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MKM 210

Marketing Research

TU BBM · Semester 7 · BBM curriculum effective from 2021

Requirement
elective
Credits
3
Study Guide
6 units available

Chapter notes

Authoritative study guide across 6 syllabus units

Open a unit to read its study notes.

Unit 1: Introduction to Marketing Research· 8 LHs· ~10 marks

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Difficulty: ★★★ | High-yield focus: Master definitions of Marketing Research, Problem-Identification Research, and Marketing Information System in Part 1. Key exam mastery: Diagram the Marketing Decision Support System (MDSS) Framework, contrast Marketing Research vs Marketing Information System (MIS) in Part 3, and solve the Expected Value of Information (EVPI) ladder in Part 4.

Part 1: Core Concepts (2 Marks)

  • ★ Marketing Research: The systematic and objective identification, collection, analysis, dissemination, and use of information for the purpose of improving decision-making related to the identification and solution of problems and opportunities in marketing.
  • ★ Problem-Identification Research: Research undertaken to help identify problems that are not necessarily apparent on the surface and yet exist or are likely to arise in the future (e.g., market potential, brand image, market share studies).
  • Marketing Information System (MIS): A formalized set of procedures for generating, analyzing, storing, and distributing continuous information to marketing decision-makers on an ongoing basis.

Part 2: Structural Frameworks (10 Marks)

Taxonomy of Marketing Research Classifications (Malhotra Framework)

  1. Problem-Identification Research:
    • Market potential research, market share research, brand image studies, market characteristics, sales analysis, forecasting research, business trends research.
  2. Problem-Solving Research:
    • Segmentation Research: Determining basis of segmentation and creating market profiles.
    • Product Research: Concept testing, optimal product design, package testing, brand positioning.
    • Pricing Research: Price elasticity of demand, competitor price monitoring.
    • Promotional Research: Optimal promotional budget, advertising copy testing, media selection.
    • Distribution Research: Determining channel types and channel margins.

Part 3: Distinction Tables

Basis of Comparison Marketing Information System (MIS) Marketing Research (MR)
Information Flow Continuous, ongoing stream of operational tracking data. Non-continuous; initiated as discrete, project-specific studies.
Problem Orientation Focuses on preventing problems and monitoring overall business health. Focuses on solving a specific, diagnosed marketing challenge.
Data Sources Heavily utilizes internal company accounting records and sales logs. Relies predominantly on tailored external primary research and field surveys.

Part 4: Worked Problems & Exam Traps

★ Expected Value of Perfect Information (EVPI) in Marketing Research

Problem: A consumer packaged goods company in Nepal considers launching a new herbal shampoo:

  • Decision 1 (Launch): If market success occurs, profit is NPR 10,000,000; if market failure occurs, loss is NPR 4,000,000.
  • Decision 2 (Do Not Launch): Profit is NPR 0.
  • Prior Subjective Probabilities: P(Success)=0.60P(\text{Success}) = 0.60, P(Failure)=0.40P(\text{Failure}) = 0.40. A professional market research agency offers to conduct a nationwide test market study guaranteeing perfect prediction for a fee of NPR 1,200,000. Calculate the Expected Value of Perfect Information (EVPI) and determine whether the company should hire the research agency.

Solution:

  1. Expected Value Without Research (Prior EV):

    EV(Launch)=(10,000,000×0.60)+(−4,000,000×0.40)=6,000,000−1,600,000=NPR 4,400,000EV(\text{Launch}) = (10,000,000 \times 0.60) + (-4,000,000 \times 0.40) = 6,000,000 - 1,600,000 = \text{NPR } 4,400,000
    EV(Do Not Launch)=NPR 0EV(\text{Do Not Launch}) = \text{NPR } 0
    Optimal Prior Decision is to Launch with Expected Payoff=NPR 4,400,000\text{Optimal Prior Decision is to Launch with Expected Payoff} = \text{NPR } 4,400,000

  2. Expected Value With Perfect Information (EVwPI):

    • If research predicts Success (60% probability): Launch and earn NPR 10,000,000.
    • If research predicts Failure (40% probability): Do Not Launch and earn NPR 0.
      EVwPI=(10,000,000×0.60)+(0×0.40)=6,000,000+0=NPR 6,000,000\text{EVwPI} = (10,000,000 \times 0.60) + (0 \times 0.40) = 6,000,000 + 0 = \text{NPR } 6,000,000

  3. Expected Value of Perfect Information (EVPI) & Recommendation:

    EVPI=EVwPI−Prior EV=6,000,000−4,400,000=NPR 1,600,000\text{EVPI} = \text{EVwPI} - \text{Prior EV} = 6,000,000 - 4,400,000 = \text{NPR } 1,600,000

    • The maximum value of information is NPR 1,600,000.
    • Agency fee is NPR 1,200,000.
    • Recommendation: Hire the agency. Net Gain from Research =1,600,000−1,200,000=NPR 400,000= 1,600,000 - 1,200,000 = \text{NPR } 400,000.

TU Exam Trap: Marketing research does not make executive decisions; it reduces uncertainty for managers. A research study should never be commissioned if the cost of the research exceeds the Expected Value of Information.

  • Role of Marketing Research in Strategic Marketing: Links consumer, customer, and public to the marketer through empirical evidence, minimizing market entry risk, identifying unmet demand niches, and guiding optimal 4P resource deployment.

Students lose marks here because they recommend expensive research studies without comparing research fees to the mathematical value of uncertainty reduction.