Marketing Research

Marketing managers are constantly faced with the necessity of defining problem areas. They must make decisions concerning target markets and about the marketing mixes best adapted to these markets. They have to make assumptions concerning competitors’ actions and about the uncontrollable and ever-changing environmental factors. It is the task of marketing research to help the marketing manager make better decisions and to choose wisely among alternative marketing strategies. It should aid the manager not only in planning, but also, through the feedback it provides, in controlling. Nature of Marketing Research Marketing research is the systematic, objective, and exhaustive gathering, recording, and analyzing of the facts relevant to any problem in the field of marketing. It can be thought of as the application of the scientific method to the solution of marketing problems - followed by the making of recommendations based on the results. Marketing research includes various subsidiary types of research, the most important being: (1) product research, involving market tests for new products, seeking out new uses of present products, and making studies of packaging effectiveness, among other activities; (2) market analysis, primarily the study of the size, location, and other characteristics of market; (3) sales research, activities such as evaluating sales policies, making pricing studies, assessing the effectiveness of salespeople, and setting sales quotas; (4) consumer research, of which motivation research is a type, concerned chiefly with the discovery and analysis of consumer attitudes, reactions, and preferences; and (5) advertising research, designed to help in evaluating the advertising program and in making decisions concerning it. Motivation or Qualitative Research
Motivation research is a qualitative tool, unlike other methods of market research designed to provide quantitative results. It makes use of the findings and methods of the behavioral sciences - particularly psychology, sociology, and anthropology. It aims at discovering not only the conscious opinions, attitudes, preferences, and wants of consumers but also their unconscious drives and motivations. The so-called ―depth interview‖ is used in this type of research. Limitations of Marketing Research Marketing research is not the cure-all for every company problem related to marketing. Many executives still look with skepticism on marketing research and need to be ―sold‖ on its usefulness. This is reflected in marketing research budgets that average about 0.2 percent of sales as compared to new-product research with budgets running from 5 to 10 percent. This situation often leads to the development of products with negligible market potential. The Computer and Marketing Information Systems Some market research functions are being expanded to a marketing information system (MIS). More market-related data are available than most firms can translate into useful information. A system is needed to provide an orderly flow of pertinent data from both internal and external sources that is relevant for decision making. A MIS can be the basis for monitoring, developing, and selecting various plans and functions. Recent developments in the use of computers, and a subsequent decline in the cost of using them has encouraged more marketers toward a MIS. New applications for gathering information include:
1. Computer-prepared market research reports.
Dun & Bradstreet provides data on 390,000 business firms and from a model can compile individual market profiles.
2. Measuring movement of goods.
Selling Areas-Marketing, Inc., a subsidiary of Time, Inc., provides its chain store and wholesaler clients with data on 66 main product categories and 361 sub-groupings.
3. Input-output analysis.
Evaluation of changes in usage patterns of industries or firms. Planning Market Research Some basic steps in planning marketing research include:
1. Developing hypotheses.
Most hypotheses tested emerge from insight or knowledge gained from individual experience, previous research studies or general information on a subject or activity. The hypothesis must be stated in form that can be measured by acceptance or rejection. For example: ―Trading stamps develop stronger shopper loyalty to grocery store choice, than other factors.‖ If no conclusion can be assumed, then a null hypothesis or a ―no difference statement‖ can be used. For example: ―There is no difference in shopper loyalty between grocery stores using trading stamps and those which do not.‖ Validity of a hypothesis is easier to confirm if acceptance or rejection can be measured. When forming a hypothesis, the researcher must be sure that the variable being tested is the only variable. In the above example, for instance, the stores must be comparably priced, convenient, have a similar selection of goods, etc.
2. Sources of market information: Collective data.
Market research provides information and reduces risk by helping executives make rational choices under conditions of less-than-perfect knowledge. Marketing research includes fact-finding and management counseling. Management counseling entails the assessment of various talents and thoughts of persons in marketing and the other functional areas of the firm such as accounting, production, or finance as they relate to marketing decisions. This again is the systems approach in action (MISs). Fact-finding is the actual collection of data and information. This activity includes the generation of primary and secondary data, which may then be processed further by the application of operations research techniques. Primary data. Primary data is information gathered from original sources for a specific purpose or objective. Some techniques for gathering primary data include:
1. Surveys. Answers to questions are sought through telephone or personal, face-to-face interviews, or through the mail. Generally, a specific list of questions or a questionnaire is prepared and mailed. Validity and reliability of these surveys are vital considerations. Pretesting for clarity and question sequence, instruction adequacy, and ease with which results can be edited, coded, and tabulated is essential. Then the reliability of the final results must be determined by careful statistical analysis. One common mistake in questionnaire construction is to ask questions that interest the researcher but do not provide information that can be used to make a marketing decision.
2. Observation. Here the consumer is observed in the act of purchasing. Sometimes films are taken and then analyzed. Candid camera is actually an observation technique.
3. Field experiments. May involve the survey method, the observation method, or both. The main characteristics are more rigorous research design, often using sample control groups and sophisticated statistical techniques.
Secondary data. Many people desiring market research information make the mistake of rushing out to get primary data before exhausting existing secondary sources. Secondary data may be readily available and at little or no cost. Secondary sources include: internal company records; U.S. government publications; trade, professional, and business associations; university research bureaus; libraries; and consulting, advertising, and other firms. Especially helpful government publications are the Census of Business and other publications of the U.S. Bureau of the Census; the Statistical Abstract of the United States, the Survey of Current Business, and the Monthly Labor Review. Trade publications may be located by referring to the Ayer Directory of Newspapers and Periodicals and associations through the U.S.D.A. publication, National Associations of the United States. University bureaus of business research such as those at Michigan, Harvard, Ohio State, Minnesota, Washington, Illinois, California, and Texas provide services for both private and public organizations. Interpreting Research Findings At the outset of a market research study some guidelines should be established for a continual evaluation of the data throughout the collection period. It is crucial that the marketing researchers and the research users cooperate at every stage in the research design. Often research studies go unused due to the inability of the user to understand lengthy discussions of research limitations or the use of unfamiliar technology. In addition to a written report, an oral presentation should be required to expand or clarify the results. Future Trends Noticeable improvements in market research relate to the use of advanced statistical techniques. This should lead to the further reduction of risk and uncertainty in business decisions. However, research is not a one-shot process. Research is important both preceding and following major change decisions and to ensure that research data remain current.