Chapter One

Marketing Management
1. Introduction:
Before we directly embark upon the discussion of basic concepts of marketing,
let’s discuss an overview of marketing for more understanding.
Today, you are here about to begin an excitingly important and necessary
undertaking: the exploration of marketing. Marketing is an exciting discipline
because it combines the science and the art of business with many other
disciplines, such as economics, anthropology, cultural studies, geography,
history, jurisprudence, statistics and demographics. This combination will
stimulate your intellectual inquisitiveness and enable you to absorb and understand
the phenomenon of market-based exchange. The study of marketing has been
compared to mountain climbing: challenging, arduous and exhilarating.
Marketing is important and necessary because it takes place all around us
every day, has a major effect on our lives, and is crucial to the survival and
success of firms and individuals. Successful marketing provides the promise of
an important quality of life, a better society and even a more peaceful world.
After your study of marketing, you will see what happens, understand how it
happens and at some time in the future, perhaps even make it happen.

What is marketing?
No one can exhaustively define the term Marketing. Why because there are numerous
definitions offered by different scholars and writers to the term. To mention some of them
for our purpose of study:
1. Marketing is the performance of business activities that directs the flow of
goods and services from the producer to consumers or final users. Marketing
is a process of transacting goods and services from the producer to
consumers.
2. Marketing is the delivery of a higher standard of living to society.

1
3. Marketing is a total system of interacting business activities designed to plan,
price, promote and distribute want satisfying products and services to
present and potential customers.
Of the numerous definitions offered to the term “Marketing", we can distinguish between
social and managerial definitions. A social definition shows the role marketing plays in the
society. A social definition that serves our purpose follows:
Marketing is a societal process by which individuals and groups obtain what they
need and want through creating, offering and freely exchanging products and
services of value with others.
A managerial definition of marketing is that “Marketing is a process of planning
and executing the conception, pricing, promotion and distribution of ideas, goods
and services to create exchanges that satisfy individual and organizational goals.
Marketing has often been described as the art of selling goods and services. But, the most
important part of marketing is not selling. Selling is only the tip of the marketing iceberg.
However, the major aim of marketing is to sense, know, understand and satisfy the
customer's needs and wants in a more superior way than its competitors so that the product
or service fits itself to him (consumer).
The biggest objective of business is customer satisfaction. However, this does not mean that
the profit motive of the business is to be sacrificed at the expense of consumer satisfaction.
It is only to mean that profits should be made by satisfying consumer needs, because
consumer is a king.
The essence of marketing is a state of mind. In making marketing decisions, the manager
has to adopt the viewpoint of the customer. Decisions, therefore, are driven by what the
customer needs and wants. The decisions made by the manager must focus on satisfying the
customer’s needs and wants. The key to success of marketing is adopting the customer’s
viewpoint.
The shortest definition of marketing is that “Marketing is managing profitable customer
relationships”.
The twofold goal of marketing is to attract new customers by promising a superior value
and to keep and grow current customers by delivering satisfaction in a more superior
fashion than any other competitors.
4. Marketing is a process of getting the right goods and services:
 To the right people
 In the right place
 At the right time
 At the right price
 With the right communication and motivation.
For example, when Sony designed its walkman, when Nintendo designed a
superior video game, when Toyota introduced its Lexus automobile, these
manufacturers were swamped with orders because they had designed the right

2
product based on careful marketing homework and taking into consideration the
above definition

 Marketing is a social and managerial process by which individuals and

groups obtain what they want and need through creating, offering and
exchanging products of value with others.

This definition of Marketing rests on the following core concepts: needs, wants and
demands; products (goods, services, and ideas); Value, cost and satisfaction; exchange
and transactions; relationships and networks; markets; marketers and prospects. This
will be shown in the following diagram.

 CORE CONCEPTS IN MARKETING:

Needs,
Needs,
wants, Nee
wants, Products
Products(goods,
(goods, Value,
Value,
costcost
andand Exchange
Exchange and
and
andand
demand1.
demand services
servicesand
andideas)
ideas) satisfaction
satisfaction transaction
transaction

R/ships and
networks

Markets

Marketers
and
prospects
Diagram 1: core concepts of marketing
1. Needs, Wants and Demands

Marketing starts with human needs and wants. People need food, water, air, clothing and
shelter to survive. Beyond this, people have strong desire for recreation, education and other
services. It is important to distinguish between needs, wants and demands.
NEED. A human need is a state of deprivation of some basic satisfaction. Needs are not
created by society or marketers. They exist from the very texture of human biology and the
human condition.
WANTS. Wants are desires for specific satisfiers of needs. An American needs food and
wants a hamburger, French fries and a coke. In different society, wants can be satisfied in
different ways.

3
For example, as an American satisfies his wants by hamburger, an Ethiopian can satisfy his
wants by eating Injera. Human wants are shaped and reshaped by social forces and
institutions including churches, schools, mosques, families and business corporations.
DEMANDS. Demands are wants for specific products that are backed by an ability
and willingness to buy them. Wants become demands when supported by purchasing
power.
Companies must, therefore, measure not only how many people want their product, but
more importantly, how many would actually be willing and able to buy it. As it has rightly
been mentioned above, marketers cannot create needs. However, they can influence demand
by making the product appropriate, attractive, affordable and easily available and accessible
to target consumers.

2. Products (goods, services and ideas)

People satisfy their needs and wants with products. A product is anything that can be
offered to satisfy a need or want. We also use other terms for product such as "offering"
or "solution". A product or offering consists of as many as three components: physical
goods, services and ideas. For example, a fast food restaurant is supplying goods
(hamburgers, fries, and soft drinks), services (purchasing, cooking and seating), an idea
(saves me time). A computer manufacturer is supplying goods (computer, monitor, and
printer), services (delivery, installation, training, maintenance and repair) and an idea
(computational power).

The importance of physical product lies not so much in them as in obtaining the services
they render. We buy a car because it supplies transportation service. We buy a microwave
oven because it supplies a cooking service. Thus, physical products are real vehicles that
deliver services to us.

A carpenter that is buying a drill is not buying a physical drill. Rather, he is buying holes.
A physical object, therefore, is a means of packaging service. The marketers' job is to sell
the benefit or services built into physical products. Some sellers fall in love with their
products. Sellers who concentrate their thinking on the physical product instead of the
customers' needs are said to be suffering from MARKETING MYOPIA. Myopia is
shortsightedness or nearsightedness and a marketer can not be able to see far ahead and
sense, identify, understand and satisfy consumers’ needs and wants in the market.

3. Value, Cost and Satisfaction.

Value: Value is the consumer's estimate of the product's overall capacity to satisfy his/her
needs. Value is a ratio between what the customer gets and what he gives. The customer
gets benefits and assumes costs. Benefits include functional benefits and emotional benefits.
On the other hand, costs include monetary costs, time costs, energy costs and psychic costs.

4
Thus, value can be given:

 Value = Benefits = functional benefits + emotional benefits

Costs monetary costs + time costs + energy costs + psychic costs.

The consumer chooses the product that produces the most value per dollar. Value is the
satisfaction of customer requirements at lower possible cost of acquisition, ownership and
use.

4. Exchange and transaction

People can often obtain products in different ways such as:

1. Self-production: People can relieve hunger through hunting, fishing and fruit
gathering. In this case, there is no market and marketing.
2. Coercion: Hungry people can wrest or steal food from others. A hungry person can
use force to get a product as in a hold-up or burglary. In this case, no benefit is offered
to the other party, fortunately if not harmed.
3. Begging: Hungry people can approach others and beg for food. They have nothing
tangible to offer except gratitude.
4. Exchange: A hungry person can obtain a desired product from some one else by
offering some thing in return. A product that can be offered in return may be money, a
good or service. Marketing emerges when people decide to satisfy needs and wants
through exchange. Exchange is the act of obtaining a desired product from some
one by offering something in return. For exchange potential to exist, the following
five conditions must be satisfied.
1. There are at least two parties.
2. Each party has something that might be of value to the other party.
3. Each party is capable of communication and delivery.
4. Each party is free to accept or reject the exchange offer.
5. Each party believes that it is appropriate or desirable to deal with the other
party.

Exchange is usually described as a value creating process b/c exchange normally leaves
both parties better off. Exchange must be seen as a process rather than as an event. An
exchange is process b/c it involves negotiation and moving toward an agreement. When
agreement is reached, we say that a transaction takes place.
Transaction: A transaction is a trade off values between two or more parties.

5
For transaction to take place, one party must offer something to other party and receive
something in return. For example, Mr. A gives x to Mr. B and receives y in return. Mr.
Jones gave $400 to Smith and received a TV set in return.
Transaction, however, does not require only money as a means or medium of transaction as
there might be a barter transaction. A barter transaction consists of the trading off goods or
services for other goods or services. A transaction involves several dimensions: at least two
things of value, agreed upon conditions, a time of agreement and a place of agreement.
Transaction differs from transfer.
Transfer: In a transfer, A gives x to B but does not receive anything in return.
E.g., Gifts, subsidies, and charitable contributions are all transfer.
5. Relationships and Networks
Transaction marketing is a part of larger idea called r/ship marketing. R/ship marketing
is the practice of building long term satisfying relations with key parties- customers,
suppliers and distributors in order to retain their long tem preference and business.
Smart marketers try to build up long-term trusting, win-win r/ships with valued customers,
distributors, dealers and suppliers. They accomplish these r/ships by promising and
delivering high quality, good service and fair prices to other parties over time. The ultimate
outcome of r/ship marketing is the building of a unique company asset called a marketing
network.
A marketing Network: A marketing network consists of its supporting stakeholders:
customers, employees, distributors, retailers, ad agencies, university scientists, and others
with whom it has built mutually profitable business r/ships.
6. Markets: The concept of exchange leads to the concept of a market. A market consists
of all the potential customers sharing a particular need or wants who might be willing
and able to engage in exchange to satisfy that need or want. Thus, the size of market
depends on the number of people who exhibit the need or want, have resources that interest
others, and are willing and able to offer these resources in exchange for what they want.
Traditionally, a market was a place where buyers and sellers gathered to exchange their
goods - such as a village square. Economists use the term to refer to a collection of buyers
and sellers who transact over a particular product or product class. E.g. the housing market,
the grain market and so on. Marketers, however, see the sellers as constituting the industry
and the buyers as constituting the market.

Communication

Industry-
Industry- collection
collection of
of Market- collection of
Sellers. Sellers. Goods/ services buyers buyers
1 Money

Information

6
Here, in just the above diagram, the sellers and buyers are connected by four flows. The
sellers send goods, services, and communications (ads, direct mail, and so forth) to the
market; in return, they receive money and information (attitudes, sales data, and so forth).
The inner loop shows an exchange of money for goods and services. The outer loop shows
an exchange of information.

7. Marketers and prospects:

A Marketer is someone seeking one or more prospects who might engage in an exchange
of values.
A prospect is someone whom the marketer identifies as potentially willing and able to
engage in an exchange of values. In the normal situation, the marketer is a company
serving a market in a face of competitors.

MARKETING MIX:
The marketing mix is the set of marketing tools the firm uses to pursue its
marketing objectives in the target market. McCarthy classified these tools into
four broad groups that he called the four P’s of marketing: product, price, place
and promotion.
a. Product: Product means the combination of goods and services that the
company offers to the target market.
b. Price: Price is the amount of money customers have to pay to obtain the
product.
c. Place: Place includes company activities that make the product available to
target consumers.
d. Promotion: Promotion means the activities that communicate the merits of
the product and persuade target customers to buy it.

7
Product Price

Variety List Price

Quality Discounts
Design Allowances
Brand name Credit terms
Packaging

Target
Market

Place
Promotion
Channels
Coverage Advertising
Locations Sales Promotion
Inventory Personal Selling
Transportation Direct marketing
Marketing Mix: 4 P’s Public Relation

. Robert Lauterbom suggested that the seller’s four P’s corresponded to the
customer’s four C’s.
Four P’s Four C’s
Product -------------- Customer solution
Price -------------- Customer cost
Place -------------- Convenience
Promotion ---------- Communication
Extended Marketing Mix (3 Ps)
Now a days three more Ps have been added to the marketing mix namely People,
Process and Physical Evidence. This marketing mix is known as extended
marketing mix.
People:- All people involved with consumption of a service are important. For
example workers, management, consumers etc
Process:- Procedure, mechanism and flow of activities by which services are used.

8
Physical Evidence:- The environment in which the service or product is delivered,
tangible are the one which helps to communicate and intangible is the knowledge
of the people around us.
The 8th P of the Marketing Mix:
 Productivity & Quality - This P asks “is what you’re offering your customer a
good deal?” This is less about you as a business improving your own
productivity for cost management, and more about how your company passes
this onto its customers.

Even after 31 years (or 54 in the case of the original P’s) the Marketing Mix is still
very much applicable to a marketer’s day to day work. A good marketer will learn
to adapt the theory to fit with not only modern times but their individual business
model.

Marketing Management Philosophies

Marketing activities should be carried out under a well-thought-out philosophy of
efficient, effective and socially responsible marketing. However, there are five
concepts under which organizations conduct marketing activities.

They are as follow:

1. The Production Concept
2. Product Concept
3. Selling Concept
4. Marketing Concept
5. Societal Marketing Concept
6. Holistic Marketing Concept

1. The Production Concept: This is one of the oldest concepts in business. It

holds that consumers will prefer those products that are widely available and
inexpensive/low in cost.
Managers of production-oriented business concentrate on achieving high
production efficiency, low costs, and mass distribution. The assumption that
consumers are primary interested in product availability and low price will hold
true in at least two situations:
a) This orientation makes sense in developing countries, where the demand
for a product exceeds supply.

9
Here consumers are more interested in obtaining the product than in its fine
points (features), and suppliers taking this advantage will concentrate on
finding ways to increase production and distribution.
b) Where the product’s cost is high and has to be decreased to expand the
market, by increase in [Link] Instruments is one of the leading
companies that use the production concept with philosophy of “GET-OUT-
PRODUCTION, CUT THE PRICE”. Accordingly, TI puts all of its efforts
in building production volume and improving technology in order to bring
down costs .It uses its lower costs to cut prices and attract more consumers
and hence expand the market size.

2. The Product Concept: The product concept holds that the consumers will
favor those products that offer the most quality, performance or
innovative features.
Managers in these organizations focus their energy on making superior
products and improving them over time. They assume that buyers admire well-
made products and can appraise product quality and performance. However,
these managers are sometimes caught up in a love affair with their product and
do not realize what the market needs.

Product oriented company’s often design their products with little or no

customer input. They trust that their engineers can design exceptional products.
Very often they will not even examine competitor's products. Even, whatever,
quality product is produced without considering the consumers needs, there will
be no demand for the product in market. Consumers place orders to purchase a
product because there is certain problem with them. The solution to the problem
is the product. The consumers buy the product only when there is a problem and
when they wish a solution from the product. Otherwise, no need of buying the
product even if the product is quality and provides the best performance for
other some purpose.

3. The Selling Concept: The selling concept holds that consumers and
businesses, if left alone, will ordinarily not buy enough of the organizations’
product. The organization must, therefore undertake an aggressive selling
and promotion effort. This concept assumes that consumers typically show
buying inertia or resistance and therefore must be coaxed into buying.
The selling concept is practiced most aggressively with unsought goods-
goods that buyers normally do not think of buying, such as insurance,
encyclopedias, and funeral plots.

10
These industries have perfected various sales techniques to locate prospects and
hard sell them on their products benefits.
Most firms practice the selling concept when they have overcapacity. Their aim
is to sell what they make rather than make what the market wants. Moreover,
prospects are bombarded with TV commercials, newspaper ads, direct mail and
sales calls. At every turn, someone is trying to sell something. As a result, the
public often identifies marketing with hard selling and advertising.
Nevertheless, marketing based on hard selling carries high risks. It assumes that
customers who are coaxed into buying a product will like it, and even if they do
not like it, they will not bad-mouth it or complain to consumer organizations
and will forget their disappointment and buy it again. These are indefensible
assumptions because one study showed that dissatisfied customers may bad-
mouth the product to 10 or more acquaintances; bad news travels fast.
* Selling focuses on the needs of the seller. Selling is preoccupied with the
seller's need to convert his product into cash through hard selling.

4. The Marketing Concept: The marketing concept holds that achieving

organizational goals depends on determining the needs and wants of target
markets and delivering the desired satisfaction more effectively and
efficiently than competitors do.
Market targeting is not sufficient by itself. It is not an end. After the market is
targeted, the marketers must know what the customers in that market want. This
can be obtained through market research and assessment.

In addition more attention given to consumers, companies have also been

giving more thought to the competitions. It is not enough to satisfy customers if
competitors are satisfying them just as well. It might be very difficult to
dislodge if the competitors once set their foot on the ground in the market.
What companies seek is a competitive advantage, some thing that sets them
apart from their rivals and makes their product more appealing to customers. In
other words, they produce tailored products to satisfy the target market.

There are, basically, two ways to establish a competitive advantage:

1) Offering the lowest possible price for a product, or
2) Offering a unique benefit that justifies an equal or higher price.
With the first approach the key to success lies in driving down costs so that a
company can produce its products less expensively than its competitors can.
A company pursuing a second approach must analyze existing and potential
customers to determine what matters most to them - delivery, service, style,
image, reliability.

11
Then it must create and communicate that quality better than competitors do. The
marketing concept has been stated in colorful ways such as "we make it happen for
you." To fly, to serve (British Air lines); "Going to great lengths to please you"
Ethiopian Air lines; our business is service (Total).
There is some difference b/n marketing and selling concept. These two concepts
are sometimes confused. The Selling concept takes an inside out perspective. It
starts with the factory, focuses on the company’s existing product and calls for
heavy selling and promotion to obtain profitable sales. In contrast, the marketing
concept takes an outside in perspective. It starts with a well-defined market,
focuses on customer needs, coordinates all marketing activities affecting customers
and makes profit by creating long-term customer r/ships based on customer value
and satisfaction. Under the marketing concepts, companies produce what
consumers' want thereby satisfying consumers and making profits.

Marketing and Selling Concept Contrasted

- Starting Focus Means Ends
Point
Selling factory Existing Selling and Profit through sales
concept Products promoting Volume
Marketing market Customer Integrated Profit through ustomer
concept Needs marketing satisfaction

[Link] Societal Marketing Concept: The Societal marketing concept holds that the
organization should determine the needs, wants and interests of target markets and it
then deliver superior value to customers in a way that maintains or improves the
customers’ and the societies’ well-being.

12
The marketing concept was regarded as appropriate strategy for forward- looking company
and it was regarded socially quite acceptable because of its focus on customer wants and
satisfaction. It has, however, been now widely recognized that it has a serious drawback – it
takes into account only the short-run customer satisfaction and company goals and it
ignores the long-run societal interest. The short-run societal interest could be in conflict
with the long-run consumer welfare or the societal interests. For example, a product, which
gives short-run consumer satisfaction, may have adverse effects in the long- run. Cigarette
factories and automobile companies are good examples for this. There are also products the
production of which causes environmental problem, ecological problem and the depletion of
resources at all.

6. Holistic Marketing Concept: this is the most recent concept of marketing

which is based on the development, design and implementation of marketing
programs processes and activities from a broad integrated perspective. It is the
integration of internal marketing, integrated marketing, relationship marketing and
performance marketing concept.
Products &Services
Senior Management
Other departments Communications
Channels

Marketing Department
Internal Integrated Marketing
Marketing

Holistic
Marketing

Performance Relationship Marketing

Sales revenue Marketing

Brand & customer equity Community

Partners
Ethics Environment Customers Channel

Figure 6: Holistic Marketing Dimensions

13
(a)Internal Marketing Concept: This concept holds the idea to satisfy the
internal people or employees within the organization, so that they work for the
satisfaction of the customers. The first step to satisfy the customers is to satisfy
the internal people first or to motivate them first.
(b)Integrated Marketing Concept: It refers to an approach where all the
departments of the organization work in a coordinated manner to support and serve
the customers. Any single section cannot serve the customers without the help of
other sections. The customer’s satisfaction is achieved when all the
departments have the common goals and intention to serve the customers.
(c)Relationship Marketing Concept: It refers the long-term relationship with the
customers. It emphasizes on creating, maintaining and developing a long term
value laden or value based relationship with the target customers and other
parties.
(d)Performance marketing: Holistic marketing incorporates performance
marketing and understanding the returns to the business from marketing
activities and programs as well as their legal, ethical, social, and
environmental effects. Performance marketing thus includes: Financial
accountability and Social responsible marketing.

Marketing research
Marketing research is the systematic design, collection, analysis, and
reporting of data relevant to a specific marketing situation facing an
organization.
Companies use marketing research in a wide variety of situations. For example,
marketing research gives marketers insights into customer motivations, purchase
behavior, and satisfaction.
It can help them to assess market potential and market share or measure the
effectiveness of pricing, product, distribution, and promotion activities.

14
Marketing research Process

Effective marketing research involves the Six steps, which are shown as follows:
1. Define the problem and research objective.
Here management must define the problem and research objective very clearly.
Management must not define a problem too broadly or too narrowly. If the
problem is defined too broadly, a lot of unnecessary information will be collected
and it is likely to be very difficult to screen the relevant and vital information from
unnecessary ones.

15
On the other hand, if the problem is defined too narrowly, the necessary
information will not be incorporated and the decision-making will be very difficult
as there is the lack of information. A well-defined problem is half-solved
problem. The nature of the problem will determine whether the research is
Exploratory, Descriptive or Causal.
1. Exploratory research: The type of research conducted to clarify and
define the nature of a problem. The goal of exploratory research is to
gather preliminary data to shed light on the real nature of the problem
and to suggest possible solutions or new ideas.
This research may help to crystallize a problem and identify the
information needed for future research.
2. Descriptive research: The major purpose of descriptive research, as
the name implies, is to describe characteristics of a population or
phenomenon. Descriptive research seeks to determine answers to who,
what, when, where, and how questions.
3. Causal research: Research conducted to identify cause and effect r/ships
among variables. Exploratory and Descriptive research normally precede
cause and effect r/ships.
In causal studies, researchers typically have an expectation about the r/ship to
be explained, such as predicting the influence of price, packaging, advertising
and the like on sales.

As far as the type of research is concerned, it can be basic/ pure research or applied
research.
Basic research is the research conducted to expand the limits of the boundaries of
knowledge itself; conducted to verify the acceptability of a given theory.
Applied research is the research undertaken to answer questions about specific and
immediate problems or to make decisions about particular courses of action.

Step 2. Develop the research plan.

The second stage of marketing research calls for developing the most efficient plan for
gathering the needed information. The marketing manager needs to know the cost of the
research plan before approving it.
Designing a research plan calls for decisions on the data sources, research
approaches, research instruments, sampling plan and contact methods.

A. Data sources: The research plan can call for gathering primary data, secondary data
or both. Primary data are data gathered for specific purpose or for a specific research
project.

16
Secondary data are data that were collected for another purpose and already exist
somewhere.
Primary data are data freshly gathered for a specific purpose or for a specific
research project.

Researchers usually start their investigation by examining secondary data to see whether
their problem can be partly or wholly solved without collecting costly primary data.
Hence, secondary data provide a starting point for research and offer the advantages of
low cost and ready availability.
When the needed data by the researcher do not exist, or are outdated, inaccurate,
incomplete, or unreliable, the researcher will have to collect primary data. Most
marketing research projects involve some primary data collection.

B .Research Approaches: Primary data can be collected in four ways using different
data collection methods as follows: observation, focus groups, survey and experiments.
1. Observation Research: Fresh data can be collected by closely observing the
relevant actors and settings. Observational research is the part of exploratory
research.
2. Focus group research: A focus group is a gathering of six to ten people who are
invited to spend few hours with skilled moderator to discuss about a product,
service, organization, or other marketing entity. The moderator needs to be
objective, knowledgeable on the issue, and versed in group dynamics and
consumer behavior. Crucial information may be obtained through focus-group
research. However, researchers must avoid generalizing the reported feedings of
the focus group participants to the whole market, since the sample size is too
small and the sample is not drawn randomly.

3. Survey research: While observation and focus groups are best suited for
exploratory research, surveys are best suited for descriptive research.

Companies undertake surveys to learn about people’s knowledge, beliefs,

preferences, satisfaction and to measure these magnitudes in general population.

4. Experimental research: The most scientifically valid research is experimental

research. Best suited for causal research, experimental research calls for selecting
matched groups of subjects, subjecting them to different treatments, controlling
extraneous variables and checking whether observed response differences are
statistically significant.

17
The purpose of experimental research is to capture cause-and-effect r/ships by
eliminating competing explanations of the observed findings.

C. Research Instruments: Marketing researchers have a choice of two main research

instruments in collecting primary data, namely questionnaires and mechanical devices.
Questionnaires: A questionnaire contains a set of questions presented to respondents for
their answers. Because of its flexibility, the questionnaire is by far the most common
instrument used to collect primary data. Questionnaires need to be carefully developed,
tested and debugged/ corrected/ before they are administered on a large scale. One can
usually spot several errors in a casually/ carelessly/ prepared questionnaire.

In preparing a questionnaire, the professional marketing researcher carefully chooses the

questions and their form, wording, and a sequence. A common error is including questions
that cannot, would not, or need not be answered and omitting questions that should be
answered. Merely interesting questions should be dropped because they may exhaust the
respondents’ patience.

In addition, the form of question asked can influence the response. Marketing researchers
distinguish between open-end and closed-end questions.
Closed-end questions specify all the possible answer, and respondents make a choice
among them. Open-end questions allow respondents to answer in their own words. Closed
–end questions provide answers that are easier to interpret and tabulate. Open-end
questions often reveal more because they do not contain respondents’ answers. Open-end
questions are especially useful in the exploratory stage of research, where the researcher is
looking for insight into how people think rather than in measuring how many people think
a certain way. Finally, questionnaire designer should exercise care in wording and
sequencing of questions. The questionnaire should use simple, direct, unbiased wording
and should be presented with a sample of respondents before it is used. Difficult or
personal questions should be asked towards the end of the questionnaire so that the
respondents should not become defensive early. Finally, the questions should flow in a
logical order.

Mechanical instruments: Mechanical devices are used less frequently in marketing

research. For example, Galvanometers are used to measure the subject’s interest or
emotions aroused by the exposure to specific advertising or picture. Tachistoscope
flashes advertising to a subject with an exposure interval that may range from less than
one-hundredth of a second to several seconds. Eye cameras are used to study the
respondents’ eye movement to see where their eyes land first, how long they linger on a
given item and so on. The Audiometer is attached to TV sets in participating homes to
record when the set is on and to which channel it is turned.

18
D. Sampling plan: This plan calls for three decisions:

1) Sampling unit: who is to be surveyed? The marketing researcher must define the target
population that will be sampled. Who should be the sampling unit of business
organizations? This may be either husbands, or wives or both. Or it can be households,
teenagers, professionals and the like. Once the sampling unit is determined, a sampling
frame must be developed so that everyone in the target population has an equal chance of
being sampled.

2) Sample size: How many people should be surveyed? Large samples give more reliable
results than small samples. However, it is not necessary to sample the entire target
population or even the substantial portion to achieve reliable results. Samples of less than
1% of a population can often provide good reliability, given a credible sampling
procedure.
3) Sampling procedure: How should the respondents be chosen? To obtain a
representative sample, a probability sample of population should be drawn. Probability
sampling allows the calculation of confidence limits for sampling error.

Probability sampling: The following are examples of probability sampling.

1. Simple random sample: Every member of population has an equal chance of

selection.
2. Stratified random sample: The population is divided into mutually exclusive groups
(such as age groups) and random samples are drawn from each group.
3. Cluster / area Sample: The population is divided into mutually exclusive groups /such
as city blocks /, and the researcher draws a sample of the groups to interview.
When the cost or time involved in probability sampling is too high, marketing researchers
will take non- probability samples. There are three types of non-probability samples:
1. Convenience sample: The researcher selects the most accessible population
members from which to obtain information.
2. Judgment sample: The researcher uses the judgment to select population members
who are good prospects for accurate information.
3. Quota sample: The researcher finds and interviews a prescribed number of people in
each of several categories.
The shortcoming of non-probability sampling is that they do not allow measuring the
sampling error.

19
E. Contact methods: Once the sampling plan has been determined, the marketing
researcher must decide how the subject should be contacted. There are various alternatives
as the contact method. They are mail, telephone, or personal interviews.
1. The mail questionnaire: This is the best way to reach people who would not give
personal interviews or whose response might be biased or distorted by the interviewers.
Mail questionnaires require simple and clearly worded questions.
However, the response rate is usually low and/ or slow. For mail questionnaire,
clarification is not possible if the respondent is not clear with the questionnaire.

2. Telephone interviewing: This is the best method for quick gathering of information.
The response rate is higher than in the case of mailed questionnaires. The advantage of it
is that the interviewer is able to clarify questions if the respondents do not understand
them. Its main drawback is that the interviews have to be short and not too personal
.
3. Personal interviewing: is the most versatile of three methods. The interviewer can ask
more questions and can record additional observations about the respondent, such as dress
and body language. Personal interviewing is the most expensive methods and requires
administrative planning and supervision than the other two methods. It is also subject to
interviewer bias or distortion.

In arranged interviews, respondents are randomly selected and either telephoned or

approached at their homes or offices and asked for an interview. Often a small payment or
incentive is given to respondents in appreciation for their time.
Interceptive interviewers: Involve stopping people at shopping mall or busy street corner
and requesting an interview. Interceptive interviews have the drawback of being non-
probability samples, and the interviews must not require too much time from the
interviewee.

Step 3. Collect the information.

The data collection phase of marketing research is generally the most expensive and the
most prone to error. In the case of surveys, four major problems arise:
1. Some respondents will not be at home and must be recontacted or replaced.
2. Other respondents will refuse to cooperate.
3. Still others will give biased or distorted answers.
4. Finally, some interviewees will be biased or dishonest.

20
Step 4. Analyze the information.

At this stage, the researcher will have to analyze all collected data. The researcher
tabulates the data and develops frequency distributions. Averages and measures of
dispersion are computed for the major variables. The researcher will also apply some
advanced statistical techniques and decision models in the hope of discovering additional
findings.

Step 5. Present the findings

At the last step in marketing research, the researcher presents his/ her findings to the
relevant parties. The researcher should present major findings that are pertinent to the
major marketing decisions facing management. A well defined marketing research project
and its findings would help managers make a better decision than they would have
without research.

Step 6. Make the Decision

The manager who commissioned the research need to weigh the evidence. If their
confidence in the findings is low, they may decide against the findings. They may
even decide to study the issues further and do more research.
The decision is theirs, but rigorously done research provides them with insight into
the problem.

21