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Marketing Research for Dummies

Market Research if not a Substitute for top management Judgement, but it is an aid to judgement. For any organization, large or small, profit/non-profit institutions, a systematic study of their market would be useful in decision making. Market Research is the foundation stone for marketing concept.

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The Marketing Environment

Having a good product, brand name, marketing network, best price, goodwill for customers, will not achieve the volume of business that you are looking for. Unless the organization has done a strategic and systematic Market research about the place, promotion, pricing, product, people, etc.,

In today’s competitive market, it is necessary to study all aspects of the market to become successful for a long time. A detailed research has to be conducted, not just once, but at regular intervals to maintain the success and cater to needs of customer and satisfy them.

Market Research

The term Market is a concept which includes all the activities, which are related to the transfer of products and services, like product development, packing branding. Warehousing, distribution, advertising, sales promotion, sales services and so on.

  • Market: Market refers to all the potential customers sharing a particular need/want and might be willing to engage in activities to satisfy those needs.
  • Research: Research is a process of gathering, recording and the analysis of relevant and critical facts about a specific problem.
  • Market Research: Market Research is a systematic gathering, recording and analyzing of data about problems relating to the marketing of good and services. It is a function which links the seller and the buyer with understanding of the target customers and the understanding the market as a process.

Classifications of Market Research

  • Basic Research: is also called fundamental research, theoretical research or pure research. It aims at expanding the frontiers of knowledge and does not directly involve pragmatic problems.
  • Applied Research: is also called decisional research, on the other hand, proceeds with a certain problem, and specifies alternative solutions and the possible outcomes of each alternative. Unlike Basic research it is promoted by commercial considerations.

The Need of Market Research

Market Research if not a Substitute for top management Judgement, but it is an aid to judgement. For any organization, large or small, profit/non-profit institutions, a systematic study of their market would be useful in decision making. Market Research is the foundation stone for marketing concept.

The significance of market research is increasing due to shift from local, national to international marketing and from price to non-price competition.

There are several factors which contribute to the research:

  • Large scale production: The producers do not have the direct contact with the customers. It is important that the manufacturers know the potential areas where their good can be marketed, so that the demand for the same can be estimated.
  • There has been a shift from a reseller to a buyer market, this becomes important to study and understand the buyers behavior
  • The specialist, statisticians, psychologists and behavioral scientists, have helped in the development of market research, as a separate discipline and strengthened its technique.
  • Finally, the change in population, particularly the shift from rural to urban areas has widened the scope for marketing of goods and services in the urban areas.

Applications of Market Research

Market research is applicable to many functions of marketing aspects. As discussed in The Marketing Environment, the research should be on a continuous basis and not only when organizations are at the downfall or at the decline stage. This will affect the performance of the organizations. Each aspect is to be studied carefully and decisions and proper strategies are to be adopted on the basis of it.

Here is an example on the applications of Market research. It clearly bring out, how market research has been helpful in resolving marketing problems/ identifying opportunities.

A Pharmaceutical company carried out a study on the prescription behaviour for a major brand on account of its declining sale. The study brought out interesting and even startling findings on a number of aspects such as relationship between the sales and the age of the brand, its regular promotion, its core therapeutic emphasis and the role of retailer in servicing prescription.

Prior to the study, all these aspects had been only a matter of conjecture all the while. On the basis of Findings of the study, the company changed its marketing strategy. This enabled it to regain the lost market share of its brand.

Threats to Market Research

The success of market research depends upon the cooperation of the respondents. Unprofessional or unethical market research may seriously damage the research which in-turn will give bad results in the reports. The researchers may also draw wrong judgments and results, which will hamper the decision making of their clients.

The three major issues which causes threats to market research and survey research are:

  • Excessive interviewing.
  • Lack of Knowledge.
  • Amusement of respondents.
  • The use of Market research as a sales ploy.

Market Information System (MIS)

Market Research is said to be different from MIS. Let us define MIS as a structured, interacting, complex of persons, machines and procedures designed to generate a flow of pertinent information collected from internal and external sources for the use as a base of decision making, in specified areas of marketing management.

MIS concentrates more on the storage and flow of information to marketing managers. This indicates that MIS is a much wider concept than marketing research. Good MIS determines the information need of the organization and generates and processes such information on a continuous basis. It should also provide for its storage, so it can be used as and when required.

There are three types of information required by marketing managers:

  • Recurrent information: This type of information is provided on a periodic basis, which pertains to information on sales, market share, customer satisfaction, perception of customer and advertising expenditure.
  • Monitoring information: This type of information is obtained from regular scanning of certain sources like official publications, journals and annual reports.
  • Requested information: As the name suggests, a shout by marketing managers. This can involve a wide range of activities such as, cost and price analysis of a competitive product, cash flow of competitive companies, qualifying testing of competitive companies.

Market Decision Support System (MDSS)

In a highly competitive environment, especially in the western countries, marketing managers find themselves seeking a wide range of information, in order to take the right decision. This means, that they should

not only be concerned with the availability of the requisite information but also with its accuracy and adequacy. This system consists of data, storage analysis and the reporting of marketing data. It has given a boon for setting up the MDSS.

MDSS can be classified into five components:

  1. Data sources
  2. Data management
  3. Display
  4. Statistical analysis
  5. Modelling

Data sources are major components of MDSS. These sources can be both internal and external. For example a company’s accounting system is an internal data source. This source provides data pertaining to orders, sales inventory level, receivables and payables. Library sources, as well as syndicate services are the examples of external data sources.

Library sources contain a wide range of information such as, government publication report, sales of periodicals, buyer profiles, sales of retail outlets, evaluation of advertising campaigns, major economic, social and demographic trends etc.

Owing to a variety of internal and external data sources, it becomes necessary for the companies to device a proper database management, this involves identifying relevant data from a variety of sources, deciding on the extent of data and keeping the data in an easily available form.

Data formats allow the retrieval of the data easily and promptly. Display formats could range from simple ad-hoc retrieval to more formal display.

A company may have a graphic display package, consisting of such options as time series plots, bar and pie charts and scatter diagrams, where the comparisons of two majors are involved.

Statistical analysis involves the performanceof different statistical operations such as the calculations of averages, standard deviation and regression. Such calculations are helpful in understanding the relationship among marketing variables.

This in-turn bring out the under lying marketing issues in sharp focus. Modelling is the last concept of MDSS. Modelling are mathematical formulation. Marketing decisions can be tested against the model to ascertain what could be the possible outcome in given situation.

Example of Scatter Image Representation of MDSS
Example of Pie-chart representation of MDSS
Example of Bar-chart representation of MDSS

Summary

Market Research should be given prime importance in every organisation. This not only helps us to analyze our weakness but also gives firsthand information about the latest trend going in the market. One has to learn from the mistakes and take appropriate actions on which strategies are to be adopted in the near future.

Research should not be taken in a negative way, but one has to learn from the mistakes and adopt the appropriate way for successful marketing. The choice of research activities in the organization gives a solution to the exact method to be adopted to the survey.

References


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