Quiz 4: Research Design Alternatives and Qualitative Research

What are the independent, dependent, and possible extraneous variables in our chapter opening vignette written by Herb Sorensen?

Give some examples illustrating the uses of exploratory research.

What type of research design answers the questions of who, what, where, when, and how?

What are the differences between longitudinal studies and cross-sectional studies?

In what situation would a continuous panel be more suitable than a discontinuous panel? In what situation would a discontinuous panel be more suitable than a continuous panel?

What type of panel is an omnibus panel?

Explain why studies of the "if-then" variety are considered to be causal studies.

Define each of the following types of variables and give an example of each in an experiment designed to determine the effects of an advertising campaign: independent, dependent, extraneous, control group, experimental group.

Explain the two types of validity in experimentation and also explain why different types of experiments are better suited for addressing one type of validity versus another.

Distinguish among the various types of test marketing.

How does qualitative research differ from quantitative research?

What is meant by pluralistic research?

What are the different methods of observation?

Why are focus groups called "focus" groups?

What is the difference between traditional and nontraditional focus groups?

What is the role of a focus group moderator and what is meant by QRC?

When should focus groups be used? When should focus groups not be used?

Discuss the advantages and disadvantages of in-depth interviewing.

Explain how "laddering" works.

What is meant by "protocol analysis"?

Explain the rationale behind using projective techniques.

Why do you think ethnographic research could be ethically sensitive?

Think of a past job that you have held. List three areas in which you, or some other person in the organization, could have benefited from having information generated by research. What would be the most appropriate research design for each of the three areas of research you have listed?

You are no doubt familiar with Internet search engine companies that find online sources pertaining to words, phrases, or questions that users enter. Can you identifiy research problems likely to be addressed by a search engine company such as GoogleTM? What type of research design would you recommend for these problems?

Design an experiment. Select an independent variable and a dependent variable. What are some possible extraneous variables that may cause problems? Explain how you would control for the effects these variables may have on your dependent variable. Is your experiment a valid one?

The Maximum Company has invented an extrastrength, instant coffee brand to be called "Max-Gaff," positioned to be stronger tasting than any competing brands. Design a taste-test experiment that compares Max-Gaff to the two leading instant coffee brands to determine which brand consumers consider to taste the strongest. Identify and diagram your experiment. Indicate how the experiment is to be conducted, and assess the internal and external validity of your experiment.

Coca-Cola markets PowerAde as a sports drink that competes with Gatorade. Competition for sports drinks is fierce where they are sold in the coolers of convenience stores. Coca-Cola is thinking about using a special holder that fits in a standard convenience-store cooler but moves PowerAde to eye level and makes it more conspicuous than Gatorade. Design an experiment that determines whether the special holder increases the sales of PowerAde in convenience stores. Identify and diagram your experiment. Indicate how the experiment is to be conducted and assess the internal and external validity of your experiment.

SplitScreen is a marketing research company that tests television advertisements. SplitScreen has an agreement with a cable television company in a medium-size city in Iowa. The cable company can send up to four different television ads simultaneously to different households. SplitScreen also has agreements with the three largest grocery store chains, which will provide scanner data to SplitScreen. About 25% of the residents have SplitScreen scan cards that are scanned when items are bought at the grocery store and that allow SplitScreen to identify who bought which grocery products. For allowing SplitScreen access to their television hookups and their grocery-purchase information, residents receive bonus points that can be used to buy products in a special points catalog. Identify and diagram the true experimental design possible using the SplitScreen system. Assess the internal and external validity of SplitScreen's system.

A tire store chain is concerned that women have concerns about bringing their car to tire stores which are typically dominated by men-employees and customers. What type of research would you conduct to determine if this concern is prevalent among female drivers and what techniques the chain may adopt that would alleviate some of these concerns?

Memo from a Researcher 56 John Daniel, a researcher at Georgia Metro Research, made the following notes about several of his clients to you, a newly hired trainee who had just graduated from college. ClientAis a consumer packaged goods manufacturer with a well-established brand name. The client has focused on manufacturing and distribution for years while the marketing program has been set on "auto pilot." All had worked fine though there was a hint of emerging problems when, in the preceding year, market share had fallen slightly. Now, our client has just reviewed the current market share report and notices that over the previous twelve months their share has gradually eroded 15%. When market share falls, clients are eager to learn why and to take corrective action. In these situations we know immediately the problem is that we don't know what the problem is: There are many possible causes for this slippage. We need to determine the research design needed. Secondly, Client B is a manufacturer of several baked goods products sold in grocery stores throughout the country. Marketing is divided up into five regional divisions in the United States. The five divisions have had total autonomy over their advertising though all of them have used television advertising almost exclusively. Each division has tried several different television ad campaigns and some were thought to be successful and others not as successful but no one had ever formally evaluated the ad expenditures. A new marketing VP now wants to evaluate the advertising. She's interested in knowing not only the sales of the client's products sold during the different campaigns but also what happened to sales of competitors' brands. In this case, the client needs us to describe sales by SKU in the client's product category for each television market and for each time period associated with each ad campaign. What research design do you recommend? Finally, Client C is in a very competitive category with equal market share of the top three brands. Our client is convinced that they have changed every marketing-mix variable possible except for package design. Since the three competitive brands are typically displayed side-byside, they want us to determine what factors of package design (i.e., size, shape, color, texture, and so on) cause an increase in awareness, preference for, and intention to buy the brand. What do you recommend for the appropriate research design? Describe what research design you would recommend for each client.

Memo from a Researcher 56 John Daniel, a researcher at Georgia Metro Research, made the following notes about several of his clients to you, a newly hired trainee who had just graduated from college. ClientAis a consumer packaged goods manufacturer with a well-established brand name. The client has focused on manufacturing and distribution for years while the marketing program has been set on "auto pilot." All had worked fine though there was a hint of emerging problems when, in the preceding year, market share had fallen slightly. Now, our client has just reviewed the current market share report and notices that over the previous twelve months their share has gradually eroded 15%. When market share falls, clients are eager to learn why and to take corrective action. In these situations we know immediately the problem is that we don't know what the problem is: There are many possible causes for this slippage. We need to determine the research design needed. Secondly, Client B is a manufacturer of several baked goods products sold in grocery stores throughout the country. Marketing is divided up into five regional divisions in the United States. The five divisions have had total autonomy over their advertising though all of them have used television advertising almost exclusively. Each division has tried several different television ad campaigns and some were thought to be successful and others not as successful but no one had ever formally evaluated the ad expenditures. A new marketing VP now wants to evaluate the advertising. She's interested in knowing not only the sales of the client's products sold during the different campaigns but also what happened to sales of competitors' brands. In this case, the client needs us to describe sales by SKU in the client's product category for each television market and for each time period associated with each ad campaign. What research design do you recommend? Finally, Client C is in a very competitive category with equal market share of the top three brands. Our client is convinced that they have changed every marketing-mix variable possible except for package design. Since the three competitive brands are typically displayed side-byside, they want us to determine what factors of package design (i.e., size, shape, color, texture, and so on) cause an increase in awareness, preference for, and intention to buy the brand. What do you recommend for the appropriate research design? For each research design you selected for the three clients, discuss why you believe your choice of design is the correct choice.

Your Integrated Case Advanced Automobile Concepts Nick Thomas has been considering some of the issues identified in the Douglass Report (see Case). He is considering different directions to take. First, he is a little concerned that most of the information he and AAC have based their decisions on thus far are either industry reports or opinions of persons in the company. Granted, these persons are quite knowledgeable of the automobile industry. But, Thomas is concerned that he doesn't have input from some consumers. What do consumers think about global warming, future fuel costs, hybrids versus all electric cars? He knows the media has introduced a vast amount of information on these topics to consumers but he wonders if consumers are even aware of these issues. How important are these issues to consumers? What appears to be the most important: global warming, fuel costs, or giving up their SUVs? He begins to realize he doesn't know very much about what consumers think about these important issues. He doesn't know how much they talk about these issues with their neighbors or even what terms they use to speak of these issues. Recall in Case that Nick Thomas is the new CEO of Advanced Automobile Concepts (AAC), a new division of a large automobile manufacturer, ZEN Motors. ZEN is a multinational manufacturer headquartered in the United States, and has multiple divisions representing several automobile and truck brands. ZEN's divisions have been slowly losing market share to other competitors.AAC was created to revive the aging ZEN automobile brands by either reengineering existing models or developing totally new models that are more competitive in today's new-car market. Thomas is concerned about the strategic directionAAC should take. On the one hand, he knows the trend has been toward smaller, fuel-efficient automobiles; but on the other hand, he knows that this may be a passing trend, similar to what occurred in the 1970s when fuel costs soared. This previous spike led to greater demand for smaller cars and diesel engines for passenger cars. However, as soon as OPEC countries lowered their prices, Americans had a growing demand for larger cars for many years. This eventually led to the SUV craze of the 1990s through about 2006. Now, a few years after oil prices again spiked in 2008, he wonders if consumers really believe oil prices will remain high. If consumers believe this, they will probably prefer smaller, fuel-efficient vehicles. If they do not, he believes demand for these smaller vehicles will be a passing fad. A second issue that concerns Thomas is the market's attitudes toward global warming. He is concerned because even though he realizes the scientific community is in reasonable agreement about global warming, there is enough controversy in the information environment to cause consumers to wonder if concern for global warming is real. Also, Thomas doesn't know how to deal with global warming in terms of the direction he should take with his automobiles. He knows consumers have varied thoughts about global warming. Some believe it is a hoax. These consumers enjoy citing record-low temperatures which appear from time to time. Other consumers believe there may be global warming but it is a natural phenomenon of the earth's temperature cycles. These consumers do not believe mankind contributes to global warming. If either of these arguments-either it doesn't exist or it exists but mankind does not affect it-becomes widely accepted, then global warming will have little effect on automobiles. On the other hand, if consumers believe their automobile exhaust affects global warming and it is a real potential threat to life on the planet Earth, there could be tremendous changes in the types of automobiles desired in the near future. Case Your Integrated Case Advanced Automobile Concepts Nick Thomas is CEO of Advanced Automobile Concepts (AAC), a new division of a large automobile manufacturer, ZEN Motors. ZEN is a multinational manufacturer headquartered in the United States. It has multiple divisions representing several auto and truck brands. ZEN's divisions have been slowly losing market share to other competitors. AAC was created to revive the aging ZEN automobile brands by either reengineering existing models or developing totally new models that are more in tune with today's changing automobile market. Nick is very familiar with the automobile industry, as his entire adult life has been in the business. He follows trade publications carefully and believes ZEN's most significant losses are due to the growing popularity of several foreign brands, particularly brands from Japan and Korea. As CEO, Nick has been given the authority to do what he believes is needed to revive the company's brands and help return ZEN to prominence in automobile manufacturing. Nick has retrieved company sales data for all ZEN models for the last decade from ZEN's internal reports system, part of ZEN's management information system (MIS). He has accessed the intelligence system to obtain trade industry articles written about the market, including evaluations of top competitors'models. He notices that several highly evaluated models are small and fuel efficient. He also has recognized that foreign competition has severely eroded ZEN's market share of their only large, luxury car brand. ZEN's brand has been around for many years and now fails to compete with the newer luxury car models on the market. ZEN has been reluctant to move into the very small and highly fuel-efficient market for a couple of reasons. First, historically, ZEN has earned higher profits on larger vehicles. Every ZEN division has a large and extra-large model SUV. Historically these SUV models, ZEN's large trucks, and their larger family cars have been very profitable. Secondly, as sales have eroded in recent years, ZEN has been reluctant to invest the funds needed to develop radically different designs from those models that have been their "bread and butter" cars for decades. However, in recent months ZEN's sales have plummeted as fuel prices have soared. ZEN management realizes they must innovate and that is why they created the AAC division. Nick Thomas realizes that he must develop innovations in automobile design and engineering, but he is not certain in which direction he should guide his division. He realizes that, for now, oil prices are high and he understands the increases in sales of fuel-efficient gasoline, diesel, and electric hybrids. However, Nick has seen these environmental changes come and go. He tells his younger vice presidents, "When the crises are over, the car buying public wants big vehicles and we have earned our standing in the industry by giving the market what they want." Nick wonders to himself if this oil crisis is here to stay. He has also been concerned about the prospects of real global warming. He's read the reports on climate change and is confused-he doesn't know whether to believe Al Gore or Rush Limbaugh. Nick also isn't certain about the future of alternative fuels. Will the U.S. government really encourage the reduction of the country's dependence on foreign energy? He vividly recalls this being an issue in the 1970s and President Carter calling for a switch to alternative fuels. He also knows that the country didn't follow through on this at the time. Nick wonders if today's promises by politicians of reducing foreign dependence on energy will be forgotten just as it has in the past. Nick is not sure what will happen but he knows that continued high prices of fuel and increasing evidence of global warming will affect consumer behavior with regard to automobiles. What components of ZEN's marketing information system will Nick Thomas need? Not long after Thomas was hired as CEO, he hired Marilyn Douglass, former director of marketing research at Nord Motors, who has many years of experience working in the automotive industry. Nord Motors is a major competitor of ZEN. Thomas wanted Douglass on his team because he felt he needed someone to interpret consumers' future automotive needs. He asked Douglass to prepare a report summarizing what she felt were the major automobile alternatives for ZEN to consider. Her report, referred to in the company as the "Douglass Report," outlined the following major alternatives. Regarding fuels, ZEN should consider only making hybrid autos in the near future. ZEN has another division of top researchers who are investigating new fuels and engines of the future. They have spent considerable time on developing a hydrogen cell but it will be several years before they have perfected a version that will be safe for public use. The rationale for Douglass's decision about hybrids is that some form of electric motor should be used. They are quiet, almost maintenance free, and the cost per mile is much cheaper than present internal combustion engines. But, the problem with all electric vehicles is their poor infrastructure to support the vehicle. For example, an all-electric car will not be useful except in very limited conditions due to restrictions on its range. For now, the range is not sufficient on the best of electric cars for use without the widespread availability of electrical plug-in receptacles needed to recharge the car. This is not something that will change overnight and even if there are plugs available, there must be meters with pay receptacles allowing users to pay for the electricity consumed. This may occur in limited situations but it will be many years before the driving public has such an infrastructure available. Douglass believes that all electric cars will find a niche in the market but that the range limitation would cap sales. She believes that several manufacturers will enter this business and will develop different vehicles for different purposes. These vehicles will differ in terms of speeds, passenger space and storage payloads, range, and cost. She believes there will be many market entries, competition will be fierce, and no one will get an upper hand on the volume needed to earn respectable profits. The Douglass Report suggests that ZEN's best opportunity will reside with hybrids that use both electric power and engine power, using either gasoline, diesel, biodiesel, or even CNG. The key to the future was thought to be hybrid cars with an electric motor charged by and alternating with an internal combustion engine. Her best choice for the engine fuel for now is biodiesel simply because diesel engines get higher miles per gallon (mpg) than gasoline and there is not likely to be a major change in the infrastructure needed to make biodiesel widely available. Some form of diesel will be necessary for the trucking industry, for example, for years to come. The Douglass Report recommends that this decision be confirmed by others at ZEN. The report stated that ZEN's competitiveness will depend on selecting the car designs (models) that best meet market demand. The underlying premise is that all vehicles will need to have high mpg ratings and that demand will differ depending on the size of the vehicles. Generally speaking, the larger the vehicle the less the mpg; so the smallest vehicle will have "very high" mpg and the largest proposed model will have "good" mpg. Some broad choices include: a. Very small, one-seat vehicle designed to get near maximum mpg b. Small, two-seat vehicle designed to get high mpg c. Larger, economy/compact size, four-seat vehicle designed to get good mpg d. Large, standard size, five- to six-seat vehicle with conventional trunk space designed to get reasonably good mpg How many of these models will ZEN want to create, manufacture, and market? The Douglass Report explains that there may very well be enough demand to justify several ZEN models. It will be critical to determine which models have the greatest demand. Secondly, Douglass warned that just because we have an energy and environmental crisis, the car-buying public will not be satisfied with one solution. Similar to the market today, there are varied segments and each may prefer a unique model to best satisfy their demands and to determine market segments. Finally, the Douglass Report discusses the need to market vehicles in the future as efficiently as possible. Two factors are given for the additional efficiency requirements in the future. First, there will be increased competition. Start-up firms will be encouraged by new governmental policies to produce new, energy-saving vehicles. Second, profit margins will be lower on smaller vehicles of the future. As noted earlier, smaller cars traditionally have been priced competitively; they do not have the "higher" price points of some of the larger, luxury cars. Marketing efforts will need to clearly "reach" the market segments with promotional materials without wasting promotional dollars on market segments that are not interested in the vehicle being promoted. Media can be purchased that targets markets based upon knowledge of standard demographic data, such as gender, marital status, number of persons in a household, age, level of education, job category, income, dwelling type, number of vehicles owned/leased, and type of vehicle owned (economy, standard, luxury, SUV, pickup truck, van). Also, dealer locations can be selected based on other factors, such as size of the city. Thomas read the Douglass Report carefully. He believed it was a good point to start the decision-making process, but he needed additional information. Secondly, Thomas dwells on consumer attitudes and car purchasing intentions. That is, will a strong belief in global warming caused by mankind be highly associated with buying certain types of cars? Will this vary around the country? Will these relationships exist within definable market segments? Finally, Thomas knows that AAC can retrofit some ZEN models that will improve fuel economy without drastic requirements of new technology or retooling or added costs. He wonders: "How much of an improvement in mpg would consumers require to buy the present ZEN models? What percentage increase in fuel economy (mpg) in current ZEN models will be required before ZEN becomes equally preferred with some of the better selling foreign autos?" Thomas wonders how he could find answers to these questions. He is considering talking with a marketing researcher. Imagine you are the researcher hired by Thomas to address these questions. To deal with the first set of issues-determining how consumers feel about certain issues, how important these issues are to them, and what terms they use to discuss these issues-what research design would you suggest? Why?

Your Integrated Case Advanced Automobile Concepts Nick Thomas has been considering some of the issues identified in the Douglass Report (see Case). He is considering different directions to take. First, he is a little concerned that most of the information he and AAC have based their decisions on thus far are either industry reports or opinions of persons in the company. Granted, these persons are quite knowledgeable of the automobile industry. But, Thomas is concerned that he doesn't have input from some consumers. What do consumers think about global warming, future fuel costs, hybrids versus all electric cars? He knows the media has introduced a vast amount of information on these topics to consumers but he wonders if consumers are even aware of these issues. How important are these issues to consumers? What appears to be the most important: global warming, fuel costs, or giving up their SUVs? He begins to realize he doesn't know very much about what consumers think about these important issues. He doesn't know how much they talk about these issues with their neighbors or even what terms they use to speak of these issues. Recall in Case that Nick Thomas is the new CEO of Advanced Automobile Concepts (AAC), a new division of a large automobile manufacturer, ZEN Motors. ZEN is a multinational manufacturer headquartered in the United States, and has multiple divisions representing several automobile and truck brands. ZEN's divisions have been slowly losing market share to other competitors.AAC was created to revive the aging ZEN automobile brands by either reengineering existing models or developing totally new models that are more competitive in today's new-car market. Thomas is concerned about the strategic directionAAC should take. On the one hand, he knows the trend has been toward smaller, fuel-efficient automobiles; but on the other hand, he knows that this may be a passing trend, similar to what occurred in the 1970s when fuel costs soared. This previous spike led to greater demand for smaller cars and diesel engines for passenger cars. However, as soon as OPEC countries lowered their prices, Americans had a growing demand for larger cars for many years. This eventually led to the SUV craze of the 1990s through about 2006. Now, a few years after oil prices again spiked in 2008, he wonders if consumers really believe oil prices will remain high. If consumers believe this, they will probably prefer smaller, fuel-efficient vehicles. If they do not, he believes demand for these smaller vehicles will be a passing fad. A second issue that concerns Thomas is the market's attitudes toward global warming. He is concerned because even though he realizes the scientific community is in reasonable agreement about global warming, there is enough controversy in the information environment to cause consumers to wonder if concern for global warming is real. Also, Thomas doesn't know how to deal with global warming in terms of the direction he should take with his automobiles. He knows consumers have varied thoughts about global warming. Some believe it is a hoax. These consumers enjoy citing record-low temperatures which appear from time to time. Other consumers believe there may be global warming but it is a natural phenomenon of the earth's temperature cycles. These consumers do not believe mankind contributes to global warming. If either of these arguments-either it doesn't exist or it exists but mankind does not affect it-becomes widely accepted, then global warming will have little effect on automobiles. On the other hand, if consumers believe their automobile exhaust affects global warming and it is a real potential threat to life on the planet Earth, there could be tremendous changes in the types of automobiles desired in the near future. Case Your Integrated Case Advanced Automobile Concepts Nick Thomas is CEO of Advanced Automobile Concepts (AAC), a new division of a large automobile manufacturer, ZEN Motors. ZEN is a multinational manufacturer headquartered in the United States. It has multiple divisions representing several auto and truck brands. ZEN's divisions have been slowly losing market share to other competitors. AAC was created to revive the aging ZEN automobile brands by either reengineering existing models or developing totally new models that are more in tune with today's changing automobile market. Nick is very familiar with the automobile industry, as his entire adult life has been in the business. He follows trade publications carefully and believes ZEN's most significant losses are due to the growing popularity of several foreign brands, particularly brands from Japan and Korea. As CEO, Nick has been given the authority to do what he believes is needed to revive the company's brands and help return ZEN to prominence in automobile manufacturing. Nick has retrieved company sales data for all ZEN models for the last decade from ZEN's internal reports system, part of ZEN's management information system (MIS). He has accessed the intelligence system to obtain trade industry articles written about the market, including evaluations of top competitors'models. He notices that several highly evaluated models are small and fuel efficient. He also has recognized that foreign competition has severely eroded ZEN's market share of their only large, luxury car brand. ZEN's brand has been around for many years and now fails to compete with the newer luxury car models on the market. ZEN has been reluctant to move into the very small and highly fuel-efficient market for a couple of reasons. First, historically, ZEN has earned higher profits on larger vehicles. Every ZEN division has a large and extra-large model SUV. Historically these SUV models, ZEN's large trucks, and their larger family cars have been very profitable. Secondly, as sales have eroded in recent years, ZEN has been reluctant to invest the funds needed to develop radically different designs from those models that have been their "bread and butter" cars for decades. However, in recent months ZEN's sales have plummeted as fuel prices have soared. ZEN management realizes they must innovate and that is why they created the AAC division. Nick Thomas realizes that he must develop innovations in automobile design and engineering, but he is not certain in which direction he should guide his division. He realizes that, for now, oil prices are high and he understands the increases in sales of fuel-efficient gasoline, diesel, and electric hybrids. However, Nick has seen these environmental changes come and go. He tells his younger vice presidents, "When the crises are over, the car buying public wants big vehicles and we have earned our standing in the industry by giving the market what they want." Nick wonders to himself if this oil crisis is here to stay. He has also been concerned about the prospects of real global warming. He's read the reports on climate change and is confused-he doesn't know whether to believe Al Gore or Rush Limbaugh. Nick also isn't certain about the future of alternative fuels. Will the U.S. government really encourage the reduction of the country's dependence on foreign energy? He vividly recalls this being an issue in the 1970s and President Carter calling for a switch to alternative fuels. He also knows that the country didn't follow through on this at the time. Nick wonders if today's promises by politicians of reducing foreign dependence on energy will be forgotten just as it has in the past. Nick is not sure what will happen but he knows that continued high prices of fuel and increasing evidence of global warming will affect consumer behavior with regard to automobiles. What components of ZEN's marketing information system will Nick Thomas need? Not long after Thomas was hired as CEO, he hired Marilyn Douglass, former director of marketing research at Nord Motors, who has many years of experience working in the automotive industry. Nord Motors is a major competitor of ZEN. Thomas wanted Douglass on his team because he felt he needed someone to interpret consumers' future automotive needs. He asked Douglass to prepare a report summarizing what she felt were the major automobile alternatives for ZEN to consider. Her report, referred to in the company as the "Douglass Report," outlined the following major alternatives. Regarding fuels, ZEN should consider only making hybrid autos in the near future. ZEN has another division of top researchers who are investigating new fuels and engines of the future. They have spent considerable time on developing a hydrogen cell but it will be several years before they have perfected a version that will be safe for public use. The rationale for Douglass's decision about hybrids is that some form of electric motor should be used. They are quiet, almost maintenance free, and the cost per mile is much cheaper than present internal combustion engines. But, the problem with all electric vehicles is their poor infrastructure to support the vehicle. For example, an all-electric car will not be useful except in very limited conditions due to restrictions on its range. For now, the range is not sufficient on the best of electric cars for use without the widespread availability of electrical plug-in receptacles needed to recharge the car. This is not something that will change overnight and even if there are plugs available, there must be meters with pay receptacles allowing users to pay for the electricity consumed. This may occur in limited situations but it will be many years before the driving public has such an infrastructure available. Douglass believes that all electric cars will find a niche in the market but that the range limitation would cap sales. She believes that several manufacturers will enter this business and will develop different vehicles for different purposes. These vehicles will differ in terms of speeds, passenger space and storage payloads, range, and cost. She believes there will be many market entries, competition will be fierce, and no one will get an upper hand on the volume needed to earn respectable profits. The Douglass Report suggests that ZEN's best opportunity will reside with hybrids that use both electric power and engine power, using either gasoline, diesel, biodiesel, or even CNG. The key to the future was thought to be hybrid cars with an electric motor charged by and alternating with an internal combustion engine. Her best choice for the engine fuel for now is biodiesel simply because diesel engines get higher miles per gallon (mpg) than gasoline and there is not likely to be a major change in the infrastructure needed to make biodiesel widely available. Some form of diesel will be necessary for the trucking industry, for example, for years to come. The Douglass Report recommends that this decision be confirmed by others at ZEN. The report stated that ZEN's competitiveness will depend on selecting the car designs (models) that best meet market demand. The underlying premise is that all vehicles will need to have high mpg ratings and that demand will differ depending on the size of the vehicles. Generally speaking, the larger the vehicle the less the mpg; so the smallest vehicle will have "very high" mpg and the largest proposed model will have "good" mpg. Some broad choices include: a. Very small, one-seat vehicle designed to get near maximum mpg b. Small, two-seat vehicle designed to get high mpg c. Larger, economy/compact size, four-seat vehicle designed to get good mpg d. Large, standard size, five- to six-seat vehicle with conventional trunk space designed to get reasonably good mpg How many of these models will ZEN want to create, manufacture, and market? The Douglass Report explains that there may very well be enough demand to justify several ZEN models. It will be critical to determine which models have the greatest demand. Secondly, Douglass warned that just because we have an energy and environmental crisis, the car-buying public will not be satisfied with one solution. Similar to the market today, there are varied segments and each may prefer a unique model to best satisfy their demands and to determine market segments. Finally, the Douglass Report discusses the need to market vehicles in the future as efficiently as possible. Two factors are given for the additional efficiency requirements in the future. First, there will be increased competition. Start-up firms will be encouraged by new governmental policies to produce new, energy-saving vehicles. Second, profit margins will be lower on smaller vehicles of the future. As noted earlier, smaller cars traditionally have been priced competitively; they do not have the "higher" price points of some of the larger, luxury cars. Marketing efforts will need to clearly "reach" the market segments with promotional materials without wasting promotional dollars on market segments that are not interested in the vehicle being promoted. Media can be purchased that targets markets based upon knowledge of standard demographic data, such as gender, marital status, number of persons in a household, age, level of education, job category, income, dwelling type, number of vehicles owned/leased, and type of vehicle owned (economy, standard, luxury, SUV, pickup truck, van). Also, dealer locations can be selected based on other factors, such as size of the city. Thomas read the Douglass Report carefully. He believed it was a good point to start the decision-making process, but he needed additional information. Secondly, Thomas dwells on consumer attitudes and car purchasing intentions. That is, will a strong belief in global warming caused by mankind be highly associated with buying certain types of cars? Will this vary around the country? Will these relationships exist within definable market segments? Finally, Thomas knows that AAC can retrofit some ZEN models that will improve fuel economy without drastic requirements of new technology or retooling or added costs. He wonders: "How much of an improvement in mpg would consumers require to buy the present ZEN models? What percentage increase in fuel economy (mpg) in current ZEN models will be required before ZEN becomes equally preferred with some of the better selling foreign autos?" Thomas wonders how he could find answers to these questions. He is considering talking with a marketing researcher. Imagine you are the researcher hired by Thomas to address these questions. Consider the second paragraph in the case. What research design would you suggest to determine all of the following: Which attitudes are strongly associated with purchase intentions of different auto models? Will these relationships vary around the country and will they exist for definable market segments? Why?

Your Integrated Case Advanced Automobile Concepts Nick Thomas has been considering some of the issues identified in the Douglass Report (see Case). He is considering different directions to take. First, he is a little concerned that most of the information he and AAC have based their decisions on thus far are either industry reports or opinions of persons in the company. Granted, these persons are quite knowledgeable of the automobile industry. But, Thomas is concerned that he doesn't have input from some consumers. What do consumers think about global warming, future fuel costs, hybrids versus all electric cars? He knows the media has introduced a vast amount of information on these topics to consumers but he wonders if consumers are even aware of these issues. How important are these issues to consumers? What appears to be the most important: global warming, fuel costs, or giving up their SUVs? He begins to realize he doesn't know very much about what consumers think about these important issues. He doesn't know how much they talk about these issues with their neighbors or even what terms they use to speak of these issues. Recall in Case that Nick Thomas is the new CEO of Advanced Automobile Concepts (AAC), a new division of a large automobile manufacturer, ZEN Motors. ZEN is a multinational manufacturer headquartered in the United States, and has multiple divisions representing several automobile and truck brands. ZEN's divisions have been slowly losing market share to other competitors.AAC was created to revive the aging ZEN automobile brands by either reengineering existing models or developing totally new models that are more competitive in today's new-car market. Thomas is concerned about the strategic directionAAC should take. On the one hand, he knows the trend has been toward smaller, fuel-efficient automobiles; but on the other hand, he knows that this may be a passing trend, similar to what occurred in the 1970s when fuel costs soared. This previous spike led to greater demand for smaller cars and diesel engines for passenger cars. However, as soon as OPEC countries lowered their prices, Americans had a growing demand for larger cars for many years. This eventually led to the SUV craze of the 1990s through about 2006. Now, a few years after oil prices again spiked in 2008, he wonders if consumers really believe oil prices will remain high. If consumers believe this, they will probably prefer smaller, fuel-efficient vehicles. If they do not, he believes demand for these smaller vehicles will be a passing fad. A second issue that concerns Thomas is the market's attitudes toward global warming. He is concerned because even though he realizes the scientific community is in reasonable agreement about global warming, there is enough controversy in the information environment to cause consumers to wonder if concern for global warming is real. Also, Thomas doesn't know how to deal with global warming in terms of the direction he should take with his automobiles. He knows consumers have varied thoughts about global warming. Some believe it is a hoax. These consumers enjoy citing record-low temperatures which appear from time to time. Other consumers believe there may be global warming but it is a natural phenomenon of the earth's temperature cycles. These consumers do not believe mankind contributes to global warming. If either of these arguments-either it doesn't exist or it exists but mankind does not affect it-becomes widely accepted, then global warming will have little effect on automobiles. On the other hand, if consumers believe their automobile exhaust affects global warming and it is a real potential threat to life on the planet Earth, there could be tremendous changes in the types of automobiles desired in the near future. Case Your Integrated Case Advanced Automobile Concepts Nick Thomas is CEO of Advanced Automobile Concepts (AAC), a new division of a large automobile manufacturer, ZEN Motors. ZEN is a multinational manufacturer headquartered in the United States. It has multiple divisions representing several auto and truck brands. ZEN's divisions have been slowly losing market share to other competitors. AAC was created to revive the aging ZEN automobile brands by either reengineering existing models or developing totally new models that are more in tune with today's changing automobile market. Nick is very familiar with the automobile industry, as his entire adult life has been in the business. He follows trade publications carefully and believes ZEN's most significant losses are due to the growing popularity of several foreign brands, particularly brands from Japan and Korea. As CEO, Nick has been given the authority to do what he believes is needed to revive the company's brands and help return ZEN to prominence in automobile manufacturing. Nick has retrieved company sales data for all ZEN models for the last decade from ZEN's internal reports system, part of ZEN's management information system (MIS). He has accessed the intelligence system to obtain trade industry articles written about the market, including evaluations of top competitors'models. He notices that several highly evaluated models are small and fuel efficient. He also has recognized that foreign competition has severely eroded ZEN's market share of their only large, luxury car brand. ZEN's brand has been around for many years and now fails to compete with the newer luxury car models on the market. ZEN has been reluctant to move into the very small and highly fuel-efficient market for a couple of reasons. First, historically, ZEN has earned higher profits on larger vehicles. Every ZEN division has a large and extra-large model SUV. Historically these SUV models, ZEN's large trucks, and their larger family cars have been very profitable. Secondly, as sales have eroded in recent years, ZEN has been reluctant to invest the funds needed to develop radically different designs from those models that have been their "bread and butter" cars for decades. However, in recent months ZEN's sales have plummeted as fuel prices have soared. ZEN management realizes they must innovate and that is why they created the AAC division. Nick Thomas realizes that he must develop innovations in automobile design and engineering, but he is not certain in which direction he should guide his division. He realizes that, for now, oil prices are high and he understands the increases in sales of fuel-efficient gasoline, diesel, and electric hybrids. However, Nick has seen these environmental changes come and go. He tells his younger vice presidents, "When the crises are over, the car buying public wants big vehicles and we have earned our standing in the industry by giving the market what they want." Nick wonders to himself if this oil crisis is here to stay. He has also been concerned about the prospects of real global warming. He's read the reports on climate change and is confused-he doesn't know whether to believe Al Gore or Rush Limbaugh. Nick also isn't certain about the future of alternative fuels. Will the U.S. government really encourage the reduction of the country's dependence on foreign energy? He vividly recalls this being an issue in the 1970s and President Carter calling for a switch to alternative fuels. He also knows that the country didn't follow through on this at the time. Nick wonders if today's promises by politicians of reducing foreign dependence on energy will be forgotten just as it has in the past. Nick is not sure what will happen but he knows that continued high prices of fuel and increasing evidence of global warming will affect consumer behavior with regard to automobiles. What components of ZEN's marketing information system will Nick Thomas need? Not long after Thomas was hired as CEO, he hired Marilyn Douglass, former director of marketing research at Nord Motors, who has many years of experience working in the automotive industry. Nord Motors is a major competitor of ZEN. Thomas wanted Douglass on his team because he felt he needed someone to interpret consumers' future automotive needs. He asked Douglass to prepare a report summarizing what she felt were the major automobile alternatives for ZEN to consider. Her report, referred to in the company as the "Douglass Report," outlined the following major alternatives. Regarding fuels, ZEN should consider only making hybrid autos in the near future. ZEN has another division of top researchers who are investigating new fuels and engines of the future. They have spent considerable time on developing a hydrogen cell but it will be several years before they have perfected a version that will be safe for public use. The rationale for Douglass's decision about hybrids is that some form of electric motor should be used. They are quiet, almost maintenance free, and the cost per mile is much cheaper than present internal combustion engines. But, the problem with all electric vehicles is their poor infrastructure to support the vehicle. For example, an all-electric car will not be useful except in very limited conditions due to restrictions on its range. For now, the range is not sufficient on the best of electric cars for use without the widespread availability of electrical plug-in receptacles needed to recharge the car. This is not something that will change overnight and even if there are plugs available, there must be meters with pay receptacles allowing users to pay for the electricity consumed. This may occur in limited situations but it will be many years before the driving public has such an infrastructure available. Douglass believes that all electric cars will find a niche in the market but that the range limitation would cap sales. She believes that several manufacturers will enter this business and will develop different vehicles for different purposes. These vehicles will differ in terms of speeds, passenger space and storage payloads, range, and cost. She believes there will be many market entries, competition will be fierce, and no one will get an upper hand on the volume needed to earn respectable profits. The Douglass Report suggests that ZEN's best opportunity will reside with hybrids that use both electric power and engine power, using either gasoline, diesel, biodiesel, or even CNG. The key to the future was thought to be hybrid cars with an electric motor charged by and alternating with an internal combustion engine. Her best choice for the engine fuel for now is biodiesel simply because diesel engines get higher miles per gallon (mpg) than gasoline and there is not likely to be a major change in the infrastructure needed to make biodiesel widely available. Some form of diesel will be necessary for the trucking industry, for example, for years to come. The Douglass Report recommends that this decision be confirmed by others at ZEN. The report stated that ZEN's competitiveness will depend on selecting the car designs (models) that best meet market demand. The underlying premise is that all vehicles will need to have high mpg ratings and that demand will differ depending on the size of the vehicles. Generally speaking, the larger the vehicle the less the mpg; so the smallest vehicle will have "very high" mpg and the largest proposed model will have "good" mpg. Some broad choices include: a. Very small, one-seat vehicle designed to get near maximum mpg b. Small, two-seat vehicle designed to get high mpg c. Larger, economy/compact size, four-seat vehicle designed to get good mpg d. Large, standard size, five- to six-seat vehicle with conventional trunk space designed to get reasonably good mpg How many of these models will ZEN want to create, manufacture, and market? The Douglass Report explains that there may very well be enough demand to justify several ZEN models. It will be critical to determine which models have the greatest demand. Secondly, Douglass warned that just because we have an energy and environmental crisis, the car-buying public will not be satisfied with one solution. Similar to the market today, there are varied segments and each may prefer a unique model to best satisfy their demands and to determine market segments. Finally, the Douglass Report discusses the need to market vehicles in the future as efficiently as possible. Two factors are given for the additional efficiency requirements in the future. First, there will be increased competition. Start-up firms will be encouraged by new governmental policies to produce new, energy-saving vehicles. Second, profit margins will be lower on smaller vehicles of the future. As noted earlier, smaller cars traditionally have been priced competitively; they do not have the "higher" price points of some of the larger, luxury cars. Marketing efforts will need to clearly "reach" the market segments with promotional materials without wasting promotional dollars on market segments that are not interested in the vehicle being promoted. Media can be purchased that targets markets based upon knowledge of standard demographic data, such as gender, marital status, number of persons in a household, age, level of education, job category, income, dwelling type, number of vehicles owned/leased, and type of vehicle owned (economy, standard, luxury, SUV, pickup truck, van). Also, dealer locations can be selected based on other factors, such as size of the city. Thomas read the Douglass Report carefully. He believed it was a good point to start the decision-making process, but he needed additional information. Secondly, Thomas dwells on consumer attitudes and car purchasing intentions. That is, will a strong belief in global warming caused by mankind be highly associated with buying certain types of cars? Will this vary around the country? Will these relationships exist within definable market segments? Finally, Thomas knows that AAC can retrofit some ZEN models that will improve fuel economy without drastic requirements of new technology or retooling or added costs. He wonders: "How much of an improvement in mpg would consumers require to buy the present ZEN models? What percentage increase in fuel economy (mpg) in current ZEN models will be required before ZEN becomes equally preferred with some of the better selling foreign autos?" Thomas wonders how he could find answers to these questions. He is considering talking with a marketing researcher. Imagine you are the researcher hired by Thomas to address these questions. Nick Thomas's last question deals with determining how much of an increase in mpg will be needed for consumers to have equal preference for ZEN models as those outselling ZEN today. What research design would you suggest?