Chapter 3

Conducting Market Research

Marketing Research

• is the systematic design, collection, analysis, and reporting of data and findings relevant to a
specific marketing situation facing the company

NEED FOR MARKETING RESEARCH

• To undertake marketing effectively

• Changes in technology

• Changes in consumer tastes

• Market demand

• Changes in the product ranges of competitors

• Changes in economic conditions

• Distribution channels

PURPOSE OF MARKETING RESEARCH

• Gain a more detailed understanding of consumers’ needs: Example: views on products prices,
packaging, recent advertising campaigns

• Reduce the risk of product/business failure: There is no guarantee that any new idea will be a
commercial success

- Can help to achieve commercial success

• Forecast future trends: It can also be used to anticipate future customer needs

OVERVIEW OF THE MARKETING RESEARCH PROCESS

• Why should we do research?

• What research should be done?

• Is it worth doing the research?

• How should the research be designed to achieve the research objectives?

• What will we do with the research?

The Marketing Research Process

• Define the problem

• Develop research plan

• Collect information

• Analyze information

• Present findings

• Make decision

STEP 1: DEFINE THE PROBLEM

“A problem well-defined is half solved”

• Identifying and defining the problem or opportunity is a crucial first step in the marketing
research process

• When defining the problem, it is important to think broadly about the possible causes.

• Problem definition involves:

 Specifying decision alternatives

 Itemizing the possible causes of the symptoms

 Listing the reasonable alternative courses of action that the marketing manager can
undertake to solve the problem

Step 2: Develop the Research Plan

• Exploratory Research Design: It is defined as collecting information in an unstructured and

informal manner.

• Examples: Reading periodicals, visiting competitors premises, examine company sales and
profits vs. industry sales and profit

• Descriptive Research Design: It refers to a set of methods and

procedure that describe marketing variables.

• Portray these variables by answering who, what,why and how questions.

• Example: consumer attitude survey to your companies services.

• Causal Research – The most specific type of research is causal research, which usually comes in
the form of a field test or experiment.  In this case, you are trying to determine a causal
relationship between variables.  For example, does the music I play in my restaurant increase
dessert sales (i.e. is there a causal relationship between music and sales?)
STEP 3: COLLECT INFORMATION

• The collection of data relates to the gathering of facts to be used in solving the problem.

• Data can be primary, i.e., collected from the original base through empirical research by means
of various tools.

• Data can be secondary, i.e., collected from concerned reports, magazines and other periodicals,
especially written articles, government publications, company publications, books, etc.

• There can be broadly two types of sources

a) Internal sources: existing within the firm itself, such as accounting data, salesmen’s reports, etc.

b) External sources: existing outside the firm.

Step 4 Analyze the Information

• The researchers compute averages and measures of dispersion for the major variables and apply
some advanced statistical techniques and decision models in the hope of discovering additional
findings.

• Run summaries with the tools provided in your software package (typically Excel, SPSS, Minitab,
etc.), build tables and graphs, segment your results by groups that make sense (i.e. age, gender,
etc.), and look for the major trends in your data.  Start to formulate the story you will tell

Step 5: Present the Findings

• As the last step, the researcher presents the findings. Researchers are increasingly asked to play
a proactive, consulting role in translating data and information into insights and
recommendations for management

Step 6: Make the Decision

• Some organizations use marketing decision support systems to help their marketing managers
make better decisions. MIT’s John Little defined a marketing decision support system (MDSS) as
a coordinated collection of data, systems, tools, and techniques, with supporting software and
hardware, by which an organization gathers and interprets relevant information from business
and environment and turns it into a basis for marketing action

• Once the market research process is complete, the information collected might be stored by the
company in another system also commonly known as marketing decision support system. This
system generally has all the data collected from the market and can be used by marketers and
management alike to make the right decisions for the company. At the same time, it is not
necessary that the market research process give completely accurate results. In fact, over time
many innovators and thinkers have ignored market research analysis and launched the product
by gut feeling and have still succeeded.
Learning Target

 Explain the scope of marketing research

 Discuss the steps involved in conducting good marketing research
 Enumerate and explain the marketing research process

The Scope of Marketing Research

Marketing managers often commission formal marketing studies of specific problems and
opportunities, like a market survey, a product-preference test, a sales forecast by region, or an
advertising evaluation. It’s the job of the marketing researcher to produce insight to help the
marketing manager’s decision making. Formally, the American Marketing Association says:

Marketing research is the function that links the consumer, customer, and public to the
marketer through information used to identify and define marketing opportunities and
problems; generate, refine, and evaluate marketing actions; monitor marketing performance;
and improve understanding of marketing as a process. Marketing research specifies the
information required to address these issues, designs the method for collecting information,
manages and implements the data collection process, analyzes the results, and communicates
the findings and their implications

Importance of Marketing Insights

Marketing insights provide diagnostic information about how and why we observe certain
effects in the marketplace and what that means to marketers
Who Does Marketing Research?

Most large companies have their own marketing research departments, which often play crucial
roles within the organization. Marketing research, however, is not limited to large companies
with big budgets and marketing research departments. Often at much smaller companies,
everyone carries out marketing research including the customers. Small companies can also
hire the services of a marketing research firm or conduct research in creative and affordable
ways, such as:

1) Engaging students or professors to design and carry out projects

2) Using the Internet

3) Checking out rivals

4) Tapping into marketing partner expertise

5) Tapping into employee creativity and wisdom

The Marketing Research Process

Learning Target

 Explain the scope of marketing research

 Discuss the steps involved in conducting good marketing research
 Enumerate and explain the marketing research process

The Scope of Marketing Research

Marketing managers often commission formal marketing studies of specific problems and
opportunities, like a market survey, a product-preference test, a sales forecast by region, or an
advertising evaluation. It’s the job of the marketing researcher to produce insight to help the
marketing manager’s decision making. Formally, the American Marketing Association says:
Marketing research is the function that links the consumer, customer, and public to the
marketer through information used to identify and define marketing opportunities and
problems; generate, refine, and evaluate marketing actions; monitor marketing performance;
and improve understanding of marketing as a process. Marketing research specifies the
information required to address these issues, designs the method for collecting information,
manages and implements the data collection process, analyzes the results, and communicates
the findings and their implications

Importance of Marketing Insights

Marketing insights provide diagnostic information about how and why we observe certain
effects in the marketplace and what that means to marketers

Who Does Marketing Research?

Most large companies have their own marketing research departments, which often play crucial
roles within the organization. Marketing research, however, is not limited to large companies
with big budgets and marketing research departments. Often at much smaller companies,
everyone carries out marketing research including the customers. Small companies can also
hire the services of a marketing research firm or conduct research in creative and affordable
ways, such as:

1) Engaging students or professors to design and carry out projects

2) Using the Internet

3) Checking out rivals

4) Tapping into marketing partner expertise

5) Tapping into employee creativity and wisdom

The Marketing Research Process

Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives

Marketing managers must be careful not to define the problem too broadly or too narrowly for
the marketing researcher

Step 2: Develop the Research Plan

In the second stage of marketing research we develop the most efficient plan for gathering the
needed information and discover what that will cost. To design a research plan, we need to
make decisions about the data sources, research approaches, research instruments, sampling
plan, and contact methods
Data Sources The researcher can gather secondary data, primary data, or both. Secondary data
are data that were collected for another purpose and already exist somewhere. Primary data
are data freshly gathered for a specific purpose or project

Step 3: Collect the Information

The data collection phase of marketing research is generally the most expensive and error-
prone. Some respondents will be away from home, offline, or otherwise inaccessible; they must
be contacted again or replaced. Others will refuse to cooperate or will give biased or dishonest
answers

Step 4: Analyze the Information

The next-to-last step in the process is to extract findings by tabulating the data and developing
summary measures.The researchers now compute averages and measures of dispersion for
the major variables and apply some advanced statistical techniques and decision models in the
hope of discovering additional findings. They may test different hypotheses and theories,
applying sensitivity analysis to test assumptions and the strength of the conclusions

Step 5: Present the Findings

As the last step, the researcher presents the findings. Researchers are increasingly asked to
play a proactive, consulting role in translating data and information into insights and
recommendations for management

Step 6: Make the Decision

Some organizations use marketing decision support systems to help their marketing managers
make better decisions. MIT’s John Little defined a marketing decision support system (MDSS)
as a coordinated collection of data, systems, tools, and techniques, with supporting software
and hardware, by which an organization gathers and interprets relevant information from
business and environment and turns it into a basis for marketing action
Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives

Marketing managers must be careful not to define the problem too broadly or too narrowly for
the marketing researcher

Step 2: Develop the Research Plan

In the second stage of marketing research we develop the most efficient plan for gathering the
needed information and discover what that will cost. To design a research plan, we need to
make decisions about the data sources, research approaches, research instruments, sampling
plan, and contact methods

Data Sources The researcher can gather secondary data, primary data, or both. Secondary data
are data that were collected for another purpose and already exist somewhere. Primary data
are data freshly gathered for a specific purpose or project

Step 3: Collect the Information

The data collection phase of marketing research is generally the most expensive and error-
prone. Some respondents will be away from home, offline, or otherwise inaccessible; they must
be contacted again or replaced. Others will refuse to cooperate or will give biased or dishonest
answers

Step 4: Analyze the Information

The next-to-last step in the process is to extract findings by tabulating the data and developing
summary measures.The researchers now compute averages and measures of dispersion for
the major variables and apply some advanced statistical techniques and decision models in the
hope of discovering additional findings. They may test different hypotheses and theories,
applying sensitivity analysis to test assumptions and the strength of the conclusions

Step 5: Present the Findings

As the last step, the researcher presents the findings. Researchers are increasingly asked to
play a proactive, consulting role in translating data and information into insights and
recommendations for management

Step 6: Make the Decision

Some organizations use marketing decision support systems to help their marketing managers
make better decisions. MIT’s John Little defined a marketing decision support system (MDSS)
as a coordinated collection of data, systems, tools, and techniques, with supporting software
and hardware, by which an organization gathers and interprets relevant information from
business and environment and turns it into a basis for marketing action