UNIT 6: MARKET RESEARCH

Many people think of a market as a place in an open area where they can go to
buy goods. This is only limited definition of market.
A market is an arrangement that enables buyers and sellers to get into contact
with an aim of exchanging goods and services.
Or It refers to all people or institutions within a specific geographical area that
need a product and are willing and able to buy it.

Market may therefore be a physical place or not a physical place.

Marketing Is a series of activities aimed at identifying customers’ needs,

developing products to meet customers’ needs, making products available to the
customers and in a convenient location, at a reasonable price, at a convenient
time and place.
Marketing: The action of promoting and selling products including market
research and advertising.

Market Research refers to the process of collecting and analyzing information

for the purpose of initiating, modifying or terminating a particular business
activity.

It refers to acquiring of information and knowledge for professional or

commercial purposes such as determining opportunities and goals for a
business.
Components of Marketing/4ps
Marketing mix is a crucial tool to help understand what the product or service
can business offer and how to plan for a successful product offering.
Components of marketing include 4PS.
marketing mix refers to the combination of all activities that are done to
market a product.
These activities involve;
- Finding out what products people need
- Providing products that meet people’s needs
- Setting prices that affordable and reasonable in the market
 - Carrying out sales promotion to market products known and attractive to
customers.
The above activities are called the elements of marketing mix or the 4PS of
marketing namely.
 Product
 Price
 Promotion
 Place

 Product. A product is the good or service that a business offers to

customers to satisfy their needs or wants. The product should be:
 Developed in consideration of needs of customers of customers.
 Good design
 Good Quality
 Properly packed
 Convenient in size and quality
 Within the RSB set Quality standards and regulations.

 Place. Refers to the channels of distribution that are selected to make the
products available to some consumers or market. The product must be
available to customers where and when customers want to buy. The aim
of “Place” in the marketing mix is make sure that the product is available
at the right place, at the right time in the right quantities.
 Price. Price is the amount that a customer pays for a product to enjoy it.
It is a monetary value of the product. The Price should.
- Attract the customers to buy the product
- Enable the entrepreneur to get a profit
- Able to compete with other businesses selling similar products. If the
price is too low most people think the product is inferior or of a poor
quality and the product is it will scare away buyers.
Promotion. Promotion is disseminating of good information about a product.
The main purpose of promotion is to raise awareness about a product, its
location, its qualities etc. Promotion should be done to;
-Make the product known to customers
-Make the product attractive to customers
-Increasing the sales of the business

The marketing mix is about putting the right product or a combination thereof
in the place, at the right time, and at the right price.

Importance of the four “P” of marketing in a commercial activity

 Ensures we get our goods and services to customers effectively and
efficiently.
 Builds and maintains brand value and awareness.
 Enhances shareholders value.
 Builds customer value.

Marketing strategies:
 Select customers to serve.
 Segmentation. Segmentation refers to a process of bifurcating or
dividing a large unit into various small units which have more or less
 similar or related characteristics. A market segment is a small unit
within a large market comprising of alike minded individuals. A market
segment comprises of individuals who think on the same lines and have
similar interests.
Basis for segmentation
- Age
- Gender
- Income
- Marital status
- Occupation
Importance of marketing segmentation
 Market Segmentation helps the marketers to devise appropriate marketing
strategies and promotional schemes according to the tastes of the
individuals of a particular[;, market segment.
 Market segmentation helps the marketers to understand the needs of the
target audience and adopt specific marketing plans accordingly.
 Market segmentation also gives the customers a clear view of what to buy
and what not to buy.
 Market segmentation helps the organizations to target the right product to
the right customers at the right time.
 Segmentation helps the organizations to know and understand their
customers better. Organizations can now reach a wider audience and
promote their products more effectively.
 Targeting. A target is a specific group of consumers at which a
company aims its products and services.
Targeting refers to breaking a market into segments and then
concentrating your marketing efforts on one or a few key segments
consisting of the customers whose needs and desires most closely match
your product or service offerings.
 Decide on the value proposition. This is an innovation, service, or
feature intended to make a company or product attractive to customers.

 Product differentiation. Is a marketing strategy whereby businesses

attempt to make their product unique to stand out from competitors.
Product differentiation means that some feature, physical attribute, or
substantive difference exists between a product and all other alternatives.
 Positioning. refers to the place that a brand occupies in the mind of the
customer and how it is distinguished from products from competitors.
In order to position products or brands, companies may emphasize the
distinguishing features of their brand (what it is, what it does and how,
etc.) through the marketing mix. Once a brand has achieved a strong
position, it can become difficult to reposition
Sports marketing: This is when businesses sponsor games and sports;
they may have athletes, footballers, and boxers wearing their business
logos on their uniform.
Cause marketing: This is a way of developing brand loyalty by
sponsoring a charity. For example, paying fees or supplying uniforms for
a charity marathon, donating to a school and hospital to promote a
business

MARKET SURVEY

A market survey is an objective and systematic collection, recording,

analysis and interpretation of data about existing or potential markets for
a product/service.

OR It refers to an organized system of collecting, recording and analyzing

market related data for the purposes of obtaining useful information.

Importance of market surveys.

Market surveys are useful to business enterprises in the following ways
 To identify customer needs and requirements. Understanding
customers’ needs helps the business to produce right products and
adjust the existing ones to meet changing customer needs.
 To identify the nature of demand. This helps the business to identify
when demand is highest and lowest and what factors influence the level
of demand. This helps the entrepreneur to plan production and meet
changing demand.
 To identify the nature and size of competition. Market surveys help
the entrepreneur to identify the weaknesses and strength of competitors
so as to plan accordingly.
 For future market expectations. Market surveys help a business to
forecast its sales and make appropriate plans. If sales are predicated to
 increase, production plans are made to increase output and if predicated
to fall, then output is reduced.
 To identify changes in customers’ tastes and preferences. Market
surveys help to identify changes in tastes and preferences to adjust its
line of production. This prevents the business from producing unwanted
products.
 Helps in determining marketing programs. Business managers need
information about customer locations, age groups, size and other
information to make marketing and promotional programs successful.
 Market surveys helps the entrepreneur to identify potential customers
and therefore develop appropriate products.

CUSTOMER SURVEY
It is a measure of how products and services supplied by a company meet
or surpass customer expectation.
TYPES OF CUSTOMERS
Different businesses categorize customers differently. Some of the
common classification of customers include the following.
 Loyal customers. These are customers that regularly transact with the
organization. They are usually fewer but bring more money into the
business.
 Need based customers. These are types of customers that come to the
business with the intention of buying some particular goods. They have
attachment to a specific product not the business.
 Wondering customers. These are customers that move from shop to
shop investigating the qualities of products because they are not sure
about their preferences. They are least reliable and least profitable.
 Impulsive customers. These are customers that don’t have any specific
item in mind. They normally buy what they find attractive at the specific.
 Discount customers. These are customers that buy low-cost products that
have discounted. These customers can only be part of your business if
you offer regular discounts.
 Potential customers vs Actual customers. Potential customers are
those people or organizations that are likely to buy products from the
business at a future date. Actual customers are those who have already
had transactions with the business.
 IMPORTANCE OF CUSTOMERS TO A BUSINESS
Most businesses hang signs to show the importance of customers to them
“Customers are the reason why we exist”,“ The customer is the king”. These
summarizes the importance of customers to any business, whether big or
small.
 Customers are the source of all the sales revenue to the business
 Customers provide feedback to the business. This helps the business
understand its weaknesses and strengths and make appropriate
improvements.
 Loyal customers can book the products and make appropriate
improvements.

CUSTOMER DATA COLLECTION

You need to collect as much data as possible about customers before you
get useful information about the customers. Knowing much about your
customers helps to provide right products.
The following data can be collected about customers
CONTACT DETAILS
Name and contact - Name
Details of the customer -Telephone
Number
-E-mail
 -Twitter etc.
 Enables you to market them directly by SMS, E-mail, and fax
 You can send personalized messages
 Enables you to contact them directly in case you need them

CUSTOMER PROFILE -Date of birth

Personal profile -Sex
-Income
-Hobbies etc.
 Helps you identify your customers and segment the market
 Helps you identify other possible areas of business
 Their age and income levels help you determine the pricing strategy etc

TRANSACTION HISTORY -When they started

OF THE CUSTOMER buying from the
Business -
-Average value of
the purchase
-Types of the products they
Bought most
 Helps you rate the most valuable customers
 Helps you to know the payment habits can help you decide on what
methods of payment to accept etc.
METHODS OF COLLECTING CUSTOMER DATA
There are many practical methods that a business Entreprises can use to get
feedback from its customers. The following are some of the methods that can be
used to get customer feedback
 Telephone surveys. This involves calling customers and asking them a
few questions about the business and its services. You may hire skilled
people to do calling and recording of the responses so that results can be
analyzed later.
  Suggestion Boxes (Feedback boxes). Suggestion boxes are placed in
strategic places so that customers can write their complaints and deposit
them in the box. The complaints normally indicate the areas of
improvement.
 Questionnaires. Questionnaires are developed and given to customers to
fill and return. The advantage is that the returned questionnaires can be
filed and analyzed to get what customers think.
 Focus groups. These are small groups of between 6-10 people that are
gathered and give their impressions about a good or service. There
responses are generalized to the whole population of customers.
 Direct face to face inquiry. Provide brief cards on which customers can
answer brief questions about the business and its products. Ask questions
like;
What services should we improve?
What new product should we introduce?
 Customers. The easiest and the most direct way to find what customers
think about your business, products and services is asking them.
 Through employees. These interact with the customers most. Employees
can provide information about customers in terms of the business aspects
they complain about, what they compliment about the business and other
issues concerning business.
 Be your customer. This works best in large organizations with branches
where staff may not know each other. A number of staff pretends to be a
customer and goes through the same experience that other customers goes
through.

FACTORS THAT DETERMINE THE METHODS TO GET

CUSTOMER FEEDBACK
 Nature of the information needed. The nature of the information
required determines the method to be used
 Cost of collecting feedback. Some methods are more expensive than
others.
 Time available. For example, if you quickly need feedback in the
shortest possible time, you can call by Telephone.
 Nature of customers. For example, if customers are well educated and
have access to internet, you can use E-mails to get feedback.
  Availability of some methods. Some methods of collecting feedback
may not be available to the business owner or to the customers so you use
what is available.

IMPORTANCE OF CUSTOMER SURVEYS

 Maximizing sales and profits. Understanding customers helps the
business to plan targeting marketing programs so that you maximize sales
and profits. It is cheaper to maximize sales from old customers than
attracting new ones
 Retaining customers. Customers are like water; they move where there
is a slope. The slope may be better services, better quality etc. It is
important that the business understand its customers, their interests and
needs. This provides information necessary to retain customers.
 Maximize customer value. Having the right data and information about
customers helps reduce costs, for example you produce what your
customers' needs most.
 It can help improve a product or service. Listening to your customers
is the only way to guarantee you create a product or service that they
actually want to buy
 It offers the best way to measure customer satisfaction. Measuring
customer satisfaction helps you determine whether your product or
service meets or surpasses customer expectations.
 It delivers tangible data that can be used to make better business
decisions

COMPETITOR SURVEY
Competitor survey is the process of assessing the strengths and weaknesses of
both current and potential competitors.
Current competitors. These are existing producers or suppliers producing/
dealing in the same products as your business.
Potential Competitor. These are producers capable of distributing or producing
similar products as yours at a future date.
SOURCES OF COMPETITOR INFORMATION
A business enterprise may depend on many sources to get information about its
competitors. Some of these are easy to access and others more difficult and time
consuming.
Recorded data
 Annual reports and accounts
 Government reports
 Newspaper articles
 Presentations/speeches
 Analyst reports
 Websites
Observable data
 Pricing / price lists
 Tenders
 Advertising campaigns
 Patent applications
 Promotions
Opportunistic data
 Meetings with suppliers
 Sales force meetings
 Trade shows
 Recruiting ex-employees
 Seminars/competitions
 Discussion with shared distributors
 Customers etc.
Identifying competitors.
You cannot analyze the competitors unless you know. All the competitors are
not the same and so you need to identify various categories of competitors that
you will need to analyze.
Direct competitors are those businesses that produce or sell identical or similar
products or services. This means customers can easily switch from your
products to theirs because the products are similar. These provide the most
intense competition. For example starting a hotel, other hotels in the
neighborhood proving similar services are direct competitors.
Indirect competitors are those that produce products and services that are close
substitutes. These target the same customers with a product that or service that
provide an alternative level of satisfaction.
Actual competitors are those businesses that are already in existence and
already producing goods and services.
Future competitors (potential competitors) are businesses that are not yet in
the same market place as the one you intend to be or the one you already in

Competitor product features

Competition arises when companies produce similar products. A competitive
analysis therefore includes a product analysis. Competitors’ products are
analyzed in terms of the following.
 The product features
 The products key strength
 The products key weaknesses
 The products opportunities
 Threats to the product
 The customers’ perception of the product
 How the product is marketed and distributed.
Competitor strength and weaknesses
It is important to understand the strength and weaknesses of your competitor. It
is important to be objective here otherwise if you are biased and do not want to
admit that the strength of your competitor, you will not be able to deal with the
competition. While it is easier to find the strengths of the competitor and the
products, it’s difficult to get the weaknesses but if you conduct a survey,
interview customers you will get right information.
Competitor strength weaknesses
- Big network of distributors -Poor packaging
- Good supply of raw materials -Regular product shortages
- Highly skilled sales staff -Located far from local
customers
- Etc
Competitor intelligence
If you are keen enough to monitor how businesses launch new products, you
will find out that most companies launch similar products almost at the same
time. This is not always a coincidence. In most cases it is because competing
firms developed the same products after they learnt what others were
developing. Competitive intelligence is basically the practice of gathering
information about competitors.

What you need to know about your competitors include the following
 Yearly or monthly sales and profits
 Top selling brands and their total sales
 Market share
 Advertising strategy and spending
 Distribution costs etc.
Competitor profiling
Part of analyzing competitors involves competitor profiling. This is the process
of identifying and recording certain kinds of data about the competitor.
Competitor profiles would normally contain the following categories of
information.
 Background information
 Business location (Head office and branches if any)
 Form of business organization (Partnership, company etc)
 Ownership that is who are the shareholders or partners etc.

The main objectives of doing competitor analysis can be summarized as

follows:
To study the market;
To predict and forecast organization’s demand and supply;
To formulate strategy;
To increase the market share;
To study the market trend and pattern;
To develop strategy for organizational growth;

To study forthcoming trends in the industry;

Understanding the current strategy strengths and weaknesses of a competitor
can suggest opportunities and threats that will merit a response;

IMPORTANCE OF COMPETITOR ANALYSIS

  A competitor analysis helps the business identify market gaps for
products, services and initiatives. This helps the business to produce the
products that feels the identified gap.
 To help the management of a business enterprise understand their
competitive advantage and disadvantage in comparison to the competitors
and plan accordingly.
 Might give the business ideas for new technology and methodology that
could be applied within the organization. This can be generated by
understanding what can are using.
 Competitive analysis gives the awareness of threats and managing tasks.
Threats mainly arise from the competitors as they start offering new
products.
 It determines the purchasers; illustrates what they are expecting from the
delivery of your products or services to be successful.
 To generate understanding of competitors’ past, present (and most
importantly) future strategies.

PRODUCT/SERVICE ANALYSIS AND QUALITY CONTROL

Product analysis/Evaluation. Product analysis means studying how well a

product performs its purpose.
Quality. This means ability of a product to fit the purpose for which the
product is required.
Benefits of product evaluation.
 It helps the entrepreneur to determine whether the product(s) worth
producing
 Product analysis helps to determine a relevant price for a specific product
 Product analysis helps the entrepreneur to improve on the existing
products to meet customer requirements.
 Helps the customer to determine whether the product is worth producing.

Quality management.
Quality means the ability of a product or a service to satisfy the consumer.
Quality management is the process of controlling the business and production
activities with the aim of ensuring that the products and services meet
consumers required specifications or needs.
Quality control. This is the process which attempts to minimize or eliminate
errors in the quality of a product.
It can also be defined as of working or operational techniques and activities
established at from the time of purchase of raw materials up to the end of the
production process that ensures the production of good quality products.

Advantages of quality control

 Satisfaction of consumers:
Consumers are greatly benefited as they get better quality products on
account of quality control. It gives them satisfaction.
 Reduction in production cost:
By undertaking effective inspection and control over production
processes and operations, production costs are considerably reduced.
Quality control further checks the production of inferior products and
wastages thereby bringing down the cost of production considerably.
 Most effective utilization of resources:
Quality control ensures maximum utilization of available resources
thereby minimizing wastage and inefficiency of every kind.
 Reduction in inspection costs:
Quality control brings about economies in inspection and considerably
reduces cost of inspection.
 Increased goodwill:
By producing better quality products and satisfying customer’s needs,
quality control raises the goodwill of the concern in the minds of people.
 Increased sales:
Quality control ensures production of quality products which is
immensely helpful in attracting more customers for the product thereby
increasing sales.

Disadvantages of Quality control

 Rejected product is expensive for a firm as it has incurred the full costs of
production but cannot be sold as the manufacturer does not want its name
associated with substandard product.
 Quality control may be expensive.
 Profitability of the business may be affected in case of many defects.
 Quality Assurance. It refers to the processes that ensure production
quality meets the requirements of the customer.
Quality assurance is any systematic process of checking to see whether a
product or service being developed is meeting specified requirements.
It refers to the maintenance of a desired level of quality in a service or
product, especially by means of attention to every stage of the process of
delivery or production.

Advantages of Quality Assurance

 Costs are reduced because there is less wastage and re-working of faulty
products as the product is checked at every stage of production.
 It can help improve workers’ motivation as they have more ownership
and recognition for their work
 Stops customer complaints/gives better customer satisfaction
 It improves the relationship between managers and workers since
checking and control is reduced.

Disadvantages of Quality Assurance

 Costs a lot of money to train staff
 Time consuming to train staff
Total Quality management (TQM)
Total quality management is a specific approach to quality assurance that
aims at developing a quality culture throughout the firm.
Total Quality Management is a management framework based on the
belief that an organization can build long-term success by having all its
members, from low-level workers to its highest ranking executives, focus
on quality improvement and, thus, delivering customer satisfaction

Today total quality management is more important than end of

production line checking, to ensure the highest level of
consumer satisfaction.

Quality Assurance vs Quality control

Quality Assurance Quality control

A medium to long term process, Can be implemented at short notice

cannot be implemented quickly
Focus on processes-how things are Focus on outputs-work in progress
made or delivered
Achieved by improving the
production process
Targeted at the whole organization
Emphasizes the customer
Quality is built into the product
and finished goods
Achieved by sampling and
checking(inspection)
Targeted at production process
Emphasizes the required standard
Defect products are inspected out

Suppliers survey.
A Supplier Survey is a process used by the company to collect information from
current and/or prospective suppliers to gage whether or not they satisfy specific
social and environmental criteria that are meaningful to that company.
The supply chain
A supply chain is a system of organizations, people, activities, information, and
resources involved in moving a product or service from supplier to customer.
Refers to the sequence of processes involved in the production and distribution
of a commodity.
The supply chain does not only include manufacturers, wholesalers and retailers
but also transporters and the customers themselves. A typical supply chain
involves a variety of stages which include.
Finding potential suppliers (sources)
You can find potential suppliers through a variety of ways. It’s much better and
safer to build a shortlist of possible suppliers through a combination of sources
to give you a broader base to choose from.
 Recommendations. Ask friends and business acquaintances (somebody
you used to do business with) to recommend suppliers they know or who
have supplied them before. Such recommendations are likely to give you
good quality suppliers.
 Directories. There are always many business directories that list
suppliers of different products. Searching through such directories will
give you a list of potential suppliers and their contacts.
 Trade associations. Many traders belong to trade associations. Such
associations keep a register of their members and their nature of
businesses by checking with them you can get a list of potential suppliers.
 Business support organization. Business support organizations such as
chambers of commerce or enterprise development Agencies can
recommend potential suppliers.
 Exhibitions. Exhibitions and trade shows offer another great opportunity
to talk with several potential suppliers in the same place at the same time.
Here you can easily check whether the exhibitors are relevant and
suitable for your Business.
 Press. Trade magazines feature advertisements from potential suppliers.
A selection of trade publications and trade press listings should be
available at your local business library.
Types of suppliers
As stated before, different enterprises have different suppliers. Generally, the
following general categories of suppliers can be identified.
 Agents. These stock and supply products on behalf of other business
people.
 Manufacturers. They produce goods and supply them to wholesalers.
Some manufactures may supply directly to large scale retailers and
consumers.
 Wholesalers. These are suppliers who supply to retailers and at times
consumers in large quantities.
  Retailers. These are small scale suppliers who supply in smaller
quantities. They break the bulk obtained from wholesalers so that it can
be supplied in quantities suitable for small scale buyers.
Factors considered when choosing the right suppliers
Having the right suppliers is as important as any other aspect. Generally, the
following factors should be put into consideration when selecting suppliers.
 Price. This refers to the value of money. Suppliers providing supplies at
lower prices should be considered because it enables you to produce at a
lower cost and sell more. However, lowest prices may not always be the
right choice as it may be an indicator of quality. It is appropriate when all
suppliers have the same quality, lead time and other factors.
 Quality. Suppliers with good quality products should be considered
because if the quality of supplies is low, then quality you give to
customers will also be low and this has serious consequences of sales and
profits of the business.
 Lead time. This is the time between placing an order and the delivery of
products. The shorter the lead time the better the supplier.
 Financial capacity and security. It is always important to make sure
your supplier has a strong financial position and cashflow to be able to
deliver what you need, in the required quantities and in time. A supplier
that has a good financial position is more appropriate than a supplier that
has a poor financial position.
 Strong service and clear communication. You need a supplier with a
clear system of communication and customer service.
 Distance between the business and the supplier. When the supplier is
near, it is also easy to verify quality and follow up your orders. The near
the supplier the better
 Credit and terms of payment. The terms of payment should also be
seriously considered when choosing suppliers. Suppliers that demand
100% payment on order may not be favorable but suppliers that give
credit should be favored because they are sure to supply the agreed
quality.
 Means of transportation. Suppliers with their own means of transport in
terms of delivery trucks are more reliable as compared to those that
depend on public means.
 Quality control. Find out the quality control measures that the supplier
has in place. Suppliers without good quality control measures will not
supply quality products.
  Past history. Find out whom the supplier has dealt with before and the
quality of service provided. This may be used as a source of information
about their capacity.
 Legal status of the supplier. The legal status of the suppler should be a
factor to consider. If the supplier is not duly registered, does not belong to
trade Associations and does not have the proper tax identification papers,
such suppliers may not be worth dealing with.

Developing a marketing plan

A marketing plan is a comprehensive document that outlines a company's
advertising and marketing efforts for the coming year.
It the part of the business plan outlining the marketing strategy for a product or
service.
A marketing plan includes;
 Product description. is a structured format of presenting information
about a project product
 Customer description
 Demand/need for the product, competition
 Current production
 Price
 Sales forecast for the next 12 months
 Business location
 Promotion

Prepared by Robert Woods