Marketing Research- Function that links an organization to its market through gathering of information.- A process of collecting, recording and analyzing data about customers, competitors and the market.- Systematic collection, analysis, and interpretation of information used to develop a marketing strategy or to solve a marketing problem. Provides information based on supportable facts

Why is market research needed?

Due to the high chances of failing, a company should first find out, before producing a

product, what consumers want to buy and how many consumers will

be willing to buy the product.

Usually, market research tries to answer these questions:

- What feature of the product do they like/dislike?- Are people willing to buy the product?- What price are people prepared to pay?- Location of the selling point of the product.- Type of customer who buys the product.- Type of promotion that will be effective.- Competition in the same industry.

PURPOSE OF MARKET RESEARCH

The purpose of market research is to gather data on customers and

potential customers. The collected data aids business

decision making. This therefore reduces the risks involved in

making these decisions. Market Research is a critical part of marketing intelligence that obtains information on consumer needs

- It facilitates the identification and definition of market driven opportunities and problems, the development

- Enables the monitoring of marketing performance and improved understanding of marketing as a business process

- Organizations use market research information to identify new product opportunities, develop advertising strategies, and implement new data gathering methods to better understand customers

TYPES OF MARKET RESEARCH

Primary research:Collects ‘first-hand’ data as they are being collected by the organization for the first time for its own needs. Although primary research can be expensive and time-consuming, the

up-to-date and relevant data

collected can give organizations a competitive advantage. This is

because their rivals will not have had access to it.

There are two types of Primary Research:

Qualitative – used to measure people’s reactions, responses or feelings toward a given subject (i.e. blind taste test). It discover the motivational factors behind consumer buying habits.

This research provides information on consumer perceptions, such as:

how they feel about products and services

what they like or do not like what they would want from a new

product

Quantitative - collecting data by surveying a representative sample of a target market population (i.e. Telephone Survey). This research presents information in a numeric way, such as graphs, tables or charts that can be used to analyse the information.

Secondary research:Is the use and analysis of data that

already exist, these data were originally collected by another

organization, often for a different purpose.

** Secondary research should be undertaken first – but only if the data exist

SOURCES OF SECONDARY DATA

Secondary data can be obtained from the following well known sources:

Government publications

Provides information about the consumers, such as:- Population census- Social Trends- Annual Abstract of Statistics- Family Expenditure Survey.

Local libraries and local government offices

Provides local data such as: - local population census – total population size, age

and occupation distributions- number of households in the area- Proportions of the local population from different

ethnic and cultural groups.

Trade organizations

Trade organizations produce regular reports on the state of the markets their members operate in. For example:

- Society of Motor Manufacturers and Traders- Furniture Retailers Association- Engineering Employers Federation.

Market intelligence reports

These are extremely detailed reports on individual markets and industries produced by specialist market research agencies. They are very expensive, but they are usually available at local business libraries. Examples are:

- Mintel reports-- Key Note reports- Euromonitor.

Newspaper reports and specialist publications

Example: The Financial Times – regular articles on key industries such as IT and detailed country reports – essential for potential exporters.

Internal company records

If the business has been trading for some time, a large quantity of secondary data will already be available for further analysis from:

- customer sales records- guarantee claims from customers- daily, weekly and monthly sales trends- feedback from customers on product,

service, delivery and quality

PROCESS

1. Problem Definition2. Development of an approach to the

problem3. Research Design Formulation4. Data Collection5. Data Analysis6. Report Preparations and Presentation

Examines each detail of the product or service and analyzes its potential impact on the market, looking at things such as flavour, scent, design, colour and sounds

Market research can, therefore, be used to discover information about:

o Market size and consumer tastes and trendso The product and its perceived strengths and weaknesseso The promotion used and its effectivenesso Competitors and their claimed unique selling propositionso Distribution methods most preferred by consumerso Consumers’ preferences for packaging the product.

ADVANTAGES Of Conducting Market Research

I. Reduces the risks associated with new product launches: By investigating potential demand for a new product or service the business should be able to assess the likely chances of a new product achieving satisfactory sales.

II. Predict future demand changes: Example: A travel firm may wish to investigate social and other changes to see how these might affect the demand for holidays in the future. For instance, the growth in the number of single-person households may suggest that there could be a rising demand for ‘singles’ holidays.

III. Explains patterns in sales of existing products and market trends: Market research is not just undertaken for new or planned products, it needs to be conducted for existing products too

IV. Assess the most favored designs, flavors, styles, promotions and packages for a product

Consumer tests of different versions of a product or of the proposed adverts to promote it will enable a business to focus on the aspects of design and performance that consumer’s rate most highly.

LIMITATIONS Of Market Research

I. Marketing research studies consumer behavior and marketing environment. Since these factors keep on changing, it cannot give exact information.

II. Costly: Marketing research is a costly affair. It needs a lot of money to conduct various market research activities. Huge funds are required to pay salaries, prepare questionnaires, conduct surveys, prepare reports, etc. It is not a viable choice for small businesses. It is suitable only to large companies who can afford its cost.

III. It cannot be an alternative to decision making. In other words, it cannot replace decision making. It aids in decision-making. It can improve the quality of decisions. However, it cannot guarantee a 100% success.

IV. It can reduce the business risks. However, it cannot totally eliminate all these risks.

V. Limited scope: Marketing research solves many business-related problems. However, it cannot solve all business problems. It cannot solve problems related to consumer behavior, income and expenditure relationship, etc. Thus, its scope is limited.