Foundations of Marketing 5th Edition by Ferrell,William Pride

Exercise 5

Marketing Research and Sales Forecasting at Ogden Publications
Understanding customers is the key to success at Ogden Publications. The Tulsa, Oklahoma-based company publishes magazines and books for people interested in self-sufficiency, sustainability, rural lifestyles, and farm memorabilia. Ogden publishes 10 magazines, including Mother Earth News, Utne Reader, and Natural Home.
Ogden Publications uses extensive market research in order to keep its customers happy and continue to grow its audience. According to Bryan Welch, publisher and editorial director at Ogden Publications, "We have become really dedicated to constantly and persistently surveying the audiences to make sure that we understand what turns them on." The results of surveys are used to describe and analyze buying behavior and ever-changing customers' needs and wants. Ogden uses the survey method when the nature of the problem or issue relates to relationships that can be translated into hypotheses that can be tested to see if these assumptions are correct. For example, decreased readership of magazines is associated with increased use of information technology within the target market (such as iPads, netbooks, and PDAs).
"We like to try to find out various things from an editorial perspective and advertising sales perspective that will help improve the content we are providing to our readers to make sure we are reaching the audience that our advertisers would like to reach," says Cherilyn Olmstead, Ogden Publications' circulation and marketing director. Ogden's marketing team uses SurveyMonkey, an online survey system, to collect and store data from the many online surveys that Ogden presents to its readers. SurveyMonkey allows the marketing team to reduce its costs and increase its response rate. The system gives the marketing team more control over its surveys. Olmstead says, "We determine what questions we want to ask." Online surveys allow for quicker collection of audience responses and can be inexpensive compared to other data collection methods.
Ogden Publications also creates online companion websites for each of its magazines. In addition to offering customers additional resources, the online companions to the magazines also provide Ogden with valuable information about its readers. Once a customer visits the magazine's site, Ogden can track several activities, including the number of clicks on advertising links and how many minutes the customer spends on a particular page. With a traditional magazine, Ogden Publications would have to wait several months to get reader and advertiser feedback. With the companion sites, it can see if it needs to change its content and make adjustments to future editions of the print and web products. Internal primary data collection through the companion websites allows Ogden to further customize online content to better meet readers' needs.
One thing we do differently here than people do in most businesses is that we don't budget, we forecast," says Welch. Olmstead and her team use information from past years and the reception from various new marketing projects to forecast future sales, both at the subscription and newsstand level and with advertisers. However, the forecasts often serve as general guidelines for Ogden Publications. "I will tell you, without a shadow of a doubt, that the five-year forecast is accurate six months out. Beyond that, it is wildly inaccurate," says Welch. "The reason you do it is because it is a strategic tool. It makes everyone think about what we will need to do to be successful in five years." Forecasting represents a critical stage in strategic planning that attempts to understand external and internal forces and their impact on sales over time. When interpreting statistical information such as forecasts, it is important to reflect on any changes that affect the assumptions of the forecast.
Ogden's readership continues to grow, thanks to the increased interest in sustainable lifestyles. Market research helps the company to tailor the magazine to readers' evolving desires. Welch says, "Our knowledge of how effective our medium is is extremely powerful today." Without marketing research, companies would struggle to determine changing market and consumer needs.
Why does Ogden Publications create long-term forecasts if they often become inaccurate after six months