Tuesday, 28 June 2011

Marketing Research

What is Market Research

Marketing research is the systematic gathering, recording, and analysis of data about issues relating to marketing products and services. 

The goal of marketing research is to identify and assess how changing elements of the marketing mix impacts customer behavior. The term is commonly inter changed with market research; however, expert practitioners may wish to draw a distinction, in that market research is concerned specifically with markets, while marketing research is concerned specifically about marketing processes.

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Marketing research is often partitioned into two sets of categorical pairs, either by target market:
§  Consumer marketing research, and
§  Business-to-business (B2B) marketing research Or, alternatively, by methodological approach:
§  Qualitative marketing research, and
§  Quantitative marketing research

Consumer marketing research is a form of applied sociology that concentrates on understanding the preferences, attitudes, and behaviors of consumers in a market-based economy, and it aims to understand the effects and comparative success of marketing campaigns. The field of consumer marketing research as a statistical science was pioneered by Arthur Nielsen with the founding of the A.C.Nielsen Company in 1923.
Thus, marketing research may also be described as the systematic and objective identification, collection, analysis, and dissemination of information for the purpose of assisting management indecision making related to the identification and solution of problems and opportunities in marketing.
Role of marketing research (MR)
The task of marketing research is to provide management with relevant, accurate, reliable, valid, and current information.Competitive marketing environment and the ever-increasing costs attributed to poor decision making require that marketing research provide sound information.Sound decisions are not based on gut feeling, intuition, or even pure judgment.
Marketing managers make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs. They make decisions about potential opportunities, target market selection, market segmentation, planning and implementing marketing programs, marketing performance, and control. These decisions are complicated by interactions between the controllable marketing variables of product, pricing, promotion,and distribution. Further complications are added by uncontrollable environmental factors such as general economic conditions, technology, public policies and laws, political environment, competition, and social and cultural changes. Another factor in this mix is the complexity of consumers. Marketing research helps the marketing manager link the marketing variables with the environment and the consumers. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information, consumers' response to marketing programs cannot be predicted reliably or accurately. Ongoing marketing research programs provide information on controllable and non-controllable factors and consumers;this information enhances the effectiveness of decisions made by marketing managers.

Traditionally, marketing researchers were responsible for providing the relevant information and marketing decisions were made by the managers. However, the roles are changing and marketing researchers are becoming more involved in decision making, whereas marketing managers are becoming more involved with research. The role of marketing research in managerial decision making is explained further using the framework of the"DECIDE" model:

D = Define the marketing problem
E = Enumerate the controllable and uncontrollable decision factors
C = Collect relevant information
I = Identify the best alternative
D = Develop and implement a marketing plan
E = Evaluate the decision and the decision process

The DECIDE model conceptualizes managerial decision making as a series of six steps. The decision process begins by precisely defining the problem or opportunity, along with the objectives and constraints.Next, the possible decision factors that make up the alternative courses of action (controllable factors) and uncertainties(uncontrollable factors) are enumerated. Then, relevant information on the alternatives and possible outcomes is collected. The next step is to select the best alternative based on chosen criteria or measures of success. Then a detailed plan to implement the alternative selected is developed and put into effect. Last, the outcome of the decision and the decision process itself are evaluated.

Marketing research characteristics
First, marketing research is systematic. Thus systematic planning is required at all the stages of the marketing research process. The procedures followed at each stage are methodologically sound, well documented, and, as much as possible, planned in advance. Marketing research uses the scientific method in that data are collected and analyzed to test prior notions or hypotheses.
Marketing research is objective. It attempts to provide accurate information that reflects a true state of affairs. It should be conducted impartially. While research is always influenced by the researcher's research philosophy, it should be free from the personal or political biases of the researcher or the management. Research which is motivated by personal or political gain involves a breach of professional standards. Such research is deliberately biased so as to result in predetermined findings. The motto of every researcher should be, "Find it and tell it like it is." The objective nature of marketing research underscores the importance of ethical considerations, which are discussed later in the chapter....
Comparison with other forms of business research
Other forms of business research include:
Market research is broader in scope and examines all aspects of a business environment. It asks questions about competitors, market structure, government regulations, economic trends,technological advances, and numerous other factors that make up the business environment (see environmental scanning). Sometimes the term refers more particularly to the financial analysis of companies, industries, or sectors. In this case, financial analysts usually carry out the research and provide the results to investment advisers and potential investors.
Product research - This looks at what products can be produced with available technology, and what new product innovations near-future technology can develop (see new product development).
Advertising research - is a specialized form of marketing research conducted to improve the efficacy of advertising. Copy testing,also known as "pre-testing," is a form of customized research that predicts in-market performance of an ad before it airs, by analyzing audience levels of attention, brand linkage,motivation, entertainment, and communication, as well as breaking down the ad’s flow of attention and flow of emotion.

Classification of marketing research
Organizations engage in marketing research for two reasons: (1) to identify and (2) solve marketing problems. This distinction serves as a basis for classifying marketing research into problem identification research and problem solving research.
Problem identification research is undertaken to  help identify problems which are, perhaps, not apparent on the surface and ye texist or are likely to company image, market characteristics, sales analysis,short-range forecasting, long range forecasting, and business trends research. Research of this type provides information about the marketing environment and helps diagnose a problem. For example, The findings of problem solving research are used in making decisions  which will solve specific marketing problems.
The Stanford Research Institute, on the other hand, conducts an annual survey of consumers that is used to classify persons into homogeneous groups for segmentation purposes.The National Purchase Diary panel (NPD) maintains the largest diary panel in the United States.
1.    Standardized services are research studies conducted for different client firms but in a standard way. For example, procedures for measuring advertising effectiveness have been standardized so that the results can be compared across studies and evaluative norms can be established. The Starch Readership Survey is the most widely used service for evaluating print advertisements; another well-known service is the Gallup and Robinson Magazine Impact Studies. These services are also sold on asyndicated basis.
2.    Customized services offer a wide variety of marketing research services customized to suit a client's specific needs. Each marketing research project is treated uniquely.
3.    Limited-service suppliers specialize in one or a few phases of the marketing research project. Services offered by such suppliers are classified as field services, coding and data entry, data analysis, analytical services, and branded products. Field services collect data through mail, personal, or telephone interviewing,and firms that specialize in interviewing are called field service organizations. These organizations may range from small proprietary organizations which operate locally to large multinational organizations with WATS line interviewing facilities. Some organizations maintain extensive interviewing facilities across the country for interviewing shoppers in malls.
4.    Coding and data entry services include editing completed questionnaires, developing a coding scheme, and transcribing the data on to diskettes or magnetic tapes for input into the computer. NRC Data Systems provides such services.
5.    Analytical services include designing and pretesting questionnaires, determining the best means of collecting data,designing sampling plans, and other aspects of the research design. Some complex marketing research projects require knowledge of sophisticated procedures, including specialized experimental designs, and analytical techniques such as conjoint analysis and multidimensional scaling. This kind of expertise can be obtained from firms and consultants specializing in analytical services.
6.    Data analysis services are offered by firms,also known as tab houses, that specialize in computer analysis of quantitative  data such as those obtained in large surveys. Initially most data analysis firms supplied only tabulations (frequency counts) and cross tabulations(frequency counts that describe two or more variables simultaneously). With the proliferation of software,many firms now have the capability to analyze their own data, but, data analysis firms are still in demand.
7.    Branded marketing research products and services are specialized data collection and analysis procedures developed to address specific types of marketing research problems. These procedures are patented,given brand names, and marketed like any other branded product.

Types of marketing research
Marketing research techniques come in many forms, including:
1.    Ad Tracking – periodic or continuous in-market research to monitor a brand’s performance using measures such as brand awareness, brand preference, and product usage. (Young,2005)
2.    Advertising Research – used to predict copy testing or track the efficacy of advertisements for any medium,measured by the ad’s ability to get attention, communicate the message, build the brand’s image, and motivate the consumer to purchase the product or service. (Young, 2005)
3.    Brand equity research - how favorably do consumers view the brand?
4.    Brand association research - what do consumers associate with the brand?
5.    Brand attribute research - what are the key traits that describe the brand promise?
6.    Brand name testing - what do consumers feel about the names of the products?
7.    Commercial eye tracking research - examine advertisements, package designs, websites, etc. by analyzing visual behavior of the consumer
8.    Concept testing - to test the acceptance of a concept by target consumers
9.    Cool hunting - to make observations and predictions in changes of new or existing cultural trends in areas such as fashion, music,films, television, youth culture and lifestyle
10.  Buyer decision processes research - to determine what motivates people to buy and what decision-making process they use
11.  Copy testing – predicts in-market performance of an ad before it airs by analyzing audience levels of attention, brand linkage, motivation, entertainment, and communication, as well as breaking down the ad’s flow of attention and flow of emotion. (Young, p 213)
12.  Customer satisfaction research - quantitative or qualitative studies that yields an understanding of a customer's of satisfaction with a transaction
13.  Demand estimation - to determine the approximate level of demand for the product
14.  Distribution channel audits - to assess distributors’ and retailers’ attitudes toward a product, brand, or company
15.  Internet strategic intelligence - searching for customer opinions in the Internet: chats, forums, web pages, blogs... where people express freely about their experiences with products, becoming strong "opinion  formers"
16.  Marketing effectiveness and analytics - Building models and measuring results to determine the effectiveness of individual marketing activities.
17.  Mystery Consumer or Mystery shopping - An employee or representative of the market research firm anonymously contacts a salesperson and indicates he or she is shopping for a product. The shopper then records the entire experience. This method is often used for quality control or for researching competitors' products.
18.  Positioning research - how does the target market see the brand relative to competitors? - what does the brand stand for?
19.  Price elasticity testing - to determine how sensitive customers are to price changes
20.  Sales forecasting - to determine the expected level of sales given the level of demand. With respect to other factors like  Advertising expenditure, sales promotion etc.
21.  Segmentation research - to determine the demographic, psycho graphic,and behavioural characteristics of potential buyers
22.  Online panel - a group of individual who accepted to respond to marketing research online
23.  Store audit - to measure the sales of a product or product line at a statistically selected store sample in order to determine market share,or to determine whether a retail store provides adequate service
24.  Test marketing - a small-scale product launch used to determine the likely acceptance of the product when it is introduced into a wider market
25.  Viral Marketing Research - refers to marketing research designed to estimate the probability that specific communications will be transmitted throughout an individuals Social Network. Estimates of Social Networking Potential (SNP) are combined with estimates of selling effectiveness to estimate ROI on specific combinations of messages and media.
All of these forms of marketing research can be classified as either problem-identification research or as problem-solving research.
There are two main sources of data - primary and secondary. Primary research is conducted from scratch. It is original and collected to solve the problem in hand. Secondary research already exists since it has been collected for other purposes. It is conducted on data published previously and usually by someone else.Secondary research costs far less than primary research, but seldom comes in a form that exactly meets the needs of the researcher.
A similar distinction exists between exploratory research and conclusive research. Exploratory research provides insights into and comprehension of an issue or situation. It should draw definitive conclusions only with extreme caution. Conclusive research draws conclusions: the results of the study can be generalized to the whole population.
Exploratory research is conducted to explore a problem to get some basic idea about the solution at the preliminary stages of research. It may serve as the input to conclusive research. Exploratory research information is collected by focus group interviews, reviewing literature or books, discussing with experts, etc. This is unstructured and qualitative in nature. If a secondary source of data is unable to serve the purpose, a convenience sample of small size can be collected. Conclusive research is conducted to draw some conclusion about the problem. It is essentially, structured and quantitative research, and the output of this research is the input to management information systems (MIS).
Exploratory research is also conducted to simplify the findings of the conclusive or descriptive research, if the findings are very hard to interpret for the marketing managers.

Marketing research methods
Methodologically, marketing research uses the following types of research designs:
Based on questioning:
§  Qualitative marketing research - generally used for exploratory purposes -small number of respondents - not generalizable to the whole population -statistical significance and confidence not calculated - examples include focus groups, in-depth interviews, and projective techniques
§  Quantitative marketing research - generally used to draw conclusions - tests a specific hypothesis - uses random sampling techniques so as to infer from the sample to the population - involves a large number of respondents - examples include surveys and questionnaires. Techniques include choice modelling, maximum difference preference scaling, and covariance analysis.
Based on observations:
§  Ethnographic studies -, by nature qualitative, the researcher observes social phenomena in their natural setting - observations can occur cross-sectionally (observations made at one time) or longitudinally (observations occur over several time-periods) - examples include product-use analysis and computer cookie traces. See also Ethnography and Observational techniques.
§  Experimental techniques -, by nature quantitative, the researcher creates aquasi-artificial environment to try to control spurious factors, then manipulates at least one of the variables - examples include purchase laboratories and test markets
Researchers often use more than one research design. They may start with secondary research to get background information,then conduct a focus group (qualitative research design) to explore the issues.Finally they might do a full nation-wide survey (quantitative research design)in order to devise specific recommendations for the client.
Business to business market research
Business to business (B2B) research is inevitably more complicated than consumer research. The researchers need to know what type of multi-faceted approach will answer the objectives, since seldom is it possible to find the answers using just one method. Finding the right respondents is crucial in B2B research since they are often busy, and may not want to participate. Encouraging them to “open up” is yet another skill required of the B2B researcher. Last, but not least, most business research leads to strategic decisions and this means that the business researcher must have expertise in developing strategies that are strongly rooted in there search findings and acceptable to the client.

4 key factors that make B2B market research 
  special and different to consumer markets:
1.    The decision making unit is far more complex in B2B markets than in consumer markets
2.    B2B products and their applications are more complex than consumer products
3.    B2B marketers address a much smaller number of customers who are very much larger in their consumption of products than is the case in consumer markets
4.    Personal relationships are of critical importance in B2B markets.

Marketing research in small businesses 
and nonprofit organizations
Marketing research does not only occur in huge corporations with many employees and a large budget. Marketing information can be derived by observing the environment of their location and the competitions location. Small scale surveys and focus groups are low cost ways to gather  information from potential and existing customers. Most secondary data(statistics, demographics, etc.) is available to the public in libraries or on the internet and can be easily accessed by a small business owner.
Below are some steps that could be done by SME(Small Medium Enterprise) to analyze the market :
1.    Provide secondary and or primary data (if necessary);
2.    Analyze Macro &Micro Economic data (e.g. Supply & Demand, GDP,Price change, Economic growth, Sales by sector/industries,interest rate, number of investment/divestment, I/O, CPI, Social analysis,etc.);
3.    Implement the marketing mix concept, which is consist of: Place, Price, Product,Promotion, People,Process, Physical Evidence and also Political & social situation to analyze global market situation);
4.    Analyze market trends,growth, market size, market share, market competition (e.g. SWOT analysis, B/c analysis,channel mapping identities of key channels, drivers of customers loyalty and satisfaction, brand perception, satisfaction levels, current competitor-channel relationship analysis, etc.),etc.;
5.    Determine market segment, market target, market forecast and market position;
6.    Formulating market strategy & also investigating the possibility of partnership/ collaboration(e.g. Profiling & SWOT analysis of potential partners, evaluating business partnership.)
7.    Combine those analysis with the SME's business plan/ business model analysis (e.g. Business description, Business process, Business strategy, Revenue model, Business expansion, Return of Investment, Financial analysis (Company History, Financial assumption, Cost/Benefit Analysis, Projected profit & Loss, Cash flow,Balance sheet & business Ratio,etc.).

Note as important :Overall analysis is should be based on 6W+1H (What, When, Where, Which, Who,Why and How)question.
International Marketing Research plan
International Marketing Research follows the same path as domestic research, but there are a few more problems that may arise.Customers in international markets may have very different customs, cultures,and expectations from the same company. In this case, secondary information must be collected from each separate country and then combined, or compared.This is time consuming and can be confusing. International Marketing Researchrelies more on primary data rather than secondary information. Gathering the primary data can be hindered by language, literacy and access to technology.

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