Dallas Business Consultant Elijah ClarkDallas Business Consultant Elijah Clark

Marketing Research Methods

Marketing and advertising has a direct affect on sales by reducing price sensitivity. If a customer likes and is satisfied with a product, they are more likely to recommend that product to a friend. Marketing is best when it delivers a value to customers efficiently and effectively. Researchers agree that qualitative techniques define and describe, while quantitative techniques estimate and quantify. Marketing metrics are an important part of evaluating the control process of marketing. When creating a new marketing strategy, neither qualitative nor quantitative measures are more important than the other when determining value and sales. Testing both measures will generate the most affective results.
 
According to the evidence from the Coca-Cola Company, taste was considered the most important factor for their declined sales between the 1970s and 1980s. The New Coke was developed to enhance the flavor and generate sales. With the approval of more than half of the 200,000 blind product testers, the New Coke was introduced to replace the original flavored Coke. Because of the unfavorable results and backlash from consumers, the New Coke was withdrawn from the market and the Coke Classic was introduced with the original ingredients. In regards to the Coca-Cola Company’s quantitative study and the New Coke, the test provided inconclusive results because of the lack of information given to the participants. Though the participants enjoyed the flavor of the New Coke, it did not outweigh their desire and loyalty of the original Coke.
 
Objective-based research is called quantitative research, and subjective-based research is considered qualitative research. Quantitative is considered hard marketing metrics, while qualitative is soft measures. Quantitative evaluates assets with monetary value, such as sales, gross margins, and profits. Qualitative evaluates intangible assets that indirectly derive from value such as loyalty, likability, and satisfaction. When gaining feedback from consumers, the appropriate questions must be asked in order to produce valuable and affective results. Quantitative objects are ideal for businesses that desire to increase their return on investment. Much of qualitative research is used only in subjectivist-type research, which uses either communication or observation. An example of communication-based research includes the simple form of asking questions to participants. To effectively measure qualitative research, there needs to be a means of recording and measuring behavior and reactions.
 
I do not believe that marketers should choose between quantitative and qualitative research methods. Both measures are important and produce valuable insight into consumer behavior and value. The New Coke’s example of relying on only one type of study displays poor predictive validity. A consumers’ like toward an item is not a good predictor of purchase. Had the Coke Company taken a segmented approach and kept both products on the store shelves, they could have had a better idea of which the users liked best and which would generate the most sales in a side-by-side comparison.
 
Quantitative research focuses on similar topics as qualitative, such as how people feel, think, and behave. However, instead of asking participants directly, it uses structured data to test the information and conclude a hypothesis. Quantitative research can be used to objectively analyze information using calculations raw data and statistics. This type of research often test its methods using experiments, segmenting, and surveys, which can be used to collect the data. While qualitative research is not structured in nature, quantitative is very structured and based solely on factual data and calculations. A quantitative research survey would include closed questions. Quantitative research results are usually numerical, and data used to obtain the information includes phone calls, face-to-face, mail, and surveys.
 
the best solution is to use both qualitative and quantitative approach. Qualitative research focuses on analyzing the in-depth details of why consumers behave the way in which they do. It searches for the barriers in place that may affect their reasoning. For instance, a new company may want to know things about their product in conjunction with how it feels, smells, and taste. Using a qualitative approach would assists in finding the appropriate marketing or product solution. A qualitative research type setting would be used to collect user information and explore the reasoning for their responses. In addition to those responses, details could be collected to determine how they arrived at their conclusions. Those details could include motives, emotions, and mental triggers. A focus group type setting is perfect for conducting qualitative research. Focus groups allow for in depth interviews with the participants that can be used to gain valuable product insight.

The Impact of Marketing

Marketing firms should focus their campaigns on what generates sales. The best campaigns are those that influence product purchases. If consumers dislike the campaign, but it sells product better than favored campaigns, then the advertisement would be considered a success. The goal of any campaign is to generate sales. The ideal campaign should build trust, influence sales, and generate brand awareness. Businesses should target and adapt their marketing strategies to focus on what consumers want and will purchase. The consumer is the ultimate power broker within any organization. Organizations should structure their marketing efforts on identifying and meeting their consumers’ individual needs. Those needs must be met within all aspects of the business, including price, customer support, and sales.
 
My opinion is that marketing both reflects and shapes the needs of consumers. For instance, Apple Inc. is introducing a new watch to the market in a few days. I want a watch, but I do not want to spend $400 on an apple watch. Because of the price, I will not get the watch without being convinced that it can offer me something worth the price. In this sense, the idea/marketing of the watch is reflecting what I know based on the information I have. However, if apple markets the watch effectively, I can convince myself that I need the watch even if I do not really want to spend the money. In this sense, the marketing is shaping my needs and wants. The reality is that effective marketing can convince me of something that is outside of my desires. 
 
The implication is that marketing agency’s can capitalize off my internal weakness and pursued me to purchase without me desiring to do so. Though I may not need or want the product or service, the marketing campaign could create the campaign to be attractive by targeting it toward solving my hesitations to purchase. In addition, marketing is generated to serve the needs and wants of consumers. If the purchasing item is something that I already know I want, but have not purchased it for whatever reason, the marketing should influence my decision by resolving my concerns.
 
From a personal perspective, I purchase based on three factors; Whether or not the item will help me become more productive, can it satisfy the things or people I love, or will is satisfy a fetish. I love electronics and tools that make me more productive, so if I give a salesperson my daily schedule, I expect them to convince me as to how their product can fit into that schedule and make it better. From there, I will take care of the third factor to convince my wife about why I “need” it.
 
If the marketing firm can convince me that their product or service can enhance my productivity and quality of life, then I will make the purchase. The issue with this is that marketers can sell ideals that are not necessarily good for individuals. For example; unhealthy eating habits, weight loss goals, and purchasing items that are not financially responsible. The result is that the consumer should make the right decision.
 
Marketing audits are crucial to achieving business success. Having the ability to find and understand your consumer, competitors, and product potential will make the process of marketing your product or service much easier than if done without it. A problem that I often see being in the marketing industry is that organizations don’t get audits, and within the middle of their marketing efforts, they realize they have no real plan or way to monitor the effects of their marketing campaigns. Having a plan of action helps pace and organizes the marketing efforts. Marketing audits help organizations identify strengths, weaknesses, opportunities, and risks specific to their industry and market. Marketing audits can also satisfy the vision of the organization, the value of products offered, and the effectiveness of current, previous and future marketing efforts and organizational efficiency’s. A good marketing audit should assist with the implementation of a marketing strategy, which should help in generating brand awareness and sales. 

International Finance

International Finance
International finance deals with more than individual markets by including managing exposure to exchange rate, and financing international capital marketing and budgeting. Additionally, foreign exchange focuses on aspects such as political risk, legal, cultural, and taxation. Corporate finance relates to the financial activities of a corporation. The goal of corporate finance is to increase the value of the firm to shareholders through implementing plans and strategies to achieve the goals. Strategies include making profitable decision on raising and managing capital, dividend distributions, and acquisitions.

Exchange Rate
The exchange rate is one of the most significant factors of international finance. which assist in creating financial balance. Exchange rates are used to provide information for corporations when undertaking capital budgeting and making financial decision regarding foreign markets. The exchange rate is the currency value as determined by domestic and foreign currency.

Domestic and International Markets
Corporations are called international corporations or multinational if they have significant foreign operations. The principles of corporate finance are applied to international corporations. International corporations seek investments that generate company value and shareholder wealth. To increase the value of a firm, companies take on projects that have a positive NPV. With both international and domestic markets, a positive NPV is paramount for organizational success. Both international and corporate finance focus on generating profitable capital investment decisions related to dividends, leverage, and financing.

Conclusion
The Foreign exchange market is the worlds largest financial market. The difference between international finance and corporate finance is that international finance not only considers domestic rules and regulations, but also considers foreign policies, politics, risk, culture, environmental changes, and government intervention. Consequently, international finance is not just simply “corporate finance with an exchange rate.”

In addition to an exchange rate being the value of one country’s currency transacted into another country’s currency; nearly all currency trading takes place in U.S. dollars, and the rate of exchange changes constantly. The abbreviation used for foreign exchange is FX; currency swaps are considered to be FX swaps. Currency swaps present hedging risk in international trade. For example, if a firm produces in products in one country and then exports to another, the firm is responsible for paying its workers along with its suppliers in its domestic currency. However, the firm may receive revenue in foreign currency. The risk involved with currency exchange rates is that currency changes over time. If the value of foreign currency decreases, the firm loses profits. To protect itself against rising and falling currency, the company can enter a currency swap. A currency swap protects companies by setting fixed terms of revenue exchange over a period of time. In addition to currency swap, there are also the interest rate swaps, and credit default swap.

In addition to the foreign exchange rates, there is the foreign exchange market, which give opportunities and provides information to international organizations when undertaking capital budgeting and making financial decisions. Within the foreign exchange market, countries trade their currency for another country’s currency. Within the market, most trading takes place between the U.S. dollar, the British pound sterling, the Japanese yen, and the euro.

The foreign exchange market is not an actual physical location where participants meet to trade and exchange currency, but instead its participants go to major commercial and investment banks around the world to convert their currency. Additionally, trading can take place over computers, telephones, and through other methods. A popular communication network for foreign transaction is the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which uses data transmission lines to help banks communicate with one another. Foreign exchange participants include importers, exporters, portfolio managers, brokers, traders, and speculators.

Initial Public Offering (IPO)

Initial Public Offering
Initial public offerings (IPOs) are transactions in which businesses publicly sell their common stock within an inefficient market. In the IPO market, sellers often have more company information than buyers and insider trading is considered legal. The day in which the IPO begins trading, the stock price is likely to close higher than its original value in an attempt to sell the stocks in aftermarket trading. Within the aftermarket trading is where the value reflects the true stock price, as buyers and sellers bargain transactions. A benefit of IPOs is that they grant liquidity to company owners and raise company capital. Taking a company public is when daily operations are overseen by corporate officers who are monitored by shareholder-appointed board of directors.

The Hypothesis
Selling shares in the aftermarket can be referred to as spinning. The term spinning defines IPOs that are immediately sold in the aftermarket and are spun for a quick profit. As firms try to prevent their willingness to participate in underpricing, they may hire a lead underwriter with a highly ranked analyst. This process is known as analyst lust hypothesis. Both the spinning hypothesis and the analyst lust hypothesis are associated with the changing issuer objective function hypothesis. First-day returns create low-frequency movements in underpricing that is less common than hot issue markets. The change in underpricing is known as the changing risk composition hypothesis. The hypothesis states that riskier IPOs are underpriced more often than less-risky IPOs. IPOs are underpriced as a way to entice investors to participate within the market. The realignment of incentives hypothesis is similar to the changing risk composition hypotheses in that its ownership changes instead of pricing relations in average underpricing.

Market Efficiency
Market efficiency is when stock price values are determined by all publicly available information. According to the efficiency market hypothesis, no one investor has the ability to outperform the stock market based on private information. Consequently, stock values are equally priced because of market efficiency. Furthermore, market efficiency requires investors to use their skills and knowledge to interpret the information to achieve profitability.

Market Inefficiency
Market inefficiency creates undervaluation for investors looking to buy into the market. Additionally, it creates overvaluation in which investors can sell. An inefficient market opposes an efficient market by stating that stock prices are not priced accurately and deviate either above or below their true value.

The hypothesis states that issuing firms are willing to accept underpricing when they hold constant the level of characteristics and managerial ownership. Within the changing issuer objective function hypothesis issuers are more likely to leave money on the table considering they place more attention and value on hiring a lead underwriter. Consequently, they are less concerned with avoiding underwriters with a history of excessive underpricing. This method of doing business is referred to as analysts lust hypothesis.

IPO proceeds are functions based on the choices of underwriters and auction and bookbuilding contracts. The changing issuer objective function hypothesis states issuers may put weight on proceeds from future sales and side payments instead of IPO proceeds. Within the changing issuer objective function issuers hire prestigious underwriters who charge by leaving more money on the table. Decision-makers of the issuing firms pay the price because they receive side payments and positive analyst coverage.

To launch an IPO, company’s work with investment banking firms as advisors and underwriters. As an underwriter, the bank purchases the IPO shares from the company and distributes the shares to the market. Underwriters advise issuers on pricing decisions. When an underwriter receives compensation for their recommendation, it creates an incentive to recommend a lower offer price. Bookbuilding is used to price and allocate IPOs. If there is an excess demand for shares, underwriters make the decision to whom to allocate those shares. With bookbuilding, underwriters can allocate who receives hot IPOs. Money on the table is when underwriters have influence over venture capitalist and issuing firm executives. Allocating IPOs allows for underwriters to continually underprice stocks. Decision-makers gain profits in their personal accounts when hot IPOs are allocated to them.

A hot IPO is considered an IPO that is expected to spike in price immediately upon trading. Spinning creates incentives for issuers to select bankers who underprice. The term spinning was formed when the underwriters for the firms allocated hot IPOs to brokerage accounts. The analyst lust hypothesis states that the coverage of analyst is an important factor when choosing a lead underwriter. Considering underwriters are not paid high fees for providing analyst coverage, issuers pay via the cost of underpricing. However, a concern with the analyst lust hypothesis is that it does not consider conflict of interest between managers and pre-issue shareholders, which could benefit pre-issue shareholders in situation where the analyst coverage produces higher market value.

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