FRANK E. CAMACHOD. MAHHEW KNAIN

Listening toCustomers: The

Market ResearchFunction at Marriott

CorporationThe market research function is an integrai part af each af Marriott's majorbusinesses and has a significant role in shaping corporate strategy. As Mar-riott's businesses have evoived, the research function aiso has evoived andchanged.

Listening to customers is a tradition at Marriott Corpora-tion. This tradition began with the Corporation's founder, J.Willard Marriott, Sr., who believed strongly that one of thekeys to success is giving customers good service. In the earlyyears of the Corporation, this belief translated into the prac-tice of managers talking directly to customers. Marriott man-agers still continue this practice. However, over the years, asMarriott has grown, the need for a more systematic assess-ment of its customers and potential customers also has grown.

Overview of Marriott CorporationTo facilitate an understanding of the market research func-

tion, we first provide a brief overview of Marriott's corporatecommitments and its major business operations.

Corporate CommitmentsMarriott has three major commitments:—a commitment to provide superior service,—a commitment to being the employer of choice, and—a commitment to continuing growth.Marriott's commitment to superior service is a natural out-

growth of the belief that customer satisfaction is key to con-tinued success. However, superior service not only meansmeeting or exceeding the expectations of our current cus-tomers, but also means developing new products that keeppace with changing market needs.

Marriott's commitment to its employees stems from a be-lief that, because we are a service-oriented business, our em-ployees are our most important resource. Because servicesare delivered through our employees, an investment in ouremployees is an investment that helps to ensure continuingsuccess in our business. .. : * , ,; ••• _:,;.,-,,„,.-.,.,,,:,.

Frank E. Camacho is Vice President, Cor-porate Marketing Services, Marriott Cor-poration, Washington, DC.

D. Matthew Knain is Director, CorporateMarketing Sen/ices, Morriotf Corporation,Washington, DC.

LISTENING TO CUSTOMERS

"So, where are you staying in Washing-ton?"

"Marriott of course.""Which one? . . . Crystal City, CrystalGateway, the JW, the Marriott Suites, theCourtyard, or the Fairfield Inn?"

"You mean there's more than one?!"

Marriott is committed to growth through both expansionof its current businesses and the addition of new businessesthat provide good strategic fits with our corporate strengths.Well-planned growth means increased shareholder value. Italso means continuing opportunities for our employees andtherefore has a direct impact on our ability to retain qualityemployees and deliver superior service. Marriott's commit-ment to growth is reflected by its increase in sales, on av-erage, of more than 20% a year over the past 10 years.

Marriott's BusinessesMarriott Corporation is a leading company in the services

sector. Its businesses can be classified in three different a r e a s -lodging, contract services, and restaurants (Table 1).

Marriott is perhaps best known for its lodging operations.In 1987, lodging operations represented 41% of sales. Majorbusinesses in this area are:

—Marriott Hotels and Resorts,—Marriott Suites,—Residence Inn by Marriott,—Courtyard by Marriott, and—Fairfield Inns.

Table 1MARRIOTT BUSINESSES^

Lodging Contract Services Restaurants

Marriott Hotels andResorts

Full service in luxury/quality segmentMore than 177 hotelsMore than 79,000rooms

Marriott SuitesFull service, all-suiteconceptFirst property openedin 1987

Residence Inn byMarriott

Moderate price,extended-stay suiteconcept106 Inns, with 12,300suitesAcquired in 1987

Courtyard by MarriottModerate price hotelsMore than 100 inoperationLaunched in 1983

Fairfield InnEconomy segmentFirst two propertiesopened in 1987

Marriott Business andFood Services

Employee foodservices andconference facilitymanagementMore than 1100accounts

Marriott EducationServices

Student and facultyfood services585 clients

Marriott Health CareServices

Food services forhospitals, retirementcommunities, andnursing homes400 accounts

Marriott In-Flite ServicesAirline cateringservicesMore than 140 airlines

HOST International,Inc.Food, beverage andmerchandise services . ' •"•49 airports

Family Restaurants214 Bob's Big Boyrestaurants145 Howard Johnsonrestaurants

Roy Rogers556 fast-foodrestaurants, in Mid-Atlantic

Travel Plazas byMarriott

106 restaurants, giftshops, and relatedfacilities

Hot ShoppesMarriott's originalrestaurant chain16 cafeterias in theWashington area

-Statistics as of January 1, 1988.

MARKETING RESEARCH, MARCH 1989

Each of these businesses caters to the needs of a specific seg-ment of the lodging market. Other related businesses includevacation ownership resorts and senior living services.

Though less well known, Marriott's Contract Services rep-resented 46% of 1987 sales. Major businesses in this area in-clude:

—Marriott Business Food and Services,—Marriott Education Services,—Marriott Health Care Services,—Marriott In-Flite Services, and—Host International, Inc.

Restaurant operations represented 13% of sales in 1987. Thisarea of operations consists of four major businesses:

—family restaurants,—Roy Rogers,—Travel Plazas by Marriott, and—Hot Shoppes.

Common across these three areas is the service compo-nent. However, each area and each business within each areaserves a unique set of customers and consequently has aunique set of concerns.

Each strategic business unit (SBU) has a high degree of au-tonomy and operates as a profit center. Many major func-tions, including finance, marketing, operations, and plan-ning, are handled at the SBU level. Other functions, includingtreasury, architecture and construction, legal, and market re-search, operate at a corporate level, providing support to eachSBU as needed and transferring knowledge between SBUswithin their technical specialty.

Overview of Marriott's Market Research FunctionAt Marriott, market research is a corporate-level rather than

a business-level function. The department known as Cor-porate Marketing Services or CMS consists of more than 30research professionals. The department head, a Vice Presi-dent, reports directly to the Senior Vice President for Stra-tegic Planning and Business Development who, in turn, re-ports to the Chairman, J. Willard Marriott, Jr.

MissionThe research department has the following formal mission

statement.Department Mission Statement

Corporate Marketing Services' mission is to improve the quality ofbusiness decisions at Marriott through:1. Building a knowledge base on customers, competitors, and mar-

kets for our major businesses, and transferring that knowledge be-tween strategic business units and among key managers.

2. Conducting primary market research for strategic business units toensure that projects meet their objectives, are cost effective, andavoid duplication of other work.

3. Providing quality control and oversight on all market research con-ducted for Marriott or its subsidiary companies.

4. Consulting with corporate and strategic business unit managementon marketing strategy and tactics.

Several points are worth noting. First, the mission statementimplies that good business decisions require a systematic un-

I Each SBU has a highdegree of autonomyand operates as aprofit center.

Though Marriott'sresearch department isa corporate-levelfunction, it isorganized to providethe benefits thatwould result from adecentralizedbusiness-levelfunction.

LISTENING TO CUSTOMERS

Each SBU has aResearch Director whoworks on a regularbasis with key clientsin the business.

derstanding of customers, competitors, and markets. Sec-ond, it implies that the research function should be proactivein disseminating relevant information. Third, the statementrecognizes that there are certain commonalities across Mar-riott's businesses and that knowledge gained in one businessmay benefit another. Fourth, it recognizes a need to ensurequality in research if that research is to provide good direc-tion. Finally, the research department has a responsibility toensure that research is interpreted properly and that actionstaken are consistent with the research implications.

Organizational StructureThough Marriott's research department is a corporate-level

function, it is organized to provide the benefits that wouldresult from a decentralized business-level function (Figure 1).

Reporting directly to the Vice President of Corporate Mar-keting Services are 10 Directors. Each of these Directors isresponsible for providing research support to a particularbusiness or set of businesses. Each Director has a "dotted-line" reporting relationship with senior managers of thesebusinesses, typically either the General Manager (the overallhead of the business) or the Vice President of Marketing. De-pending on the extent of a business' research needs, each ofthe Directors may have one or more additional researchersreporting to them and also working exclusively with the samebusinesses.

The strength of this type of organization is that each majorstrategic business unit has a Research Director who knowsthe business and works on a regular basis with key clientsin the business. This ongoing relationship enables each Di-rector to act as a consultant to his or her business, proac-

Figure 1CORPORATE MARKETING SERVICES ORGANIZATION

vice PresidentCorporateMarketingServices

LodgingGroup

H Group Director"

Director

Associate Director |

Director |

General ManagersVice Presidents of

Marketing/Planning for:

Hotels & Resorts |

Residence Inns |

— r Courtyard

Fairfield Inns SMarriott Suites

ServicesGroup

Associate Director | - - -

Director

Director

Group Director [

Director |

Pood and ServicesManagement

Host

J - --r Biq Boys

Senior LivingServices

Roy Rogers

Corporate Strategy& New Ventures

Group

Group Director |,

Associate Director |

Corporate LevelFunctions

other StrategicBusiness Units

MARKETING RESEARCH, MARCH 1989

tively recommending needed research and advising the busi-ness of actions warranted by the research findings.

The Corporate Strategies and New Ventures (CS&NV) re-search group has a unique role. Part of this group's functionis to provide research support to departments and busi-nesses whose research needs do not warrant a full-time re-search professional. The Special Projects part of this groupprovides support to several corporate functions such as plan-ning and human resources, as well as several businesses. Inaddition, because Special Projects consists of a pool of re-searchers, if necessary they can be assigned temporarily towork with one of the nine business research functions.

Another function of the CS&NV group is to provide es-sentially a "field and tab" service to the nine business re-search functions. This service operates very much like an in-dependent research firm. The nine business-spedfic Directorscan use this group just as they would any external field andtab house. The group actually submits bids on research andoversees data collection and data processing components ofvarious research projects. The value of this group is that itprovides a centralized service for many research studies thatrequire primarily data collection and data processing andminimal levels of design and analysis. This centralized ser-vice was created to allow the nine business-specific Directorsto concentrate on their role as business consultants. The groupis headed by an Associate Director who reports to the GroupDirector of the CS&NV research group.

Types of Research Conducted

As the Marriott Corporation has grown, the volume of re-search conducted also has grown. In 1988, Corporate Mar-keting Services conducted more than 200 separate researchstudies at a total cost of about $10 million. Over the past fiveyears, research volume has increased in excess of 25% a year.This volume of research and the rate of its increase are im-pressive in absolute terms. However, research expendituresrepresent only about one-tenth of 1% of annual sales andhave only shghtly exceeded Marriott's total corporate growthrate of approximately 20% over the past five years.

The types of research Corporate Markefing Services pro-vides are probably similar to those in many large corpora-tions. Research addresses a variety of informational needsranging from the long term and strategic to the short run andvery tactical. Research projects typically are designed to an-swer questions related to one or more of the following topics:

—market segmentation and sizing,—concept development and product testing,—price sensitivity assessment,—advertising and promofions tesfing,—market tracking, and .— c u s t o m e r s a t i s f a c t i o n . ••-•••

Methods employed include both qualitative and quantitativeapproaches and generally are no different from those usedin any other research department: telephone, mail, in-per-son, focus groups, central location tests, and customer in-tercepts. -7,

I Over the past fiveyears, research volumehas increased inexcess of 25% a year.

LISTENING TO CUSTOMERS

CMS operates on acost pass-throughbasis with all directexpenses billed backto the business ordepartments.

I CMS has a portfolioof approaches forconducting research.

The first step in theactual research processis a more precisedefinition of theresearch to beconducted.

Because Marriott's businesses are predominantly lodgingand food oriented, room design and taste testing research iscommon. Also, because our businesses are service mtensive,issues related to such acfivities as speed of delivery and staffcourtesy are studied regularly. The need for research meth-ods that reliably assess both the tangible and intangible as-pects of our various products is a continuing challenge.

The Budgeting ProcessCorporate Marketing Services operates on a cost pass-

through basis with all direct expenses billed back to the par-ticular businesses or departments that are the research cUents.In other words, the CMS budget is derived directly from m-dividual project commitments made by these chents, ratherthan from a more arbitrary corporate overhead allocation.

Budgets are prepared on a calendar-year basis beginningin September of the prior year. Each of the 10 Directors meetswith his or her key clients to identify critical issues facing thebusiness. Typically, these clients include the General Man-ager of the business and the heads of key funcfions includingmarketing, operations, and planning.

Once an initial "shopping list" of research needs is com-piled Directors develop preliminary methods and estimatelikely costs of the various research efforts as well as the levelof internal research staffing that will be required. This pre-liminary research plan is reviewed with the Vice Presidentof CMS to ensure that the proposed research approaches arefeasible and represent a level of quaUty and cost appropriatefor the issues to be studied. Frequently, as a part of this re-view, additional items are idenfified and included m the re-search plan.

Each Director then reviews this research plan with his orher business to ensure that it is in keeping with the overallbusiness budget. At this time, each business commits to alevel of internal research staffing, which aUows any hinng ofadditional CMS researchers to be initiated.

The overall CMS research budget is derived from thesevarious business-specific budgets. The overall budget, alongwith each business research plan, is submitted for final re-view by the Chairman, as weU as the Senior Vice Presidentfor Strategic Planning. This final corporate review ensuresthat each business research plan is consistent with its stra-tegic objecfives and that any corporate-level initiatives arebeing addressed.

The Research ProcessThe budgeting process leads to the development of a re-

search plan that lays out an annual agenda of projects anda "broad-brush" method for these projects. The first step mthe actual research process is a more precise definition of theresearch to be conducted. Depending on the parficular study,either the Director or another researcher meets with the busi-ness client to review in detail the business issues to be in-vestigated and estabUsh specific and concrete research ob-jectives Once these objectives are dearly determmed, a formal

MARKETING RESEARCH, MARCH 1989

research proposal is prepared and submitted to the businessclient for approval.

Once the project is authorized, CMS begins the second step,the detailed design of the study. At this stage, a determi-nation is made of the extent of outside research resources tobe employed. CMS has a portfolio of approaches for con-ducting research. Basically, for each study, two types of "makeor buy" decisions must be made. The first is to decide whetherthe four key study components—design, data collection, dataprocessing and analysis, and interpretation—w^ill be handledinternally or externally. The second is to decide whether touse multiple research firms or a single source. Several con-siderations are involved in determining the exact process tobe employed:

—the level of business-specific knowledge required for thestudy,

—the need for specialized data collection techniques,—the magnitude of the data collection and/or data pro-

cessing tasks,—the need for sophisticated data analysis techniques, and—the current workload of the internal research staff.

Depending on these considerations, several approaches arepossible. For example, large-scale studies with complicateddesigns and large data collection components may be man-aged internally but contracted with a "full service" researchfirm. Some studies may require such an extensive under-standing of the business that the internal staff will fully de-velop the study design through the quesfionnaire phase, butcontract out the data collection phase of the study. Otherstudies requiring a large data collection component but witha fairly simple or standardized questionnaire might be con-tracted to a field and tab house. Our in-house service is fre-quently called upon to oversee these efforts. In still other in-stances, when the data collection component is small butcomplex, the internal research staff may conduct interviewsthemselves. In short, CMS has a high degree of fiexibility inthe approach taken for the design and execution of any par-ticular research project.

The third major step in the research process is the deliveryof the study findings. Depending on the study, this step maybe as simple as issuing a brief summary report or may consistof a several-hours-long formal presentafion with handoutsand supporting audiovisual materials. For most studies, top-line findings are presented first, followed by a more detailedfinal report.

The last step is less structured but perhaps the most im-portant. After the completion of the final report, a confinuingdialogue takes place between CMS and the client. In thisconsultafive phase of the research process, the Director workswith the client in assessing the implicafions of the research.Alternative courses of action may be considered and, in lightof the research findings, their likely outcomes evaluated.Specific executions also may be evaluated to ensure they areconsistent with the conceptual direction implied by the re-search. A decision may be made to conduct additional re-search. 7 V ; ;.;:_

Once the project isauthorized, CMSbegins the secondstep, the detaileddesign of the study.

IThe third major stepin the research processis the delivery of thestudy findings.

Finally, the Directorworks with the clientin assessing theimplications of theresearch.

LISTENING TO CUSTOMERS 11

Marriott mustcontinue to identifynew businessopportunities andmarket research willhave a major role inthis process.

Implications of Corporate Marketing Services Structureand Process

As may be apparent from the foregoing discussion, thestructure of CMS places numerous demands on the Direc-tors. Though the Directors report on a "solid-line" basis tothe Vice President of Corporate Marketing Services, they alsoreport on a "dotted-line" basis to at least one and frequentlyseveral top-level managers of their respective businesses. Aseach business directly pays for the Director and other as-signed researchers, this dotted line generally is viewed asnearly solid by the business.

The strength of this dual reporting status is that the Di-rector becomes not only a research expert, but also an expertin the business. As noted before, this business-specificknowledge enables the Director to have a strong advisoryrole rather than being the provider of research that may ormay not be considered by the business.

The fact that each business pays directly for research is alsoa strength. Usually, the business is in the best position toestablish its research priorities and to determine the amountof research it can afford. Consequently, only research that isconsidered important is funded and the businesses pay closeattention to the research that is conducted.

Another strength of the research structure at Marriott, whichmay not seem significant, is the fact that the research staffassigned to a business are located in the same offices as thebusiness. This proximity eliminates both physical and psy-chological barriers and fosters a greater level of day-to-dayinteraction between the business and the research staff. Day-to-day contact enables the researchers to be cognizant of is-sues facing the business and the various actions being taken.Also, the business managers are likely to seek out the re-searchers to ask their advice and to involve them early in anyinitiatives.

Two challenges are inherent in this somewhat decentral-ized approach. One relates to the tendency for businesses tobe preoccupied with the costs of research. Research costs areeasy to measure and directly affect the "bottom line" of thebusiness. It is more difficult to assess the dollar benefit ofresearch and how cost-saving measures such as reducedsample sizes or less rigorous designs might adversely affectresearch benefits.

A second challenge relates to the preservation of certainsynergies that are present in centralized research functions.Centralized functions provide opportunities for sharingknowledge, obtaining economies of scale, and shifting re-sources. A fully decentralized structure would be unable totake advantage of these synergies.

Corporate Marketing Services has several types of controlmechanisms to address these challenges. First, the Vice Pres-ident has ultimate responsibility for research quality. ThoughDirectors have the autonomy to make research decisions, re-search designs for particularly controversial or high impactprojects must be approved by the Vice President. Also,monthly status reports are prepared on all research and arereviewed by the Vice President.

MARKETING RESEARCH, MARCH 1989

A second mechanism that helps to ensure both quality andefficiency is the use of a relatively small number of externalresearch firms. Research firms that work regularly with Mar-riott have the benefit of better understanding our businessesand our research needs. They are more responsive whenquick-turnaround research is needed. Also, we have a bettersense of the strengths of the firms. Research firms are eval-uated formally every year and the results of these evalua-tions are shared with them.

To preserve cross-business synergies, we hold regularmeetings of different types with the research staff. The Di-rectors of each business meet monthly with the Vice Presi-dent. Also, each month, meetings are held with the full staffof the two major research groups—lodging and services. Atthese meetings, research projects are reviewed and discussedand common problems identified. Through these meetings,technical approaches are shared and opportunities for op-erational efficiencies are identified. These regular meetingsencourage informal sharing of experiences and collaborationon particularly thorny research problems. Also, summariesof all completed studies are issued to the Directors each monthto keep them apprised of findings in other businesses.

Future DirectionsMarriott's corporate commitment to growth and excellence

has a direct impact on the research function. In the future,we anticipate an increased level of attention will be given tofour broad areas:

—customer satisfaction,—new business opportunities,—corporate synergies, and—employees as a new market.

Marriott already invests heavily in research devoted tomeasuring and ensuring customer satisfaction. Many of Mar-riott's businesses already have in place regular research pro-cesses to track satisfaction and identify areas for improve-ment. These research efforts, in all likelihood, will becomemore rigorous and will be used as direct determinants of em-ployee compensation. Though Marriott has always believedin customer satisfaction as a goal, the ability to provide sys-tematic incentives to achieve this goal becomes more impor-tant as the corporation grows.

Ensuring customer satisfaction will help Marriott maintaina leadership position in its current businesses, but expansionof those businesses alone will not meet Marriott's growth re-quirements. With a 1987 base of $6.5 billion in sales and acommitment to grow at a rate in excess of 15% annually,Marriott must continue to identify new business opportuni-ties. Some of these opportunities w ill be in new segments ofour current markets. However, others will be in new marketswhere our current corporate strengths will be advantageous.Market research will have a major role in the identificationof th^se opportunities and the development of products andservices needed to pursue them.

Related to the identification of new opportunities is the is-sue of corporate synergies. Corporate synergy refers, in part.

In the future, weanticipate an increasedlevel of attention willbe given to four broadareas: customersatisfaction, newbusinessopportunities,corporate synergies,and employees as anew market.

LISTENING TO CUSTOMERS 13

to the leveraging of our opportunities through creative cross-business advertising and promotional strategies. It also refersto careful use of the Marriott brand in association with nev^businesses. Research will be called upon increasingly to helpidentify these types of corporate synergies.

Marriott's businesses all have a substantial service com-ponent, which necessarily implies that a large part of ourbusinesses' success will depend on the quality of our em-ployees. With a base of more than 210,000 employees, Mar-riott is already the ninth largest employer in the country. Mostof these employees come from an age cohort that is rapidlydiminishing in number. As a result, Marriott, like many ser-vice-intensive businesses, already faces a labor shortage thatwill only become more severe as the corporation grows.

Marriott therefore cannot take for granted that it will beable to continue to attract and motivate top quality employ-ees. Employees will increasingly become a new market inwhich we must compete for share. Just as it is concernedwith retaining current customers and obtaining new cus-tomers, Marriott will have to develop strategies for retainingand recruiting employees. When employees are thought ofin this way as a new market, the natural conclusion is toutilize marketing research tools in the development of effec-tive marketing strategies.

ConclusionFor a large, growing, and service-oriented company like

Marriott, listening to customers is crucial to continuing suc-cess. Several factors enable Marriott to listen closely to itscustomers:

Top management's customer-oriented philosophy.An organizational structure that focuses research re-sources on priority issues.A committed, professional research staff with business-specific knowledge.A commitment to quality standards in the research pro-cess. •

Reprint No. MR11102

14 MARKETING RESEARCH, MARCH 1989