You have to get personal like you are writing this assignment for you own. And you have to use scholarly sources and peer reviewed articles in addition to my textbook. And have Graduate writing skil

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Chapte r 3

M ark et R ese arc h : I d en tif y in g M ark et O pportu nitie s

is to ck p hoto /T h in ksto ck

L e arn in g O utc o m es

B y the end of this chap ter , you should:

Under stand ho w the Ansoﬀ ma trix model and SW OT analy sis can be used to iden fy and evalua te ne w mark et

opportunies.

R ec ogniz e how PESTEL analy sis is used in the process of en vironmen tal sc anning and analy sis.

Rec ogniz e how the pracce and pr ocess of mark et r esear ch is shaped by the ulma te g oal of impr oving

cus tomer sa sfacon.

K no w the step s involv ed in the mark eng r esear ch process and rec ogniz e when resear ch should and should not

be conduct ed.

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Ch. 3 I n tro ductio n

This chap ter in ves g ates the basic applic aons of mark et r esear ch and the mark et r esear ch process. Bringing tog ether tw o themes from the pr evious chap ter s, w e

begin by looking at w ays t o apply mark et r esear ch methodologies to the sear ch for ne w opportunies to be er sa sfy buy ers. The Ansoﬀ ma trix model speciﬁes

four alt erna ve rout es to iden fying ne w product and mark et pr ospects. The secon tha t follo ws in ves g ates the r ole of macr o- and micro-environmen tal analy sis

in providing the pr acc al, funconal informa on requir ed to shape and r eﬁne the or ganiz aon’ s mark eng s tr ategies. The c oncluding secons of Chap ter 3 pr ovide

an in-dep th examina on of how mark et r esear ch studies ar e planned and execut ed. Topics include resear ch design, data c ollecon, analy sis, and the presen ta on of

the r esear ch ﬁndings.

* * *

One of Americ a’s larges t manuf acturers of children’ s toys pro vides a highly regarded day care program for its emplo yees. With the parents’ knowledge and consen t,

the compan y uses this seng as a product de velopmen t and conc ept tes ng laborat ory. Behavioral s tudies on ho w preschoolers interact with t oys and with each

other are rounely c onduct ed in this realisc environmen t. Children’s responses to diﬀ eren t colors, shapes, and sounds are tes ted, and the results are used t o mak e

to ys more appealing t o their peers.

On the las t day of "Terrible Timm y’s" me in the program, his mom was thanking the day c are staﬀ f or having look ed aer her son for the pre vious three-and-a-half

years, even though he can be "quit e a handful" at mes. "Oh no," prot ested one of the research s taﬀ ers. "He’ s been just great! Fan tas c track rec ord on sound and

color pre ferenc es especially ," she gushed enthusias cally . "Are you planning any more?"

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Dell h as w it h sto od t h e m ark e t t u rm oil t h ro ugh s u cce ssfu l

pro m o ng a n d g ro w th s tra te gie s a n d b y t a kin g m an y m ark e t

o ppo rtu ni es a va ila b le t o t h em .

Asso cia te d P re ss

3 .1 M ark e t O ppo rtu nit ie s a n d G ro w th S tra te gie s

The Americ an Markeng Associa on deﬁnes mark et r esear ch as "the systema c gathering , rec ording , and analy zing of data with r espect to a parcular mark et,

wher e mark et r efer s to a speciﬁc cus tomer gr oup in a speciﬁc geogr aphic area" (2011). Mark et r esear ch, or mark eng r esear ch (terms used in ter chang eably

throughout this text), pr ovides manag ers with cric ally import ant insigh ts into the cus tomer s they serve. As not ed previously , decision makers need access to the

bes t possible informa on about prospecv e buyers in or der to cr eate v alue in the minds of the consumer s and deliver on promises of cus tomer sa sfacon. Since

per cep ons of value ar e root ed primarily in subjecv e impressions, one of the most basic goals of mark et r esear ch is to pr ovide manag ers with an under standing of

ho w consumer s perceiv e compe ng brands or bundles of bene ﬁts within the mark et.

Making sound mark eng s tr ategies a t all le vels of the or ganiz aon r equir es thorough and reliable

in forma on about customer s. Informa on deriv ed from the car eful e xecuon of w ell-designed mark et

resear ch studies c an be used to iden fy ne w mark eng opportunies and dir ect the developmen t of

grow th str ategies.

In mos t indus tries and markets, gr ow th is an essen al str ategic g oal for man y reasons. E conomies of

sc ale in pr oducon, dis tribuon, and promoon o en giv e the larges t-selling br ands cos t adv antag es

over c ompe tors. With cos t adv antag es come opportunies to en for ce retail price le ver ag e.

Alt erna vely , con fron ted with the en trance of lar ge ne w compe tors or slo wing rates of mark et

gr ow th, a minimum le vel of sales gr ow th ma y be requir ed to sur vive an indus try-wide shak eout. The

laer w as eviden t as mark et demand f or per sonal comput ers in the 1980s le veled oﬀ and the t ot al

number of compe tors shr ank from 832 to 435 c ompanies (Da y, 1997). Only those ﬁrms with

sub stan al mark et shar e were equipped to sur vive the extended w ave of price cung and panick ed

selling that follo wed. Se ver al successiv e cycles of booms and bus ts have c on nued to elimina te

c ompe tors in this indus try o ver the pas t two dec ades unl only a few do zen r emain, domina ted b y

big br ands lik e Apple, Dell, and He wle -P ack ard.

The pur suit of sales grow th and ne w mark et opportunies ma y also stem fr om other pr essur es such

as the need to div ersif y the exis ng pr oduct por olio or the decision to pur sue the compe ve

advantag es tha t come with mark et leader ship . The rang e of mov es for seeking gr ow th also necessarily includes manag ement’s oblig aons t o shar eholder s and

other inves tor s. Ov erall, few ﬁrms in the incr easingly compe ve global mark etplace ar e not pur suing new mark et opportunies and gr ow th as part of their cor e

mission.

Think About It

Mark et leader ship refer s to a c ompan y that holds the highes t market shar e in a given product mark et. It is a desir able posion to hold for c ompe ve reasons

not dir ectly rela ted t o ec onomies of scale.

Wha t kinds of advantag es would mark et leader ship provide for t echnology -focused c ompanies lik e Son y, Apple, or Nokia?

Str ategic planning and analy sis enables markeng manag ers to e valua te ne w mark et opportunies as w ell as gr ow th str ategies f or e xis ng SBUs. As we ha ve alr eady

seen, techniques r oot ed in the Bos ton Consulng Gr oup ma trix model assis t manag ers in deciding ho w bes t to manag e the collecon of SBUs under their dir econ.

The str ategic v alue of this appr oach is dependen t on the reliability of the mark et r esear ch informa on.

Tw o techniques c ommonly used b y mark eng manag ers to ﬁnd and e valua te ne w mark eng opportunies ar e the Ansoﬀ ma trix and SW OT analy sis.

Th e A nso ff M atr ix M odel

The Ansoﬀ Pr oduct/Mark et Opportunity Ma trix is an analy sis tool used to iden fy ne w grow th str ategy op ons. First in troduced b y Ig or Ansoﬀ in 1957, it explicitly

rec ogniz es that new concep ts must origina te fr om one of four possible pr oduct/mark et c ombina ons. The results fr om an Ansoﬀ ma trix analy sis are a se t of ne w

ideas for alt erna ve gr ow th str ategies tha t mus t be subject ed to mor e-thor ough inves g aon and de tailed assessmen t. The four g ener al classes of product/mark et

gr ow th str ategy op ons iden ﬁed by this pr ocess are described in Figur e 3.1. These str ategies include mark et pene traon, mark et de velopmen t, product

developmen t, and diversiﬁc aon.

F ig u re 3 .1 : A nso ﬀ P ro duct/ M ark e t O ppo rtu nit y M atr ix 4/1/2019 Print

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Th e A nso ﬀ P ro duct/ M ark e t O ppo rtu nit y M atr ix i d en ﬁes g ro w th s tra te gy o p ons f r o m f o ur p o ssib le p ro duct/ m ark e t

co m bin a ons.

T h e c re a on o f B aye r’s l o w -d o se a sp ir in

a llo w ed t h e c o m pan y a cce ss t o a n e n re ly

n ew m ark e t a n d t o c u sto m ers w it h

s p eciﬁ c n eed s w it h o ut c h an gin g t h eir

p ro duct.

B aye r H ea lt h C are L LC

M ark e t P en etr a on S tr a te g y

Mark et pene traon s tr ategy describes those inia ves tha t seek to incr ease sales of the ﬁrm’ s exis ng pr oducts or ser vices to its curr ent mark ets. In one sense, it

is about doing business as usual, but c ompe ng more aggressiv ely and eﬀecv ely. This can o en be acc omplished through mor e-compe ve pricing and

promoonal str ategies and t accs. B y necessity , this requir es cap turing mark et shar e from one or mor e compe tors. In comparison to the other thr ee alterna ves

for gr ow th, this is gener ally reg arded as a lo w-risk op on for gr owing the business.

This s tr ategy c an be referr ed to as the Wiz ard of O z appr oach since the character of Dor othy even tually found happiness righ t in her own backy ard. Tha t is,

because this appr oach is focused on ser ving exis ng cus tomer s with exis ng pr oducts, it should be as familiar as y our o wn backy ard. (There’ s no place like home .)

In addion, the organiz aon is lik ely to ha ve curr ent, accur ate in forma on on customer s and compe tors, minimizing the need for addional r esear ch. For

companies tha t are commi ed to achie ving the highes t possible levels of cus tomer sa sfacon, the mark et pene traon s tr ategy r epr esen ts the mos t ar acv e path

to building incr emen tal sales.

M ark e t D eve lo p m en t S tr a te g y

Mark et de velopmen t str ategy r efer s to those gr ow th inia ves tha t are intended t o incr ease sales by in troducing e xis ng

products to ne w mark ets or ne w mark et segmen ts. These new mark ets ma y be based on diﬀ erences in geogr aphy,

demogr aphics, lifestyles, or beha vioral char acteris cs such as bene ﬁts sough t or purchase occasion. Though the products

remain unchang ed, other elements of the markeng mix ma y need to be adjus ted t o sell to the ne w tar ge t segmen ts.

This could include the es tablishmen t of new dis tribuon channels, creaon of ne w promoonal messag es, or revisions t o

pricing policies. In c on tras t to mark et pene traon s tr ategies, this appr oach to incr easing sales requir es the organiz aon t o

acquir e an under standing of ne w buy ers’ needs. Un fortuna tely , mark et r esear ch eﬀorts tar ge ng un familiar segmen ts of

the market ar e o en mor e expensiv e and subject to mor e inial design errors than ong oing studies aimed a t curr ent

cus tomer gr oup s.

The pot enal success of mark et de velopmen t str ategies ma y res t sub stan ally on cor e compe tencies within the c ompan y

that rela te t o technic al knowledg e or experse in the cr eaon of superior goods and ser vices. However , if a ﬁrm’ s unique

compe tencies r ela te primarily t o its superior kno wledg e of current cus tomer gr oup s and their needs, then product

developmen t str ategies ma y provide be er opportunies for gr ow th.

Consider the case of Ba yer ’s mark et de velopmen t str ategy . For mor e than a century, the c ompan y’s c or e pr oduct, aspirin,

had been sold primarily as a medicine for the r elie f of minor pains and fever . Ho wever , when clinic al resear ch determined

tha t a daily low dose of aspirin can reduce the risk s associa ted with s tr ok e and heart aack, the c ompan y responded b y

introducing se ver al heart car e br and extensions (e. g., Aspirin Regimen Lo w Dose). Without alt ering the cor e pr oduct in

any way, Ba yer success fully introduced ne w uses to ne w mark ets.

Follo wing the introducon of its heart car e line, Ba yer also in troduced Heart Health Adv antag e—a non-aspirin pr oduct

designed to e xtend the br and’ s str ong reput aon f or high-quality medicines t o ne w lines. Sub sequen t product line

extensions of this type tha t provide ne w products to e xis ng mark ets ar e categ oriz ed within the Ansoﬀ ma trix as part of

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Pro d uct D eve lo p m en t S tr a te g y

Pr oduct de velopmen t str ategy en tails selling ne w products to the or ganiz aon’ s curr ent cus tomer base. In c on tras t to mark et de velopmen t, the focus her e is on

alteraons and modiﬁc aons t o the pr oduct elemen t of the markeng mix t o impr ove its ﬁt with the e xis ng buy er segmen ts’ prefer ences. These chang es could

include revisions t o a c ompan y’s c or e pr oduct, funconal chang es in product pack aging , new branding str ategies, or e xtensions of an e xis ng pr oduct line. A

compan y that possesses a thor ough and inma te under standing of ho w the curr ent value pr oposion sa sﬁes its curr ent cus tomer s with its current pr oducts is

mor e likely to be success ful in eﬀorts to sell ne w product concep ts to these mark ets. O en the mos t proﬁt able new opportunies to sa sfy e xis ng cus tomer s

origina te with the cus tomer s themselv es. Both formal and in formal r esear ch on clients’ needs and prefer ences help s companies k eep pace with import ant shis in

tar ge t mark et pr efer ences.

Pr oduct de velopmen t str ategies o en requir e ﬁrms to e xtend their unique c or e compe tencies f ar outside their tr adional mark ets. Though Ba yer , for e xample, has

remained a leader in o ver -the-c ounter pharmaceuc als, it has also aggressiv ely pursued numer ous prescrip on drug opportunies within its exis ng health car e

pr oduct mark ets. These include tr ea tmen ts for h ypert ension and respir ator y in fecons.

The Arm & Hammer br and also pr ovides g ood e xamples of pr oduct de velopmen t str ategy o ver the pas t 25 year s. It has introduced a wide rang e of new products

tha t ser ve the needs of those segmen ts that were inially culv ated via the ﬁrm’ s mark et de velopmen t str ategies in the 1970s. These ne w extensions of the br and

name included an extensiv e array of f abric c ar e (e. g., deter gen ts, fabric so ener s) and personal hygiene pr oducts (e. g., toothpas te, t ee th whit ening systems).

D iv e rs iﬁ ca on G ro w th S tr a te g y

Div ersiﬁc aon gr ow th str ategy in volv es introducing ne w products into ne w mark ets. The ob vious disadv antag e to this appr oach is that the ﬁrm has no previous

pr oduct or mark et e xperience to build upon. In man y instances, cus tomer accep tance depends on the c ompan y’s ability t o le ver ag e a rec ogniz able brand name to

ne w cus tomer segmen ts. This str ategy r epr esen ts the polar opposit e of market pene traon and is cert ainly the mos t risky , as it requir es the compan y to en ter

un familiar mark ets with pr oducts with which it has no prior experience. Consequen tly, it also has the mos t potenal for sales gr ow th. Some ﬁrms will either acquir e

outside SBUs or create a s tr ategic alliance with an outside manuf acturer to r educe the risk inher ent in this type of str ategy . In this way, the y are eﬀecv ely buying

their way in to ne w mark ets.

Since div ersiﬁc aon s tr ategy does not aim t o le ver ag e either mark et- or pr oduct -rela ted dis ncv e compe tences r ela ted t o the ﬁrm, it is some mes reg arded as a

ﬁnancial str ategy mor e than the pursuit of new mark eng opportunies. Ulma tely , ho wever , the responsibility for making ne w acquisions work belongs to the

mark eng funcon of the or ganiz aon.

Think About It

St arbuck s has created a po werful, widely rec ogniz ed brand iden ty.

Has it lever ag ed the po wer of this br and to pur sue either mark ets or pr oduct de velopmen t str ategies?

Wha t possibilies remain un tapped?

The Ansoﬀ ma trix is a pot enally valuable tool for iden fying gr ow th str ategies. The f our cells of the ma trix are exhaus ve in terms of specif ying the four possible

sour ces of new grow th opportunies de ﬁned by mark et and pr oduct char acteris cs. The opons unc over ed by using this fr ame work ar e, necessarily , only starng

poin ts. Subsequen t evalua on, reﬁnemen t, and tes ng of concep ts is requir ed to fully e valua te the pr oﬁt pot enal of parcular cus tomer , mark et, or pr oduct

str ategies. A pr eliminar y assessmen t of a new str ategic c oncep t’s viability c an be de termined b y the applic aon of S W OT analy sis.

Th e S W OT A naly sis

S W OT is an acr onym for str eng ths, w eaknesses, opportunies, and threa ts. SW OT analy sis is a str ategic planning me thod used to in ves g ate ho w internal,

c ompan y-speciﬁc f act ors (s treng ths and weaknesses) and en vironmen tal f act ors external t o the ﬁrm (opportunies and thr eats) will impact the pur suit of a speciﬁc

mark eng v en tur e. These ven tur es are typic ally a new product or ser vice, oen disc over ed thr ough the applic aon and analy sis of the Ansoﬀ matrix.

The SW OT analy sis model is based on the premise tha t a thor ough under standing of the s tr eng ths, weaknesses, opportunies, and thr eats rela ted t o a giv en

proposal can pr ovide mark eng manag ers with insigh t into the f easibility and pot enal pr oblems associa ted with in troducing a ne w product or ser vice. The ulma te

objecv e of a SW OT analy sis is to pr ovide user s with an accur ate and r ealis c assessmen t of the situaon facing the ﬁrm with r espect to a speciﬁc mark et

opportunity , enabling them to decide whe ther to pr oceed with the concep t or abandon the plan.

SW OT is a v er y ﬂe xible and adap table analy cal technique. Ho wever , the pr ocess can be only as rig orous and the results only as v alid as the in forma on used to

cons truct the par ame ter s of the analy sis. Many manag ers do not rec ogniz e the potenal value of S W OT analy sis as a resear ch-driv en technique. Ra ther , they see it

exclusiv ely as a fairly c asual br ains torming e xer cise tha t lets mulple pares pr ovide input on a pr oposal on an informal basis. Ho wever , mor e disciplined

applic aons of the S W OT technique, including cus tom-or dered mark et r esear ch, can pr ovide much mor e manag erially useful and reliable results.

For mark eng manag ers, a rig orous SW OT analy sis begins by de ﬁning the nature of the speciﬁc mark et opportunity in as much de tail as possible. The ne xt s tep in

the pr ocess is to iden fy the in ternal and e xternal f act ors tha t are rele van t and import ant to the success or failur e of the proposed ne w product or ser vice concep t.

Many of these fact ors can be unc over ed by examining the ho w the curr ent value chain w ould enable the compan y to sa sfy pr ospecv e buyers of this pr oposed

product or ser vice. SW OT analy sis requir es the user to gr oup the rele van t internal and e xternal f or ces in to one of f our primar y categ ories: 4/1/2019 Print

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SW OT a n aly sis i s t y p ic a lly d eve lo ped b y c o m ple ng t h e i n te rio r c e lls o f a 2 x2 m atr ix w here i n te rn al c o m pan y-s p eciﬁ c

stre n gth s a n d w eakn esse s i n te rs e ct w it h e xte rn al o ppo rtu ni es a n d t h re ats .

W hic h w ould y o u r a th er h ave : a m ore r ig o ro us o r a m ore c a su al

ap pro ach t o S W OT a n aly sis ?

R ubberB all/ S u perS to ck

In ternal F orc es

Strengths : These are resour ces and skills that the compan y has acquired that speciﬁc ally rela te t o the

mark et opportunity being e valua ted. Str eng ths include disncv e compe tencies or char acteris cs tha t

give the compan y an advantag e over other s in the industry.

W eaknesses : These ar e fact ors rela ted t o the ne w opportunity in which the compan y is reg arded

un fa vor ably by consumer s, or that mak e the compan y parcularly vulnerable to c ompe tors.

Weaknesses include fea tur es or char acteris cs tha t leave the c ompan y at a disadv antag e compar ed

to c ompe tors’ pr oducts or ser vices.

External F orc es

Opportunies : These are mark et-speciﬁc situa ons that would enable the or ganiz aon t o impr ove

sales or pr oﬁts, with special emphasis on those tha t other s might exploit to g ain compe ve

advantag e if the or ganiz aon f ails t o act upon them.

Threats : These ar e fact ors tha t may endang er or threaten the viability or pot enal value of this ne w

opportunity . In some circums tances, these c an be coun ter ed to cr eate opportunies.

F ig u re 3 .2 : S W OT a n aly sis

As sho wn in Figur e 3.2, SW OT analy sis is typically presen ted and o en interpr eted in a 2x2 ma trix wher e the internal c ompan y-speciﬁc s tr eng th and weakness

fact ors ar e acr oss the top r ow and the e xternal f act ors of opportunies and thr eats ar e pr esen ted on the bo om. This forma t allows the user to c ompar e and

con tras t each of these fact ors ag ains t the other s. It provides, in a sense, a dynamic and in ter acv e checklis t of pros and cons b y evalua ng the opportunity being

consider ed agains t each of the elemen ts idenﬁed within the cells of the matrix.

The primar y value in de veloping the 2x2 S W OT analy sis matrix is to iden fy cric al inter secons be tween internal and e xternal f act ors. Some mes called ma tching ,

this is the pr ocess of aligning the str eng ths of the ﬁrm with opportunies while looking for w ays t o mig ate pot enal thr eats and compan y-speciﬁc w eaknesses.

This allo ws manag ers to r ender a pr eliminar y determina on on the feasibility and t ot al mark et pot enal of the pr oduct or ser vice opportunity being evalua ted. Of

equal import ance, the inter secon of in ternal w eaknesses with external thr eats should signal manag ers to seek r emedies.

Consider the e xample of a Da ve Ingr aham, the young en trepr eneur in Chap ter 2 who w an ts to open a small c afé in the northeas tern c olleg e town. The S W OT

ma trix for his pr oposed coﬀ ee shop migh t look some thing like the one in Figur e 3.3. 4/1/2019 Print

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Th e i n te rs e c on o f t h e p o te n al s tre n gth s a n d w eakn esse s f o r t h e p ro po se d c a fé a re c o m pare d t o t h e o ppo rtu ni es

an d t h re ats p o se d b y t h e e n vir o nm en t i n a n o rth easte rn c o lle ge t o w n.

F ig u re 3 .3 : S W OT a n aly sis f o r c a fé

Da ve sees the s tr eng ths of his concep t as providing a g ood ma tch or ﬁt with the opportunies pr ovided b y the en vironmen t. The most cric al matches f or him

include a g ood loc aon and s tuden t-friendly a tmospher e (streng ths) tha t will cater t o the needs of a lar ge univ ersity popula on (opportunity). However , he needs

to be c oncerned tha t the pot enal risk s from rising ma terial c os ts and narr ow pr oﬁt mar gins (threats) ar e ampliﬁed by his lack of manag erial experience

(w eakness). Hiring expert manag ers or spending some me as an emplo yee within this indus try w ould be alt erna ve ways t o r emedy this misma tch.

Think About It

Based on the S W OT analy sis in Figure 3.3 and the descrip on provided in Chap ter 2, wha t other posiv e str eng th-t o-opportunity ma tches do y ou see for Da ve

Ingr aham’ s proposal?

Wha t are the neg av e weakness-t o-threat in ter secons tha t will pose a problem for him?

SW OT analy sis can be an e ﬀecv e model for e valua ng new opportunies within man y mark eng c on te xts. Be yond the analy sis of new products and ser vices, it

can be applied t o in ves g ang the pot enal ar acv eness of new dis tribuon channels, chang es in supplier rela onship s, and SBU acquisions. In ever y ins tance,

ho wever , the results of a S W OT analy sis are not intended t o pr ovide a ﬁnal decision. Concep ts that pass this inial hur dle then requir e a more detailed e valua on

and the subsequen t developmen t of a comple te mark eng plan.

The S W OT pr ocedur e described in this secon can be classiﬁed as con ﬁrma tor y analy sis in the sense that it seek s valida on for a speciﬁc ne w product or ser vice

proposal. Ho wever , SW OT analy sis can also be applied in an explor ator y analy sis . In this case, ne w mark et opportunies or c oncep ts are not de ﬁned prior to

assembling in forma on on the compan y’s g ener al str eng ths and weaknesses. Opportunies and thr eats from the mark ets in which the y curr ently oper ate ar e used

to c omple te the ma trix. The inter secons of these for ces ar e then explor ed to ﬁnd ne w pot enal mark et opportunies. This appr oach is used less oen in

mark eng c on te xts since the Ansoﬀ ma trix analy sis provides man y of the same insigh ts.

SW OT analy sis is also used in some instances t o pr oﬁle a ﬁrm’ s compe ve rivals. This is mos t frequen tly done with respect to speciﬁc mark et opportunies. If , for

example, y our ﬁrm is con templa ng the introducon of varie es of ﬂavor ed peanut bu er to the adult mark et, cr eang separ ate S W OT ma trices for each of y our

primar y compe tors rela ve to this ne w concep t may iden fy some import ant consider aons. These c ould include rela ted mark et opportunies tha t you had not

consider ed or potenal thr eats tha t you had o verlook ed. Oen this type of compe ve assessmen t will focus on under standing c ompe tors’ dis ncv e

compe tencies, pr oduct diﬀ eren a on, and br and posioning str ategy .

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What problems are you lik ely to enc ounter when applying S W OT analy sis to ne w product and ser vice opportunies?

In addion to those situa ons discussed here, wha t other kinds of business situa ons could be in ves g ated using the S W OT analy sis approach described in this

secon?

Do you think this technique w ould work w ell in non-business con te xts? Explain y our ans wer .

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Mark e ng m an age rs u se t h e P EST EL f r a m ew ork t o f a cilit a te a c o m pre h en siv e s c a n o f t h e e xte rn al e n vir o nm en t

co nfr o n ng t h e o rg a n iz a on. W hy d o y o u t h in k i t i s n ece ssa ry t o c o nsid er t h ese f a cto rs ?

3 .2 E n vir o nm en ta l A naly sis

Mark eng manag ers ar e task ed with shaping the elemen ts of the markeng mix t o ﬁt the pr efer ences and needs of the tar ge t mark et. This pr ocess does not,

however , tak e place in a cons tan t or unchanging en vironmen t. The dynamic external en vironmen t to which decision mak ers mus t respond and adap t comprises tw o

disnct types of variables. Macr o-environmen tal f or ces ar e those unc ontrollable e xternal v ariables tha t impact all ﬁrms within an indus try. These include

demogr aphic shis, prevailing ec onomic condions, cultur al trends, and chang es in the regula tor y en vironmen t. The PESTEL fr ame work, discussed in the follo wing

secon, addr esses these macr o-environmen tal f or ces. Micr o-environmen tal f or ces ar e external s muli tha t selecv ely and discretely in ﬂuence each ﬁrm uniquely

and independen tly. Though not dir ectly under the con trol of an y single organiz aon, some of these elemen ts of the external en vironmen t can be manag ed and

inﬂuenced to a signiﬁc ant degr ee. These micro-environmen tal f or ces include the beha vior of a compan y’s supplier s, customer s, and channel intermediaries such as

independen t wholesalers and retailer s.

Mark eng manag ers exer cise dir ect con trol o ver a limit ed rang e of internal r esour ces and decision variables thr ough which the y can respond to the thr eats and

opportunies posed by the external en vironmen t. Primar y among these tools ar e the mark eng mix v ariables and manag ers’ discr eon t o iden fy segmen ts and

select tar ge t mark ets. The success of a mark eng plan hing es on the ability to adap t the mark eng mix t o ﬁt the changing char acter of both the tar ge t mark et and

the lar ger c on te xt pr ovided b y macr o-environmen tal f or ces and tr ends.

U nders ta n din g F o rc e s a n d T re n ds: P EST EL A naly sis

The pr ocess of systema cally assessing ho w elemen ts of the external en vironmen t will impact a business or market is t ermed en vir onmen tal sc anning . Fact ors of

parcular concern to mark eng manag ers include those issues and tr ends tha t inﬂuence the atudes and beha vior of current and pr ospecv e tar ge t mark ets.

Other poin ts of concern focus on c ondions rele van t to ec onomies, indus tries, allied companies (e. g., supplier s), and compe tors.

Conducng an en vironmen tal sc an can inc orpor ate a wide r ang e of informa on sources and resear ch methodologies such as sta s c al trend analy sis and data

mining. Ho wever , each varia on on the process shar es the goal of pr oviding manag ers with rele van t informa on to impr ove the quality of mark eng decisions.

These decisions include choices about ne w opportunies nes ted in the s tr ategic alt erna ves of mark et pene traon, mark et de velopmen t, and product de velopmen t.

Although there are a number of ways t o sc an the external en vironmen t, among those models with the most compr ehensiv e set of external f act ors is the PE STEL

analy sis . PESTEL is an acr onym for the six en vironmen tal f act ors iden ﬁed in the frame work sho wn in Figur e 3.4: polical, economic, social, technologic al,

envir onmen tal, and leg al. These macr o-environmen tal v ariables o en appear as the sour ce of opportunies and threats in SW OT analy sis.

Fig u re 3 .4 : P EST EL a n aly sis

P o li ca l F a cto rs

P olic al fact ors ar e external macr o-environmen tal v ariables tha t reﬂect ho w governmen t for ces impact the compe ve mark et as a whole and the c ompan y

speciﬁc ally. This categ ory includes tr ade res tricons, tax policies, emplo yment regula ons, and consumer pr otecon legisla on. General polic al stability and the 4/1/2019 Print

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A y o uth m ark e ng c o m pan y w it h s e ve ra l F o rtu ne 5 00 c lie n ts s p ecia liz e s i n

a n aly zin g " tw een s," t h e g ro up o f k id s b etw een 8 a n d 1 2 y e ars o ld . A

m ark e te r i n te rv ie w s t w o y o ung g ir ls a b o ut t h eir w is h es, d esir e s, a n d d re am s

as c o nsu m ers . W hat d o es t h is i n fo rm a on o ﬀ er f o r t h e m ark e te rs o f t w een

p ro ducts ?

W hen e va lu a ng f o re ig n m ark e t o ppo rtu ni es, v o la le c u rre n cy

e xch an ge r a te s a d d t o t h e r is k o f n ew v e n tu re s a n d a m plif y t h e

need f o r a ccu ra te m ark e t r e se arc h .

is to ck p hoto /T h in ksto ck

r ole of g overnmen t in providing for f air and sa fe mark ets c an v ar y widely fr om one coun try to the ne xt. Similarly , signiﬁcance of polical inﬂuences on business

infras tructur e can be sub stan ally diﬀ eren t when mo ving from one pr oduct categ ory to the ne xt.

E co nom ic F a cto rs

E conomic f act ors mak e up a categ ory of variables tha t rela te t o the pr evailing o ver all condion and

health of the ec onom y in which tar ge t mark ets e xis t. Speciﬁc variables of concern include gr oss

domes c product (GDP), discr eonar y income, consumer con ﬁdence, unemplo yment, inﬂa on,

inter es t rates, and curr ency exchang e rates. E ach of these fact ors can ha ve a signiﬁc ant impact on

product - and market-le vel decision making. In ter es t rates ar e of parcular concern to c ompanies in

pur suit of grow th opportunies, bec ause as the cos t of borr owing mone y directly aﬀects a business’ s

ability to e xpand. Other ec onomic fact ors dir ectly impact consumer s’ ability to a ﬀor d the pr oducts

being sold.

So cia l F a cto rs

Social f act ors o en repr esen t the mos t import ant concerns for mark eng manag ers bec ause they

re ﬂect tw o cric al classes of customer char acteris cs: cultur e and demogr aphics. Culture embodies

the shared belie fs, a tudes, and values of a socie ty. Demogr aphics describes the sta s c al

char acteris cs of a popula on expr essed by variables such as loc aon, ag e, and emplo yment.

The inter acon of mark eng and cultur e is a two-w ay s tr ee t. Cultur al meanings are trans ferr ed to

pr oducts via mark eng c ommunic aons, making pr oducts mor e ar acv e to c onsumer s who hold

these values. In turn, the symbols and ic ons of cultur es and subcultur es establish f ounda onal values for man y types of product mark ets. F or e xample, health

consciousness is both a v alue pr omot ed by mark eter s and a cor e cultur al value shar ed across man y consumer mark ets. The import ance of children’s vit amins to

good health and ho w this is expr essed in mark eng c ommunic aons c onnects the adv erser ’s br and-speciﬁc messag e to pr evailing cultur al norms about caring for

one’ s family . Similarly , marketer s ﬁnd opportunies to sell pr oducts at holida ys tha t revolv e around cultur al rituals that create or a ﬃrm speciﬁc cultur al meanings.

Demogr aphic market char acteris cs assis t mark eter s in under standing ho w diﬀ eren t segmen ts respond to the mark eng pr ogr ams as a funcon of per sonal

variables such as ag e, sex, and inc ome. Atude resear ch on consumer s is oen ed to dis nguishing how diﬀ eren t demogr aphic segmen ts feel about a pr oduct or

ser vice. Mark eter s rely hea vily on demogr aphics because they can be reliable indic ator s of ho w diﬀ eren t segmen ts perceiv e product value. The y are also used

extensiv ely in the analy sis of B2C markets bec ause chang es in most demogr aphic variables ar e easily for ec ast. Fr ee or ine xpensiv e secondar y data ar e readily

available fr om a lar ge number of g overnmen t agencies and widely accessible online.

"T w een " M ark e t R ese arc h

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M ark e t d em an d f o r r e cy cle d e le ctro nic c o m po nen ts h as g ro w n

ste ad ily o ve r t h e p ast 1 5 y e ars .

a ge f o to sto ck /S u perS to ck

Do demogr aphic fact ors such as ag e, sex, inc ome, and family s ta tus in ﬂuence the way w e feel about br ands? Consider the mark et f or f as t food. Some c ompanies

emphasiz e low prices. Other s focus on health y alterna ves. Some appeal to pr ospects based on menu-speciﬁc fea tur es, while other s emphasiz e ever ything but

the f ood being sold.

Can these diﬀ erences be ed to the demogr aphic proﬁle of the tar ge t mark et f or these r es taur ants? Wh y or why not?

Te ch nolo g ic a l F a cto rs

Although t echnologic al fact ors ar e variables tha t impact some mark ets and businesses f ar mor e than other s, all markeng manag ers need to be a w ar e of the tr ends

and shis in this categ ory. The dimensions of t echnologic al change that mos t oen inﬂuence mark eng pr ocesses include inno va ons in c ommunic aon and

channels of dis tribuon. Companies at the leading edg e of these types of chang es can es tablish c ompe ve adv antag es and cr eate e ﬀecv e barrier s to mark et

en try. B y pioneering inno va v e systems of in ter acng with cus tomer s, processing or der s, and dis tribung products, Amaz on.com was able to es tablish a sus tainable

c ompe ve adv antag e root ed in brand aw ar eness and sc ale ec onomies tha t eﬀecv ely prohibits man y ﬁrms from compe ng with the compan y directly .

En vir o nm en ta l F a cto rs

En vir onmen tal f act ors ar e primarily long-t erm ecologic al concerns tha t have the pot enal to impact

all businesses a t some le vel. These c an be loc al/r egional in scope (e. g., water short ages, chr onic

ﬂooding) or global. Beyond issues associa ted with clima te chang e, this categ ory includes fact ors such

as responsible w aste disposal, polluon mig aon, and ener gy eﬃciency . A prime example of this

tr end is gr een legisla ve inia ves aimed at reducing landﬁll w astes fr om sour ces such as product

pack aging and the disposal of electr onics. In many jurisdicons, "rever se value chain" la ws pr escribe

the standar ds and processes for the sa fe r ecy cling of consumer electr onics and appliances. Although

some industries such as farming and paper pr oducts are mor e directly impact ed than others,

envir onmen tal f act ors repr esen t emer ging grow th opportunies for man y more, as mark ets ar e

trans formed t o r eﬂect incr easing aw ar eness of business’ s role in en vironmen tal s te w ar dship.

Le g al F a cto rs

Leg al fact ors in the macr o-environmen t include laws and regula ons intended t o c on trol the beha vior

of business organiz aons and special in ter es t gr oup s. These include antrus t laws, Occupa onal

Safe ty and Health Adminis traon (OSHA) r egula ons, consumer pr otecon sta tut es, and product

safe ty and health la ws. St ate and loc al agencies o en impose speciﬁc regula ons to g overn the

pricing of c onsumer necessies and na tural monopolies such as ulity companies. Although some

business leader s may resen t wha t they reg ard as the "o ver -regula on" of mark ets and business pr acces, the objecv es of maintaining f air s tandar ds for the

pr otecon of consumer s and a level c ompe ve playing ﬁeld are gener ally rec ogniz ed as valid regula tor y goals.

* * *

Each of the PE STEL model’ s six fact ors will be of gr eater or lesser import ance to an y giv en compan y based on the character of the mark ets in which it c ompe tes. In

g ener al, the process of macr o-environmen tal analy sis should incorpor ate as man y credible and reliable sour ces as possible to cr eate a c omple te pictur e of rele van t

trends in the e xternal en vironmen t. In many instances, the en vironmen tal sc an will highligh t the need to undert ake cus tom-designed r esear ch studies aimed a t

ans wering speciﬁc ques ons about mark ets, cus tomer s, or the impact of parcular mark eng s tr ategies.

Implemen ng the PESTEL Analy sis

PESTEL analy sis is a ver sa le diagnos c tool for helping manag ers under stand the macr o-environmen tal f or ces tha t can impact the a r acv eness of alterna ve

mark ets. The purpose is t o iden fy those mark et-speciﬁc elemen ts that may posiv ely or negav ely aﬀect the mark eng and sale of individual br ands. It is o en

applied to the pr ocess of evalua ng interna onal opons for mark et de velopmen t. When used in this way, the speciﬁc char acteris cs of naons are the subject

of the analy sis.

One approach to implemen ng a pracc al PESTEL me thodology is to sc ore each op on using standar d measur es for each of the six en vironmen tal f act ors

iden ﬁed by this fr ame work. A lis t of pot enal indic ator s for each measur e is provided in T able 3.1.

Ta b le 3 .1 : P EST EL f a cto rs a n d i n dic a to rs

PE STEL

FA CTOR S INDICA TOR S

Polic al World Bank Go vernance Indic ator s, Cen tral In tellig ence Agency World Fact Book, Herit age Founda on Economic Fr eedom Inde x,

Trade and t axa on policies

E conomic Gr oss Domes c Product and GDP per capit a, GDP annual grow th rate, Ne t exports, Balance of pa ymen ts, Current acc oun t deﬁcit,

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Social Popula on demogr aphics, Income and wealth dis tribuon (GINI coe ﬃcien t) Literacy rate, Enr ollmen t in educaonal pr ogr ams,

Human De velopmen t Index (HDI) Score (Unit ed Naons Developmen t Progr am)

Technologic al Global Compeveness Reports: W orld Economic F orum, Technologic al infras tructur e: Central In tellig ence Agency World Fact Book,

Ra tes of inno va on and t echnologic al obsolescence

Envir onmen tal Human De velopmen t Reports (Unit ed Naons Environmen tal Pr ogr am), Waste and en vironmen tal manag ement policies, Clean air,

land, and water s tandar ds

Legal Transpar ency Interna onal, Corrup on Index: hp://w ww.tr anspar ency.org ( h p://w ww.tr an sp are n cy.o rg ) , Leg al sta tut es on

compe on and emplo yee sa fe ty , Consumer health and sa fe ty la ws

Using standar d measur es that are dir ectly compar able across coun tries enables analy sts t o e valua te the a r acv eness of alterna ve mark et en try op ons. In

man y situa ons, manag ers will de velop sc orec ards to s ystema cally or ganiz e and analy ze the a r acv eness of alterna ve ne w mark ets on a ﬁx ed set of crit eria,

as sho wn in Table 3.2.

Ta b le 3 .2 : N ew m ark e t a ra c ve n ess s c o re ca rd

Coun try A Coun try B Coun try C Coun try D

Crit erion Import ance

Weigh t (%)

Rang (1–

10) Assessmen t Rang

(1–10) Assessmen t Rang

(1–10) Assessmen t

Polic al

Freedom of pr ess 11 8 .88 2 .22 7 .77 6 .66

Civil liberes 4 5 .2 3 .12 8 .32 5 .2

Economic

GDP per c apit a 16 10 1.6 4 .64 8 1.28 8 1.28

For eign dir ect inves tmen t 12 9 1.08 3 .36 9 1.08 4 .48

Social

Median age 7 6 .42 10 .7 7 .49 4 .28

Literacy rate 4 5 .2 9 .36 8 .32 8 .32

T echnologic al

Per cen tag e household

Interne t access 16 9 1.44 8 1.28 8 1.28 7 1.12

Global compe veness rank 7 9 .63 2 .14 9 .63 9 .63

En vir onmen tal

P er cen tag e plas cs recy cled 4 7 .28 10 .4 6 .24 7 .28

Carbon emissions per

household 7 4 .28 9 .63 8 .56 6 .42

Leg al

Corrup on index score 9 8 .72 1 .09 10 .9 8 .72

Go vernmen t transpar ency

ranking 3 10 .3 2 .06 9 .27 10 .3

T ot al 100 8.03 5 8.14 6.69

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Man y c o m pan ie s u se t h e " sto re i n te rc e p t" t e ch niq ue. T h is

t e ch niq ue a llo w s t h e c o m pan y t o g a th er c u sto m er f e ed back c h eap ly

a n d e ﬀ ec ve ly .

B le n d I m ages/S u perS to ck

3 .3 M ark e t R ese arc h

Mark et r esear ch describes a broad arr ay of pr ocesses rela ted t o the c ollecon and analy sis of

informa on for the sak e of impr oving mark et-r ela ted decision making. In some ins tances, the

r esear ch process can be in formal and ine xpensiv e. This would include acvies ranging fr om follo w-

up con ver sa ons with recen t customer s to r ounely c ollecng da ta tha t are pos ted on the In terne t.

Alterna vely , ambious resear ch studies such as in- ﬁeld mark et t es ts or sur ve y r esear ch that requir es

collecng da ta fr om tens of thousands of subjects c an be v er y expensiv e. In ever y ins tance, ho wever ,

mark eng manag ers need to e xplicitly rec ogniz e the me and expense associa ted with the c ollecon

of mark et-r ela ted da ta f or each type of s tudy and de termine whe ther the value of in forma on

exceeds the price.

A pplic a tio ns a n d T y p es o f R ese arc h S tu die s

For man y organiz aons, c ollecng cus tomer and c ompe tor in forma on is an essen al part of the

drive to impr ove pr oduct value and cus tomer sa sfacon. Be er mark et-r ela ted in forma on is always

requir ed to mak e beer decisions, especially in the face of dynamic and v ola le mark et c ondions.

For man y large c orpor aons, an ong oing progr am of mark et r esear ch provides feedback t o the

or ganiz aon on ne w opportunies, emer ging market pa erns, and chang es in the compe ve

envir onmen t. Other resear ch inia ves, ho wever , ar e undert aken on a limit ed-term basis to pr ovide

speciﬁc in forma on to addr ess a speciﬁc ques on.

Whether part of an ongoing resear ch progr am or a one-me cus tom designed s tudy , the possible applic aons of mark et r esear ch gener ally fall in to one of thr ee

ca teg ories, which ar e discussed in turn belo w.

Id en fy a nd E v a lu a te M ark e ng O pportu ni es

This ﬁr st c ateg ory includes resear ch studies focused on ﬁnding ne w mark et opportunies and f or ec asng their ﬁnancial pot enal. The types of resear ch plans in

this set include mark et segmen ta on s tudies, demand es ma on resear ch, and project feasibility assessmen t. Both the Ansoﬀ matrix and SW OT analy sis can pla y

signiﬁc ant roles in shaping the r esear ch process once mark et opportunies ha ve been t en ta v ely iden ﬁed.

Asse ss P o te n al C o nse q uen ce s o f M ark e ng D ecis io ns

Each of the f our elemen ts of the markeng mix c an be the subject of separ ate or c ombined mark et r esear ch studies. Assessing the pot enal impact of pr oposed

chang es in the 4 Ps is a cric al task for mark eng r esear chers. Speciﬁc types of resear ch in this second categ ory w ould include ne w product mark et t es ts,

compar av e tes ts for alt erna ve adv ersing plans, and experimen tal s tudies on the e ﬀect of price chang es across product lines and mark et segmen ts.

Monit o r a nd I m pro ve M ark e ng P ro ce sse s

The thir d categ ory o en involv es longitudinal studies. Longitudinal s tudies requir e the collecon of repea ted ob serva ons of the same v ariables o ver e xtended

periods of me. These ar e some mes referr ed to c orr elaonal studies when the y are used to measur e sta s c al rela onship s between tw o or mor e mark eng

variables (e. g., sales and adv ersing). By tr acking the same rela onship s over an e xtended period of me, mark et r esear chers can iden fy reliable rela onship s and

evalua te v ariability in sales and cus tomer sa sfacon as a funcon of chang es in the ﬁrm’s mark eng acvies. These types of tr acking studies c an also be use ful in

evalua ng customer per cepons of brand-speciﬁc variables such as imag e, aw ar eness, rec all, and pr efer ence.

In addion to g athering in forma on from sour ces external t o the ﬁrm, or ganiz aons o en rely on in ternal sour ces of data t o help them e valua te ong oing mark eng

pr ogr ams and diagnose pot enal pr oblems. This type of resear ch on the eﬀecv eness and eﬃciency of the ﬁrm’ s mark eng e ﬀorts o en analy zes da ta fr om exis ng

in-house da tabases. As not ed at the close of Chap ter 2, these da tabases typic ally include informa on on compe tors and supplier s, as well as da ta speciﬁc t o

cus tomer s and sales. In many situa ons, however , mark eng manag ers will need to turn to e xternal sour ces of supply for mark et r esear ch services and data.

S u pplie rs o f M ark e tin g R ese arc h

Although an a ver ag e business ma y spend between 25 and 50 per cent of its annual mark eng budg et on r esear ch acvies (Small Business Encyclopedia, 2011), not

ever y or ganiz aon has the ability or desir e to eng age in the collecon and analy sis of data on its o wn. Mor e than $20 billion is spen t each year on mark eng

ser vices around the world. Appr oxima tely one-thir d of the tot al is spen t in the United States alone (Honomichl Global T op 25 R eport, 2010).

Commer cial resear ch vendor s and external ser vice supplier s provide a wide r ang e of mark et r esear ch services to their cus tomer s. Full-ser vice supplier s perform all

mark eng r esear ch funcons for the clien t from the start of the pr oject thr ough its conclusion. This includes cus tom r esear ch designs, data c ollecon ser vices, and

sta s c al analy sis of the results. Limit ed service supplier s typically specializ e in the provision of select ser vices. These include online resear ch specialis ts, companies

tha t sell syndic ated da ta, and ﬁrms tha t specializ e in the study of speciﬁc mark ets or mark eng funcons.

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Th e s te p s i n vo lv e d i n t h e m ark e ng

re se arc h p ro ce ss a re n o t a lw ays f o llo w ed

in a s tr ic tly s e q uen al m an ner.

S o m e m es, i n fo rm a on a cq uir e d a t o ne

le ve l o f t h e p ro ce ss w ill r e q uir e r e -

eva lu a on.

F ig u re 3 .5 : T h e m ark e ng

re se arc h p ro ce ss

3 .4 T h e M ark e tin g R ese arc h P ro ce ss

The formal s tep s involv ed in the mark eng r esear ch process are not intended t o pr ovide a one-siz e-ﬁts-all recipe for

designing e ﬀecv e studies. The objecv e of providing a s tep-b y-s tep appr oach to the pr ocess is to impose a measur e of

discipline that will ensur e an eﬀecv e and eﬃcien t design of the resulng s tudy . The six-step model illus trated in Figur e 3.5

is intended t o ans wer thr ee basic resear ch quesons: What should we be in ves g ang? Ho w should we design the study?

Wha t will the results reveal? This ﬁnal ques on is not intended t o for ce a guess about the speciﬁc out come of the r esear ch.

Instead, it r equir es the resear cher to be sur e tha t the design of the study is in tended t o yield the in forma on requir ed to

ans wer the ques on that was originally posed.

Defin e t h e P ro ble m a n d R ese arc h G oals

The s tarng poin t for an y systema c appr oach to mark et r esear ch is to speciﬁc ally deﬁne the manag erial, market-r ela ted

pr oblem and tr ansla te tha t problem into a r esear ch queson. For e xample, a br and manag er for a c ompan y that sells

dessert toppings ma y be considering the launch of a line of reduced-c alorie toppings. The r ela ted r esear ch quesons migh t

pertain to measur es of ancipa ted c onsumer in ter es t or pr oduct accep tance.

T o pr ovide the bes t possible guidance for the design of the s tudy , resear ch problems should be de ﬁned as narr owly and

speciﬁc ally as possible. If the problem is poorly de ﬁned at the outse t or the inial speciﬁc aon is t oo v ague, the me

expense and dir ect cos ts associa ted with the s tudy will be w asted. A g ood w orking de ﬁnion of the resear ch problem to be

in ves g ated should s tart with an under standing of the mark et-r ela ted ques on facing the ﬁrm. If the mark eng manag er is

not directly over seeing the pr ocess, the resear ch director mus t have a clear under standing of wh y the informa on is

import ant and ho w it will be used. This should enable an accur ate tr ansla on of the problem under inves g aon in to

speciﬁc and measur able resear ch objecv es and metrics.

The deﬁnion of the problem in this inial step is c ombined with the iden ﬁcaon of g oals simply bec ause the two cannot

be fully under stood independen t of each other. The inten t of the resear ch is to pr ovide the in forma on necessar y to solv e

the problem under consider aon. The objecv es or goals, once under stood, de termine ho w the study mus t be designed to

pr ovide the in forma on requir ed to solv e the problem.

Sp ecif y t h e R ese arc h D esig n

The inial decisions on ho w the resear ch study should be designed and structur ed must reﬂect the na ture of the resear ch

queson being posed. Three classiﬁc aons ar e used to iden fy diﬀ eren t types of resear ch designs based on the objecv es

of the resear ch.

Explor ator y resear ch collects in forma on about a problem under inves g aon in a loosely or ganiz ed, uns tructur ed, and

informal manner . It is oen used as a form of pr eliminar y resear ch to help de ﬁne the underlying mark et-r ela ted pr oblem

mor e clearly and speciﬁc ally. Qualit av e techniques such as focus gr oup s and dep th inter vie ws ar e rounely used for this

purpose.

Descrip ve resear ch inves g ates the r esear ch queson using methodologies tha t describe the level or me trics associa ted

with mark et-r ela ted v ariables. In con tras t to pur ely explor ator y resear ch, descrip ve studies begin with a w ell-de ﬁned

resear ch problem. In fact, the r esear chers need to kno w the who , what, when, wher e, why, and ho w elemen ts of the plan

befor e undert aking any descrip ve studies. The ﬁnal pr oduct of descrip ve resear ch is a snapshot of the rele van t mark et

based on the char acteris cs select ed for s tudy .

Causal resear ch studies e xamine the na ture of cause-and-e ﬀect r ela onship s between mark eng v ariables. The se ng for

causal r esear ch studies c an be either in the ﬁeld (e. g., tes t mark ets) or in c on trolled se ngs such as focus gr oup facilies or

labor atories.

I d en tif y t h e I n fo rm atio n S o urc e b y T y p e

Informa on that is gather ed in response to a parcular r esear ch queson is termed primar y data . Primar y data c an be ob tained fr om cus tomer s through per sonal

inter vie ws, sur ve ys, or passiv e observa on of their beha vior. Gathering data thr ough the direct observa on of cus tomer s has sever al disadv antag es over other

techniques. It is unable t o pr ovide da ta on indiscernible per sonal traits such as belie fs, a tudes, a w ar eness, and mov aon. P er sonal in ter vie ws and sur ve ys c an

typic ally sample man y more people much more quickly . Asking subjects to pr ovide in forma on about themselv es, however , also has its limit aons. P ot en al

responden ts may decline to parcipa te in the pr ocess, or their responses ma y be inaccur ate. It is also possible tha t the willingness of some people to parcipa te

while other s refuse c an pr oduce biased results based on the c omposion of the complian t sample.

Secondar y data is in forma on that has been collect ed prior to the s tudy for unr elated purposes. Sec ondar y data ma y be informa on that is internal t o the ﬁrm

(e. g., sales rec ords) or external (e. g., census data). Ex ternal sec ondar y data ma y be either published data or s yndic ated, c ommer cially available da ta. Go vernmen t

agencies such as the Bur eau of Labor Stas cs and the Census Bur eau rounely c ollect and dissemina te a gr eat deal of informa on that is of signiﬁc ant value to

mark eng manag ers. 4/1/2019 Print

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At t h e K ro ge r t a s ng c e n te r, c u sto m ers p ar cip ate i n a r e se arc h

stu dy b y t a s ng c o okie s a m ple s a n d c o m ple ng a q ues onnair e

w it h f e ed back . F ro m t h is f e ed back , t h e c o m pan y w ill a d ju st i t s

re cip e.

Asso cia te d P re ss

Sec ondar y data ha ve some adv antag es over primar y data. It is alr eady available and r ela vely

ine xpensiv e to acquir e in con tras t to the c os ts associa ted with ob taining c ompar able primar y data.

The principal disadv antag e is tha t the available da ta ma y not accur ately addr ess the speciﬁc resear ch

problem. Consequen tly, sec ondar y data is o en used as a supplemen t to the primar y data c ollect ed

for the speciﬁc ques on under inves g aon.

D eve lo p a S a m plin g P la n

The sampling plan refer s to those elemen ts of the resear ch design used to select subjects fr om the

resear ch popula on of inter es t. The objecv e is to iden fy a sub set of per sons who will reliably

repr esen t the whole popula on. This principle is clearly eviden t when public opinion pollster s ar e

conducng sur ve ys prior t o an elecon. A small but w ell chosen sample of the elect orate c an be

used to accur ately pr oject the results for the whole popula on of vot ers.

Although ther e are sta s c al me thods of determining the minimum sample siz e for an y giv en study ,

larger samples will yield mor e reliable results. Consequen tly, designer s must weigh the incr emen tal

c os t of including mor e than the minimum number of subjects in the sample agains t the oﬀseng

impr ovemen t in the sta s c al accur acy of the results.

C o lle ct a n d A naly ze t h e D ata

The me thod of data c ollecon is necessarily dependen t on the over all resear ch plan. It requir es

ga thering in forma on about customer s, compe tors, and mark ets b y means of a br oad rang e of

techniques. Primar y data c an be collect ed through tes t mark et trials, in-home pr oduct tes ng , focus gr oup s, consumer panels, and sur ve ys. Sur ve y da ta c an be

collect ed in face-t o-face mee ngs, over the t elephone, or online. Inaccur acies or errors in the da ta c an result fr om ﬂa ws in the pr ocess of collecng the

in forma on. When using ques onnair es, for e xample, the ques ons must be communic ated clearly and fr ee from the use of biased w ording.

The pr ocess of da ta analy sis usually begins with entering da ta in to ﬁles f or inial r evie w and scr eening. If data need t o be c oded or ma thema cally trans formed f or

sub sequen t analysis, it is usually done at this inial stag e of the pr ocess. Descrip ve sta s cs (e. g., frequencies, means) ar e created t o inspect the da ta f or ob vious

errors and missing values. Once the da ta se t has been cleaned, sta s c al sow are is used to analy ze the r esults of the s tudy .

Pre se n t t h e F in din gs

The pr esen ta on of ﬁndings c an be done in either a formal or in formal f orma t. In each instance, ho wever , a wri en summar y of the study ’s r esults is pr epar ed.

Presen ta ons b y pr ofessional mark et r esear ch ﬁrms are typic ally more formal than those giv en by an in-house mark et r esear ch sta ﬀ . Of primar y import ance in

either seng is the clear communic aon of the r esults in a manner tha t addr esses both the speciﬁed resear ch objecv es and the inial managerial queson that

promp ted the s tudy . Wri en reports typic ally con tain an e xecuv e summar y, a s ta temen t of the resear ch objecv es, an explana on of the methodology emplo yed,

an o ver vie w of the sta s c al results, in terpr eta on of the ﬁndings, and the author s’ ﬁnal rec ommenda ons.

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Ch. 3 C onclu sio n

As sta ted a t the outse t, one of the most import ant roles of mark et r esear ch is to pr ovide in forma on that will reduce the uncert ainty and risk con fron ng the ﬁrm.

Consequen tly, the value of resear ch is greates t when mark et c ondions ar e mos t vola le and leas t cert ain. The intensity of head-t o-head compe on and instability

of c onsumer pr efer ences ar e tw o fact ors tha t incr ease the value of curr ent, reliable mark et r esear ch. However , the rela ve import ance, role, and sc ope of mark et

resear ch will necessarily diﬀer from one or ganiz aon t o the ne xt.

Or ganiz aons tha t embr ace the markeng c oncep t rec ogniz e that eﬀecv e mark et r esear ch possesses the potenal to impr ove cus tomer sa sfacon and br and

loyalty . In fact, it is o en said tha t mark et r esear ch is the listening part of the dialogue be tween buy ers and seller s that is the process of mark eng. It is cert ainly

one of the mos t import ant means by which or ganiz aons c an learn about cus tomer s' wan ts, needs, and pr efer ences.

For the mos t part, mark eng manag ers need to under stand the essen al elemen ts of the process well enough to be g ood clien ts. First and f or emos t, this means

knowing how to w ork with pr ofessional resear chers to assis t in the meaningful transla on of mark eng pr oblems into r esear ch quesons. The second mos t

import ant role of mark eng manag ers as consumer s of resear ch is to be cric al customer s. More than the professionals who execut e the resear ch studies,

manag ers mus t rec ogniz e that resear ch results ar e only of value when the in forma on collect ed is rele van t and speciﬁc to the challeng es facing the or ganiz aon. 4/1/2019 Print

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Ch . 3 L e arn in g R eso urc e s

Key I d eas

C ri ca l T h in kin g Q ues ons

1. It is both logic al and readily e viden t from experience tha t beer in forma on leads to be er decision making. Ho wever , mos t manag ers rounely mus t make

import ant decisions with far less in forma on than they would lik e to ha ve. Wha t are the primar y reasons for this in forma on gap?

2. Does the pur suit of customer sa sfacon driv e all mark et r esear ch decisions? If there are excep ons, wha t is the raonale f or making them?

3. Both v alue and cus tomer sa sfacon ar e subjecv ely experienced. Ho w does this reality limit the ulity and w orth of mark et r esear ch?

4. The chapter ar gues tha t grow th is an essen al str ategic g oal. Is this ab solut ely true in ever y cir cums tance? Can gr ow th tak e on diﬀ eren t meanings depending on the

situa on facing the ﬁrm?

5. It is claimed tha t the Ansoﬀ Product/Mark et Opportunity Ma trix is exhaus ve in terms of iden fying all the possible sour ces for ne w grow th str ategy op ons. Do

the four pr oduct/mark et c ombina ons really c over e ver y possible op on?

6. The Ansoﬀ ma trix iden ﬁes mark et pene traon as a gr ow th str ategy . Can this really be c onsider ed a new grow th str ategy or is it jus t business as usual?

7. Which would be a mor e expensiv e str ategy t o pur sue in mos t situa ons: mark et de velopmen t or product de velopmen t? Why?

8. The Bayer aspirin pr oducts example illus trates both mark et de velopmen t and product de velopmen t str ategies in acon. Select a ser vice-orien ted c ompan y with

which you ar e familiar . How could y ou apply these tw o str ategies t o tha t organiz aon?

9. Does S W OT analy sis work be er in some situa ons than other s? If so, wh y? Wha t are the condions under which it is diﬃcult to use?

10 . Some manag ers simply don’t reg ard SW OT as a serious form of analy cal tool. Ins tead, the y reg ard it as only a br ains torming e xer cise. Can it be valuable as a

br ains torming de vice? Can it be used in both ways t o e xplor e the same situa on or opportunity? What do you miss out on b y vie wing it only one way and not the

other?

11 . Mark eng manag ers respond to c omple x and vola le en vironmen ts with a limited set of tools o ver which the y exer cise dir ect con trol. These include the mark eng

mix v ariables and manag ers’ discr eon t o iden fy segmen ts and select tar ge t mark ets. Ar e ther e circums tances in which c ompanies can e xert dir ect inﬂuence over

the char acter of the mark ets in which the y compe te?

12 . The pr ocess of en vironmen tal sc anning is a mor e challenging task in some mark ets and indus tries than other s. Why? Are for eign mark ets mor e diﬃcult to tr ack

than domes c markets?

13 . When using the PE STEL appr oach to en vironmen tal sc anning , some consider aons c ould ﬁt in to mor e than one of the six categ ories. Iden fy some of these and

explain wh y the y tend t o span boundaries. Is this lik ely to be a pr oblem when using this technique?

14 . Some of the six macr o-environmen tal v ariables iden ﬁed in PESTEL analy sis can appear as the sour ce of opportunies and threats in SW OT analy sis. Provide

examples.

15 . In PE STEL analy sis, social fact ors o en repr esen t the mos t cric al concerns for mark eng manag ers. Wh y?

16 . Longitudinal studies requir e the collecon of repea ted ob serva ons of the same v ariables o ver e xtended periods of me. Pr ovide thr ee examples of mark eng

phenomena tha t can be measur ed or evalua ted only b y conducng longitudinal studies.

17 . Under wha t circums tances w ould explor ator y resear ch be the endpoin t of a resear ch study rather than a s tepping s tone t o de ﬁning the real underlying mark eng

pr oblem mor e clearly?

18 . Descrip ve resear ch describes levels associa ted with speciﬁc mark et-r ela ted v ariables. It is in tended t o giv e manag ers a snap shot of some aspect of the mark et in

which the y compe te. Giv e three examples of c ommon types of descrip ve resear ch.

19 . Causal resear ch studies e xamine the na ture of cause-and-e ﬀect r ela onship s between mark eng v ariables. Wh y aren’t all mark et r esear ch studies designed to

demons trate c ause-and-e ﬀect r ela onship s? Are other types of studies c oncep tually inferior bec ause they do some thing less than this?

Key T e rm s

Click on each key t erm to see the de ﬁnion .

SLID E 1 O F 15 4/1/2019 Print

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Ansoﬀ Product/Mark et Opportunity Ma trix

(h p:// co nte n t. th uze le arn in g.c o m /b ooks/A U BU S6 20.1 2.1 /se c ons/f ro nt_m a er/b ooks/A U BU S6 20.1 2.1 /se c ons/f ro nt_m a er/b ooks/A U BU S6 20.1 2.1 /se c ons/f ro nt_m a er/b ooks/A U BU S6 20.1 2

A model t o assis t in the process of iden fying ne w grow th str ategy op ons. It rec ogniz es new product - and market-r ela ted opportunies as origina ng from one of

four alt erna ve str ategies: mark et pene traon, mark et de velopmen t, product de velopmen t str ategy , and div ersiﬁc aon.

causal r esear ch

Studies tha t inves g ate c ause-and-e ﬀect r ela onship s between mark eng v ariables.

con ﬁrma tor y analy sis

In ves g aons seeking v alida on or con ﬁrma on for a speciﬁc ne w product or ser vice proposal.

descrip ve resear ch

Studies using me thodologies tha t describe the level or me trics associa ted with mark et-r ela ted v ariables. The ﬁnal pr oduct of descrip ve resear ch is a snapshot of

the rele van t mark et based on the char acteris cs select ed for s tudy .

diversiﬁc aon gr ow th str ategy

A c omponen t of the Ansoﬀ matrix tha t involv es incr easing sales by in troducing ne w products into ne w mark ets.

en vir onmen tal sc anning

The pr ocess of systema cally assessing ho w elemen ts of the external en vironmen t will impact a business or market.

explor ator y analy sis

Open in ves g aons undert aken without an y prior assump ons about the validity or feasibility of the pr oposal under consider aon.

e xplor ator y resear ch

Studies tha t collect in forma on about a problem under inves g aon in a loosely or ganiz ed, uns tructur ed, and informal manner . They are o en used as preliminar y

resear ch to help de ﬁne the underlying mark et-r ela ted pr oblem mor e clearly and speciﬁc ally.

longitudinal studies

These s tudies requir e the collecon of repea ted ob serva ons of the same v ariables o ver e xtended periods of me. The y are also referr ed to as c orr elaonal studies

when the y are looking for s ta s c al rela onship s between tw o or mor e mark eng v ariables.

macr o-environmen tal f or ces

Unc ontrollable e xternal v ariables tha t impact all ﬁrms within an indus try (e. g., prevailing ec onomic condions, cultur al trends).

mark et de velopmen t str ategy

A c omponen t of the Ansoﬀ matrix tha t involv es incr easing sales by in troducing e xis ng pr oducts into ne w mark ets.

mark et leader ship

A c ompan y that holds the highes t market shar e in a given product mark et.

mark et pene traon s tr ategy

A c omponen t of the Ansoﬀ matrix tha t involv es incr easing sales of exis ng pr oducts to curr ent mark ets.

mark et r esear ch

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The systema c gathering , rec ording , and analy zing of data with r espect to a parcular mark et, wher e market r efer s to a speciﬁc cus tomer gr oup in a speciﬁc

geogr aphic area.

mark eng r esear ch process

A muls tep pr ocedur e designed to ans wer thr ee resear ch quesons: What should we be in ves g ang? Ho w should we design the study? Wha t will the results

re veal?

ma tching

The pr ocess of aligning the str eng ths of the ﬁrm with new opportunies while pur suing ways t o mig ate pot enal thr eats and compan y-speciﬁc w eaknesses.

micr o-en vironmen tal f or ces

Unc ontrollable e xternal v ariables tha t selecv ely and discretely in ﬂuence each ﬁrm uniquely and independen tly (e.g., beha vior of a compan y’s supplier s and

customer s).

PESTEL analy sis

An en vironmen tal sc anning appr oach that examines six classes of e xternal en vironmen tal f act ors: polic al, economic, social, technologic al, environmen tal, and leg al.

primar y data

In forma on that is gather ed speciﬁc ally in response to a parcular r esear ch queson.

product de velopmen t str ategy

A c omponen t of the Ansoﬀ matrix tha t involv es incr easing sales by in troducing ne w products into curr ent mark ets.

sampling plan

Dimensions of the r esear ch design used to select subjects fr om the resear ch popula on of inter es t.

sec ondar y data

In forma on that has been collect ed prior to a s tudy for unr elated purposes.

S W OT analy sis

A s tr ategic planning t echnique used t o in ves g ate ho w internal, c ompan y-speciﬁc f act ors and external en vironmen t impact the feasibility of ne w mark eng

ven tur es. SW OT is an acr onym for s tr eng ths, weaknesses, opportunies, and thr eats.

W eb R eso urc e s

This sit e provides fr ee access to whit e paper s and arcles on a wide rang e mark eng r esear ch techniques. Arcles w ere wri en by mark et r esear ch professionals to

illus trate bes t pracces.

hp://w ww.decisionanaly st.c om/ Arnde x.dai ( h p://w ww.d ecis io nan aly st. co m /A r ndex.d ai)

A pr acc al site tha t provides user s with a set of organiz ed procedur es to r esear ch a compan y or industry. Link s to use ful resour ce and data sit es are also pr ovided.

h p://w ww.virtualpe t.com/indus try/ho wto/ sear ch.h tm ( h p://w ww.v ir tu alp et. co m /industr y/h ow to /se arc h .h tm )

This sit e is designed to pr ovide en trepr eneur s with guidance on how to in ves g ate and analy ze both pot enal cus tomer s and compe tors. It includes a checklis t of

readily a vailable da ta sour ces as well as in forma on on mark et r esear ch methodologies.

hp:// edwardlo we.or g ( h p:// ed w ard lo w e.o rg )

This w eb site pr ovides a thor ough presen ta on on man y import ant aspects of SW OT analy sis. It includes useful tools, templa tes, and w ork shee ts as well as se ver al

examples of the t echnique. Other link s on the site include compar able levels of in forma on on the applic aon of the PE STEL analy sis methodology .

hp://r apidbi.c om/sw ot analy sis/ ( h p://r ap id bi. c o m /sw ota n aly sis /)

This sit e provides a c oncise, y et sophis cated, in troducon to the applic aon of the Ansoﬀ Ma trix model as a tool for s tr ategic planning.

h p://w ww.mindt ools.com/pag es/arcle/ne wTMC_90.h tm ( h p://w ww.m in dto ols .c o m /p age s/ a r cle /n ew TMC _90.h tm ) 4/1/2019 Print

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This site also provides a g ood in troducon to the pr acc al applic aon of the Ansoﬀ Ma trix, including curr ent examples f or each of the four alt erna ve gr ow th

str ategies.

h p://w ww.soopertut orials.com/business/mark eng /1787-in tensiv e-grow th-s trategies-ansoﬀ s-product -mark et-e xpansion-grid-2.h tml

(h p://w ww.s o opertu to ria ls .c o m /b usin ess/m ark e ng/1 787-in te n siv e -g ro w th -s tr ate gie s-a n so ﬀ s-p ro duct-m ark e t-e xp an sio n-g rid -2 .h tm l)