Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

8. Improving Decisions
   with Marketing
   Information

Text © The McGraw−Hill

Companies, 2002

Improving Decisions with Marketing Information 225

four Ps? Do we know enough to decide what celebrity to use in an ad or how to

handle a price war in New York City or Tokyo? If not, we may want to do research

rather than rely on intuition.

The importance of understanding the problem—and then trying to solve it—can

be seen in the introduction of Fab One Shot, a laundry product developed to clean,

soften, and reduce static cling all in one step. Marketing managers were sure that

Fab One Shot was going to appeal to heavy users—especially working women with

large families. Research showed that 80 percent of these women used three different

laundry products for the family wash, but they were looking for more convenience.

When marketing managers found that other firms were testing similar products,

they rushed Fab One Shot into distribution. To encourage first-time purchases, they

offered introductory price discounts, coupons, and rebates. And they supported the

sales promotion with heavy advertising on TV programs that research showed the

heavy users watched.

However, research never addressed the problem of how the heavy user target

market would react. After the introductory price-off deals were dropped, sales

dropped off too. While the product was convenient, heavy users weren’t willing to

pay the price—about 25 cents for each washload. For the heavy users, price was a

qualifying dimension. And these consumers didn’t like Fab’s premeasured packets

because they had no control over how much detergent they could put in. The com-

peting firms recognized these problems at the research stage and decided not to

introduce their products.

After the fact, it was clear that Fab One Shot was most popular with college stu-

dents, singles, and people living in small apartments. They didn’t use much—so the

convenience benefit offset the higher price. But the company never targeted those

segments. It just assumed that it would be profitable to target the big market of

heavy users.^8

The moral of this story is that our strategy planning framework is useful for guid-

ing the problem definition step—as well as the whole marketing research process.

First, a marketing manager should understand the target market and what needs the

firm can satisfy. Then the manager can focus on lower-level problems—namely, how

sensitive the target market is to a change in one or more of the marketing mix

ingredients. Without such a framework, marketing researchers can waste time, and

money, working on the wrong problem.

The problem definition step sounds simple—and that’s the danger. It’s easy to

confuse symptoms with the problem. Suppose a firm’s MIS shows that the company’s

sales are decreasing in certain territories while expenses are remaining the same—

resulting in a decline in profits. Will it help to define the problem by asking: How

can we stop the sales decline? Probably not. This would be like fitting a hearing-

impaired patient with a hearing aid without first trying to find out whythe patient

was having trouble hearing.

It’s easy to fall into the trap of mistaking symptoms for the problem. When this

happens, the research objectives are not clear, and researchers may ignore relevant

questions—while analyzing unimportant questions in expensive detail.

Sometimes the research objectives are very clear. A manager wants to know if

the targeted households have tried a new product and what percent of them bought

it a second time. But research objectives aren’t always so simple. The manager might

also want to know whysome didn’t buy or whether they had even heard of the

product. Companies rarely have enough time and money to study everything. A

manager must narrow the research objectives. One good way is to develop a list of

research questions that includes all the possible problem areas. Then the manager

can consider the items on the list more completely—in the situation analysis step—

before narrowing down to final research objectives.

Don’t confuse

problems with

symptoms

Setting research

objectives may require

more understanding