the total market.
• Develop a marketing mix for the one segment.
• This strategy enables a company:
− to penetrate one market in-depth;
− to take only limited resources to complete;
• Large competitors may bypass market.
• Strategy limitations are:
− seller has ‘all eggs in one basket’;
− if single segment declines in market potential, the seller suffers.
2.2.6 Multiple-Segment Strategy
• Two or more different groups of potential customers are identified as
• A separate marketing mix is developed to reach each market.
• Usually has greater sales volume than single-segment approach.
• Cost of production and marketing typically increases.
2.2.7 What is Market Aggregation?
• Treating the total market as a unit of one mass, aggregate market
whose parts are considered to be alike in all major respects.
• A single marketing mix is developed.
• In market aggregation, the seller assumes there is a single demand
curve for its product.
Give examples of companies using single-segment (concentration)
strategy, multi-segment strategy and market aggregation strategy.
2.2.8 Target Market Strategies
• Market aggregation can be used for non-differentiated products, such
as gasoline, salt, sugar, nails, etc.
• Product differentiation is often used in:
− changing some superficial feature of a products, e.g. package or
− promotion of a differentiating benefit.
2.2.9 Development of Target Marketing
• The concept of Target Marketing is a refinement of the basic
philosophy of marketing.
• In target marketing, the firm attempts to relate the characteristics or
attributes of the goods and services they provide more closely to
DBA205 Consumer Behaviour Topic 2 – Identifying the Customer II – Market Segmentation
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• For many industries, the markets served are too heterogeneous, e.g.
automobiles, shampoo, audio equipment etc.
• Within these larger markets, segments can be identified and served
Conditioner shampoo (2-in-1)
Class B stereo
Class A stereo
Figure 2.2 Industry Segments
• The lack of homogeneity may be due to:
− differences in the amount of money consumers are willing to pay;
− differences in the way in which the product is used;
− different motives for buying;
− or other factors.
2.2.10 Stages in Target Marketing
Stage One – Market Segmentation
The process of dividing the heterogeneous market into distinct groups or
Stage Two – Market Targeting
The process whereby one or more of the market segments identified are
evaluated and selected.
Stage Three – Product Positioning
Within the chosen market segment, the product is positioned against
1. Identify bases for segmentation.
2. Determine the important characteristics of
each market segment.
3. Evaluate potential and commercial
attractiveness of each segment.
4. Select one or more segments.
5. Develop detailed product positioning for
6. Develop a marketing mix for each selected
Figure 2.3 Three Stages of Target Marketing
Topic 3 Identifying the Customer III –
Organisational Buyer Behaviour
• The organisation buys products and services for use in creating other
products and services.
• Organisational buyers are subject to (both from within and outside the
organisation) diverse motivations.
• The corporate or organisation man endeavours to satisfy the objectives
of his institution (usually profits), while, at the same time, he is
interested in enhancing his own career.
• Organisational purchase decisions are rarely made by one person.
Purchase decisions are made collectively by a group of people known
as the Buying Centre or Decision Making Unit (DMU).
3.2 Differences from Consumer Behaviour
• Organisational buyer behaviour is generally a group process. Several
people playing different roles may be involved.
• Organisational buying involve some technical complexity.
• Organisational buying often involves negotiation. As a result, personal
selling assumes more importance.
• The post-purchase process is likely to be more important in
organisational buying because of the necessity for installation, service
calls, and warranty.
• Organisational buyers are much more likely to require sellers to design
products to meet specifications.
3.3 Difference in Selling to Industrial and Ultimate
Industrial Consumer Ultimate Consumer
Reason for purchase Satisfy business,
institutional or government
Satisfy personal or household
Customer-made products Often Infrequently
Large purchases Often Infrequently
Nature of demand Derived Direct
Negotiated terms or sale Often Infrequently
Geographic dispersion Often concentrated Usually widely dispersed
Emphasis on personal
Buying motives Primarily rational Less rational
Purchasing skills of buyer Extensive Limited
Reciprocal agreements Frequently Infrequently
Figure 3. 1 Industrial/Ultimate Consumer
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3.4 Decision Criteria in Organisational Buying
Organisational buying decisions often reflect five types of criteria.
• Performance criteria – How well the product or services do the job.
• Economic criteria – What costs will be associated with buying and
using the product.
• Integrative criteria – Will the supplier go beyond minimal actions in
meeting the customer’s expectations.
• Adaptive criteria – How certain is the buying influence that the
supplier will produce and deliver to specifications.
• Legalistic criteria – What legal policy considerations must be kept in
mind when buying the product or service.
What are the key characteristics of organisational buying process?
3.5 Models of Organisational Buying Behaviour
Some models that are currently used to explain organisational buying
• Buying Centre (Decision Making Unit)
• Buygrid Framework … by Marketing Science Institute (1967)
• Framework of Influence in Organisational Buyer Behaviour … by the
American Marketing Association (1978)
• Model of Industrial Buyer Behaviour … (1973)
3.6 Buying Centre (Decision Making Unit)
Members of the Buying Centre (Decision Making Unit) typically include:
Each member of the buying centre or decision making unit in their
respective roles can influence the final purchase decision.
3.6.1Buying Centre Roles Defined
• Users – These are the personnel who will be using the products in
Users may have anything from an inconsequential to an extremely
important influence on the purchase decision.
In some cases the users initiate the purchase action by requesting the
They may even develop the product specifications.
• Gatekeepers – Control information to be reviewed by other members
of the buying centre.
The control of information may be in terms of disseminating printed
information or advertisements or through controlling which
salesperson will speak to which individuals in the buying centre.
To illustrate, the purchasing agent might perform this screening role by
opening the gate to the buying centre for some sales personnel and
closing it to others.
• Influencers – These individuals affect the purchasing decision by
supplying information for the evaluation of alternatives or by setting
Typically, technical personnel, such as engineers, quality control
personnel, and R&D personnel are significant influences on the
Sometimes, individuals outside the buying organisation can assume
this role (an engineering consultant or an architect who writes very
• Deciders – These are individuals who actually make the buying
decisions, whether or not they have the formal authority to do so.
The identity of the deciders is the most difficult role to determine:
buyers may have formal authority to buy, but the managing director of
the company may actually make the decision.
A decider could be a design engineer who develops a set of
specifications that only one supplier can meet.
• Buyers – The buyer has formal authority for selecting a supplier and
implementing all procedures connected with securing the product.
The power of the buyer is often usurped by more powerful members of
Often the buyer’s role is assumed by the purchasing agent, who
executes clerical functions associated with a purchase order.
Decision stage User Influencer Buyer Decider Gatekeeper
Identification of need X X
and scheduling the purchase X X X X
alternatives X X X X
Evaluating alternative buying
actions X X X
Selecting the suppliers X X X X
Figure 3. 2 Roles of Members of the Decision Making Unit by Decision Stage
What do buyers like and dislike about sales people?
3.7 Buy-Grid Framework
• A framework that explains different types of industrial buying
• Three typical buying situations (or buy classes):
− New task – More people influence this buying decision process
than the other two.
− Straight rebuys – Routine purchases with minimal information
needs and no real consideration of alternatives.
− Modified rebuys – Somewhere between the other two in terms of
time required, information needed, and alternatives considered.
Stages in the industrial buying process (buy phases)
in relation to buying situations (buy classes)
(Stages in buying-decision
New class Modified
1. Recognise the problem
2. Determine product needs
3. Describe product
4. Search for suppliers
5. Acquire supplier proposals
6. Select suppliers
7. Select an order routine
8. Evaluate product
3.8 Influence on Organisational Buyer Behaviour
• Model developed by Bonoma/Zaltman in a workshop‘Organisational
Behaviour’organised by the American Marketing Association in 1978.
• The model indicates that there are four main influences on
organisational buying decisions:
− Influence within the purchasing department.
− Inter-departmental influence.
− Intra-company influences.
− Inter-company influences.
• The four-cell framework indicates:
− the complex nature of the organisational buying process;
− the importance of understanding behavioural relationships among
individuals involved in the decision-making process.
Within Purchasing Dept Between Dept
Influences 2 Inter-Dept./Intra-Orgn.
• Social factors
• Price/cost factors
• Supply continuity
• Risk avoidance
• Organisation structure
• Power/conflict process
• Gatekeeper role
Influences 4 Inter-Dept./Inter-Orgn.
Word of mouth
Trade shows, journals,
Nature of suppliers
Figure 3. 4 Influences on Organisational Buyer Behaviour
3.9 Sheth’s Model of Industrial Buyer Behaviour
• Sheth’s model identified three distinct aspects of organisational buyer
− The psychological world of the individuals involved in
organisational buying decision.
− The conditions which precipitate joint decision-making among
− The process of joint decision-making with the inevitable conflict
among the decision makers and its resolution by resorting to a
variety of tactics.
• Five different influences identified by Sheth include:
− the background of the individuals;
− information sources;
− active search;
− perceptual distortion;
− satisfaction with past purchases.
• Six factors determine joint versus autonomous decision making:
− Time pressure
− Perceived risk Product-specific factors
− Type of purchase
− Organisation structure
− Organisation size Company-specific factors
− Degree of centralisation
• The model points out that conflict is inevitable in organisational
decision-making where several parties are involved. This can be
− problem solving;
• Finally, ad hoc situational factors such as temporary price controls,
trade recessions, industry strikes, etc. may influence organisational
Where do professional buyers typically get their information from?
Topic 4 Investigating Customer I – Role of
4.1 Consumer Research
The marketing concept is built on the premise that marketers first identify
consumer needs and then develop products and services to satisfy those
Consumer research is the set of diverse methods used to identify such
needs. Consumer research is also needed to identify and locate appropriate
target markets, and to learn their media habits.
Additionally, consumer research is used to identify felt and unfelt needs, to
learn how consumers perceive products and brands and stores, what their
attitudes are before and after promotional campaign, and how they make
their consumption decisions.
4.2 History of Consumer Research
The field of consumer research developed as an extension of the field of
marketing research, focusing almost exclusively on consumer behaviour
rather than on other aspects of the marketing process.
The initial reason for studying consumer behaviour was to enable
marketers to predict how consumers would react to promotional messages
and to understand why they make the purchase decisions they do.
4.3 The Modern Era
• The era in which the field of consumer research developed is known as
the modernist era.
• Researchers who believe in the assumptions upon which modernism is
based are called positivists.
− The research methods used in positivist research are experiments,
survey techniques, and observation.
− The findings of the positivist research are descriptive, empirical,
and can be generalised to larger populations.
− The data collected is quantitative in nature, and lends itself to
sophisticated statistical analysis by computer.
4.4 The Development of Motivational Research
• Researchers realised that consumers were not always consciously
aware of why they made decisions they did.
• Even when they were aware of their basic motivations, consumers
were not always willing to reveal these reasons.
DBA205 Consumer Behaviour Topic 4 – Investigating Customer I – Role of Marketing Research
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4.4.1 Motivation Research
• As early as 1939, a Viennese psychoanalyst named Ernest Dichter
began to use Freudian psychoanalytic techniques to uncover the hidden
motivations of consumers.
• Motivational research methods consist of projective techniques and indepth
• Motivational research findings are highly subjective, because they are
based on analyst interpretation.
• Because of these limitations some marketers use a combination of
quantitative and qualitative research to help make strategic marketing
• Interest in consumer experiences has led to the term experientialism,
and the researchers who adopt this research technique are known as
experientialists or interpretivists.
The research methods used by experientialists are as follows.
• Ethnography – The researchers place themselves in the society under
study in an effort to absorb the meaning of various cultural practices.
• Semiotics – The study of symbols and the meanings they convey.
• In-depth interviews – Allow the researcher to play an active role in the
Marketers have discovered that rather than conflicting, positivism and
interpretivism are really complementary in nature.
4.4.2 The Consumer Research Process
Step 1 – Define the Objectives of the Research
1. A carefully thought out statement of the objectives helps to define the
type and level of information needed.
a) Qualitative studies entail the interviewing of small number of
respondents by trained professionals, who also do the analysis.
i. Qualitative studies are usually used to come up with new ideas
for products or promotional campaigns.
ii. Because of the small number of respondents, the findings of the
research are not usually projectable to the marketplace.
b) Quantitative studies entail the use of questionnaires directed to a
relatively large number of respondents.
i. Quantitative studies are used to find out how many people in
the population, what percentages use certain products and how
frequently they use them.
ii. Findings of this type of research are usually computer analysed.
Step 2 – Collecting Secondary Data
1. Secondary data is any data originally generated for some purpose
other than the present research objectives.
a) Secondary data is based on research done by outside organisations
as well as data generated in-house for earlier studies, or even
customer information collected by the company’s sales or credit
b) Government agencies, private population data companies,
marketing research companies, and advertising agencies are
important additional sources of secondary data.
c) If the secondary data collected does not provide enough data to
meet the objectives of the study then primary data must be
Step 3 – Designing Primary Research
1. Qualitative Research Designs
a) In-depth interview
i. An in-depth interview is a lengthy, non-structured interview
between a respondent and a highly trained interviewer.
ii. Respondents are encouraged to talk freely about their activities
attitudes, and interests, in addition to the product category or
brand under study.
iii. Some marketers prefer the individual in-depth interview
because they feel that respondents are free of group pressure,
less likely to give socially acceptable responses, more likely to
remain attentive, and more likely to reveal private thoughts.
b) Focus Groups
i. Focus groups consist of eight to ten respondents who meet with
a moderator-analyst for a group discussion.
ii. Respondents are encouraged to discuss their interests, attitudes,
reactions, motives, lifestyles, feelings about the product, usage
iii. A researcher can easily conduct two or three focus groups in
iv. Some marketers prefer focus groups because it takes them less
time overall to complete the study and the group concept yields
a greater number of new ideas and insights.
c) Projective Techniques
i. Projective techniques are designed to tap the underlying
motives of individuals despite their unconscious rationalisation
or efforts at conscious concealment.
ii. The respondent is asked to complete sentences or describe, or
explain the meaning of various stimuli.
iii. The theory behind projective tests is that the respondents’ inner
feelings influence how they perceive ambiguous stimuli.
iv. The stories they tell or the sentences they complete are actually
projections of their inner thoughts.
v. The basic assumption underlying projective techniques is that
respondents are unaware that they are exposing their own
2. Quantitative Research Designs
a) Observation Research
i. Consumers are watched during the process of buying and using
ii. Observation researchers gain a better understanding of what a
product symbolises to a consumer, and greater insight into the
bond between the person and the product.
i. In such experiments only one variable, the independent
variable, is manipulated at a time, while all other elements are
ii. Controlled experiments of this type ensure that any difference
in results, the dependent variable, is due to different treatments
of the variable under study, and not to extraneous factors.
i. Researchers can ask questions in person, by mail, or by
Each of the above methods has its advantages and disadvantages
Step 4 – Collecting Primary Data
1. The Questionnaire
a) Questionnaires must be interesting, objective, unambiguous, easy
to complete, and generally non-burdensome.
b) Questionnaires include both questions that are relevant to the
purposes of the study as well as pertinent demographic questions.
c) To assure validity, questionnaires are pre-tested and ‘debugged’
before widespread distribution.
Types of Questionnaire Questions
a) Open-ended questions require answers to be in the respondent’s
i. Open-ended questions yield more insightful information but are
more difficult to code and analyse.
b) Closed-ended questions require that the respondent merely check
the appropriate answer from a list of options.
i. Closed-ended questions are relatively simple to tabulate and
analyse, but the answers are limited to the alternative responses
c) Inventories are when the instrument presents a series of statements
to which respondents are asked to indicate their degree of
agreement or disagreement or feelings or evaluations.
i. Likert scales ask the respondent to check or write the number
corresponding to their level of ‘agreement’ or ‘disagreement’ to
ii. Semantic differential scales ask the respondent to evaluate a
concept, etc. on the basis of each attribute by checking the
point on the continuum that best reflects their feelings.
iii. Rank order scales ask the respondent to rank items in order of
preference in terms of some criterion, such as quality or value
a) Who to survey? – Interviewing the correct target market or
potential target market is basic to the validity of the study.
b) How many to sample? – The size of the sample is dependent on the
size of the budget and the degree of confidence that the marketer
wants to place in the findings.
c) How to select the sample?
i. Probability samples allow the findings to be projectable to the
ii. Non-probability samples allow the findings to be ‘respective’
of the population.
Step 5 – Analysis
1. Qualitative Research
a) The moderator or test administrator usually analyses the responses
2. Quantitative Research
a) Open-ended responses are first coded and then converted to
numerical scores, either by hand or with the aid of a computer.
b) Then all responses are tabulated and analysed.
Step 6 – Report Preparation
a) The research report should include a brief executive summary of
b) The research report may or may not include recommendations for
c) The body of the report includes a full description of the
methodology used and, for quantitative research, also includes
tables and graphics to support the findings.
4.5 Major Data Collection Methods
The major methods of gathering data in marketing research include:
• Secondary research – Utilisation of data that were developed for some
purposes other than helping solve the problem at hand.
− Internal secondary data
− External secondary data
• Survey research – Systematic collection of information directly from
− Telephone interviews
− Mail interviews
− Personal interviews
• Experimental research – The research manipulates one or more
variables in such a way that its effect on one or more other variables
can be measured. Two types of experimental research include:
− Laboratory experiments.
− Field experiments.
• Observation – The direct examination of behaviour or the results of
− Personal observation.
− Equipment observation.
• Projective techniques and in-depth interviews – Designed to gather
information that respondents are either unable or unwilling to provide
in response to direct questioning.
Projective techniques – Allow respondents to project or express their
own feelings as characteristics of someone or something else.
In-depth interviews – Allow individuals to express themselves without
any fear of disapproval, dispute, or advice from the interviewer.
4.6 Primary Measurement Techniques
The two primary measurement techniques used in marketing research
• Questionnaires – A formalised instrument for asking information
directly from a respondent concerning behaviour, demographic
characteristics, level of knowledge.
• Attitude Scales – A formalised instrument for eliciting self-reports of
beliefs and feelings concerning an object(s).
Using the factors given below list the differences between consumer
and industrial research.
Factors Consumer Research Industrial
4.7 Quantitative and Qualitative Research
Marketing research methods can be classified as follows.
4.7.1 Quantitative Methods
1. Quantitative research methods use numbers to represent the constructs
of a marketing phenomenon, their relationship and relative strengths.
2. They allow for easy comparison of findings between studies.
3. Data can be tested for significance, confidence and errors.
4. The limitation lies in its ability to reflect complex forms of behaviour.
5. Quantitative research techniques include sampling, multivariate
hypothesis testing, etc.
4.7.2 Qualitative Methods
• Qualitative research methods use words, symbols, or pictures to
represent marketing phenomena.
• Qualitative assumptions are inductive and holistic, i.e. they are
designed to discover, explore and interpret phenomena so that
hypotheses can be established prior to being tested.
• Uses and limitations of qualitative research:
− In naming new products.
− In uncovering obscure attitudinal dimensions prior to designing a
− To investigate a phenomenon already observed usually in a
− To interpret the logic behind customers’ actions.
It is more difficult to compare studies and to apply tests. Qualitative
research techniques include:
− focus group interviews;
− in-depth individual interview;
− projective techniques;
− participant observation.
4.8 Sources of Research
This Make or Buy decision is dependent on the following factors:
• Economic factors – Is it more economical to contract an outside
agency than to conduct research in-house?
• Expertise – Does the company have the necessary expertise to conduct
• Special equipment – Does the company have the equipment to conduct
• Political consideration – Will the study involve controversial issues
within the organisation which may lead to disputes?
• Legal and/or promotional consideration – Will the result of the study
be used for legal proceedings or promotional purposes?
• Administrative facets: Are the staff within the company already fully
committed? Will they have the time to conduct in-house research
• Confidentiality requirements – The greater the confidentiality
required, the more the tendency to contract an outside agency
In practice, marketing research is conducted both in-house and contracted
to outside agencies.
What are the criteria you would consider when selecting a research
4.9 Market Research Brief
The Market Research Brief is a document produced by the user or buyer to
communicate perceived requirements of a market research project to a
4.9.1 Purpose of a Written Brief
• The process of writing makes the initiator of the brief more clear about
his problem and how the collected data can help him make correct
• It helps both parties to plan and administer the research programme.
• It ensures a certain amount of agreement amongst all parties.
• It helps reduce disputes between user and researcher.
• The brief can be used as a basis for negotiation with various research
4.9.2 Format of a Research Brief
• Provide background information about the problem.
• Set objectives (both marketing and research objectives).
• Specify target for study, i.e. consumer, retailer etc.
• Specify who will use the findings.
• Lay out the constraints, e.g. cost, time, etc.
• Give the researcher an idea of the administrative requirements, i.e.
submission of proposal, information available within the company, etc.
4.10 Elements of the Research Proposal
• Summary – A brief statement of the major points from each of the
• Background – A statement of the management problem and the factors
that influence it.
• Objectives – A description of the types of data the research project will
generate and how these data are relevant to the management problem.
A statement of the value of the information should generally be
included in this section.
• Research approach – A non-technical description of the datacollection
method, measurement instrument, sample, and analytical
• Time and cost requirements – An explanation of the time and costs
required by the planned methodology.
• Technical appendixes – Any statistical or detailed information in
which only one or a few of the potential readers may be interested.
What are the typical contents of a Marketing Research Plan?
Topic 5 Investigating Customer II – Secondary
Data Sources and Sampling
Secondary data are existing data which have been collected for other
Secondary data research is, therefore, the collection of existing data from
various sources, internal and external to the company, in order to make
sound marketing decisions.
5.2 Sources of Secondary Data
5.2.1 Internal Data Sources
• Accounting records/order forms – Provide information on:
− customer location;
− frequency of purchase;
− order size (volume and profitability);
− contact (name, position);
− types of product ordered;
− delivery type and time requested;
− outlet type (channels).
• Sales reports – Provide information on:
− number of appointments made to see buyer;
− number of follow-up meetings;
− number of final sales, etc.
• After sales/service records – Provide information on:
− detail breakdown by region;
− nature of complaints.
• Previous market research – Although done for other purposes, some of
the background information may still be valuable.
• Other reports:
− overseas trade discussion/seminars;
− product launches;
− R & D conferences.
5.2.2 External Data Sources
• Books – Available from:
− local and national libraries;
− tertiary institutions;
− other institutions.
• Journal and periodicals:
− Journal of Market Research;
− Journal of Advertising Research;
− Economist, Marketing Quarterly Review, etc.
• Commercial research – Many commercial outlets undertake research
and these reports are available (at a price) to interested parties.
• Directories and company information:
− Kompass, Buku Merah, Stock Exchange Yearbook, etc.
− ‘Who’s Who’ and ‘Who Owns What’, etc.
• Governmental publications:
− Monthly Digest of Statistics;
− Economic Trends;
− Population Trends;
− Family Expenditure Survey, etc.
• Other research bodies:
OECD, banks, trade and profession associations, Chamber of
5.3 Determinants of Secondary Data Usage
In determining the amount and scope of secondary research to be
undertaken the following factors should be considered.
• Applicability of the data to the problem.
• Knowledge of the sources of secondary data.
• Recency of the secondary data.
• Accuracy of the secondary data.
• Cost of both primary and secondary data.
• Expertise of the researchers in:
− defining the problem;
− analysis of published data;
− collecting the information;
− presenting the data.
• Time scale involved – the quicker the research has to be, the less time
there is for primary data collection.
5.3.1 Advantages and Problems of Secondary Data
• Secondary data is relatively cheap.
• It enhances the context and validity of primary research.
• It has enormous personal benefits – vital for all marketing project
• Availability – Much information does not exist (e.g. in a new product
category where the demand is largely created by supply).
Linked to this is the issue of access to the data, and this is determined
by knowledge that the data exist.
• Relevance – This refers to how much published material fits the
information needs of the research problem.
Units of measurement (e.g. TV or radio areas for which data may exist,
but which are not the same as governmental regional breakdowns).
Surrogate (or partial) data (you may have to settle for information
which is not quite right, but which will do).
• Accuracy – The main problem with secondary data is in determining
Accuracy depends on the competence and motivation of the researcher
who originally compiled the secondary data.
• Recency – Unfortunately for some secondary data source, the data can
be out of date.
• Cost – Although undertaking secondary search is less expensive than
primary research, specific market reports can run into thousands of
If you need to get more details of your customers from which internal
sources can these information be obtained?
5.4.1 Some Basic Sampling Terms
• Sampling – Concerned with collecting, analysing and interpreting
market data. It involves the study, in considerable detail, of relatively
small numbers of informants taken from larger group.
• Population – Sometimes called the ‘Universe’. This refers to any
group of people or objects which are similar in one or more ways, and
which form the subject in a particular survey.
• Census – This occurs when the universe is examined in its entirely.
• Sample – This occurs when a number of sampling units are drawn from
a population and examined in some detail. This information is then
considered as applying to the whole universe.
• Elementary sampling unit – This refers to an individual element of the
population which is to be sampled.
• Sampling frame – This refers to lists, indexes, maps, or other records
of population from which a sample can be selected.
• Stratified sample – This occurs when a sample is specially designed so
that certain known characteristics in the population under survey are
represented in certain proportions.
• Sample error – This refers to the difference between a sample estimate
and the value of the population parameter obtained by complete count
5.5 Advantages of Sampling
• It saves money … the overall cost of samples is lower than a complete
• It saves time … census takes many years to prepare for publication
whereas sampling surveys can be conducted and published in a few
• It saves labour … fewer staff are engaged in sample surveys than when
complete census are taken. Labour economies also take place in
tabulation and processing of data.
• Sampling allows for more data to be provided … this is possible as
sample surveys investigate fewer cases.
Can a census be used in place of a sampling in marketing research?
5.6 Types of Sampling
There are two broad types of sample:
• Quota or non-probability sample – Where judgement is used to select
a sample e.g. by sex, age, social group, etc. In quota sampling not all
the elements of a population have an equal chance of being chosen in
• Random or probability sample – Where each element of the population
from which the sample is chosen has an equal probability of inclusion
in the survey.
5.7 Quota (Non-Probability) Sampling
• It allows researchers freedom to obtain interviews without unnecessary
• It is substantially less expensive than random sampling.
• It is administratively simple because it is independent of sampling
• There is bias tendency.
• The result of the sampling is influenced by the interviewer’s pattern of
• It is impossible to estimate sampling error.
5.8 Random (Probability) Sampling
• Its sound theoretical basis allows the legitimate use of the mathematics
• It is the only completely objective method of sampling populations.
Alternatively, a census has to be carried out.
• The results of random sampling are statistically sounder … it is
possible to calculate the standard error of the mean.
• Because of the mechanical selection method of the sampling unit, bias
is reduced to the bare minimum.
• There is difficulty in obtaining complete lists of a universe or
• Even when they are available, there is a possibility that the population
lists may be out of date, as they often are.
• Population lists vary greatly in their reliability.
• All population lists are subject to printing delays.
• Selected sample units may be widely scattered, thus making it difficult
for the interviewer to carry out the survey.
• Non-response is a serious source of bias, thus callbacks are necessary.
Callbacks add to the cost of the survey.
In market research practice, quota sampling is used more extensively
than random sampling. Why is this so?
Topic 6 Investigating Customers III –
Questionnaire Design and Survey
6.1 Questionnaire Design
A questionnaire is simply a formalised set of questions for eliciting
information. As such, its function is measurement, and it represents the
most common form of measurement in marketing research.
A questionnaire can be used to measure:
• demographic characteristics;
• level of knowledge;
• attitudes and opinions.
What are the typical ways of questionnaire may be administered?
6.1.1 Questionnaire Design Principles
• Questions should be phrased in simple language.
• Questions should be specific.
• Questions should be economically worded.
• Bias should be avoided.
• Third party questions should be avoided.
• Questions should not place too much strain on the memories of
• Questions should be asked in sequence.
• The funnel technique should be used to avoid bias.
• Threatening or taboo questions should be handled with delicacy and
• Precise age of respondents need not be sought … age group is
• Questions should be designed in order to facilitate subsequent analysis.
• Two basic types of questions are used in surveys.
− Open-ended questions.
− Closed questions.
In survey research there is practical case for pre-coding and also for
closing as many questions as possible.
6.1.2 Open/Closed Questions
• Open questions:
− ‘What extras and/or accessories were already fitted when you
bought your car?’
• Closed questions:
− ‘Which of these extras and/or accessories were already fitted when
you bought your car?’
6.1.3 Structured or Unstructured Questionnaire
• The order in which the questions are asked together with their wording
are laid down.
• The interviewer must not alter or explain the questions.
• Many of the questions are closed and possible answers to most
questions are pre-coded.
• Most of the questions are open-ended.
• The interviewer is free to change the order of asking questions and to
Why is it that structured questionnaires are preferred over
unstructured questionnaires in survey research?
6.1.4 Dichotomous or Multiple-Choice Questions
• Dichotomous questions – allow for only two responses such as:
Yes or No
Agree or Disagree
Did or Did Not
• Multiple-choice questions – provide a list of possible answers from
which a respondent must choose such as:
− Do you plan to buy a new refrigerator in the next six months?
Is the Respondent Likely to Give a True Answer?
A true answer may not be obtained because:
• the respondent may find it difficult to verbalise;
• the respondent’s memory may be defective;
• the respondent may be reluctant, or unwilling to answer the question.
6.1.5 Pilot Testing of Questionnaires
• Pilot testing or pre-testing of questionnaires is a critical activity that
should be conducted prior to admission.
• Pilot testing is, in essence, a market test of a questionnaire.
• A pilot test requires five types of decisions.
− What items should be pilot tested?
- Unique and more ambiguous questions should receive most
− How should the pilot test be conducted?
- If possible, in the same manner as planned in the final survey. It
allows the researcher to discover which questions are likely to
be skipped or refused.
− Who should conduct the pilot test?
- Both experienced and inexperienced interviewers should be
involved. This will give a realistic feedback or response rate,
time of interview, etc. Problems for and with the interviewers
can also be discovered.
− Which respondent should be involved in the pilot test?
- Similar to those of the target respondents.
− How many respondents should be used?
- There is no pre-set numbers. However, the more complex the
questions, the larger the sample should be.
6.2 Survey Research
6.2.1 Choice of Survey Research Method
The selection of any one particular method over another will depend on the
• The budget available for the survey research, which is related to:
− The time available for the research work. Methods vary in the
amount of time they require for completion.
− The accuracy of the result required, since some methods are more
accurate than others. However, the more accurate the method, the
more expensive it is likely to be.
• The kind of people to be surveyed, for different methods will suit
different types of people or different circumstances. For instance,
people vary in their degree of literacy and some people are fearful of
completing a written questionnaire.
• The geographic spread of the sample to be surveyed. If sample is
geographically scattered, some methods are more economical than
others to operate.
6.3 Advantages and Disadvantages
6.3.1 Telephone Interview
• A relatively large number of interviews can be conducted within a
short period of time.
• The interviewer can be located in one place.
• The interviewer can be supervised directly.
• The cost per interview is low.
• The sample can be spread over the country, since no travelling
expenses are incurred.
• Particularly satisfactory where population consists of higher social
classes where the majority are telephone subscribers.
• Inaccessible people can be interviewed where the interview can be
brief and arranged at a time convenient to the respondent.
• Telephone subscribers may not be representative of the general
• Only a short questionnaire is likely to be feasible.
• Observation is not possible.
• The times of the day or evening when respondents can be called are
• The interviewer has a time constraint in identifying himself,
establishing credibility and trust in order to solicit response from the
• Some subscribers are not listed in public directories.
6.3.2 Mail Interview
• A widespread sample may be reached without proportionately
increased costs as postal rates do not vary with distance within any one
• The mail survey may be very much cheaper than the personal
interview survey as field expenses are not incurred.
• No interviewer training is involved.
• Interviewer-bias is avoided.
• Certain groups which cannot be reached easily or without undue
expense by other methods can be reached by mail.
• The respondent can consider his/her answers at leisure.
• Respondents are a self-selecting group and may not be fully
representative of the population.
• The refusal rate is invariably much higher than with any other method
• The respondents may misinterpret the questions and give contradictory
or misleading answers since there is no interviewer present to clarify
the actual questions.
• The amount of information which can be obtained is limited by the
need to keep the questionnaire short and simple.
• Up-to-date address lists are expensive to obtain and maintain.
• The last returns tend to come in slowly, so that a substantial margin of
time must be allowed before the next step of the survey is undertaken.
• As personal questions may serve to antagonise the respondents, they
should be kept to a minimum or omitted altogether.
• The answers given on returns may not be those of the respondents, but
instead come from one or several other people.
6.3.3 Personal Interview
• The personal interview yields a high percentage of acceptable
• There is a low refusal rate.
• The sample can be statistically accurate.
• The information can be accurate, as the interviewer can immediately
clarify statements or misunderstandings.
• The interviewer can assess cases when incorrect information is given
• Through observation, additional information on respondent’s
characteristics can be noted.
• The respondent is likely to give spontaneous answers.
• Personal questions can be asked.
• The questionnaire can be longer than with any other methods.
• The high cost per interview, including interviewers’ fees, maintenance,
travelling expenses, etc.
• Through personal contact the interviewer may influence the answers
given (this is called interviewer bias).
• Inaccuracy in recording the replies may occur, especially if the
respondent is in a hurry, or shows a negative attitude towards the
• The expensive organisation and administration needed for selecting,
training and supervising interviewers.
• The number of interviews per day is restricted by the:
− time taken to contact appropriate respondents;
− length of the interviews themselves.
• It may be necessary to conduct interviews in the evenings and at
weekends, which increases the cost for overtime payments, overnight
List the strengths of the three major survey methods under the
Mail Telephone Personal
1. Ability to handle
2. Ability to collect
large amount of
3. Accuracy on
4. Control of
5. Degree of sample
6. Time required
7. Probable response
Topic 7 Investigating Customers IV –
7.1 Observation Research
• Observation research includes viewing and listening to situations. It
also encompasses recording human behaviour with monitoring
• Three conditions must be met for the use of this research technique.
− The data must be accessible to observation (this will rule out
measuring motivation, attitudes, etc.).
− Behaviour must be repetitive, frequent, or otherwise predictable.
− The event must cover a reasonably short span of time.
• Reasons for preferring observation data:
− In some cases, observation is the only technique that can be used to
collect accurate information (e.g. food or toy preference of children
who cannot talk).
− Where at times people are not aware, cannot remember, will not
admit to certain behaviours. (Retailers monitoring their
competitor’s prices and advertising effort knowing that their
competitors will not provide such details.)
− The relationship between the accuracy of the data and the cost of
the data is more favourable for observation than for other
techniques (e.g. traffic count).
What are the disadvantages of using observation research in
7.1.1 Types of Observation Approaches
• Natural or contrived situation – The researcher who sits near the
entrance to a restaurant and notes how many couples or groups or
families enter during specific periods is operating in a natural situation.
A researcher might need to control precisely the length of time a
message designed for a billboard is shown to a respondent. This would
probably require the respondents to look into a tachistoscope while the
‘billboard’ appears. This is a contrived situation.
• Open versus disguised observation – Observing a salesperson’s
behaviour is a form of open observation.
One-way mirror and hidden cameras observing consumer purchase
behaviour is a form of disguised observation.
• Structured versus unstructured observation – Unstructured
observation, the observer knows in advance precisely which aspects of
the situation are to be observed or recorded.
Completely unstructured observation places no restriction on what the
observer should note.
• Direct or indirect observation – Most of the examples described are
Indirect observation techniques observe the effects or results of the
behaviour rather than the behaviour itself. Examination of archives and
physical traces (pantry audit, garbage audit) are examples of indirect
• Human or mechanical observation – Traffic counts on automobile by
researchers is an example of using human beings to observe.
Audimeter used to monitor consumer TV viewing habits is an example
of mechanical observation.
Give examples of other types of mechanical or electronic equipment,
currently in use to observe behaviour.
7.2 Retail Audit
• A retail audit is a system of continuous research whereby a panel of
recruited retailers have invoices and stocks audited periodically so that
shares of market held by different brands can be determined by their
movement from shops.
• The retail audit provides a valuable source of information to marketers
− it records retail sales and brand share;
− it monitors distribution achieved;
− it signals the danger of ‘stockout’.
• Sales to consumers are recorded through a sample of retail outlets
representing the distributive trade in a country.
• The auditing method is based on observation derived as follows:
Opening Stock + Net deliveries – Closing stocks = Sales
• Audits are carried out once every two months.
• Main suppliers of this syndicated services: A.C. Nielsen, Retail Audits,
and Stats MR.
• Reports are given to subscribers on a bi-monthly basis.
• The fully detailed information provided by a retail audit includes:
Consumer sales and brand
: Units, Sterling (dollar) average
per shop handling.
Retailer purchases : Units, brand shares.
Sources of delivery : Direct/via depot/others.
Retailers stocks and brand
: Units, average per shop
Stock cover : Days, weeks, months.
Prices : Average retail selling prices at
time of audit.
Promotion : Display at point-of-sales, special
How does a marketer measure its market share against that of
7.3 Consumer Panels
• Consumer panels are continuous research whereby a group of
individuals agree to provide information over a period of time.
• The three main types of panels are:
Household panel : e.g. housewives purchasing for
Individual panel : e.g. individual purchases of a typical
Special interest panel : e.g. motorist.
Topic 7 – Investigating Customers IV – Observation Research DBA205 Consumer Behaviour
• The main objective of a consumer panel is to record consumer
purchases and brand share, in particular giving marketers information
− Demographic characteristics.
− Psychological characteristics.
− Buying behaviour.
− Where purchase are made.
− Price paid, etc.
• Data are obtained from panels of households or individuals by
• Consumer durables are audited once a quarter, and fast moving
consumer goods (fmcg) once a week.
• Panel members are required to record purchases in specially designed
pre-coded diary and/or households are audited (pantry audit).
• In addition, household’s TV viewing habits/patterns are monitored by
• Reports are given to subscribers on a four-weekly basis.
• Detailed information provided by consumer panels includes:
Consumer purchases : Units, Sterling (dollar), brand
penetration, consumer typology
psychographics, buying behaviour,
amount bought, loyalty and
Where purchase was
: Types of outlet.
Price : Average purchase price.
Promotion : Offers associated with purchases.
Advertising : Media consumption by panel
In what ways can the use of consumer panel information help
marketers understand its customers?
Topic 8 Investigating Customers V –
• Experimentation involves the manipulation of one or more variables by
the experimenter in such a way that the effects on one or more other
variables can be measured.
• A variable being manipulated is called an ‘independent variable’ (e.g. a
POS display is an independent variable).
• A variable that will affect the impact of the independent variable is
called a ‘dependent variable’ (e.g. unit sales is the dependent variable
in the above POS experiment).
• The portion of the sample or population that is exposed to a
manipulation of the independent variable is known as a ‘treatment
group’ (the stores receiving the POS display are a treatment group).
• A group in which the dependent variable is unchanged is called the
‘control group’ (those stores receiving no POS display constitute the
• In order to be confident that any change (or lack of change) in the
dependent variable is caused by the independent variable, the
researcher must measure or control the effects of other variables.
• In the POS display experiment above, the experiment sought to
establish the extent to which the displays would cause a change in sales
at retail stores.
• Experimentation is oriented towards establishing and measuring causal
relationships among the variables under consideration.
8.2 Laboratory Experiment
• Laboratory experiments are widely used in marketing research in the
initial testing of new products, package designs, advertising themes
• The ‘blind test’ is a typical example of a laboratory experiment where
consumers evaluate various versions of a product without knowing the
• In laboratory experimentation, the environment is simulated (e.g. home
shopping centre) and then used to test respondents’ reactions to new
products, advertising theme, etc.
• Laboratory experiments are characterised by a relatively high degree of
• This method tends to cost substantially less in terms of resources and
time than field experiment.
• It enables the firm to minimise the chance that competitors will learn
of its new ideas.
Place: Testing centre/hall,
Where product normally
used, kitchen, bathroom,
Treatment: Atomistic (usually) Holistic (usually)
Length of trial: On the spot Normal use
Subjects: Expert panel
Ad hoc sample(s) –
test panel, both
normally drawn from
the target group
Ad hoc sample(s)
test panel, both normally
drawn from the target
Design: Comparative or
Figure 8. 1 Comparisons of Laboratory versus Field Experiment
How accurate is a blind test when used for example to test
consumers’ preference for a beverage product of your choice?
8.3 Test Marketing
• Test marketing is a particular type of field experiment.
• It involves the duplication of the planned national marketing
programme for a product in one or more geographical areas.
• Test markets are not limited to new product only – other variables in
the marketing mix can also be tested.
• Two primary goals of test marketing are:
− to determine the market acceptance;
− testing of alternative marketing mixes.
• Test marketing can alert management to unsuspected problems and
opportunities associated with a new product.
8.4 Factors Favouring Test Marketing
• Acceptance of the product concept is very uncertain.
• Sales potential is difficult to estimate.
• Cost of developing consumer awareness and trial is difficult to
• A major investment is required to produce the product at full scale
(relative to the cost of test marketing).
• Alternative prices, packages, or promotional appeals are under
Can you cite reasons why some marketers do not want to test
8.5 Criteria for Selecting Test Market Areas
• Must be large enough to produce meaningful data (at least 2% of
potential actual market).
• Should have typical media availability and be self-contained from a
• Should be demographically similar to the actual market.
• Should be a self-contained trade area, to avoid transhipments into and
out of the area.
• Should be representative with respect to competition.
• Should allow testing under use conditions that are appropriate to the
8.6 The Average Test Marketing
• Uses three test areas.
• Lasts about 10 minutes.
• Tests different levels of one or more marketing mix variables,
• Uses both store audits and consumer surveys to measure the effect of
the different marketing mixes.
8.7 Steps in Test Marketing
• Define the objective.
• Set criteria for success.
• Integrate the test marketing.
• Establish controls.
• Select representative test markets.
• Decide on the number of test markets.
• Establish the duration of the test.
• Evaluate the results.
What are the typical causes of marketing failure revealed in test
Topic 9 Investigating Customers VI –
• Motivation research is concerned with the causes of people’s
behaviour, with the question ‘Why’. It seeks to relate behaviour with
underlying motives, desire and emotions.
• It is concerned with finding out how the product is seen through the
consumer’s eyes, how the consumer sees himself (self-image) and how
he views the product (product image).
• The major contributors to this field of research are:
− Dr Ernest Dichter:
A doctor of psychology with strong Freudian psychological
Wrote the book ‘Strategy of Desire’ in 1960.
He asserts that rationality is a fetish of the 20th Century …. That
we are not allowed by our culture to admit true irrationality as an
expansion of our behaviour.
Yet, the majority of our religion and political systems and even
loyalty, love and affection are all irrational.
By ‘tearing off the mask’ of human behaviour, we can see people
as they really are.
− Louis Cheskin:
Noted for his work in the study of colour as a motivating influence.
Wrote ‘ How to Predict What People Will Buy’ in 1952.
He claims that colourful and ingenious packaging are necessary
factors for successful marketing.
He showed through the use of ‘blind test’ that people will usually
declare a product superior (although not true) because of style or
• The research procedures used in motivational research come from
psychology and psychiatry. Motivational research attempts to get
below the surface of people’s behaviour as consumers so that a better
appreciation of their needs can be formed.
• The knowledge derived from motivational research can be used in
advertising, new product development, price investigation, packaging
• In-depth interviews and projective techniques are the two major types
of research technique used in motivational research.
9.2 Some Early Motivational Research Findings
Consumers resist prunes because they are wrinkled looking and remind
people of old age.
Men smoke cigars as an adult version of thumb sucking. They like their
cigars to have strong odour to prove their masculinity.
A woman is very serious when baking a cake because unconsciously she is
going through the symbolic act of giving birth. She does not like easy-touse
cake mixes because the easy life evokes a sense of guilt.
9.3 Product Personality
Power tools …are symbols of manliness. They represent masculine skill
and competence, and are often bought for their symbolic value rather than
for active do-it-yourself applications. Ownership of a good power tool or
circular saw provides a man with feelings of competence.
Rice… is viewed as a feminine food (in the US). It typically suggests a
strong, healthy, fertile female. Throwing rice at newly married couples
symbolises the wish that the marriage be blessed with children.
Ice-cream … is often associated with love and affection, it derives
particular potency from childhood memories, when it was given to a child
for being good, and withheld as an instrument of punishment. People refer
to ice cream as something they love to eat.
Given the motives below, what do you think are the associated
products typically purchased by consumers to satisfy them?
Motives Associated Products
9.4 Measurement Methods
Some of the major types of methods that can be used to measure
motivation are listed below.
• Observation (covered in Topic 7).
• Self-reports attitudes scales (will be covered in Topic 10).
• In-depth interviews.
• Focus group interviews.
• Projective techniques.
9.5 In-Depth Interviews
• An in-depth interview is a research technique in which consumers are
interviewed one at a time or in a small group. It is designed to uncover
a consumer’s underlying attitudes and/or motivation through lengthy
and relatively unstructured interview.
• The one-on-one interviews are called Individual In-Depth Interviews.
• Small group interviews are called Focus Group Interview.
9.6 Focus Group Interview
• Focus group interview is a qualitative research method in which a
small sample of respondents discuss selected topics as a group.
• Normally consists of four to fifteen respondents forming the group.
• Respondents discuss an elected topic for about 1-2 hours with a
moderator in attendance.
Focus group interviews are used for what purposes?
• Interaction among group members refines opinions, giving more
detailed, accurate information than could be gleaned separately.
• The technique is stimulating, enhancing the likelihood of obtaining
more meaningful comments.
• Respondents in a crowd can be encouraged to speak out more than they
• Spontaneity is enhanced, with less pressure to give ‘desired’ answers.
• The techniques are particularly adaptable to children and to situations
where adult literacy is low.
• Securing responses from a random sample can be difficult.
• People may hide behind ‘majority view’.
• Strong opinions can eclipse those of others.
• Like interviewers, the moderator may introduce bias.
• They can be expensive – securing a sample, paying participants, using
a central location and paying the moderator.
9.7 Projection Techniques
Some of the more common types of projective techniques being used in
motivational research are:
• Third person test – The objective is to project people’s thoughts into a
buying situation being experienced by some designated third party.
This way consumers are able to express their feelings without personal
embarrassment or implications.
• Word association test – A series of words are fired at respondents and
they are expected to say immediately what words come to their minds.
The objective is to attract spontaneous response that will indicate the
associations which are linked with products, brand names or even
perhaps types of occupations.
• Sentence completion test – Respondents are asked to complete a short
sentence or series of sentences, and their responses are analysed for
underlying attitudes and other behavioural factors.
• Thematic apperception test – A series of pictures is shown to
respondents, who are asked to describe the situation shown, what leads
up to it, and to give their opinion of the likely outcome.
• Story completion test – The test extends the sentence completion test
by giving respondents an opening sentence and inviting them to
continue the story.
• Cartoons (blank balloons) – Two people might be shown in a certain
setting, discussing some matters. In one of the balloons would be
shown the remarks made by one person, while the other balloon would
The respondent has to complete the conversation by filling in the
response which is thought be most appropriate in the circumstances.
• Psychodrama – This test involves people in an imaginary buying
situation related to specific types of products, and they would be asked
to act out their anticipated behaviour in those circumstance.
• Rorschach ink blot test – A series of ten standardised ink blots are
shown to respondents, who are invited to say what they see in them.
Psychologists claim that this test enables them to understand better the
inner thoughts and the personalities of those people tested.
Critics claim that by ‘tearing off the mask’ of human behaviour and
seeing people as they really are, marketers are indirectly invading the
privacy of consumers. What is your view?
Topic 10 Investigating Customers VII –
Some of the major methods used to measure attitude include:
• Observation and inference (covered in Topic 7).
• Qualitative research (covered in Topic 9).
− In-depth interviews.
− Focus group interviews.
• Self-report attitude scales.
− Likert scale.
− Semantic differential scale.
− Guttman scale.
− Staple scale.
− Rank order scale.
What are the problem(s) associated with each of these approaches to
the measurement of attitude?
Qualitative research Self-report
10.2 Measurement of Attitude
The following factors should be considered when designing attitude scales.
• The nature and degree of verbal description associated with the scale.
• The number of items (response categories) on the scale.
• Balanced versus unbalanced in the scale.
• Odd versus even number of items on the scale.
• Forced versus unforced scales.
10.3 Likert Scale
• A large number of statements related to the particular object being
surveyed are collected by the researcher.
• These statements are then administered to a group of people whose
attitudes are being studied. They are asked to respond to each
− Strongly agree.
− Strongly disagree.
• These five categories are then scored using 5, 4, 3, 2, 1 respectively for
favourable statements and the reverse for unfavourable ones.
• Individual scores are totalled and compared. For example, if 12
statements are made a maximum score of 60 (5 x 12) would indicate a
positive attitude and a minimum score of 12 (1 x 12) a negative
• The main advantages of this method include: good reliability, simple to
construct, precise information on respondent’s attitude, and can be
used to provide consumer profile.
• The technique is unable to measure neutral regions.
‘Isetan is one of the most attractive stores in town’
+2 +1 0 -1 -2
‘The service at Isetan is satisfactory’
+2 +1 0 -1 -2
10.4 Semantic Differential Scale
• Developed by Osgood, Suci and Tannebaum of the institute of
Communication Research, University of Illinois.
• Respondents are required to rate the attitude object on a number of
itemised seven point rating scales bounded at each end by one of two
• The respondent marks the blanks that best indicates how accurately
each term describes or fits the attitude object.
1 2 3 4 5 6 7
• This method is flexible, reasonably reliable and simple to use.
• The limitations are that the midpoint may not coincide with the precise
neutral region and that the seven points are not equally spaced.
• Widely used in studying attitudes covering corporate image, product
image, brand image, advertising image, etc.
10.5 Guttman Scale
• Respondents are asked a series of questions on the same subject and
relating to the same dimension of that subject.
• Intensity in feeling is registered by asking after each question:
‘How strongly do you feel about this?’
Answers are classified by such intensities asstrongly agree, agree,
undecided, disagree, strongly disagree. Favourable statements are
scored 4 to 0.
Statement: ‘Sunshine whole wheat bread is more nutritious’
Agree Undecided Disagree Strongly
(4) (3) (1) (1) (0)
Statement: ‘Group sales will show improvement next year’
YesYes Yes No No No
• Each individual respondent’s content score is computed. For example
if seven statements are made, the highest score is 28 and the lowest 0.
• Scores of respondents are entered on a scalogram board which is a
device designed to simplify the overall process of analysis.
• The main benefit of this method is that it can measure neutral regions.
• The limitations include the complexity of the method and its unidimensionality.
10.6 Staple Scale
• It is a simplified version of the Semantic Differential Scale.
• The scale values are used to indicate how accurately an adjective
describes the concept in question, that is, no bipolar adjectives are
• The advantage of this method lies in the ease of administration and the
absence of any need to pre-test adjectives or phrases to ensure true
• Profile analysis can be presented by this method.
10.7 Rank Order Scale
• Respondents are required to rank a set of objects according to some
• For example, respondents may be asked to rank five brands of
cigarettes in terms of their preference.
_______________ Lucky Strike
Scoring: 1. for the best taste;
2. for the second best, etc.
• When constructing rank order scales, it is important to include closely
• Its simplicity makes it a widely used method, particularly in measuring
Topic 11 Presentation and Interpretation –
• Report preparation is the final stage of a research project.
• It is a key stage because the project can guide management decisions
only if it is effectively communicated to management.
• A research report is an oral presentation or written statement (or both)
that has the aim of communicating research findings, recommendations
and conclusions to management for decision making purposes.
When are written reports required?
11.2 Guidelines in Writing Reports
The following guidelines should be observed when writing marketing
• Focus on the objectives of the study.
• Minimise the reporting of technical aspects of the project.
• Use terminology that matches the vocabulary of the readers.
• Develop an interesting style of writing.
• Use visual aids wherever practical.
11.3 Report Format
The topics of a comprehensive report should include the following:
1. Title Page (sometimes precede by title fly page)
2. Letter of Transmittal
3. Letter of Authorisation
4. Table of Contents (and list of figures and tables)
6.1 Introduction (includes Background and Objectives)
6.2 Methodology (comprising Research Design, Data Collection
methods, Sampling, Fieldwork and Analysis)
6.5 Conclusions and Recommendations
7.1 Data Collection forms, Detailed calculations, General tables,
Bibliography, and others.
11.4 Brief Description of Each Topic
1. Title Page: Includes the title of the report, for whom the report was
prepared, who it was prepared by, and the date of release or
2. Letter of Transmittal: A covering letter, the purpose of which is to
release or deliver the report to the recipient.
3. Letter of Authorisation: This is the letter to the researcher approving
the research project.
4. Table of Contents: Lists the divisions and subdivisions of the report
with page references. Is based on the final outline of the report.
5. Summary: Briefly tells why the research project was conducted, what
aspects of the problem were considered, what the outcome was, and
what should be done.
6. Body: Constitutes the bulk of the report containing an Introduction
(including background and objectives), Methodology, Results,
Limitations, Conclusion and Recommendations.
7. Appendix: Comprises the details which may be too technical to appear
in the body of the report. Usually contains the tables, graphs,
11.5 Adapting the Level of Formality
Not all research findings are required to be reported in a very formal
manner. Hence, research findings can be adapted to suit requirements of
the reader as follows:
Figure 11.1 Adapting the Level of Formality
• Title fly page
• Title page
• Letter of authorisation
• Table of contents
• Report body
• Title page
• Table of Contents
• Report body
• Title page
• Table of Contents
• Report body
• Title page
• Report body
• Report body
11.6 Presentation of Research Findings
The meeting at which research findings are presented to management is
called the presentation. The purposes of listening to an oral presentation
• To quickly learn what the presenter knows, without the need to read
the report in detail.
• To satisfy themselves that the work is reliable by asking the presenter
• To apply the facts of the report to resolve the company’s problems.
11.7 Oral Presentation
The key to effective oral presentation is preparation. In preparing oral
presentation, consider the following factors.
• Know your audience – The report should be aimed and presented with
the reader in mind.
• Be organised – A well-organised report helps the audience through a
logical process from investigation to conclusion.
• Use visual aids – Including flipcharts, slides, transparencies, etc. can
help keep the audience interested.
• Do not read the report – Reading will only bore the audience. Oral
presentation is supposed to clarify and extend the written report, not
• Practice – Practise the presentation to ensure that delivery and
organisation of materials achieve the objectives of the presentation.
11.8 Effective Use of Graphic Aids
• Effective use of graphic aids enhances a presentation. The proper use
of graphic aids can clarify complex points and/or emphasise a specific
• The two most widely used graphic aids used in presenting research
reports are tables and charts.
a) Tables – Tables are used to present numerical information,
especially when several pieces of information have been gathered
and each item discussed. When using tables the following should
• Table number.
• Boxhead and subhead.
b) Charts – Charts translate numerical information into visual form
so that relationships may be easily grasped. Charts could take the
form of a pie chart, bar chart, multiple bar chart etc. Charts should
include the following:
• Figure number
• Explanatory legends
• Source and footnotes
Figure 11.2 Examples of Types of Charts
11.9 Presenting Numerical Information
Numerical information can be presented in four different ways in a
research report. They are:
• inclusion in a text paragraph;
• placement in a semitabular form;
• placement in tables;
• graphical expression.
11.10 Evaluation of the Report
When evaluating a research report, consider the following factors.
• The research objectives are clearly stated.
• Research problem(s) are also clearly stated.
• The research design is appropriate for the problem and succinctly
• The collection procedures chosen are appropriate for the problem and
• The procedures used to analyse the data are appropriate.
• The conclusions are unambiguously stated.
• The data must support the conclusions.
• The report is written clearly.
• The report is logically organised.
• The limitations of the study are clearly stated.
• The report contains all the necessary data for evaluative purposes.
What are the disadvantages of using observation research in
Topic 12 Understanding Customer
Behaviour I – Culture
− ‘That complex whole that includes knowledge, belief, art, morals,
law, custom, and other capabilities and habits acquired by man as a
member of society.’
− ‘The distinctive way of life of a group of people, their complete
design for living’
• Culture is everything that is socially learned and shared by the
members of a society.
• Non-material culture includes words people use, ideas, customs,
beliefs, habits, etc.
• Material culture consists of all physical substances including tools,
automobiles, houses, shopping centres, etc.
12.2 Cultural Relevance to Marketing Decisions
• Culture influences consumers. Perspectives from cultural anthropology
help marketers understand a number of facets of consumer behaviour
such as the following.
− National character or the differences that distinguish one national
group from another.
− Differences in subcultures such as Blacks, Jews, andPuerto
− The silent language of gesture, posture, food and drink preferences,
other non-verbal clues of behaviour.
− The significance of symbols in a society.
− Taboos or prohibitions in a culture, relating to various things such
as the use of given colour, phrases, or symbols.
• Anthropologists have helped marketers recognise that consumer goods
have significant ability to carry and communicate cultural meaning.
12.3 Characteristics of Culture
• Culture is invented.
− Three interdependent systems exist:
(i) an ideological system;
(ii) a technological system;
(iii) an organisational system.
• Culture is learned.
− It is not innate or instinctive but is learned early in life.
• Culture is prescriptive.
− Ideal patterns of behaviour, thought, and feeling which groups
share are norms. Sanctions are taken when actual behaviour
deviates from the norms.
• Culture is socially shared.
− That is, by a group of human beings living in an organised society
and kept relatively uniform by social pressure.
• Cultures are similar but different.
− The following elements are found in all cultures:
athletic sports bodily adornment
a calendar cooking
religious ritual many others
• Culture is gratifying and persistent.
− It satisfies basic biological as well as learned needs. People feel
comfortable doing things in their customary ways.
• Culture is adaptive.
− It is gradually and constantly changing.
• Culture is organised and integrated.
− That is, its parts fit together.
Define the following terms.
12.4 Cultural Values
• A cultural value is a widely held belief or sentiment that some
activities, relationships, feelings or goals are important to the
community’s identity or well being.
• Values produce inclinations to respond to specific stimuli in standard
• Values serve as standards or criteria that will tell us how to act, what to
want, and what attitude to hold, and then allow us to judge and
compare ourselves with others.
• Americans’ closely held cultural values include: democracy,
individualism, equality, materialism, progress and achievement,
humanitarianism and many others.
What are your country’s closely held values?
12.5 Cultural Values Influence on Consumer Behaviour
• Marketers have long recognised the importance of appealing to
consumer’s values in marketing.
− The Marlboro theme ‘The Marlboro Man’ may attract people who
value the respect connected with rugged and independent cowboys.
− Camel’s theme ‘Where a Man Belongs’ appeals to a sense of
• Some recent studies have found that commonly held cultural values do
shape consumption choices to a certain extent.
− Culture is an underlying determinant of the type of automobiles
purchased (such as full-size, intermediate, compact and subcompact
12.6 Values, Norms, Sanctions, and Consumption Patterns
Specify ranges of
Figure 12.1 Values, Norms, Sanctions, Consumption Patterns
12.7 Cultural Change
• Cultural change may come about slowly in an evolutionary manner, or
• Changing cultural values in the United States include:
− shifting from an industrial to an information-based society;
− high technology can no longer be forced on the population without
the human element or ‘high-touch’ reaction it causes;
− the American economy is becoming increasingly part of the global
− managers are beginning to think about the long run rather than just
the next quarter;
− centralised structures are becoming decentralised;
− the American traditional sense of self-reliance is once again
− citizens, workers and consumers have a greater voice in
government, business, and the marketplace;
− the computer has allowed American society to move from pyramid
hierarchies to networks;
− population, job, government power, and wealth are moving
irreversibly from North to South.
In what ways has your country’s culture changed over the years and
what are the implications for marketing?
12.8 Implication of Cultural Change for the Marketer
• The search for a new work ethic – Will mean that leisure activities will
occupy a more important place in people’s lives.
− Time saving is becoming very important.
− Consumers will insist on having their ‘right’ to safe, proven, nonpolluting
products and packages.
− Self-fulfilment and self-actualisation are important motivating
− Sexually explicit appeals are more acceptable than they used to be.
Topic 12 – Understanding Customer Behaviour I – Culture DBA205 Consumer Behaviour
− The back-to-nature or ‘simple is better’ trend has been influential
in many product areas.
• Product planning – Must be done in full recognition of cultural trends.
• Distribution channels – Changing consumer values may lead to
different shaping patterns which may necessitate new channels of
• Promotion – Messages must take into consideration the effect of
culture e.g. greater stress on ecology, more informative copy, etc.
• Market segmentation – Consumer values can be used to segment the
12.9 Cross-Cultural Understanding of Consumer
• When one is confronted with a different culture, ‘culture-shock’ is
often experienced. A true understanding of the host countries is critical
to success in international marketing.
• Decision areas for the international marketer:
− Determining underlying values and their rate of change within the
relevant market. What sorts of values are currently held?
− Evaluate the product concept as it relates to the host country. Does
it harmonise with current and evolving values? Are there conflicts?
− Determine the characteristic purchase decision-making pattern.
How are purchase decisions made? Are members of the ‘family’
involved in the decision-making?
− Determine appropriate promotion methods. What is the best way to
communicate with the target markets? What messages should be
− Determine appropriate distribution channels. What is the existing
distribution practice? How and where do people shop?
12.10 Culture’s Influence on Consumer Behaviour
12.10.1 Influence on Product Strategy
• Mr Donut had to make several modification to their product for the
Japanese market because:
− their counters were too high;
− the pastry was too big;
− cups were too heavy;
− the donuts had too much nutmeg.
• Barbie dolls had to be modified in the following ways to succeed in the
− The bosom had to be made smaller.
− The blue eyes were changed to brown.
− Barbie’s hair had to be darkened.
12.10.2 Influence on Promotion Strategy
• When Coca-Cola was first translated into Chinese it meant ‘bite the
• Colgate Palmolive’s ‘Cue’ toothpaste is a pornographic word in
12.11 The Nature of Subculture
• Subcultures are relatively homogenous groups within a national
society. They are, however, not entirely homogenous.
• Members of a given ethnic group:
− generally descend from common forefathers;
− tend to reside in the same locale, and one that is distinct from
another ethnic group, over generations;
− tend to marry within their own group;
− give certain objects meanings unique to their ethnic group over
• Consumers may be subdivided into three main types of ethnic
− Race – Racial subcultures are made up of people with a common
biological heritage involving certain physical distinctions.
− Nationality – People with a common origin constitute another
ethnic subculture, usually characterised by a distinctive language or
− Religion – Religious subcultures are composed of people with a
common and unique system of worship.
• Subcultures found in the US include:
− youth subculture;
− the elderly.
12.12 Marketing Implications
• Blacks appear to be trendsetters in fashion, hairstyles, shoes and
• Blacks spend more time listening to radio than do whites.
• Hispanics are heavy consumers of fast food, soft drinks and beer.
• 90% of adult Hispanics speak Spanish and 43% speak ‘only enough
English to get by’; 70% watch, listen to, or read Spanish media every
week; using Spanish media is thus essential for marketers in the US.
• Youth typically spend on clothes, records, stereo equipment,
entertainment, and travel.
• Young women tend to buy cosmetics followed by clothes, health and
beauty aids and jewellery.
• Young men spend most on dates and autos, followed by sporting
goods, cameras, records, stereos, bicycles, athletic shoes, jeans, hobby
products, musical instruments and electronic games.
• Radio is probably the fastest, easiest and most effective way to reach
• Senior citizens tend to be more cautious than younger consumers, more
set in their preferences, and shrewder comparison shoppers.
What are the subcultures found in your country and what are their
influences on marketing?
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