1.0 INTRODUCTION
As a manager, you are
making decisions all the time. It is your responsibility to reduce the risk
associated with the decisions which you make. The risk arises because of lack
of complete
information. Therefore, you are always seeking information to
improve the quality of your decision-making. In many areas of management, such
as production, finance and personnel, the information required for decision-making
is primarily generated within the firm and is easy to collect and analyse.
Moreover, in these areas formalized procedures have greatly improved decisions:
statistical quality control in manufacturing, PERT in project scheduling,
queuing theory in managing large machinery maintenance programmes, etc. This note
examines marketing research and its sub-elements as they affect marketing activities.
2.0 OBJECTIVES
At the end of through this note, you should be able to:
·
explain marketing research
·
state the relevance of marketing research in the context of marketing
decisions
·
develop an appreciation of the various possible uses and applications
of marketing research
·
state the procedure of conducting marketing research
·
develop familiarity with the necessary steps needed to complete each
stage of the procedure.
3.0 MAIN CONTENT
3.1 The Context of
Marketing Decisions
In the area of marketing, much of the information required for
decisionmaking exists outside the firm e.g. information on why people buy only certain
products and not other products; information about the competitor’s next move;
information about new government rules and regulations which can affect your
working, etc. The marketing manager faces a challenging task in attempting to
improve his decision-making.
The variables involved in the marketing decisions being external
to the firm make collection of information cumbersome and expensive. Since the
variables are often qualitative and dynamic in nature, their measurement is
also difficult, and the results not always accurate. Moreover, many of the
variables interact with each other in a very complex fashion, which makes it
difficult to isolate and measure specific variables. Thus, the pressure on the
marketing manager is very strong to correctly choose the most critical decision
variables and seek relevant information about them.
The wrong choice of (information) variables will not only result
in unnecessary expenditure but can also lead the decision-making process
astray. The correct identification of variables requires at least a basic
understanding of why people behave in the manner in which they do. The manager
also needs to monitor what is happening in the marketplace and in the general
environment of the firm. The only way the manager can monitor all these is
through regular market research.
3.2 Definition of Marketing Research
The American Marketing Association defines marketing research as
the systematic gathering, recording and analysing of data about problems related
to the marketing of goods and services. Crisp has defined marketing research as
… the systematic, objective and exhaustive search for and study of the facts
relevant to any problem in the field of marketing.
It would be useful to add the word ‘continuous’ to these two
definitions to make them even more meaningful. A study conducted today may lose
much of its relevance by next year and may need updating, modification or even
an entirely new effort. The rate of change in information would depend on the
specific product and customer segment with which you are dealing.
If your firm is marketing bathroom fittings, you are dealing with
functional products. The functions these fittings will service, for example, in
1995, are the same as what they serve today. Therefore, you may not use
extensive marketing research to understand the changes in customer tastes,
because the variations in the designs (given the functional character of the
product) which you can introduce are very limited. However, you would like to
know what new colors and materials are preferred by the customers and undertake
research for this purpose. If your firm is marketing ready-made clothes for
teenagers, you are dealing with a market where rapid change is its
distinguishing characteristic.
You would need continuous and extensive market research to find
out what designs, fabrics, colors and prices will appeal to this market
segment, this winter, the coming summer and the following winter and so on. You
would also need to monitor the fashion scene in Europe and America and see what
new trends can be successfully adapted for the Nigerian market. The fact that a
product line is greatly affected by changing customer tastes, habits, values, attitudes,
or dealing in a product which is not that susceptible to environmental
influences, makes you need marketing research to improve and be at least one
step ahead of your competitors.
In the latter case (ready-made clothes), marketing research is a
critical input for the mere survival of the firm; in the former (bathroom
fittings), marketing research is necessary because it can yield valuable ideas
to make the firm a market innovator and leader. Marketing research can be used
for consumer products, industrial products and services.
3.3 Purpose of Marketing Research
The basic purpose of marketing research is to facilitate the
decision making process. A manager has before him a number of alternative solutions
to choose from in response to every marketing problem and situation. In the
absence of market information, he may make the choice on the basis of his
hunch. By doing so, the manager is taking a big risk because he has no concrete
evidence to evaluate these alternatives in comparison with others or to assess
its possible outcome. But with the help of information provided by marketing
research, the manager can reduce the number of alternate choices to one, two or
three, and the possible outcome of each choice is also known. Thus, the
decisionmaking process becomes a little easier.
The second purpose of
marketing research is that it helps to reduce the risk associated with the
process of decision-making. The risk arises because of two types of
uncertainties: uncertainty about the expected outcome of the decision, and
uncertainty about the future. Uncertainty about the expected outcome of the
decision will always remain no matter how much information you may have
collected to base your decision on hard facts. Unforeseen factors have the
uncanny ability of upsetting even the most stable apple cart.
For example, in the
mid-1950’s, Ford Motor Company in the USA had a 25 per cent share of the
automobile market. The company wanted to introduce a new car model which would
appeal to young executives and professionals. The decision was based on
research which revealed that this market segment accounted for 25 percent of
the market, and was expected to grow to about 40 percent. Ford spent colossal
amounts researching and designing the new model which was named Edsel. When
introduced in the market, the car was a total flop.
This happened because of occurrence of three unforeseen events.
Firstly, the youthful car market segment did not grow as rapidly as the market
research had indicated. Secondly, the recession also set in at about this time
and people began looking for more economical means of transportation. Thirdly,
there was a sudden change in customer tastes, with people turning away from
flashy exteriors, and the flamboyant Edsel was totally out of tune with new the
taste for austerity and functional simplicity.
This example highlights the fact that despite best research
efforts, the outcome can still be unpredictable. As Reynolds, a former Ford executive,
commented on the Edsel fiasco, It is hard to see how anyone could, given the
kind of car market that existed in 1955 and 1956, have anticipated such
trends.…” The risk also arises because of uncertainty of what will happen in
the future, the way the customers or distributors would behave, the manner in
which the competition will react, and so on. To the extent that research
provides information about the future, it anticipates the future, thus
providing the manager with a solid basis for his decision-making.
However, it cannot provide perfectly exact or accurate
information. But since the techniques of marketing research are based on
scientific methods of collecting, analysing and interpreting data, its findings
and projects, at the least, provide a definite trend of scenarios for future decision-making.
The third purpose of marketing research is that it helps firms
in discovering Opportunities which can
be profitably exploited. These Opportunities may exist in the form of
untapped customer needs or wants not catered to by the existing firms. Food
Specialities Limited (manufacturers of Nescafe Coffee, Lactogen Powdered Milk)
have recently introduced in the Indian market a dairy whitener (as a substitute
for milk) called ‘Every Day’ to be used for making tea and coffee. The product
has proved to be a success because it is most convenient for use in offices,
where tea and coffee are consumed in large quantities but milk is not easy to
procure. Every Day fulfils a slot in the market for powdered milk which was not
being catered to by the existing milk powders brands.
3.4 Scope of Marketing
Research Marketing research (MR) is concerned with all aspects of
marketing, relating to product design and development, product-mix, pricing, packaging,
branding, sales, distribution, competition, target customer segments and their
buying behavior, advertising and its impact. Specifically, the scope of MR
includes customers, products, distribution, advertising, competitive
information and macro-level phenomenon.
1 Marketing is concerned with identifying and fulfilling customer needs
and wants. Thus, MR should precede marketing. The unfulfilled wants should
first be identified and translated into technically and economically feasible
product ideas, which then should be marketed to the customers. But mere
identification of customer wants is not enough.
Marketing requires continuous effort to improve the existing
product, increase sales and beat the competition. For this, it is important to
know who the customers are for your products (whether housewives, teenagers,
children), what their socio-economic profile is (in terms of income, education,
cultural, religious and professional background) and where they are
concentrated in terms of location. Besides this information, it is also
important for you to know the process by which a prospective customer arrives
at a decision to buy your product.
If you know the sequential steps in the purchase process and the
influencing variables in each, you can design appropriate strategies to exert a
positive impact on them, and thus ensure an actual purchase. The study of
consumers and their purchase behavior is so important that there is a separate,
special body of knowledge known as Consumer Behavior.
2 The second area which is of direct concern for MR is product and
product design. MR is helpful in determining the final design of the product
and its physical attributes of color, size, shape, packaging, and brand name.
it is useful in arriving at the right combination of product mix, the number of
variations of the basic product, accessories and attachments. It can also help
decide the quantities to be produced according to the projected demand estimates.
MR can also be used to gauge customer reactions to different prices.
3) Marketing research helps in discovering what types of distribution
channels and retail outlets are most profitable for your product. On the basis
of comparative information for different channels and different types of
outlets, you can choose the combination most suitable for your product.
Distributor, stockist, wholesaler or retailer may represent one kind of distribution
channel in contrast to another in which you may use only the distributor and
retailer. Consider an example:
A firm is marketing refrigerators through distributors and retailers
in the Eastern zone. The understanding between the firm and distributors is
that the latter will provide the after-saleservice. Analysing the sales
figures, the firm finds that the sales level in the Eastern zone is much lower
than in the other zones. Marketing research indent reveals that one of the
reasons for this low sales performance is the poor after-sale service provided
by the distributor. In a high value, durable product such as the refrigerator,
the quality of after sales service is an important factor influencing the
customers’ purchase decision regarding the specific brand to buy.
The firm decides to do away with the distributor and instead opens
its own branch office. The new distribution channel comprising branch office
and retailers is operationally more expensive, but the company can now control the
quality of after sales service as well as the other marketing inputs. The
result is improved sales and the incremental cost associated with the new
distribution network is justified.
4) Most companies provide advertising support for their products. In
some cases, the amount spent on advertising may be small, while in others, it
may run into millions of naira. Irrespective of the actual amount spent on
advertising, each firm would like to maximise the return on every naira that it
spends. Marketing research can help the firm to do this. Research can provide information
on the most cost-effective media, help determine the advertising budget,
measure the effectiveness of specific advertisements, advertising campaigns and
the entire advertising strategy. Research also provides information on the size
and type of audiences for different advertising media channels. This information
can be used to refine the advertising strategy to make it more relevant and
sharply focused. Advertising research is also helpful in determining customer
perceptions about the image of specific branches and companies.
5) Marketing research is being increasingly used at the
macro-level. Government of Nigeria spends colossal amounts on various socio-economic
development schemes and projects. If the objectives of these projects are not
in tune with the prevailing consumer tastes, attitudes and values, the entire
amount may prove to be a total waste. Just as a business organization needs MR
to monitor the efficacy of its strategy in achieving the objectives, so does
the government and its departments.
3.5 Marketing Research Procedure Marketing research is
undertaken in order to improve the understanding about a marketing situation or
problem and consequently improve the quality of decision-making related to it.
The usefulness of the marketing research output will depend upon the way the
research has been designed and implemented at each stage of the process. There
are five steps in every marketing research process:
·
Problem definition
·
Research design
·
Field work
·
Data analysis
·
Report presentation and implementation.
1 Problem Definition A
problem is any situation which requires further investigations. However, not
all marketing problems need further investigation or research. Many problems
are of a routine and trivial nature which can be solved immediately after
ascertaining all the facts of the case. For example, your distributor wants 90
days credit against the usual 60 days because he is facing certain financial
problems. You can immediately check the distributor’s past record in honouring
his outstanding and ascertain the genuineness of his problem and make a
decision.
Some problems faced by marketing managers are such that they can
be handled on the basis of past experience and intuition. Such decisions can be
made if the manager has been in the line for at least a couple of years.
Decisions made on judgment may not always turn out to be correct, but the
problem may not be important enough to justify substantial time, money and
effort to be spent on solving it. But when the problem is critical, spending
resources to initiate formal marketing research is warranted.
Also, when the problem is such that the manager has no past
experience to guide him (as in case of a new product launch) or the decision
will have a critical impact on the future of the company (diversification in
new markets, new products), it is worthwhile to undertake research and make
decisions on the basis of concrete results rather than mere hunch or judgment.
It is very important that you define the problem for research properly.
It is correctly said that ‘a problem well defined is half- 165 solved’. Clear, precise, to the point
statement of the problem itself provides clues for the solution. On the other
hand, a vague, general, or inaccurate statement of the problem only confuses
the researcher and can lead to wrong problems being researched and useless
results generated.
Contrast the two following statements of the same marketing
problem:
2)Research Design If you have stated your problem correctly and precisely, you
should be able to spell out the precise objectives for research. Now you are in
a position to prepare your research design. The research design spells out how
you are going to achieve the stated research objectives. The data collection
methods, the specific research instrument and the sampling plan that you will
use for collecting data and the corresponding cost are the elements that
constitute the research design.
Data Collection Method A
great deal of data is regularly collected and disseminated by international
bodies such as the International Labor Organization, World Bank, International
Monetary Fund, Government and its many agencies including Planning Commission,
Central Statistical Organization, Census Commission, private research
organizations, and trade associations.
This kind of data which has already been collected by another
organization and not by you is known as secondary data. This secondary
data already exists in an accessible form; it only has to be located. You must
first check whether any secondary data is available on the subject matter into
which you are researching and make use of it, since it will save considerable
time and money. But the data must be scrutinized properly since it was
originally collected perhaps for another purpose. The data must also be checked
for reliability, relevance and accuracy.
When secondary data is not available or is not reliable, you would
need to collect original data to suit your objectives. Original data collected specifically
for a current research are known as primary data. Primary data can be
collected from customers, retailers, distributors, manufacturers or other
information sources. Primary data may be collected through any of the three
methods: observation, survey and experimentation.
In the observation method, the researcher gathers information by observing.
This method is generally used to observe buyer behavior in a shop or to assess
the impact of shelf placement and point of purchase promotional material. For
instance, you may like to observe the movement of shopping traffic through a
department store, the number of shoppers who stopped before a particular
display, etc.
The obvious limitation of
the observation method is that it follows observation of only overt behavior.
It provides no clues why a customer behaved in a particular manner, what
product attributes appealed most to him/her, whether he/she would like to buy
the product again, etc. Such data can be generated by using the survey
method. The survey method can also yield information about the
socio-economic profile of your customers. The survey may either be conducted
within a small group of customers through the focus group interview or may cover
a large number of customers with the help of a questionnaire.
In the focus group interview, five to fifteen customers are
invited for a discussion on a specific product or a specific aspect of the
product. The customers’ comments provide valuable insight into their thinking
which can help the manager to fine-tune his marketing strategy to suit
different customer segments. Surveys conducted with the help of questionnaires often
take off from the focus group interview which yields excellent clues for
designing the questionnaire. The questionnaire based surveys yield not only
qualitative but also quantitative data which can have statistical validity.
The third method of collecting data is through experimentation.
This is basically a simulation of the real-life situation, but in a controlled environment
in which you systematically introduce certain elements to study their impact.
This method is used for finding the best sales training technique, the best
price level, or the most effective advertisement campaign. However, its use
requires an extremely skilled researcher to ensure results.
Also, this method is expensive.
Research Instrument In the observation method, the researcher may use a camera, tape recorder
or daily sheet (a sheet in which the number of times an event occurs is
recorded). Whatever the instrument used, the researcher must ensure that the
instrument is appropriate to the occasion and is reliable. In the survey
method, the most commonly used instrument is the questionnaire.
This is a written and organised format containing all the questions
relevant to soliciting the required information. The construction of a
questionnaire requires great skill. To check that the questionnaire serves the
necessary purpose, it should be tested on a limited scale and this is
technically known as a pilot survey. The objective of a pilot survey is
to weed out unnecessary questions,168 questions which are difficult to answer,
and improve the phrasing of certain questions which are difficult to
comprehend.
In constructing a questionnaire, the important points to be
considered are the types of questions to be asked, wording of questions and
sequencing of questions. Each question should be checked to evaluate its
necessity in terms of fulfilling the research objectives.
Furthermore, the questions should be such that the respondent can
answer them easily. Questions which require the respondent to answer questions
about events which occurred a long time ago or about which they do not have
direct knowledge should be avoided since you are not likely to get very accurate
responses. The question should have direct relevance to the problem being
researched. Too many irrelevant questions will only increase the length of the
questionnaire (which would only put off the respondent) and also add to the
burden of analysis without yielding any useful result. The wording of the
questions is a very important input in ensuring the correct response.
Clearly worded, precise questions are not only easy to understand
but they also facilitate the proper response. The wording of the question
should be neutral and not attempt to influence or bias the response. This is
especially relevant when information is being sought on non-physical issues
such as motivation, attitudes and personal values of the respondent.
In deciding on the sampling
size, you have to make a trade-off between the desired accuracy of the
results and your budget. The larger the sample, the more accurate are the
results likely to be, but the cost would also be correspondingly high. Another
factor affecting the sample size is the kind of research which is being
conducted. In exploratory research even a small sample may be sufficient. In
focus-group interviews and motivation-research studies, very small sample sizes
are sufficient because here the emphasis is on qualitative aspects rather than accuracy
of numbers.
The choice of sampling procedure is between two kinds: probability
sampling and non-probability sampling. In the former, each item of the
universe has an equal chance of being selected as a sample note. In non-probability
sampling, the researcher selects the notes to be included in the sample.
Non-probability sampling is mostly used in exploratory research where a true
representation of the universe is not important. But where true representation
is important, probability or random sampling is used. Random sampling enables
the researcher to make an accurate estimate of the population characteristic
but it is more expensive than non-random sampling. The cost that you can beat
and the degree of accuracy which you require have to be weighed to arrive at a
decision.
The fourth element in the sampling plan is the sampling
procedure. How should you reach your sample notes: personally, by mail or
by telephone. Personal interviewing is most suited when there are many questions
to be asked and it is important to ensure that the questions are understood
properly. Thus, wherever the questions are a little complex, personal
interviewing should be used. This is also the best method to ensure that
correct answers are given which can be corroborated by the interviewer through
observation. But this technique requires a skilled interviewer and a great deal
of administration and supervision. Also, it is the most expensive of the three
methods.
The mail questionnaire is extremely appropriate when your
sampling notes are distributed over a wide geographical area and the cost of reaching
them personally is very high. However, the return rate of mail questionnaires
is usually very low, ranging between three and seven per cent. On an average,
you would have to mail 1000 questionnaires to get back thirty filled up
questionnaires. Another drawback is that you have no way of checking the
authenticity and accuracy of the response. The respondent may fill totally
wrong information and you may never be able to detect it.
The telephone interview combines advantages of both
personal and mail interviews. It allows you to clarify questions which may not
be clearly understood by the respondent and to reach a widely scattered sample
at a relatively low cost. But the obvious disadvantage is that your sample is
restricted to the people who have telephones. Also, you cannot conduct very
long interviews over the telephone.
Cost No information can be collected without incurring cost. Before undertaking
a research project, its cost should be calculated and assessed against the
benefits it would yield in improving the quality of decisionmaking. If the
benefits outweigh the cost, it is certainly worthwhile initiating the research.
There are four kinds of costs involved in marketing research. They include:
Cost of data collection: The actual cost incurred for collecting the data, which may
comprise the research organization’s fee, staff time, printing and postage of
questionnaire, computer time, etc.
Cost of time delays: The
more time it takes to provide the research results, the longer the dependent
decision(s) is delayed. In the meanwhile, the opportunity may be lost or it may
become less attractive.
Risk of adverse environment change: While the decision is
pending, unfavorable conditions may set in (entry of competition) and
consequently, the returns may be lower.
Cost of error: Sometimes, by chance or because of some bias or wrong choice of
sampling notes, there could be an error in the results leading to expensive
consequences for the company concerned.
Field Work This is the stage where the research design has to be converted
from the planning stage to that of implementation. To achieve the stated
research objectives, data has to be collected. This data collection is known as
field work. The two stages in field work are planning and supervision.
1) Planning It has to be planned how many people will be assigned to the field,
what will be their geographical areas of coverage, how many days will be
required for the entire operation and what is the pattern to be used for
choosing sample notes (every fourth household in a lane, all flats with an even
number in an apartment ‘block’, etc.). All this planning has to be done in
accordance with the details spelt out in the sampling plan.
2) Supervision Supervision is an extremely important input
to ensure that the data collected is genuine and accurate. Most field work is carried
out by a team of field surveyors, and each team is assigned to a supervisor.
The team members would plan their daily area of field work in consultation with
the supervisor. The supervisor may accompany different team members on
different days. In the evening the team would meet the supervisor, hand over
the data which they have collected and sort out any problems they may have
faced.
Apart from actually accompanying team members on data collection missions,
the supervisor would also make random checks to ensure that the data collected
is genuine. The check can be conducted either over the telephone (wherever
possible) or by again visiting the sampling note. The supervisor may either ask
the respondent whether he or she was visited by the field interviewer and
cross-check the accuracy of the data. Random checking is carried out to ensure
that the field workers do actually collect data from the genuine source of
information and not just fill in the data using their own imagination
ingenuity.
The collected data has also to be checked for its objectivity and accuracy.
The data has to be carefully checked to ensure that there is no distortion
because of field workers’ bias or the respondent’s bias. Respondent bias arises
because people generally like to project an image (about themselves and their
lifestyle) which is more flattering than the reality. This bias would operate
more in questions relating to income, possession of certain items (VCR, air
conditioner), and habits relating to lifestyle (travelling abroad frequently,
visiting clubs, restaurants). Interviewer bias arises because of the
interviewer’s own pre-conceived notions and ideas. A female interviewer may
prefer male respondents because she may feel that it is easy for her to gather
information from men rather than women.
In conducting field work, it may happen that the relevant source
of information is not at home or does not wish to be interviewed. The supervisor
must give guidelines for tackling such situations. The particular notes may be substituted
by the next one or the field worker visits the same note again hoping to be
more successful.
Data Analysis After you have collected the data, you need to process, organize
and arrange it in a format that makes it easy to understand and directly helps the
decision-making process. Raw data has to be processed and analysed to obtain
information. There are three phases for analysing the data:
·
Classifying the raw data in a more orderly manner.
·
Summarising the data.
·
Applying analytical methods to manipulate the data to highlight their
interrelationship and quantitative significance.
1) Classifying the Raw Data The most common classifications in
marketing research are quantitative, qualitative, chronological and
geographical.
Quantitative: In this classification, data is classified by a numerical measure
such as number of respondents in each market segment, number of years employed,
number of family members, number of notes consumed, number of brands stocked or
some such numerical characteristic.
Qualitative: In this classification, the data is classified by some
nonnumerical attributes such as type of occupation, type of family structure (nuclear or joint family), type of retail
outlet (speciality, general merchant, department store, etc).
Chronological: Chronological classification is that in which data is classified
according to the time when the event occurred.
In geographical classification, the data is classified
according to the time when the event occurred.
2) Summarising the Data The first step in summarising the
data is the tabulation. Individual observations or data are placed in a
suitable classification in which they occur and then counted. Thus, we know the
number of times or the frequency with which a particular data occurs. Such
tabulation leads to a frequency distribution as illustrated in Table 1 below: 
Table 1: Frequency Distribution
The frequency distribution may involve a single variable as in
Table 1 or it may involve two or more variables, which is known as crossclassification
or cross-tabulation. The frequency distribution presented per se may not yield
any specific result or inference. What we want is a single, condensed
representative figure which will help us to make useful inferences about the
data and also provide a yardstick for comparing different sets of data.
Measures of average or central tendency provide one such yardstick. The three types
of averages are the mode, median and mean.
Mode The mode is the central value or item that occurs most frequently.
When the data is organised as a frequency distribution, the mode is that category
which has the maximum number of observations (in the 121 – 140 category in
Table 1). A shopkeeper ordering fresh stock of shoes for the season would make
use of the mode to determine the size which is most frequently sold.
The advantage of the mode is that it is easy to 173 compute, is not affected by extreme values
in the frequency distribution and is representative if the observations are
clustered at one particular value or class.
Median The median is that item which lies exactly half-way between the
lowest and highest values when the data is arranged in an ascending or descending
order. It is not affected by the value of the observation, but by the number of
observations. Suppose you have the data on monthly income of households in a
particular area. The median value would give you that monthly income which
divides the number of households into two equal parts. Fifty per cent of all
households have a monthly income above the median value and fifty per cent of
households have a monthly income below the median income.
Mean The mean is the common arithmetic average. It is computed by
dividing the sum of the values of the observation by the number of items observed.
For example, a firm wants to introduce a new packing of sliced bread aimed at
the customer segment of small nuclear families of four members each. It wishes
to introduce the concept of a ‘single-day pack’, i.e. a pack which contains
only that number of slices that are usually eaten in a single day. This
strategy would help to keep the price of the pack well within the family’s
limited budget. The firm has many opinions on the ideal number of slices that
the pack should contain – ranging from three to as high as twelve. The firm
decides to hire a professional marketing agency to conduct market research and recommend
the number of bread slices it should pack.
The research agency goes about the task in two steps. In the first
step, it randomly chooses five families (who are consumers of bread) in each of
the four colonies in the city. These families are asked to maintain for one
week a record of the exact number of slices they consumed each day. From this
data, the agency calculates the average (or mean) number of bread slices eaten
per family per day. There would be twenty such mean values (5 families in 4
colonies each, sample size 20). In the second step, from these mean values, the
model value would provide the answer to the number of bread slices to be packed
in each pack. 174 3 Step 1 Family 1
Mean
= 4 + 4 + 2 + 5 + 6 + 5 + 3 = 7 (no. of days) 29 = 4.1 or 4 7 (For family 1) Step
1 Family 2 Mean values for 20 sample notes: 4, 10, 7, 6, 8, 8, 9, 6, 7, 7,
4, 6, 8, 3, 8, 2, 7, 8, 5, 8 
The
mode in this frequency distribution is 8. Eight slices is the most commonly
occurring consumption pattern. The agency’s recommendation is to pack eight
bread slices in the single-day pack. The mean, mode and median are measures of
central tendency or average. They measure the most typical value around which
most values in the distribution tend to converge. However, there are always extreme
values in each distribution. These extreme values indicate the spread of the dispersion
of the distribution. To make a valid marketing decision, you need not only
the measures of central tendency but also relevant measures of dispersion.
Measures of dispersion would tell you the number of values which are
substantially different from the mean, median or mode. If the number of observations
at the extreme values is large enough to form a substantial number, it
indicates an opportunity for market segmentation. In the earlier example of
bread, if in a larger sample, you find that the number of households who
consume three slices per day is also substantially large, the firm may find it
worthwhile to introduce a 3-slice pack for light bread consumers. Such
variations from the central tendency can be found by using measures of
dispersion. The two commonly used measures of dispersion are the range and standard
deviation.
Range The range is the difference between the largest and smallest
observed value. Using the data in step 1 in the bread illustration, the largest
observed value is 6 and the smallest observed value is 2, therefore, the range
is 4. The smaller the figure of the range, the more compact and homogeneous is
the distribution.
Variance and Standard Deviation These two measures of dispersion are
based on the deviations from the mean. The variance is the average of the
squared deviations of the observed values from the mean of the distribution.
Standard deviation is the square root of the variance. The standard deviation
is used to compare two samples which have the same mean. The distribution with the
smaller standard deviation is more homogeneous.
Selecting Analytical Methods Besides having a summary of the data,
the marketing manager also would like information on interrelationships between
variables and the qualitative aspects of the variables. This can be achieved
through:
(a) correlation
(b) regression analysis
(c) multiple regression analysis
d) others.
Report Presentation and Implementation The final step is the
preparation, presentation and implementation of a report giving the major
findings and recommendations. A typical format of the report may comprise the
following sections:
Objectives and methodology in which the research objectives are
stated and details of the sampling plan are described.
Summary of conclusions and recommendations in which the main
findings of the research are highlighted. On the basis of the findings, some
recommendations may be made.
Sample and its characteristics which contain descriptions of the sampling
notes in terms of their geographical location, socioeconomic profile and other
relevant details.
Detailed findings and observations in which the data
which was collected is presented in a form which is easily comprehensible to
the user. The data may be presented in tabular form or graphically in a bar
chart, pictogram or pie diagram; or in a combination of all these.
3.7 Applications of Marketing Research
The broad areas of application of marketing research are sales and
market analysis, product research, advertising, business economics and corporate
research, and corporate responsibility.
1) Sales and Market Analysis
Determination of Market Potential: The market potential
is the total amount of a product or product group which could be sold to a
market in a specified time period and under given conditions. Market potential
is applicable in case of a new product, a modified version of an existing
product, or an existing product to be introduced in a new geographical market.
Determination of Market Share: In case of an existing product, a
company may be interested to know the percentage share of the market which
their brand commands.
Sales Forecasting: Sales forecasting is an attempt to predict the sales level at a
given point in the future on the basis of the existing information. Sales
forecasting is applicable to both existing products as well as new products.
The sales may be calculated either in notes or in value. Basically, there are
two types of forecasts – short-term and long-term. The short-term forecast has
its basis more in the growth pattern of the industry to which the product
belongs and the business cycle operating in the industry.
Design of Market Segmentation Studies: A market is a group of
potential customers who have something in common. The common factor may be a
geographical area, sex (after shave lotion is used only by men), age (toys for
children under 5, between 5 & 7, etc.), physical characteristic (weak
eyesight, overweight), income, lifestyle, etc. Children comprise the market for
toys. But in this broad category, the market can be viewed to be made up of
many smaller markets or segments: one market for pre-school children, another
for school-going children, one market comprised of educational toys, one for
mechanical toys, one for electrical toys, one for indoor games, etc. The choice
before the marketing manager is whether to cater for the broad market of toys
or to only one or two of the specific market segments. MR can help answer
questions such as ‘To what extent should the market segmentation be pursued?’
and ‘What should be the basis for segmentation?’
Test Market: This is a controlled experiment to predict sales or profit
consequence of the various marketing strategies. It refers to trying out
something in a particular market before extending it on a larger scale. You may
have noticed advertisements for soaps, or snack foods which sometimes carry the
message ‘available only in Lagos’ or ‘available only in Onitsha’. Test
marketing is used not only for new products, but also for researching into the
impact on sales of retail level promotional displays and promotional schemes
such as coupons and discounts.
Distribution Channel Studies: Market research can be used to determine
the most effective and profitable distribution channels for different types of
products.
Determination of Market Characteristics: Research surveys can
be conducted to collect information about the market characteristics which
would help a new entrant plan his entry or help an existing company focus its
strategy more sharply for increasing market share. Information can be collected
on the number of brands competing in the market, state of technology prevailing
in the market, geographical concentration and dispersal of customers, nature of
outlets selling the products, number of such retail outlets, etc.
Determination of Competitive Information: Research can provide
information on the marketing strategies used by various competing brands and
the ‘unique selling proposition’ of each.
2 Product Research This can be used for:
(a)Evaluation of new product ideas
(b) Testing for new product acceptance
(c) Evaluating the need for change in product formulation
(d) Testing package design in terms of aesthetic appeal,
protection for the product, and ability to withstand transportation and stocking
ordeal
(e)Testing for product
positioning. For example, should a new brand of tea be positioned on the basis
of its fragrance and taste, or color and strength, or price?
3)Business Economics and
Corporate Research
(a) Studies of Business
Trends: These are to determine industries with growth potential and those
facing a stagnant future.
(b) Pricing Studies: These are to estimate the demand level at different prices. Such
studies reveal the extent to which customers are sensitive to price changes,
and provide valuable clues to the market or in assessing the impact of price
increase or decrease on sales.
(c)Diversifications
Studies: These provide information on the profitable new Opportunities of business growth which a firm
can consider for diversification. The diversification may be into totally new
and unknown areas or into allied areas.
(d) Product-Mix Studies: If a firm is considering diversifying into allied product areas,
it may like to find out the product-mix combinations which would optimise its
existing resources and provide synergy for growth. A company in the business of
cooking oil would like to do research into one or more of the following
products for arriving at a ‘synergistic’ product-mix: butter, spices,
dehydrated foods, frozen foods, instant food mixes, custard powder, branded
wheat flour and rice.
(e)Plant and Warehouse Location Studies: Research is also needed
to determine the best possible location for setting up a new plant. Before
arriving at a decision, a firm would need to research into factors such as
availability of raw material and labor, proximity to market place,
telecommunication and transport infrastructure, financial, taxation and other
incentives applicable to each location. In case of warehouse location, you would
research into movement patterns of goods to different cities, high sale
potential areas versus low sale potential areas, number of checks for quality
needed en route the destination to final customer, benefit of conducting these
checks against the cost of acquiring and maintaining a warehouse and convenient
rail/road connections.
4)Advertising Research
(a) Audience Measurement This is carried out on advertisements appearing in different media
such as newspapers, magazines, journals, radio, TV, outdoor hoardings, kiosks,
bus side panels, etc. The objective of this type of research is to estimate the
audience size of each media channel (e.g. print or electronic responses).
(b) Determining the Most
Cost-Effective Media Plan Each media channel has its unique advantages and
disadvantages, and each media vehicle has its own cost structure. Research can be
used to find out the best media vehicle by matching your product
characteristics with the audience profiles of different media vehicles and the
respective cost of advertising in these.
(c) Copy Testing One approach for researching into the effectiveness of the copy (the
words or pictures of the advert) is to test the following elements: Basic
themes, ideas, appeals Headlines baseline, pictures, jingle, story sequence Pre-testing
whole advertisements in rough or finished form Pre-testing the effect of
repetition to simulate a campaign (all the above can be tested under simulated
conditions) After the advertisements have been released, post-testing them individually
in their normal media The other approach for conducting research is to assess
the copy or the entire advertisement/campaign for the following: assessing for
its attention value, interest value and arousal, testing for communication
clarity, testing for their effect on consumer attitudes, testing for their
effect on purchase behavior.
(d) Determining Advertising Effectiveness After the
advertisements have been released, it is important to monitor their impact in
terms of achieving the intended objective(s). To what extent has the
advertising achieved its objective of creating brand awareness, creating
corporate image, educating the customers about the product usage, and so on.
The effectiveness is always determined in relation to the cost incurred.
5) (a)Consumer Behavior Research To determine who the
customers of the product (men, women, children, working women, housewives,
retired people) are and profile them in terms of their socio-economic
background, age, religion and occupation. (b) To find out where the customers
are located. (c) To determine their motivations to purchase your brand of product.
(d) To determine their buying behavior pattern in terms of identifying sources
of information and influence, and sequence of purchase decision. (e) To find
out the post-purchase satisfaction level of customers.
3.7 Problems of Conducting Marketing Research in Nigeria The biggest problem
confronting anyone who sets out to conduct research in Nigeria is the meager
secondary data. The census which contains a wealth of data takes many years to
be conducted, like the 2006 census conducted and result released in January,
2007. Data contained in journals and handbooks are usually two to three years
old. Thus, whatever data is available is usually obsolete and this greatly reduces
its utility. In collecting primary data, the problems are those of widely
scattered sampling notes, location or scope of sampling notes in remote and inaccessible
areas, and poor communication facilities which compound the problem of
inaccessibility. If the sampling notes are the industrial notes in the
unorganised sector, there is no guide for locating these notes. The other kind
of problem encountered in collecting primary data is the uncooperative attitude
of respondents arising out of sheer lack of knowledge about the nature of MR and
its utility. Respondents often view interviewers with suspicion and may refuse
to give any information. Most of the market research organizations are located
in the cities and have an urban-bias to the extent that they have neither a
penetration/base in the rural areas and cannot easily communicate properly with
the rural people. Most market research is conducted in the cities for products used
by city dwellers. 181 State-of
the art marketing research in Nigeria has not reached sophisticated levels as
in America or Europe. The marketing research techniques used here are still
relatively unsophisticated and simplistic.
4.0 CONCLUSION
Marketing Research as a tool for decision-making is gaining wide acceptance.
Marketing decisions involve variables which are often external to the firm,
dynamic in nature, uncontrollable by the firm and interact with each other in a
complex manner. Because of their dynamic and uncontrollable nature, the
uncertainty associated with them is very high, which in turn leads to the
situation that in most marketing decisions the associated risk factor is also
very high. T
he marketing manager is always on the lookout for ways and means
to reduce this risk. One way that the risk can be reduced is through the use of
MR which, by providing information, reduces uncertainty and converts the unknown
risk factor into a known calculated risk.
5.0 SUMMARY
In this note, it was
highlighted that MR can be used for gathering information about market
structure, competitors’ activities, consumer behavior, testing the efficacy of
various elements of the marketing strategy and making forecasts. MR can be used
for pre-testing a strategy before actually implementing it, monitor it during
implementation, and after implementation, monitor the results to assess its
impact. Apart from its usefulness in the area of marketing, MR is also used for
monitoring socio-economic projects. The manager must take the decision
regarding the utility of MR on the basis of the cost involved in conducting the
research and the benefits expected to accrue from it.
0 comments:
Post a Comment