The Nature and Scope of Marketing Research

Market vs. Marketing Research• Market Research; – The acquisiton of primary data about

customers and customer attitudes.– The process of identifying primary and

secondary information about demand for a product.–Concentrates the demand of the product.–How much is demanded, who demands?– It has a narrow scope.

Marketing Research

• The systematic and objective process of generating information for aid in making marketing decisions.

• The planning, collection and analysis of data relevant to marketing decision making.

• The systematic gathering, recording and analysing of data about problems relating to the marketing goods and services.

• The disciplined collection and evaluation of specific data in order to help suppliers to understand their customers’ needs better,

• Much broader in scope

• Covers all aspects of marketing

• Includes market research, product testing, research, promotional research, price research, research on competitior.

Importance of Marketing Research to Management

• MR can be viewed as playing 3 functional roles;

1. Descriptive Function: The gathering and presentation of statements of acts.

2. Diagnostic Function: The explanation of data or actions.

3. Predictive Function:Specification of how to use descriptive and diagnostic research to predict the results of a planned marketing decision.

Purpose of Marketing Research

• Basic Purpose of Marketing Research– Marketing research reduces uncertainty or error in

decision-making. The information collected by conducting marketing research is used for problem solving and decision making in various areas of marketing.

• To gain an understanding of markets• To identify changes in the market• To improve market awareness• To gain an understanding of customer needs• To reduce the risk and uncertainty• To anticipate/forecast market trends

Who uses Marketing Research?

Any organization needing information from the public

They are: Marketing managersProduct managersMedia plannerEducational institutionsPolitical parties Government agencies

Ch 1

Classifying Marketing Research Studies

• Identifying marketing opportunities and problems–Market-demand determination–Market segments identification–Marketing audits SWOT analysis

• Generating, refining, and evaluating potential marketing actions–Proposed marketing-mix evaluation testing–New-product prototype testing–Advertising pretesting…

Ch 1

Classifying Marketing Research Studies

• Monitoring marketing performance– Image analysis…bank image analysis– Tracking studies...sales, market shares of all

brands in our category–Customer satisfaction studies

Marketing Research Types

1. Basic (pure) Research

2. Applied Research

1. Basic Research

• Research aimed at expanding the limits of knowledge rather than solving a specific, pragmatic problem.

• Ex. Do consumers experience cognitive dissonance in low-involvement situations?

2. Applied Research

• Research conducted when a decision must be made about a specific real-life problem

• Research aimed at solving a specific, pragmatic problem- better understanding of the market-place, determination of why a strategy or tactic failed or reduction of uncertainty in management decision making.

• A sample of questions commonly answered by conducting primary applied research include: – What price should we charge for our product?– What distribution channels should be used?– How well does the product match up with the

competitor’s product?– How effective is the company’s advertising?– How will the consumers receive this new product?– What percentage of market penetration does

Product X have?– What is Product X’s image in the consumer’s

mind?

• Applied Research Example:

• Should McDonalds add Italian pasta dinners to its menu?– Marketing research told McDonald’s it should not

• Should Procter & Gamble add a high-priced home teeth bleaching kit to its product line?– Research showed Crest Whitestrips would sell well

at a retail price of $44

Main Divisions of Marketing Research

Marketing Research

Promotion Research

Sales Research

Pricing Research

Customer Research

Product and Service

Research

1. Product and Service Research

• MR can provide much help in the– design of the products. It is also concerned

with the –product development and new product testing–helps in determining the attributes of the

optimum product– also the relative importance of each attribute.

• Therefore, a product research helps in forecasting of likely trends in consumers preferences related to products quality, style, prices etc.

• Covers issues such as;• Existing products and service• New product opportunities• Competitive products• Augmented products opportunities

• Concerned with ; – Design, development, testing– Improvement, styling, performance– Comparative testing– Packaging– Psychological testing– Existing, new, augmented.

2. Customer Research

• Customers research covers investigation into buyers behavior.

• Plays an important role in judging the success of the product, as the ultimate buyer of the product is the customer.

• Investigates the reasons effecting the purchase decisions of a customer such as, the social, economic, cultural and psychological factors.

• Analyses why, how, what, when, where and how often do the buyers consume different products, and the various reasons behind them.

• Helps the company to place its product at appropriate place with optimal price.

Covers issues such as;• Finding out what kinds of people (age group,

socio economic status, family backrounds, etc) buy certain products and brands (Which customer groups represent the best target markets for my product or service?)

• Evaluating their preferences related to specific brands.

• Studying degree of brand/store loyalty for types of products/services.

3. Pricing Research Covers issues such as;

• Identifying the degree of price sensitivity for specific products/services in different market sectors.

• Estimating the relative effectiveness of price in the marketing mix.

• Identifying the degree of price competition in the specific markets.

• Evaluating the impact of trade discounts and other trading incentives needed to secure market entry and expansion.

4. Sales and Distribution Research• Sales research is concerned with a thorough examination of

selling activities of a company, usually by sales outlets, agencies and so on.

• Also involves sales forecasting which is a difficult technical function.

• This is also concerned with comparative analysis of company’s product with that of the competitors to find the differentiations in sales.

Covers issues such as;• Existing selling and distribution arrangements• Evaluation of comparative performance in specific market

sectors• Sales force organizaion relative to market oppotunities• Evaluation of alternative methods of distribution

5. Promotion Research

• It is connected with testing and evaluating the effectiveness of various methods used in promoting the company’s product or services.

Covers issues such as;• Identifying relevant/present methods of promoting specific

goods/services.• Evaluating costs and effectiveness of media judged to be

most suitable for promotional tasks.• Developing communication mix based on research

information.• Effects of advertising on sales.• Effectiveness of promotinal methods.