Marketing Research

Marketing Research is a systematic design, collection, analysis

and reporting of data and findings relevant to a specific
marketing situation facing the firm.

Marketing research firms fall into three categories.

Syndicated-service research firms

ACNeilsen-ORG-MARG, IMRB International, NCAER
(National Council for Applied Economic Research)

Custom marketing research firms

Specialty-line marketing research firms

The Marketing Research Process

Define The Problem and Research Objectives

Develop The Research Plan

Collect the Information

Analyse The Information

Present The Findings

Make The Decision

 Defining the Problem and Research Objectives

(i) What is to be researched (the content, the scope)

And

(ii) Why is it to be researched (the decisions that are to be made)

The end product of this exercise has to be a clear definition of the

problem and research objectives.
 Develop the Research Plan
Developing the most efficient plan for gathering the needed
information.

Data Sources
Primary and Secondary data.

Research Approaches
Observational Research (Observing the relevant actors and setting)
Focus Group research (The group comprising 6 to 10 people)
Survey Research (Best Suited for descriptive research)
Behavioural Data (More reliable than memory-based statements)
Experimental Research (The most scientifically valid research)
Research Instruments

Questionnaires

Qualitative Measures

Shadowing
Behaviour Mapping
Consumer Journey
Camera Journals
Extreme User Interviews
Storytelling
Unfocus Groups

Mechanical Devices
Sampling Plan
Sampling Unit: Who is to be surveyed?

Sample Size: How many people should be surveyed?

Sampling Procedure? How should the respondents be chosen?

Contact Methods

Mail Questionnaire

Telephone Interview

Personal Interview

Online Interview
Collect the Information

Analyse the Information

Make the Decision

 Suggestions about Making a Questionnaire

1. Ensure that questions are without bias.

2. Make the questions as simple as possible.
3. Make the questions specific
4. Avoid jargon or shorthand
5. Steer clear of sophisticated or uncommon words
6. Avoid ambiguous words
7. Avoid questions with a negative in them
8. Avoid hypothetical questions
9. Do not use words that could be misread
10. Decensitise questions by using response bands
11. Ensure that fixed responses do not overlap
12. Allow for “other” in fixed response questions
 Overcoming Barriers to the use of Marketing Research

1. A narrow conception of the research

2. Uneven caliber of researchers

3. Poor framing of the problem:

4. Late and occasionally erroneous findings

5. Personality and presentational differences

 The Seven Characteristics of Good Marketing Research

1. Scientific Method: Careful observation, formulation of hypotheses, prediction

and testing.

2. Research Creativity: Innovative ways to solve a problem

3. Multiple Methods: Use of two or three methods to increase confidence in the

results.

4. Interdependence of Models and data:

5. Value and cost of information

6. Healthy Skepticism

7. Ethical Marketing
 Measuring Marketing Productivity

Two complementary approaches to measure marketing

productivity are

1. Marketing metrics to assess marketing effects

2. Marketing-mix modeling to ensure casual relationships and how

marketing activity affects outcome.
Marketing Metrics

It is the set of measures that helps firms to quantify, compare, and interpret
their marketing performance.

Many marketing metrics relate to customer-level concerns such as their

attitudes and behaviour; others relate to brand-level concerns such as market
share, relative price premium, and profitability.

Companies can also monitor an extensive set of metrics internal to the

company.
 Sample Marketing Metrics

I. External II. Internal

Awareness Awareness of goals

Market share (volume or value) Commitment to goals

Relative price (market share value/volume Active innovation support

Number of Complaints (level of dissatisfaction) Resource adequacy

Consumer satisfaction Staffing/skill levels

Distribution/availability Desire to learn

Total number of customers Willingness to change

Perceived quality/esteem Freedom to fail

Loyalty/retention Autonomy

Relative perceived quality Relative employee satisfaction

Firms are also employing organisational processes and systems to make sure
that the value of all these different metrics is maximised by the firm.

A summary set of relevant internal and external measures can be assembled

in a marketing dashboard for synthesis and interpretation.

As input to the marketing dashboard, companies can prepare two market-

based scorecards that reflect performance and provide possible early warning
signals.

Customer-performance scoreboard

Stakeholder-performance scoreboard
 Sample Customer-performance Scoreboard measures
 Percentage of new customers to average number of customers
 Percentage of lost customers to average number of customers

 Percentage of win-back customers to average number of customers

 Percentage of customers falling into very satisfied, dissatisfied, neutral, satisfied, and very
satisfied categories

 Percentage of customers who say that they would repurchase the product

 Percentage of customers who said that they would recommend the product to others

 Percentage of target market customers who have brand awareness or recall

 Percentage of customers who say that that the company’s product is the most preferred in the
category

 Percentage of customers who correctly identify the brand’s intended positioning and
differentiation

 average perception of company’s product quality relative to chief competitor

 Average perception of company’s service quality relative to chief competitor.

 Measuring Marketing plan Performance

Marketers can use four tools to check on plan performance

Sales Analysis

Market Share Analysis

Marketing expense-to-sales analysis

Financial Analysis
Sales Analysis

Sales-variance Analysis
It measures the relative contribution of different factors in sales performance.
Suppose the annual sales plan called for selling 4000 units in the first quarter at Re.1
per unit, for total revenue of Rs.4000. At quarter’s end, only 3000 units were sold at
Re.0.80 per unit, for total revenue of Rs.2400. So

Variance due to price decline= (Re.1.00-Re.0.80)(3000)= Rs.600 37.5%

Variance due to volume decline= (Re.1.00)(4000-3000)= Rs.1000 62.5%
Rs.1600 100%

Microsales Analysis
It looks at specific products, territories, and so forth that failed to produce expected
sales.
Market Share Analysis

Company sales do not reveal how well the company is performing relative to
competitors. For this purpose, management needs to track its market share.

Market share can be measured in three ways:

Overall market share

It is the company’s sales expressed as a percentage of total market sales.

Served market share

Company’s sales expressed as a percentage of total sales to its served market.
Company’s served market is all the buyers who are able and willing to buy its
product. It is always greater than overall market share.

Relative Market share

It can be expressed as market share in relation to its largest competitor. If it is 100%,
it means that the company is tied for a lead.
Conclusions from market share analysis are subject to certain qualifications

The assumption that outside forces affect all companies in the same is often not
true.

The assumption that a company’s performance should be judged against the

average performance of all companies is not always valid.

If a new firm enters the industry, then the every existing firm’s market share might
fall.

Sometime a market share decline is deliberately engineered to improve profits.

Market share can fluctuate for many minor reasons.

A useful way to analyse market share movements is in terms of four components.

Overall Market Share

=Customer Penetration× Customer loyalty× Customer
Selectivity× Price Selectivity.

Customer penetration: Percentage of all customers who buy from the company.

Customer loyalty: Purchases from the company by its customers expressed as a

percentage of their total purchases from all suppliers of the same
products.

Customer Selectivity: Size of the average customer purchase from the company
expressed as a percentage of the size of the average customer
purchase from an average company.

Price Selectivity: Average price charged by the company expressed as a percentage

of the average price charged by all companies.
Marketing expense-to-sales Analysis
If in one company, this ratio was 30%, then it is consisted of five component
expense-to-sales ratios:

Salesforce-to-sales (15%)
Advertising-to-sales (5%)
Sales promotion-to-sales (6%)
Marketing research-to-sales (1%)
Sales administration-to-sales (3%)

The period-to-period fluctuations in each ratio can be tracked on a control chart.

Financial Analysis
It is to identify the factors that affect the company’s rate of return on net worth.

The return on net worth is the product of two ratios, the company’s return on assets
and its financial leverage.

The return on asset is the product of two ratios, the profit margin and the asset
turnover.

Profit Margin

1.5%
Rate of Return
Net Profit Return on Assets Financial Leverage on Net worth
Net sales = 4.8% × 2.6% = 12.5%
Asset Turnover
Net Profits Total assets Net Profits
3.2%
Total Assets Net Worth Net Worth
Net Sales
Total Assets Financial model of Return on Net Worth
 Profitability Analysis
Step 1: Identifying functional Expenses
Step 2: Assigning Functional expenses to Marketing Entities
Step 3: Preparing a Profit-and-Loss Statement for Each Marketing Entity