The HERI College Senior Survey

The Higher Education Research Institute (HERI) at UCLA executes a national survey every year to better understand the college experience so that higher education can be improved. They use a meticulously laid out questionnaire and this year’s version is available at: GSEIS. Christian and Dillman (2004, p. 78) found that the amount of space and how it is apportioned can affect response. The HERI questionnaire has evenly apportioned and pleasing spaced formatting.
They exclusively use close-ended questions with a mix of dichotomous, multiple choice, and mostly scaled response. While their questionnaire is highly organized, it does not always reflect the principles of questionnaire design espoused by marketing research. Applying these principles would improve their instrument.

McDaniel and Gates (2008, p. 298) note that dichotomous questions are often subject to measurement error because they offer only black and white choices when many times shades of gray are needed. This is not the case with the HERI questionnaire. Question 6 is the only set of dichotomous choices and they are truly yes/no.

The first three pages of the HERI instrument are mostly scaled response questions. They not only allow seniors to express an opinion about a subject but also calibrate the intensity of that feeling (p. 299). A potential problem with scaled response, remembering category options, is avoided in this questionnaire by its careful design.

The fourth page introduces multiple choice questions. McDaniel and Gates (p. 299) warn that the choices may not cover all alternatives but this may be mitigated by offering an ‘other’ choice. HERI does not do this. They should to improve the questionnaire over time. In addition, Question 27 may have positioning bias. The two positive answers about colleges are positioned where they are most easily seen.

The next question reveals another common problem in the questionnaire. McDaniel and Gates (p. 301) say that words should have the same meaning to all respondents and that, additionally, words used in questions should have a precise meaning. In Question 28 both flaming liberals and draconian conservatives could indicate themselves as moderate. This same issue occurs in Question 13 about drinking frequently or occasionally. What I consider occasional, someone else may consider frequent. Finally, in Question 5, what does the word regularly mean in “regularly communicated with professors?” Specific guidance about how many for frequent, occasional and regular is needed.

Sensitive or embarrassing questions are handled by HERI in a robotic manner. In Question 13 students are directly asked about mental depression, the need for professional counseling, and alcoholic drinking habits.

Question 19 asks about marijuana, same sex marriage, denial of services to undocumented immigrants, and affirmative action. Many may be sensitive to these issues and McDaniel and Gates (p. 327) recommend using one of two techniques in such cases: 1.) Counterbiasing; or 2.) 3rd person voice. HERI does not. This is not an anonymous survey.

McDaniel and Gates (p. 301) also admonish us not to ask questions the respondents could not answer correctly. In Question 14, HERI asks students to guess what quintile they are in for various aptitudes or domain knowledges. Ambrose and Anstey (2007, p. 28) state that an important topic category in a survey is measuring the knowledge of the population. By this they mean discovering the levels of understanding. However, in the HERI survey, the students would have no frame of reference for knowing the answers to the various parts of Question 14 and so McDaniel and Gates apply with full force.

McDaniel and Gates (p. 302) also recommend that time periods be kept recent. They highlight a question as poorly worded because its time period is a year. In Question 9 of the HERI instrument, the time period of a year is used in twenty parts to that question. As McDaniel and Gates ask, unless the students kept an accurate diary of each of the twenty activities, how would they know? A better approach is to ask how much the respondent has done in the past two weeks and then if that is more or less than average (p. 302).

All in all, I found the HERI questionnaire to be well done but a few questions could be fine tuned to get more complete and more accurate results.


References
Ambrose, David and John Anstey (March 2007). Better Suvey Design is Stick for an Answer. ABA Bank Marketing. Retieved from http://www.imc.wvu.edu/ on July 4, 2009.


Christian, L and D DIllman (Spring 2004). THE INFLUENCE OF GRAPHICAL AND SYMBOLIC LANGUAGE MANIPULATIONS ON RESPONSES. Retieved from http://www.imc.wvu.edu/ on July 4, 2009.


McDaniels, C and R Gates (2008). Marketing Research Essentials. John Wiley.

Assessing the Impact of a Sexual Harassment Lawsuit at a Metropolitan Restuarant

A popular metropolitan restaurant recently suffered the negative publicity of a sexual harassment lawsuit. The courts settled the suit in favor of the restaurant, but an interesting question is how would we measure the damage to the restaurants brand equity. Since I had our mandatory Fair Employment Practices training this week, it's an apropos topic.

Exploratory Research

Harris and Smith (2002, p. C1) define a crisis as any newsworthy event that has happened or will happen in the near future that has the potential for adverse publicity. The sexual harassment event associated with the Restaurant X satisfies their definition of a crisis. In his section on public relations, Duncan (2005, p. 563) says that this type of incident should be treated as a crisis because of the extreme impact it poses to Restaurant X’s “reputation and brand relationships.”

Lichtenstein, et al (2004, p. 29) reinforce Duncan’s premise by noting that corporate social responsibility strengthens brand equity and say its impact goes beyond sales. This means that a consumer perception of Restaurant X as an environment that condones sexual harassment will have a negative effect not only on sales. A reduction of brand equity will also result and with it there will be a consequent loss of owner equity. It is vitally important for Restaurant X to verify through marketing research the attitudes its publics harbor about the incident.

What type of survey research should be initiated

Management should already understand that negative publicity in general affects customer retention. They will want to know if their specific sexual harassment publicity is reducing their customer retention and sales. The goal of this marketing research should be to “shed light on [this specific] association or relationship,” which is how McDaniel and Gates (2008, p. 49) characterize a descriptive research design.

The basic method of research should be survey. McDaniel and Gates (p. 50) inform us that experiments are typically used only for causal research designs. Observation would be an inefficient approach to determine opinions and attitudes on the restaurant’s sexual harassment case because there is no direct interaction with the customer. Surveys are “an orderly and structured approach” to understand “opinions and attitudes.”

This research should be quantitative. Qualitative research is “not necessarily representative of the population of interest,” (see McDaniel and Gates, 2008, p. 110). Surveys are a good tool to find out what factors influence consumers (p. 142); in this case, did the publicity influence customer retention and sales. Of the various types of surveys, I recommend Computer-Assisted Telephone Interviews (CATI).

Why CATI?

In this situation there is a tradeoff between turnaround speed, measurement error, and cost. CATI is the optimal strategy, with Internet Panels a close second. Johnson (2009, p. 2) notes that non-response bias is a significant source of measurement error. He also informs us that both telephone and mail surveys are subject to increasing non-response rates.

Thee (2007, p. 1) reports another problem with telephone surveys for the restaurant: because of the substantial use of cell phones, telephone sampling frames are no longer geographically based. On the other hand, the restaurant public is geographically bound. Thee goes on to say that households with only a cell phone numbered 16% in 2007 (p. 1) and this could grow to 25% by the end of 2008.

CATI can help here. McDaniel and Gates (p. 152) inform us that the computer can customize each questionnaire according to how the respondent answers previous questions. We could ask if they are currently in the metro area. If not and they have no intention of visiting the metro area, then we could close the interview.

McDaniel and Gates (p. 365) also report on a method for determining the extent of nonresponse bias. They cite two studies that suggest nonrespondents are not a clearly distinct subgroup from the general population. To find out for certain in this case, only a very small follow-up survey using nonrespondents as the sampling frame need be conducted.

Johnson (2009, p. 1) informs us that restaurants make frequent use of self-administered surveys. The reason they are not the best solution in this case, is that customers already lost to Restaurant X because of the lawsuit won’t be patronizing the restaurant anymore. In addition, a self-administered survey approach will not have the same quick turnaround as online techniques (see Johnson, 2009, p. 2).

Interviews such as door-to-door and executive would have little traction with the immediate needs of the restaurant. Mall intercept interviews would be too expensive, and in addition, McDaniel and Gates (2008, p. 172) say to avoid such an approach when the incidence rate is low because it will be too expensive. The number of patrons of Restaurant X is low compared to the total population in the metropolitan area.

Internet Panels have been used in other crisis management situations. Duncan (2005, p. 564) reports that McDonald’s setup a panel to protect its reputation from the fallout over a fraud perpetrated in its promotional games. McDaniel and Gates (p. 156) also discuss the advantages of panels. Johnson (p. 2) informs us that “companies like Survey Sampling” provide consulting expertise to “construct a sample to match the target population” and then rent a panel from their large database. Still, as Johnson (p. 2) observes “The internet population is not representative of the population as a whole,” and “Internet users are concerned with privacy and, thus, may refuse the survey.”

What topics should the survey cover?

First up is demographics such as gender, age, and race. The next topic would investigate level of awareness. It would be used to discover the news sources that informed the respondent about the lawsuit, as well as their knowledge about the particulars of the case, and knowledge about Restaurant X policies and training to prevent sexual harassment.

The third topic would be to determine their opinion about how Restaurant X handled the sexual harassment accusation. Duncan (2005, p. 563) says that for such a crisis it is a good idea to survey opinion about the company’s level of honesty, helpfulness, speed of response, clarity, and consistency of message.

The fourth topic would be to find out from patrons about their experience with the restaurant. Have they ever witnessed sexually harassing behavior at the restaurant? Has the staff been professional and courteous? The fifth topic would be to establish the factors that influence Restaurant X patron decisions to frequent a restaurant. An important aspect here is how did the sexual harassment lawsuit affect their opinion about Restaurant X and their willingness to be a customer? The sixth topic would be open-ended questions to find out their opinions about what further steps Restaurant X should take.

The survey population

The population is the existing, lost and potential customers of Restaurant X in the metropolitan area. With no further information from the restuarant advertising or news stories, I will assume that the entire metropolitan area should be viewed as potential customers. To focus only on existing customers would not discover the opinions of lost customers. Additionally it would exclude the only source of growth, new customers.

The sampling units and sampling frame

The sampling unit would be households because people tend to go to restaurants as a family or as a couple and not alone. The sampling frame should not be the telephone directory for the metropolitan area. McDaniel and Gates (pp 333-4) list the problems with the telephone directory including problems with unlisted numbers and their prevalence among non-whites and younger people. Instead random-digit dialing from phone exchanges in the metropolitan area will form our sampling frame.

Simple random sampling will be used to create our random-digit dialing frame. Johnson (2009, p. 3) notes that probability sampling, like simple random, gives the researcher a representative sample of the population. Specifically for simple random sampling, a computer can randomly select the sample and this is consistent with the CATI approach I recommend.

The sample size

The main difference between qualitative and quantitative research is sample size (see McDaniel and Gates, 2009, p.108). Managers are more “comfortable with marketing research based on large samples and high levels of statistical significance” (p. 109). Another factor that will affect our sample size is the required confidence level. Wilson and Ogden (2004, p. 56) say that

"Survey research requires at least a 95% confidence level and a margin of error of less than 5% to be actionable.”

Do we need to know the exact population size for the metropolitan area? Using a sample size calculator it quickly becomes apparent that after a certain point increasing population size by an order of magnitude does not increase sample size requirements by more than a single person or two. Creative Research Systems (2009, p. 1) provides a Sample Size Online Calculator that I used to calculate the following sample sizes:

(The calculator is at Creative Research Systems).

Given the gravity of sexual harassment allegations and the damage to brand equity, owner equity and ongoing sales, I recommend a sample size of 384.

References
Creative Research Systems (2009). Sample Size Calculator. Retrieved on June 17, 2009 from http://www.surveysystem.com/sscalc.htm

Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Harris and Smith Public Affairs (July 3, 2002). Public Relations Handbook. Retrieved on June 10, 2009 from http://www.awphd.org/PRhandbook/PRhandbook.pdf.

Johnson, E. (2009). Quantitative Research: Surveys & Sampling. Retrieved on June 11, 2009 from http://www.imc.wvu.edu/.

Lichtenstein, Donald R., Drumwright, Minette E. & Bridgette M. Braig (October 2004). The Effect of Corporate Social Responsibility on Customer Donations to Corporate-Supported Nonprofits. Retrieved on June 9, 2009 from http://www.imc.wvu.edu/.

McDaniels, C and R Gates (2008). Marketing Research Essentials. John Wiley.

Thee, Megan (December 7, 2007). Cellphones Challenge Poll Sampling. NY Times. Retrieved on June 10, 2009 from www.imc.wvu.edu.

Wilson, Laurie and Ogden, Joseph (2004). Strategic Communications Planning, 4th Ed. Kendall/Hunt Publishing Company.

Measuring Attention and Packaging Design

A national cereal company has developed a new, healthy cereal for teens. Currently, the company is considering two package designs and would like to assess the effectiveness of each package design in getting the attention of teenagers.

Independent and dependent variables, treatment groups, the design and control for extraneous factors.
Percy (2008, p. 256) notes that mothers are key decision makers for family health and eating habits. Teenager awareness and acceptance, and mother acceptance will jointly determine the purchase decision. Our task is to test the effectiveness of two alternative package designs in getting teenager attention. The dependent variable is teenager attention. The independent variable is package design.

Wilson and Ogden (2004, p. 36) define an influential as an opinion leader, and observe “that people follow the advice of someone they trust and has knowledge on the subject.” We want teenagers who eat cereal but who are also influentials. They will be our subjects. This is a new product and the most important group to reach in this introductory phase is the influentials.

McDaniel and Gates (p. 114) also recommend “Influentials.” They say these people are two to five years ahead of the curve and have significant influence among their peers. They say, “Recruiting influentials is particularly useful when a marketer is trying to determine to launch a new product….” Brooks (2006, pp 31-2) agrees and further says, “A growing body of consumer research suggests the 60-second conversation is dethroning the 30-second ad.”

We will have two experimental groups and one control group. Experimental group one will view package design one. Physiological Measurements will be made to monitor their response to the package design. These measurements can show interest and arousal levels (see McDaniel and Gates, 2008, p 192). The treatment is to show them the design. Likewise for experimental group two but for package design two instead. The control group won't be shown either proposed design.

There are problems with measuring attention because it may change during the testing process and also the subjects know they are being tested for it (see Boyd and Westfall, 1964, pp 105, 111). A control group can help compensate for this. The control group will share the exact same experience as the two treatment groups, except they will not be exposed to a package design.

They will, however, be read the same statement about the new product and package designs and that they will be measured. McDaniel and Gates (p. 219) note that the control group is not subject to treatment, in this case exposure to one of the package designs. Their participation can be used to dampen extraneous factors, like the anticipation of knowing they will be measured.

Experimental design and conduct of the experiment.
The steps are

1. Three groups of influentials will be randomly selected


2. Physiological Measurements will be made of each group


3. Each group will be read each the same statement about the new product


4. For the control group, the post measurement will be taken


5. For the two treatment groups, show each their respective packaging designs only and take measurements

The research design is a True Experiment Design (see McDaniel and Gates, 2008, p 219), the Before-and-After with control design (p. 219). The test subjects should be assigned to each group randomly to control extraneous effects. The experiment should be held in a lab for high internal validity (p. 211).

References
Boyd, Harper and Ralph Westfall (1964). Marketing Research Text and Cases. Richard Irwin.

Brooks, Steve (November 2006). How to Build Buzz. Restaurant Business. Retrieved on June 19, 2009 from EBSCOHOST.

McDaniels, C and R Gates (2008). Marketing Research Essentials. John Wiley.

Percy, Larry (2008). Strategic Integrated Marketing Communications. Butterworth-Heinemann.

Wilson, Laurie and Ogden, Joseph (2004). Strategic Communications Planning, 4th Ed. Kendall/Hunt Publishing Company.

A New Logo for Wendy's?

Background
Wendy’s is an international fast food chain that ranks third in hamburger joints behind McDonald’s and Burger King (Hoover’s, 2009, p 1). It has over 6,500 locations in the United States and more than 20 countries worldwide. Management is considering changing the Wendy logo and brand character to keep it current. There is a concern that changing the well-known logo could have adverse repercussions. To study consumer opinion a series of personal interviews will be conducted.


According to Keller (pp 156-159), logos and brand characters are an easily recognizable way to identify a company and product. They are central to advertising campaigns and packaging. He says they can “create perceptions of the brand as fund and interesting.” However, (p. 158) he also notes they must be changed from time to time. Betty Crocker spent over $1M to update its tired brand character (pp 164-5). This $1M price tag is also the case for updating a logo (p. 157).

Sampling Method
The background information shows the importance of correctly updating a brand character, and that an appropriate budget must be allocated to this important task. Having an accurate cross-section that is representative of Wendy’s customers outweighs cost. We do not want to draw incorrect conclusions by using a sampling method known to be inaccurate.

The life-cycle of a sampling plan is to define the population, choose a data-collection method, identify a sampling frame, select a sampling method, determine sample size, develop operational procedures, execute the plan (see McDaniel and Gates, 2008, p330). This specific assignment is to select and justify a sampling method. Our first decision is between probability samples and non-probability samples. McDaniel and Gates (p. 334) note that probability samples are better for obtaining a representative cross section of our population. Given the importance of the logo or brand character, we need to have the best representation we can get. The trade-off is cost but we should have a budget commensurate with the task.

Next, we must decide among the several probability sampling methods. I like the stratified sample because it has a smaller sampling error than the other methods (see McDaniel and Gates, 2008, p. 341). It is more efficient because it eliminates one of more sources of variation through the stratification process. The researcher is making the “sample be more representative by making sure that important dimensions of the population are represented in their true population proportion.”

Wendy's should stratify on country. According to Hawkins, et al (2007, p 40) cultural factors that like language, demographics, values and nonverbal communications can impact marketing communications. A cultural faux pas with a brand character or logo can make Wendy’s appear like confused Martians. Using country to stratify, I can also avoid the main drawback on stratified sampling – we usually don’t know in advance the proportions of the strata (see McDaniel and Gates, 2008, p. 342). However, Wendy's consolidated financial statements do have that information.

Finally, should the method be proportional allocation or disproportional allocation? In this case, the method should be proportional because it is easy to calculate the relative number of locations in each country to the total number of locations (p 342). Within each country (strata), do simple random sampling with a sample size proportional to the relative percentage for the country.

To collect the data, the store intercept survey type can be used (see McDaniel and Gates, 2008, p. 150). As a style of mall-intercept survey, it would share many of the same advantages and disadvantages. The interviewer can show proposed Wendy’s logos, explain and probe (p. 171). On the other hand, the respondent may be distracted, or in a hurry. Further, there is a greater opportunity for interviewers to select the people to interview in a non-probabilistic manner. Strict operational procedures should be defined.


References
Hawkins, Del, David Mothersbaugh and Roger Best (2007). Consumer Behavior. McGraw-Hill/Irwin.

Hoovers (2009). Hoover's Profile: Wendy's International, Inc. Retrieved on June 7, 2009 from http://www.answers.com/topic/wendy-s-international

Johnson, E. (2009). Quantitative Research: Surveys & Sampling. Retrieved on June 7, 2009 from http://www.imc.wvu.edu/.

Keller, K (2008), Strategic Brand Management. Pearson/Prentice-Hall.

McDaniels, C and R Gates (2008). Marketing Research Essentials. John Wiley.

Ruger at a Crossroads

Strategic Opportunity for Sturm Ruger Firearms
Ruger is the apex predator in the revolver market in the United States but has little presence overseas. Moreover, its domestic market share is under fire from semi-automatic handguns. It has an opportunity to expand its sales internationally through revolver sales to Europe. In Europe, countries such as Finland, Norway, Sweden, Switzerland, Serbia and the Czech Republic have gun control laws similar to the United States (see Dodds, 2007, pp 1-2 or MacInnis, 2007, pp 1-2 or Wikipedia, 2009, pp 1-5). As an example, the U.S. has 90 guns per 100 citizens and Finland has 56. In Germany, a valid firearms license is required for each firearm that is owned. Nevertheless, even Germany represents a sales opportunity.

In its 10-K Report, Sturm Ruger & Co. states (see SEC, 2008, p 4) 94% of its firearms sales are to the domestic market. Their units shipped reported in the 10-K (p. 23) are

According to Motley Fool (2007, p 1) in its analysis of Sturm Ruger and Company, the competition in the U.S. firearms industry is fierce and comes from both domestic and foreign competition. They go on to say that the handgun market has constant growth but that Ruger lags the growth. Aggressive competitors like Smith & Wesson are taking market share from Ruger. They conclude that Ruger has no “strategic initiatives that could fuel the growth prospects.”

I have used the Google Trends service (www.google.com/trends) to analyze search engine requests for the word “Ruger.” What I found was fascinating. There is a significant overseas search interest in Ruger. I contend that search interest will translate into purchase intent. This is a largely untapped market for Ruger. I then compared Ruger with Glock. Here are the results.


It is similar with the other competitors and shows a surprising interest in Ruger overseas.

In-depth Interviews
Glock, Beretta and Walther are powerful international competitors to Sturm Ruger & Co. They do not have an appealing lineup of revolvers but instead have focused their attention on the semi-automatic pistol. I need to use in-depth interviews to find out the attitudes, beliefs and feelings of European consumers about revolvers versus semi-automatic handguns. Additionally, I need to define the parameters of Ruger’s relationship with the various European gun retailers, who may be competitors with each other.

Given the prevailing preference for European semi-automatics in Europe, I believe an in-depth interview is more appropriate than a focus group to find out attitudes towards revolvers. McDaniel and Gates (p. 127) say that such interviews allow the researcher to devote more time, to more deeply delve into an area, and “ to reveal feelings and motivations that underlie statements.” We need to know if handgun consumers in Europe would consider revolvers and why. The “if” will let us know if such a campaign is feasible, and the “why” will help set marketing strategic direction.

McDaniel and Gates go on to say that in-depth interviews allow research to explore “casual and tangential remarks,” and obtain insight into the main issue. Also, new directions of inquiry can be quickly and dynamically charted. The traditional discussion guide (p.117) of the focus group limits such flexibility.

Furthermore, one segment we will be interviewing is gun retailing. Here the members are competitors to each other and McDaniel and Gates (p. 128) note that in such a circumstance interviews are a better approach. We will need to discuss inventory, advertising and distribution strategies with them that they may not want to reveal in front of competitors.

I believe qualitative research is the best first step. According to Johnson (2009, p. 1), “It [qualitative research] obtains in-depth information on motivations, feelings and behaviors.” Wilkerson (2003, p. 26) says that qualitative research such as interviews allows for “broad and open-ended questions in hopes that the author would be able to capture any significant information” not in our preconceived notion of the issue. Johnson (2009, p. 3) goes on to say that in-depth interviews can reveal detailed aspects of consumer behavior. This makes qulaitative research the best first step in a campaign to introduce modern Ruger revolvers to Europe.


References
Dodds, Paisley (April 17, 2007). U.S. Gun Laws Draw Heat After Massacre. AP. Retrieved on June 7, 2009 from http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/04/17/international/i143553D58.DTL

Johnson, E. (2009). Focus Groups & Other Qualitative Methodologies. Retrieved on June 7, 2009 from http://www.imc.wvu.edu/.

McDaniels, C and R Gates (2008). Marketing Research Essentials. John Wiley.

MacInnis, Laurin (August 28, 2007). U.S. most armed country with 90 guns per 100 people. Reuters. Retrieved on June 7, 2009 from http://www.reuters.com/article/topNews/idUSL2834893820070828

SEC (2008). Sturm, Ruger Annual 10-K Report. Retrieved on June 7, from http://www.sec.gov/Archives/edgar/data/95029/000119380509000482/e605095_10k-sturmruger.txt

Wikipedia (2009). Gun Politics. Retrieved on June 7, 2009 from http://en.wikipedia.org/wiki/Gun_politics

Wilkerson, Kristen Courtney (2003). Cyber-Campaigning for Congress: A Cultural Analysis of House Candidate Web Sites. UT Austin Dissertation.

A Site for Statrats

The Census Bureau is an external provider of secondary data. Their hefty Web site is a handy source of demographic data from the largest producer of statistics; it's high quality too. According to McDaniel and Gates (2008, p 72), secondary data is existing data that may have relevance to your research. They go on to say that “sources of secondary data include innumerable government agencies,” including, of course, the venerable Bureau of the Census.

A B2B Report: The Census Bureau ICT
Summary
The Census Bureau has a survey report on its Web site known as the Information and Communication Technology Survey (ICT). Its purpose is to make “available data on e-business infrastructure investment by nonfarm businesses.” It is a supplement to the Annual Capital Expenditures Survey. Microsoft makes significant sales to businesses and these are aggregated in the ICT supplement. Here is a press report on the ICT:

Press Release

and here is the actual report:

Full Report

It lets me see sales data and trends in the information technology B2B sector of the economy with separate segments for computer and communications. The most current data, published in February 2009, is for 2007. No one accused the Census Bureau of being speedy. The report is a series of hyperlinks that let me dig as deep as I want, and it even provides me with Excel worksheets of data so I can graph and chart according to my specific interests.
I hope Microsoft is making use of this survey Web report! Dell too.

Marketing Research Utility
I worry for Microsoft. It is in a Gambler’s Ruin competition with Open Source software, which strikes at the heart of Microsoft – its value add to the economy. Open Source offers for free the software that Microsoft sells and that is the basis for its enormous revenue stream. Gambler’s Ruin is a rivalry between two parties, one with a large, well-established position and the other with a small position but able to compete effectively on individual transactions. Of course, Microsoft is the house. Prudence would dictate they worry about the growth of Open Source.

They should worry too, according to the results of the Census 2007 ICT survey. This table from the bureau gives the raw data 2007 ICT Table 1a.

I have graphed it to show the growing problem.

The graph visually shows that computer hardware sales are growing faster than software sales. I used only computer hardware sales data, no communications gear. The difference may be the use of free Open Source software that does not have a sales transaction. The table below shows more precisely the problem:

I derived these from the Census data. As a side note, Linux (Open Source) demolished Sun Microsystems in business server rooms, and Sun is now defunct. Microsoft is fighting hard to maintain its share in the server room, and almost succeeding.

Microsoft has something else to worry over: the growth in software sales is declining year over year. I wonder what is going on in 2008 and today. Kuchinskas (2003, p. 2) reports that in 2000 Dell experienced declining growth in the educational market because of tightening education budgets. They responded with a database-marketing program to the education sector. The Census data above suggests that worse comes. The entire market may be tightening budgets.

Like Dell, Microsoft does monitor market trends using secondary sources like Census, but they also glean information from data mining. In this sense they are the exception to Krol’s observation (2006, p. 1) that technology companies were late to use data to drive sales. One of the selling points we highlighted in MS SQL Server was its data mining capability and how we used it at Microsoft. We could even link to document collections from places like Census.

Unfortunately, my free Census secondary data leaves me short. 2007 data was published in February 2009. Additionally, secondary data may be insufficient. It may not have the granularity I need for a certain conclusion. To get a better sense on my impending demise, I would need primary market research. However, it is worth noting that secondary data, like Census data, may alert the "researcher to potential problems and/or difficulties" (see McDaniel and Gates, 2008, p. 73).

A B2C Report: the Census Bureau E-Stats
Summary
The Census Web site has useful business to consumer information such as the E-Stats Report, (see Ebusiness 614). This report is the result of a commitment by the Census Bureau to measure the electronic economy. It has sales data on e-commerce activities by sector. The sectors are: manufacturing and merchant wholesaling ecommerce sales (considered to B2B) and retail and select service ecommerce (B2C) sales. The data of this report is available at 2006 Final Report.

The report gives more detailed breakdowns in its appendices that are located at Census 2006 Tables. One of interest is the select services (see Census 2006 Table 4). It shows the revenue vs E-revenue in select industry groups (identified by a NAICS code). The Federal Reserve Board uses this report to track the diffusion of the electronic economy (see Dinlersoz and Murillo, 2005).

Marketing Research Utility
Businesses that deal directly with the customer can use this report to track trends by NAICS industry group to see how fast ecommerce to consumers is growing in its industry. For example, one of the industry groups currently in select services is Arts, Entertainment, and Recreation Services and e-commerce revenue is growing 21.9% per year (latest eStats data is for 2006). A company like Domino’s Pizza can use such a trend to partner with a company in the growth sector to expand pizza delivery to the consumer.

In fact, they did, partnering with TiVo and NetFlix who are in the Entertainment ecommerce trend. Consumers who stream movies can order a pizza at the same time through technology in TiVo. Secondary data from Census Reports can tell Domino’s about growth opportunities. Behavioral targeting from TiVo can help Domino’s and other companies to grow their online business to consumers.

TiVo (2009, p 2) claims to have the most advanced capacity in the television industry to track behavior. Delany and Steel (2007, p. 1) note that Microsoft engages in behavioral targeting, and according to Jopling (2006, p 3-5), Microsoft has taken a commanding lead in IPTV technology. Microsoft is always looking for new industry segments to exploit, but the question for marketing research is which ones. The Census E-Stats report has useful data to tell us which NAICS codes have strong electronic diffusion. Also, as IPTV grows, Microsoft may eventually want to partner with TiVo and its advanced technology, to provide service to the Arts, Entertainment, and Recreation industry.

References
Delany, Kevin and Emily Steel (October 2007). Firm Mines Offline Data To Target Online Ads. Wall Street Journal.

Dinlersoz, EM and Hernández-Murillo, R (January-February 2005). The Diffusion of Electronic Business in the United States. FEDERAL RESERVE BANK OF ST. LOUIS REVIEW. Retrieved on May 30, 2009 from EBSCOHOST.

Jopling, Elroy (4 January 2006). Microsoft's Global Consumer Play Begins to Unfold. Gartner, id number G00136841

Krol, Carol (June 12, 2006). Connecting the data dots. Pro Quest.

Kuchinskas, Susan (Sep 2003). Data-based Dell. Adweek Magazines' Technology Marketing.
McDaniels, C and R Gates (2008). Marketing Research Essentials. John Wiley.

Tivo (November 2008). Q3 2009 TIVO INC Earnings Conference Call - Final. Fair Disclosure Wire (Quarterly Earnings Reports). Retrieved on May 30, 2009 from EBSCOHOST.

Cheskin Research

My former employer, Microsoft, made extensive use of research to understand how to market to each information technology segment. The intent of such research was to help Microsoft establish more powerful social capital than its competitors. Social capital is existing, defined relationships that make transactions easy to accomplish (see Buchanan, 2002, 201-204). Cheskin Research was one of the companies that Microsoft used (see the Cheskin Web site).

Expertise and Methods
Cheskin is what McDaniel and Gates (2008, p 8) would call an applied research firm, one that helps companies better understand the market. Their specialty is multicultural markets in the US, which have grown faster than any other US consumer market. Cheskin applies a proven research process to help firms gain the insight they need into this area of explosive growth.

Cheskin also notes that the "general market" is showing increasing signs of reaching a tipping point on diversity - having powerful ethnic characteristics that will soon invalidate "general market" strategies. McDaniel and Gates (p. 9) observe that companies use firms like Cheskin to do programmatic research to understand “market segmentation, opportunity analysis, or consumer attitude and product usage studies” (see Cheskin on Opportunity).

Their clearly defined research process is very similar to the marketing research process described in the McDaniel and Gates text.

• The first step is to envision or frame the objectives of the research (see Envision)
  
• Next, explore to understand consumer needs, segment characteristics, and trends for both competition and the market (see Explore)


• Third, create or evaluate the concepts born from the exploration. (see Create) This means that they additionally do Selective research (see McDaniel and Gates, 2008, p 9)


• An important next step is to craft a well-told story. (see Inspire) McDaniel and Gates (p. 52) say that “this is a key step” because research “must convince management the results are credible.…”


• Finally comes the solid innovation and differentiation for Cheskin, - for a fee they will also act as consumer advocates after the research phase has completed to assure consistency of management action with market need. They call this the Express service (see Express).

Adequacy of Web site
As you can see by the material at the end of the above links, the Cheskin Web site does a good job describing and promoting their services. Furthermore, their site has blogs and podcasts (see Cheskin Blog) and various articles of interest (for example their article on the ROI of Diversity). I also appreciate that their search function has both a directory as well as free text search (see Search). I can go to a topic area and look at only the subject of interest, avoiding the usual irrelevance of many returned results from free text.

How to Improve Web Site
That said, I don’t think they have the perfect site. It is incomplete. As an example, I searched their directory to find if Cheskin used panels and how they handled panel effects. I clicked on Methods and Techniques and the following was presented:


I used their free test search with no better result. Using Yahoo, I was able to find that Cheskin does conduct panels (see Living Room Panel). Dennis (2001, p 1) reports that research firms may create professional panelists who respond differently than the rest of us, the panel effect.

Another issue with the Web site is that it does not organize around customer profiles, but rather it is organized around Cheskin and its functions. In contrast stands the WVU Web site (see WVU Web) that does have customer profiles as well as functions. Each profile tab has content organized according to the interest and comfort level of the profile. University of Maryland is the same (see UM Web). Among others, Lisa Sanders (2007, p 1) advises Website designers to use the concept of “personas” when creating a site. Personas are ”archetypical characters [who] represent specific consumer segments.”

References

Buchanan, Mark (2002). Nexus: Small Worlds and the Groundbreaking Theory of Networks. Norton.

Dennis, J Michael (2001). Are Internet panels creating professional respondents? Marketing Research.

McDaniels, C and R Gates (2008). Marketing Research Essentials. John Wiley.

Sanders, Lisa (4/9/2007). Major marketers get wise to the power of assigning personas. Advertising Age, 00018899 Vol. 78, Issue 15. Retrieved from EBSCOHOST on May 23, 2009