Ch. 05.doc

CHAPTER FIVE ACQUIRING AND USING MARKETING INFORMATION Key Points The purpose of this chapter is to dispel misconceptions that prevent nonprofits from conducting marketing research. These include such things as: marketing research should only be used for major decisions; it takes too long; involves complex surveys; is always expensive; requires sophisticated researchers; and produces findings that in actual fact are not used. Research is part of an “Organizational Knowledge System” driven by the resource-based theory of the organization which posits that competitive advantage arises from the unique set of resources that the firm has been able to accumulate that are valued by customers, that are unique, and that are costly or difficult to copy. Nonprofit research must be strategically planned and a nonprofits should develop a marketing information system, or Organizational Knowledge Management system, with four subsystems: an internal reports system; a market intelligence system; a marketing research system; and analytical marketing system. The purpose of research is to help decision makers by describing, explaining, or predicting market characteristics. The applied nature of nonprofit research provides a good framework for decisions about budgets and for designing research projects. A backward research design process focuses the manager on decisions using the research findings and then works backwards to design a study that provides the best information for the decision. The optimal report format suggests the best type of analysis and that, in turn, indicates appropriate data collection and processing procedures. Research can be quantitative or qualitative and high or low cost. Qualitative research such as in-depth interviews or focus groups can: identify a problem and gather background information for later quantitative studies; interpret past studies; pretest advertisements, product or service concepts, packaging and printed materials; and generate ideas for new products, services and advertising. Other low cost research options are: experimentation, low-cost sampling designs, secondary data and volunteer assistance. Chapter Outline Marketing Research in Nonprofit Organizations — Myths and misunderstandings The “big decision” myth The “survey myopia” myth The “focus group” myth The “big-bucks” myth The “we can’t wait” myth The “sophisticated researcher” myth The “most-research-is-not-read” myth Organizational Knowledge Management The resource-based theory of the organization Organization-level marketing knowledge systems Internal reports system The market intelligence system The marketing research system The analytical marketing system Conducting Specific Studies Description Explanation Prediction Making Research Useful — The Backward Research Process Empirical Research Alternatives Qualitative Research Experimentation Snowball Sampling Piggybacking Volunteer Researchers Secondary Sources Vignette: Alzheimer’s Association Maintain Your Brain Campaign The Alzheimer’s Association hired PR/Marketing firm Porter-Novelli to help it increase awareness of Alzheimers and to focus on actions that would reduce baby boomers’ risks and the effects of the disease. The campaign, “Maintain Your Brain” began with in-depth research with three key target audiences: individuals with family members affected by Alzheimers, baby-boomers entering the age of risk, and various support groups. Research was done through focus groups and a baseline measure was taken of awareness, attitudes and opinions with respect to the disease and the Association. The main result was a positioning of the Association based on hope and research progress and on specific steps baby boomers could take to reduce risk. Chapter Summary Marketing research can be very diverse. It can be as simple as analyzing data already in the organization or observing what target audiences do under specific circumstances like visiting a museum on a weekend versus a weekday. It can be more elaborate, involving field research or panels recruited for recurring input. It can involve experiments or focus groups. It can be expensive and it can be low-cost and straightforward. It is planned, based on some formal model or process and is tied to specific decision-making situations. Many nonprofits do not do as much research as they should because of seven myths that keep nonprofit marketing managers from engaging in more effective marketing research programs. These are: (1) The “big decision” myth, (2) The “survey myopia” myth, (3) The “focus group” myth, (4) The “Big Bucks” myth, (5) The “we can’t wait” myth, (6) The “sophisticated researcher” myth, and (7) The “most-research-is-not-read” myth. Research is part of an “Organizational Knowledge System” driven by the resource-based theory of the organization which posits that competitive advantage arises from the unique set of resources that the firm has been able to accumulate that are valued by customers, that are unique, and that are costly or difficult to copy. Scholars in the 21st century have focused on the role “intellectual capital” plays in the success of an organization, and the knowledge that only some sort of system for managing knowledge in a company or organization can adequately take advantage of that capital. It means, therefore, that nonprofit leaders in the 21st Century must shift from being visionaries to being effective knowledge managers – just as their private sector counterparts are doing. Achieving high performance in the nonprofit sector requires the building of “adaptive capacity” which resides in the organization’s intellectual capital. Nonprofit research must be strategically planned and a nonprofits should develop a marketing information system, or Organizational Knowledge Management system (MKS), with four sub-systems: an internal reports system; a market intelligence system; a marketing research system; and analytical marketing system. Marketing managers must monitor and understand the environment including internal environments with particular focus on target markets (including donors, volunteers and donors), marketing channels, competitors, publics, and macro-environmental forces. This is achieved through the MKS and its four sub-systems. Research should be focused primarily on applied research – which can be tied directly to a decision. However, when nonprofits have a stronger budget, basic research that creates groundwork for future decision-making and methodological research that is designed to improve processes and research in the future. Managerially useful research is typically of three types, increasing in levels of usefulness — description (describing the environment), explanation (focusing on association, causation and “reasons why”) and prediction (which projects a view of the future based on various organization decisions). The “traditional” marketing research approach is to identify the general nature of a problem, gather information through formal and informal research, analyze all the information and create a report for the executive who is expected to translate the researcher’s findings into action. This process often results in management disappointment because it is not focused clearly enough on the manager’s decision. The authors advocate turning the traditional research on its head so that it is driven by the decisions the manager needs to make –they call this the “backward research process.” This backward research process starts with focusing on the decision that must be taken about a marketing action and works backward to arrive at the information needed to inform that decision. The research must therefore be developed through close collaboration between the managers and the researchers. The first two steps are the most important because they are the foundation for all that follows: (1) determine what key decisions are to be made using research results, and (2) determine what information will help management make the best decisions. The succeeding steps are: (3) prepare prototype (sample) report; (4) determine the analysis needed; (5) Determine what questions have to be asked; (6) Ascertain if any of the questions may have been answered already through secondary research; (7) Design the sample for the formal research project; (8) Implement the research design; (9) Analyze the data; (10) write the report; (11) assist management in implementing the results; and (12) evaluate the research process and contribution. In addition to being based on real decisions that have to be made, good research should use the right methodology or methodologies. There are many research methods, and today, researchers may use a mix of methods  from the more expensive focus groups, field surveys, or formal internet-based study to lower-cost alternatives. Qualitative research focuses on information gathering, which does not have to be projected to broader populations or be statistically valid. These may focus on identifying problems, helping to develop a quantitative study questionnaire, helping to pre-test or post-test something or to generate ideas. Individual in-depth interviews and various types of focus groups are ways to accomplish this. Other lower –cost alternatives include: experimentation, snowball sampling, piggybacking on someone else’s research, using volunteer researchers and using a variety of secondary sources, particularly those available through the internet. Teaching Suggestions Many professors attempt to vary their lectures through such simple techniques as moving from a lectern to the center of the room or rearranging the traditional room set-up to a circle or horseshoe shape to encourage discussion and questions. Some sense of “unpredictability” – whether that is location, set-up, or speaker, adds to the attention to lecture. Continue to try to find new ways to incorporate visual and audio elements into the class. If guest lecturers are not available, often, recorded interviews can augment class discussion. This chapter lends itself to demonstration – in that students can be asked to develop short survey questionnaires, interview each other, conduct small mock focus groups about an issue of interest to those on campus, or conduct specific Internet research prior to the class or following the class. In the mid-2000’s, numerous internet research programs extended to the World Wide Web – many of them with free elements. Have students explore sites like Zoomerang, Survey Monkey and others and use the site(s) to conduct research. This is also an excellent subject to bring in a guest speaker to discuss –have a local research consultant or organization researcher come in to talk about the subject in general or to review a research case study. Frequent discussion helps to illustrate key points – discussion of text points can lead to the next text point or key learning. Possible discussion points for this chapter include: Have student discuss the various “myths” about research. Which ones did the student’s themselves hold? Are there any other beliefs – myths or truths, which students hold about research? Examine the Marketing Knowledge System (MKS) model and have the students discuss and give examples. Select a particular organization, such as the local blood bank, and discuss the external marketing environment – who are the target audiences, the publics to be served, what are the macro-environmental forces, who are competitors (particularly “generic” or attitudinal competitors in this example), and what are the subsystems of a marketing information system for the selected organization. What internal reports are generated by a blood bank? (blood donor lists, companies who hold or have held blood drives, volunteer lists, etc.) Continue through each part of the model — How is such a system created? What makes it change? Review the backward marketing research model and illustrate it for a particular nonprofit. Select a specific example (there are several examples in the questions at the end of the chapter) Bring in a nonprofit manager and have students ask questions about the kinds of decisions that the nonprofit organization has to make. Have the students give examples for each step in the research process that is outlined in the model. Short Answer Questions 1. How is marketing research different from everyday observation and careful thought? It is planned It is based on some formal model or understanding of how target audiences respond —or might respond — to marketer inputs It is tied to specific decision-making situations (AACSB: Reflective Thinking) 2. Describe and explain the “research myths” commonly held by nonprofit managers. The “big decision” myth – managers believe research should only be done for decisions with major financial implications The “Survey Myopia” myth — Managers think only expensive quantitative surveys are “research.” The “focus group” myth — managers think “we do research” just because they occasionally do focus groups The “big bucks” myth — Managers just assume they can’t afford good, useful research The “we can’t wait” myth —managers skip doing research because they think it will take too long and delay important decisions and work The “sophisticated researcher” myth — managers think they don’t have the expertise or can’t afford to hire the expertise to conduct and analyze research The “most-research-is-not-read” myth — managers don’t want to bother or fear the results of research will use those feelings to justify not gathering data (AACSB: Reflective Thinking) What are the elements of an organization-level Marketing Knowledge System (MKS)? Researchers and Managers collaborate on information gathering Managers must monitor the external marketing environment, target audiences, marketing channels, competitors, publics, and macro-environmental forces. Developments and trends in the external environment are picked up through one of four subsystems: (1) Internal Reports (2) The Market Intelligence System (3) The Marketing Research System, and (4) The Analytical Marketing System Information flows to the marketing managers to help in planning, execution and control. (AACSB: Reflective Thinking) Describe the backward research process Turns the traditional research process back-to-front Does not begin by just defining the problem, but by determining the decision to be made Each stage in the design is determined by what comes after it Sequence of steps: Decisions, information needed, prototype report, analysis needed, questions needed, questions already answered, sample designed, research implemented, data analyzed, report written, results implemented, research evaluated (AACSB: Reflective Thinking) What are some low-cost research alternatives for nonprofit organizations? Qualitative in-dept interviews or focus groups Experimentation — applying different marketing strategies to sub-samples of the population Sampling options: convenience, snowballing, piggybacking Elicit help from volunteers, board members, students Use secondary data (AACSB: Reflective Thinking) Multiple Choice Questions Managers who routinely read newspapers and trade publications, and who talk to outside the firm are typically gathering a. market research b. market intelligence (Easy, p 120) (AACSB: Communication abilities) c. internal reports d. insider trading information e. analytical marketing material Marketing research is different from everyday observation in that it is a. planned (Moderate; p 114) b. based on prior experience c. done with care and thought d. expensive e. quantitative A hospital manager who analyzed internal reports to tally how many patients were served in each facility is using a. descriptive research methods (Moderate; p 122) (AACSB: Reflective Thinking) b. causation analysis methods c. association analysis methods d. predictive research methods e. experimental research methods The backward research process begins by a. defining the problem b. translating the problem into research methodology c. examining the research data d. reviewing secondary data to eliminate research needing to be done e. determining key decisions to be made in collaboration with management (Moderate: p 125) The resource-based theory of the firm is designed to take advantage of a. marketing b. intellectual capital (Moderate; p 118) c. research d. target audience analysis e. financial and asset resources of the organization A fund raiser for United Way who divides his organization’s donor mailing list into three groups and sends out a different kind of solicitation for each group and compares the relative response rates is doing a. convenience sampling b. focus group research c. experimentation (Easy; p - 132) (AACSB: Reflective Thinking) d. target audience analysis e. Association analysis Participants in a study are asked to suggest names of others, like them. This is an example of a. piggyback sampling b. focus group research c. snowball sampling (Easy; p - 132) (AACSB: Reflective Thinking) d. secondary sources e. volunteer researchers When can research be justified, even if the financial risk of the decision is small? a. The research can be done inexpensively b. It will not take very long to complete c. A lot of the information can be obtained from secondary sources d. It will help to clarify the actions to be take or decisions to be made e. all of the above (Easy; p 115) Looking at what is associated with what, causation and reasons for causation involves which aspect of research? a. Descriptive research b. Explanation research (Moderate; p 123) c. Focus group research d. Predictive research e. Quantitative research Lexis-Nexis is an example of what type of research? a. Descriptive research b. Explanation research c. Focus group research d. Secondary research (Easy; p 133) (AACSB – Reflective Thinking) e. Quantitative research 50