4 Reviewing and Extending the Concepts

Objectives Review and Key Terms

Objectives Review

To create value for customers and build meaningful relationships with them, marketers must first gain fresh, deep insights into what customers need and want. Such insights come from good marketing information. As a result of the recent explosion of “big data” and digital technologies, companies can now obtain great quantities of information, often even too much. Consumers themselves are now generating a tidal wave of bottom-up information through their smartphones, PCs, and tablets via online browsing and blogging, apps and social media interactions, and texting and video. The challenge is to transform today’s vast volume of consumer information into actionable customer and market insights.

Objective 4-1 Explain the importance of information in gaining insights about the marketplace and customers. (pp 100102)

The marketing process starts with a complete understanding of the marketplace and consumer needs and wants. Thus, the company needs to turn sound consumer information into meaningful customer insights by which it can produce superior value for its customers. The company also requires information on competitors, resellers, and other actors and forces in the marketplace. Increasingly, marketers are viewing information not only as an input for making better decisions but also as an important strategic asset and marketing tool.

Objective 4-2 Define the marketing information system and discuss its parts. (pp 102106)

The marketing information system (MIS) consists of people and procedures for assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights. A well-designed information system begins and ends with users.

The MIS first assesses information needs. The MIS primarily serves the company’s marketing and other managers, but it may also provide information to external partners. Then the MIS develops information from internal databases, marketing intelligence activities, and marketing research. Internal databases provide information on the company’s own operations and departments. Such data can be obtained quickly and cheaply but often need to be adapted for marketing decisions. Marketing intelligence activities supply everyday information about developments in the external marketing environment, including listening and responding to the vast and complex digital environment. Market research consists of collecting information relevant to a specific marketing problem faced by the company. Last, the marketing information system helps users analyze and use the information to develop customer insights, make marketing decisions, and manage customer relationships.

Objective 4-3 Outline the steps in the marketing research process. (pp 106116)

The first step in the marketing research process involves defining the problem and setting the research objectives, which may be exploratory, descriptive, or causal research. The second step consists of developing a research plan for collecting data from primary and secondary sources. The third step calls for implementing the marketing research plan by gathering, processing, and analyzing the information. The fourth step consists of interpreting and reporting the findings. Additional information analysis helps marketing managers apply the information and provides them with sophisticated statistical procedures and models from which to develop more rigorous findings.

Both internal and external secondary data sources often provide information more quickly and at a lower cost than primary data sources, and they can sometimes yield information that a company cannot collect by itself. However, needed information might not exist in secondary sources. Researchers must also evaluate secondary information to ensure that it is relevant, accurate, current, and impartial.

Primary research must also be evaluated for these features. Each primary data collection method—observational, survey, and experimental—has its own advantages and disadvantages. Similarly, each of the various research contact methods—mail, telephone, personal interview, and online—has its own advantages and drawbacks.

Objective 4-4 Explain how companies analyze and use marketing information. (pp 116120)

Information gathered in internal databases and through marketing intelligence and marketing research usually requires more analysis. To analyze individual customer data, many companies have now acquired or developed special software and analysis techniques—called customer relationship management (CRM)—that integrate, analyze, and apply the mountains of individual customer data to gain a 360-degree view of customers and build stronger the customer relationships. They apply marketing analytics to dig out meaningful patterns in big data and gain customer insights and gauge marketing performance.

Marketing information has no value until it is used to make better marketing decisions. Thus, the MIS must make the information available to managers and others who make marketing decisions or deal with customers. In some cases, this means providing regular reports and updates; in other cases, it means making nonroutine information available for special situations and on-the-spot decisions. Many firms use company intranets and extranets to facilitate this process. Thanks to modern technology, today’s marketing managers can gain direct access to marketing information at any time and from virtually any location.

Objective 4-5 Discuss the special issues some marketing researchers face, including public policy and ethics issues. (pp 120125)

Some marketers face special marketing research situations, such as those conducting research in small business, not-for-profit, or international situations. Marketing research can be conducted effectively by small businesses and nonprofit organizations with limited budgets. International marketing researchers follow the same steps as domestic researchers but often face more and different problems. All organizations need to act responsibly concerning major public policy and ethical issues surrounding marketing research, including issues of intrusions on consumer privacy and misuse of research findings.

Key Terms

Objective 4-1

Objective 4-2

Objective 4-3

Objective 4-4

Discussion and Critical Thinking

MyMarketingLab

Go to mymktlab.com to complete the problems marked with this icon A blue star icon..

Discussion Questions

  1. A blue star icon. 4-1 What is big data, and what opportunities and challenges does it provide for marketers? (AACSB: Communication; Reflective Thinking)

  2. A blue star icon. 4-2 Explain how marketing intelligence differs from marketing research. Which is more valuable to a company? Why? (AACSB: Communication; Reflective Thinking)

  3. A blue star icon. 4-3 What is customer relationship management (CRM)? How are firms integrating this information into their marketing and general business practices? Provide an example of CRM in a firm. (AACSB: Communication, Reflective Thinking)

  4. 4-4 Marketers make heavy use of both primary and secondary data. What is primary data? What is secondary data? What are possible benefits or drawbacks of using each of these data types? (AACSB: Communication, Reflective Thinking)

  5. 4-5 What are the similarities and differences when conducting research in another country versus the domestic market? What research strategies might a company use to address the differences in various markets? (AACSB: Communication, Reflective Thinking)

Critical Thinking Exercises

  1. A blue star icon. 4-6 In a small group, identify a problem faced by a local business or charitable organization and propose a research project addressing that problem. Develop a research proposal that implements each step of the marketing research process. Discuss how the research results will help the business or organization. (AACSB: Communication; Reflective Thinking)

  2. 4-7 Suppose you are conducting market research for your favorite soda brand. Sales have been lagging for two quarters, and you are determined to find out why. You decide to host an in-person focus group to gain customer insights into your brand’s current product offerings. You are also interested in obtaining feedback on a new product that your brand plans to launch in the next six months. Determine the makeup of your focus group. Who should be invited to the focus group, and why? What types of information would you want to obtain? Identify possible questions to present to the focus group. (AACSB: Communication; Reflective Thinking)

  3. 4-8 Conduct an online search to learn more about the marketing research industry. Develop a presentation describing the variety of jobs in the marketing research field along with the compensation for those jobs. Create a graphical representation to communicate your findings. (AACSB: Communication; Use of IT; Reflective Thinking)

Applications and Cases

Online, Mobile, and Social Media Marketing The Trail You Leave Behind

Marketers are always interested in collecting as much valuable data as possible regarding customer likes, preferences, and trends. Web activity and social media platforms such as Twitter, Facebook, Instagram, and various blog sites are gold mines for marketers. All of these access points create information that can be aggregated and used to a company’s competitive advantage, which allows firms to stay in tune with what is currently trending in the marketplace. Businesses can also use these same access points to track competitor activity, which can then be used in competitive marketing intelligence.

  1. 4-9 Have you ever thought about the data you leave behind for marketers to collect? Marketers are always looking for digital footprints, which are traceable sources of online activities. Visit www.internetsociety.org/your-­digital-footprint-matters and review the various resources available. Select one of the tutorials and present what you learned from the video. (AACSB: Communication, Use of IT, Reflective Thinking)

  2. 4-10 After reviewing the tutorials on http://www.internet­society.org/your-digital-footprint-matters, do you plan to alter your online habits? Are you concerned about your digital footprint and the data trail you leave behind, and do you plan to actively manage them? Why or why not? (AACSB: Communication, Use of IT, Reflective Thinking)

Marketing Ethics Metadata

Everyone generates metadata when using technologies such as computers and mobile devices to search, post, tweet, play, text, and talk. What many people don’t realize, however, is that this treasure trove of date, time, and location information can be used to identify them without their knowledge. For example, in analyzing more than a million anonymous credit card transactions, researchers at the Massachusetts Institute of Technology were able to link 90 percent of the transactions to specific users with just four additional bits of metadata, such as user locations based on apps such as Foursquare, the timing of an activity such as a tweet on Twitter, or playing a mobile game. Since there are more mobile devices than there are people in the United States and 60 percent of purchases are made with a credit card, marketing research firms are gobbling up all sorts of metadata that will let them tie a majority of purchase transactions to ­specific individuals.

  1. 4-11 Describe at least four applications you use that provide location, time, and date information that can be tied to your identity. (AACSB Communication; Reflective Thinking)

  2. A blue star icon. 4-12 Debate whether it is ethical for marketers to use metadata to link individual consumers with specific credit card transactions. (AACSB: Communication; Ethical Reasoning)

Marketing by the Numbers The Value of Information

Conducting research is costly, and the costs must be weighed against the value of the information gathered. Consider a company faced with a competitor’s price reduction. Should the company also reduce price in order to maintain market share, or should the company maintain its current price? The company has conducted some preliminary research showing the financial outcomes of each decision under two competitor responses: the competition maintains its price or the competition lowers its price further. The company feels pretty confident that the competitor cannot lower its price further and assigns that outcome a probability (p) of 0.7, which means the other outcome would have only a 30 percent chance of occurring (1p=0.3). These outcomes are shown in the table below:

Competitive Response
Company action Maintain Price p=0.7 Reduce Price (1p)=0.3
Reduce Price $160,000 $120,000
Maintain Price $180,000 $100,000

For example, if the company reduces its price and the competitor maintains its price, the company would realize $160,000, and so on. From this information, the expected monetary value (EMV) of each company action (reduce price or maintain price) can be determined using the following equation:

EMV=(p)(financial outcomep)+(1p)(financial outcome(1p))

The company would select the action expected to deliver the greatest EMV. More information might be desirable, but is it worth the cost of acquiring it? One way to assess the value of additional information is to determine the expected value of perfect information (EMVPI), calculated using the following equation:

EMVPI=EMVcertaintyEMVbestalternative

where,

EMVcertainty=(p)(highest financial outcomep)+(1p)(highest financial outcome(1p))

If the value of perfect information is more than the cost of conducting the research, then the research should be undertaken (that is, EMVPI>cost of research). However, if the value of the additional information is less than the cost of obtaining more information, the research should not be conducted.

  1. 4-13 Calculate the expected monetary value (EMV) of both company actions. Which action should the company take? (AACSB: Communication; Analytical Reasoning)

  2. 4-14 What is the expected value of perfect information (EMVPI)? Management suggests conducting more research costing $5,000. Should the research be conducted? (AACSB: Communication; Analytical Reasoning)

Video Case Nielsen

Most people know Nielsen as the TV ratings company. In reality, however, Nielsen is a multiplatform market research company that has constantly been evolving since 1923. Its goal is to measure and track a wide range of consumer activity in order to establish a 360-degree view of individuals and market segments. To accomplish this, Nielsen has to follow consumers wherever they may be—watching TV, online, in their homes, or in stores.

How does Nielsen track all this activity? The veteran research firm has established effective methods of recording consumer activity, from retail scanner data to household panels to monitoring social networks. As data are captured, they are transferred to a Nielsen data warehouse, where they are matched to the right individual and added to the terabytes of information Nielsen already possesses. Through data sorting and analytics, Nielsen cuts through billions of daily transactions to deliver clear consumer insights to clients.

After viewing the video featuring Nielsen, answer the following questions:

  1. 4-15 What is Nielsen’s expertise?

  2. 4-16 Providing a real-world example, describe how Nielsen might discover a consumer insight.

  3. 4-17 What kinds of partnerships might Nielsen need to form with other companies in order to accomplish its goals?

Company Case Campbell Soup Company: Watching What You Eat

You might think that a well-known, veteran consumer products company like the Campbell Soup Company has it made. After all, when people think of soup, they think of Campbell’s. In the $5 billion U.S. soup market, Campbell dominates with a 44 percent share. Selling products under such an iconic brand name should be a snap. But if you ask Denise Morrison, CEO of Campbell, she’ll tell you a different story. Just a few years ago, when Morrison took over as head of the world’s oldest and best-known soup company, she faced a big challenge—reverse the declining market share of a 145-year-old brand in a mature, low-growth, and fickle market characterized by shifting consumer preferences, ever-expanding tastes, and little tolerance for price increases. Turning things around would require revitalizing the company’s brands in a way that would attract new customers without alienating the faithful who had been buying Campbell products for decades.

Morrison had a plan. A core element of that plan was to maintain a laser-like focus on consumers. “The consumer is our boss,” Morrison said. “[Maintaining a customer focus] requires a clear, up-to-the-minute understanding of consumers in order to create more relevant products.” Morrison’s plan involved transforming the traditional stagnant culture of a corporate dinosaur into one that embraces creativity and flexibility. But it also involved employing innovative methods that would allow brand managers and product developers to establish the customer understanding that was so desperately needed. In other words, marketing research at the Campbell Soup Company was about to change.

Reading Consumers’ Minds

Soup is a well-accepted product found in just about everyone’s pantry in the United States. However, not long ago, Campbell researchers discovered that marketing soups presents unique problems. People don’t covet soup. Sure, a steaming bowl of savory soup really hits the spot after coming in out of a bitingly cold rain. But soup is not a top-of-mind meal or snack choice, and it’s typically a prelude to a more interesting main course. The bottom line—consumers don’t really think much about soup, making meaningful marketing research difficult.

For years, Campbell researchers relied on good old paper-and-pencil surveys and traditional interviews to gain consumer insights for making ads, labels and packaging, and the products themselves more effective. But Campbell’s experience with such marketing research showed that traditional methods failed to capture important subconscious thoughts, emotions, and behaviors that consumers experience when shopping for soup.

So instead, to get closer to what was really going on inside consumers’ hearts and minds, Campbell researchers began employing state-of-the-art neuroscience methods. They outfitted shoppers with special vests that measured skin-moisture levels, heart rates, depth and pace of breathing, and postures. Sensors tracked eye movements and pupil width. Then, to aid interpretation, such biometric data was combined with interviews and videos that captured each shopper’s experiences.

The high-tech research produced some startling insights. Campbell knew that people hold strong emotions associated with eating soup. After all, who doesn’t remember getting a hot bowl of soup from Mom when they were sick or cold? But the new biometric testing revealed that all that warmth and those positive emotions evaporated when consumers confronted the sea of nearly identical red and white Campbell’s cans found on a typical grocery store soup aisle.

In the past, the top of a typical store shelf display featured a large Campbell’s logo with a bright red background. But the new research showed that such signs made all varieties of Campbell’s Soup blend together, creating an overwhelming browsing situation and causing shoppers to spend less time at the aisle. The biometric research methods also revealed that the soup can labels themselves were lacking—the big bowl of soup on Campbell’s labels was not perceived warmly, and the large spoon filled with soup provoked no emotional response.

Based on these research insights, in an attempt to prompt and preserve important consumer emotions surrounding soup consumption, Campbell began evaluating specific aspects of its displays, labels, and packaging. This led to seemingly small but important changes. For starters, the Campbell’s logo is now smaller and lower on the shelf, minimizing the overwhelming “sea of cans” effect. To further encourage browsing, can labels now fall into different categories, each with distinguishing visual cues. Varieties like Beef Broth and Broccoli Cheese, which are typically used as ingredients in recipes, feature a narrow blue swath across the middle of the can with a “Great for Cooking” label. A green swath and the label “98% Fat Free” characterize reduced-fat varieties. Tomato Chipotle & Olive Oil, part of Campbell’s “Latin Inspired” line, features a black background rather than the traditional white. And top-sellers such as Chicken Noodle, Tomato, and Cream of Mushroom feature the plain traditional label with the center medallion, immortalized by Andy Warhol’s larger-than-life recreations of Campbell’s soup cans. As for bringing out those warm emotions, Campbell’s labels are now adorned with steam rising off a larger, more vibrant picture of the featured soup in a more modern white bowl. The non-emotional spoons are gone as well.

Can such minor label changes make a real difference? Yes, they can. Campbell claims that its sales of condensed soups are up by 2 percent since making the changes. That may not sound like much, but even a small sales bump applied to a $2 billion consumer brand means real money. The sales jump also indicates that consumers are receiving greater value through a more fulfilling shopping experience.

Diving Deeper for Insights

Although the insights from Campbell’s biometric marketing research have proven valuable, it will take more to capture the attention of a new generation of customers and stay attuned to the changing nature of consumer food tastes and preferences. Additionally, the Campbell Soup Company makes and markets much more than just soup these days. Over the years, the company has added or created such brands as Pepperidge Farms, Swanson, Pace, Prego, V8, Bolthouse Farms, and Plum Organics. Today, Campbell’s house of packaged food brands includes something for just about everyone. With that kind of product portfolio, maintaining and creating relevant products based on a clear, up-to-the-minute understanding of consumers is an especially daunting proposition.

To capture clear and contemporary customer insights, Campbell researchers turn to deep dive marketing research—qualitative methods employed in the fields of anthropology and other social sciences for up-close-and-personal study. Campbell researchers and marketers dive in and spend time with consumers on their own turf. “We’re in their homes,” says Charles Vila, Campbell’s vice president of consumer and customer insights. “We are cooking with them; we’re eating with them; we’re shopping with them.” By spending hours at a time with consumers and observing them in their natural environments, researchers can unlock deep consumer insights of which customers themselves are often not aware.

By employing deep dive marketing research methods, Campbell researchers have identified six different consumer groups, each with an extensive profile. For each of these groups, Campbell has created six fully equipped kitchens at its Camden, New Jersey, headquarters, each designed to mirror the homes of consumers in the six groups. Each kitchen has a unique design, with different appliances, different features, and, most importantly, different food in the cabinets and refrigerators.

At one end of the spectrum is the group called “Uninvolved Quick Fixers.” These are individuals and families who are not acquainted with or into cooking. Their kitchens are strewn with pizza boxes, and collections of takeout menus adorn their fridges. Their stoves and ovens often look like they’ve never been touched. “They’re doing a lot of microwaving and frozen foods,” explains the manager of Campbell’s test facilities.

At the other end of the spectrum is group six, the “Passionate Kitchen Masters.” Their kitchens tend to be filled with well-used, high-end appliances. Their refrigerators are stuffed with fresh produce, dairy, and meats. Gourmet sauces and artisanal breads and pastas are complemented by a wide variety of spices.

Such levels of detail help Campbell marketers discover and understand existing and developing trends in each consumer group as well as in the general market. For example, ginger is in. Only a few years ago, this herb was something found only in ethnic restaurants or in obscure recipes. But now its popularity is soaring. Campbell expects that it will soon be an important ingredient for each of the six consumer segments, a valuable insight for developing new products.

Another conclusion from Campbell’s deep dive is that although Passionate Kitchen Masters consume far fewer prepared and packaged foods than other consumers, they still buy a lot of ingredients—such as broth. Broth flies under the radar of most consumers. But for people who like to cook, it’s a sturdy component of soups, sauces, and braised meats.

Under both the Campbell’s and Swanson brands, broth is also a $400 million business for the Campbell Soup Company. Applying the 2 percent sales boost resulting from the label changes discussed earlier translates to $8 million in sales gains for broth alone. That’s why Campbell researchers are so interested in consumer trends, big and small.

The main goal is to enhance the customer’s food experience. For example, Thai dishes are becoming more popular for foodies. But coming up with key ingredients like lemongrass is both time consuming and expensive. “Even for confident cooks, to bring those together, to go and purchase them, and actually blend them in such a way that it actually works, that’s not easy,” says Campbell’s vice president Dale Clemiss, who oversees the Swanson and other Campbell brands. Add that to other insights that Campbell’s research has uncovered, and a new broth is born—Swanson Thai Ginger, a broth “infused with flavors of lime, soy sauce, coconut, lemongrass, cilantro, and ginger—a simple way to make delicious restaurant inspired global dishes at home.”

Every marketing research method has pitfalls. So Campbell combines multiple research methods to minimize the possibility of making incorrect judgments. In addition to neuroscience and deep dive research, the company still employs traditional methods of surveys and interviews. The triangulation of data across methods allows for greater accuracy as well as the ability to cover larger consumer samples.

In the packaged foods business, every little bit helps. It’s all about staying in tune with consumers and keeping up with the changes—large and small—in consumer preferences. That philosophy has worked well for the Campbell Soup Company in the past. And as Campbell has dug deeper through multiple marketing research methods, the proof is in the pudding. Over the most recent three years, Campbell’s corporate revenues rose 12.6 percent while net profits returned 6 to 10 percent each year. Campbell’s stock price also increased by more than 60 percent during that time. As the company website states, “For generations, people have trusted Campbell to provide authentic, flavorful, and readily available foods and beverages that connect them to each other, to warm memories, and to what’s important today.” With the help of Campbell’s marketing research program, it looks like consumers will continue to trust Campbell for generations to come.

Questions for Discussion

  1. 4-18 What are the strengths and weaknesses of the Campbell Soup Company’s marketing information system?

  2. 4-19 What objectives does Campbell have for the marketing research efforts described in this case?

  3. 4-20 Compare the effectiveness of Campbell’s biometric research with its deep dive research.

  4. 4-21 Describe how traditional marketing research could be integrated with Campbell’s research efforts from this case.

Sources: “Soup in the U.S.,” Euromonitor International, December 2015, www.euromonitor.com/soup-in-the-us/report; Mark Garrison, “How Food Companies Watch What You Eat,” Marketplace, December 2, 2013, www.marketplace.org/topics/business/how-food-companies-watch-what-you-eat; Ilan Brat, “The Emotional Quotient of Soup Shopping,” Wall Street Journal, February 17, 2010, p. B1; Bonnie Marcus, “Campbell Soup CEO Denise Morrison Stirs the Pot to Create Cultural Change,” Forbes, April 25, 2015, www.forbes.com/sites/bonniemarcus/2014/04/25/campbell-soup-ceo-denise-morrison-stirs-the-pot-to-create-cultural-change/; and information from www.campbellsoupcompany.com/about-campbell/ and www.google.com/finance, accessed September 2016.

MyMarketingLab

Go to mymktlab.com for Auto-graded writing questions as well as the following Assisted-graded writing questions:

  1. 4-22 What is neuromarketing and how is it useful in marketing research? Why is this research approach usually used with other approaches?

  2. 4-23 Describe an example in which marketing research could cause harm to ­participants. Many companies have a review process similar to that required for following the government’s “Common Rule.” Write a brief report ­explaining this rule and how you would apply it to your example.

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