cb - session 14 - market research

8/3/2019 CB - Session 14 - Market Research

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Prof. Ronak Shah

Market Research


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Prof. Ronak Shah

Market Research is the process of Systematic Design, Collection,

Analysis and Reporting ofData & Findings, that are relevant to Specific

Marketing situation being faced by the Company

Market Research Encompasses all the spheres of Marketing, i.e. Right from

theIdea of a New ProducttoAfter Sales Service

Companies normally budget Marketing Research at 1 to 2% of Company

Sales.

Introduction to Market Research


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The Research Process Provides a Scientific Platform, Contrary to the

Traditional Intuitive Approach of Decision Making by Managers, Which

used to put Large Amount ofOrganizational Resources at Risk.

Companies generally avail service of either of the following types of

Marketing Research Firms:

Syndicate-Services Research Firms: These firms gather consumer & Trade

Information, which they sell for a fee. Eg. ACNeilsen-ORG, NCAER etc..

Custom Marketing Research Firms: They Cater to the specific Research

Needs of Individual Companies

Introduction to Market Research


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Prof. Ronak Shah

You are planning to open-up a Fast Food joint in Pune....

- Why will you conduct a Market Survey ?

- What would be the Source of your Data ?

- Whom will you ask these Questions ? How will you choose Sample ?

- How will you collect the Information ?

(Personally asking questions OR Sending

Mails etc...??)

- Which Tools will you use to Analyze

these Data ?

An Exercise


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Market Research Process

Define the Problem &

Research Objective

Develop theResearch Plan

Collect theInformation

Analyze theInformation

Prepare & Present theResearch Report


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Answers to Following Questions will help you in Defining the Problem:

What is to be Researched (The Content, The Scope)

Why is it to be Researched (The Decisions that are to be Made)

The Problem should not be defined either too Broadly or Narrowly

The End product of these Step should be a clear Definition of the Problem

Problem Definition for Our Restaurant Exercise:What is the Market Potential for a Fast-Food Joint with South Indian Dishes

as their specialty, in Pune

Step 1 Define Research Problem


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This Includes the Decision On:

- Data Source: Primary Source, Secondary Source

- Research Approaches: Focus Group, Survey, Behavioral Data, Experimental

- Research Instrument: Questionnaires, Mechanical Devices

- Sampling Plan: Sampling Unit (Who is to be Surveyed), Sample Size (How Many

People to be Surveyed), Sampling Procedure (How should Respondent be Chosen

: Probability Sampling OR Non Probability Sampling)

- Contact Methods: Mail Questionnaire, Telephone Interview, Personal Interview,

Online Interview

Step 2 Develop the Research Plan



Research Plan for Our Restaurant Exercise

- Data Source: Primary, Secondary or Both

- Research Approaches: Survey

- Research Instrument: Questionnaires

- Sampling Plan: Sampling Unit (18-35 Age Group), Sample Size (200 People),

Sampling Procedure (Random Sampling, Stratified Random Sampling (Age Group) ,

Cluster/area Samples (Region/City wise) )

- Contact Methods: Personal Interview

Step 2 Develop the Research Plan



This is Most Expensive & Error prone Phase of Market Research

Because:

Some Respondents will not be at Home....

Some Respondents will Refuse to Cooperate...

Some others will give Biased or Dishonest Answers...

Getting the Right Respondents is always Critical

Step 3 Collect The Information



Use Statistical tools & Decision Models to Analyze the collected Data.....

(You would have studied Multivariate Analysis, Chi-Square, Annova....Etc

This would be covered in detail if your choose MR as your Elective in

Semester III OR IV)

The Data Becomes INFORMATION when Arranged & Analyzed

Meaningfully......

Step 4 & 5 Analyze & Present the Findings



Demand Forecasting

Forecasting Current Market Demand

Forecasting Future Market Demand



Sales Forecasts are Used By....

- Finance Dept. to Raise the Needed Cash for Investments & Operations

- Manufacturing Dept. to Establish Capacity & Output Levels

- Purchasing Dept. to Place Orders to Suppliers

- HR Dept. to Hire the Needed Workforce...etc

Marketing Dept. is Responsible for Preparing the Sales Forecast

Importance of Demand Forecasting



Potential Market

It is the Set of Consumers who profess a Sufficient Level of Interest in your

Product Offering and Have Enough Income to purchase your Product Offering

Available Market

It is the Set of Consumers who have Interest, Income & Access to your

Product Offering.

For certain Product, Company or Government might have restricted the

Sales to only Certain Group of Consumers

Ex:Selling of Tobacco Products to Under 18 Age group is banned

Measures of Market Demand



Target Market

It is the Part of Qualified Available Market the Company Decides to Pursue.

Ex: Company might decide to concentrate its Marketing & Distribution efforts

In the North only.

Penetrated Market

It is the Set of Consumers who are Buyingthe Companys Product

Measures of Market Demand



Forecast of Current Market Demand is Useful while Venturing in to

A New Market

Two Popular Approaches Are:Total Market Potential, Industry Sales &

Market Share Information

Total Market Potential

It is the Maximum amount of Sales that might be available to all the firms in

an Industry during a Given Period, under a given level ofEnvironmental

Condition.

Total Market Potential = No. of Potential Buyers X

Average Quantity Purchased by a Buyer X

The Avg. Price of Product

(WhereXindicates Multiplication)




Essilor is World Leader in Spectacle Lenses. It is venturing in to Indian

Market & planning to Targeting Indian youth (Age 18-35), since they have

been the major consumers across the world for Essilor Contact Lenses.

It is evaluating the Market Potential of Pune, for the Contact Lenses.

One Pair of its Contact Lenses cost around Rs. 2000.

Further, following Secondary data have been obtained From PMCs

Consensus Dept. & Other Market Experts for such Products

Total Population of Pune: 6 Mill.

Age Group wise Break-up: Under 18: 20%, 18-35: 50%, Above 36: 30%

Potential Buyers in Each Age group: 60%

Avg. No. of Contact Lenses purchased by

Each Person per Year: 0.6

What is the Total Market Potential ???

An Exercise



Industry Sales & Market Shares

Company needs to Identify its Competitors and estimate their Sales. The

Company can then Compare and Evaluate its Performance vis-a-vis the

Competition.

The Industry Trade Associations normally compile and publish Data on

Industry Sales and their Category wise Break-ups.

Ex: Spectacle Lenses Market has Categories Like: Spectacle Glasses, Fiber

Glasses, Contact Lenses...etc

Syndicate Reports are also available in this regards, like, ACNeilson-ORG-

MARG Retail Index, National Readership Survey...etc




Estimation for Products which have fairly consistent Sales, or which areFrequently Used Products, is relatively easy compared to estimation for

Products whose Sales keep Fluctuating.

Demand Estimation Process is generally carried out by Research Agencies,

Which observes Environmental Factors such as the effect of Government

Regulations, Population Trends..etc.





Four Fundamental Approaches for Future Demand Forecast



Sales Force Survey

- The Sales Team is Involved in Estimating Future Demand Pattern, usingtheir Sales Experience

- Advantage - it is Easy to conduct & it is Inexpensive

- Disadvantage - It brings the Personal Factors/Experiences of a Sales

Person

- Company can Provide Incentives to its Sales person for providing Proper

Projections to overcome above Challenges

Sales Person normally understands the Importance of Accurate Projections

since their Sales Targets are being determined on the basis of these

Projections



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Prof. Ronak Shah

Customers Survey

- Understanding Consumer Behavior Patterns are the most Critical part ofDemand Estimation

- Conduct Consumer Research Survey to understand the Consumers

Demand Patterns

- Advantage It is Very Accurate since we can Read Minds of Consumers

- DisadvantageVery expensive & Complex

Expert Opinion

- These Experts may be Dealers, Suppliers, Consultants, Economist...etc

- Forecast made are generally based on Intuition rather than Scientific

Methodology



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Past Sales Analysis

Companies also use Past Sales Information for Projecting Future SalesPatterns

Methods like Time Series Analysis & Regression Analysis are used to

forecast Future Demands based on Analysis of Past Sales

Lets Look at Time Series Analysis.......... (Next Slide)

Test Marketing- Sales of the Product is directly Tested in the Market, for Few Days

- It is used where Effective Estimation or Forecasting is not Possible



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Time Series Projections: Exponential Smoothing

Include all past observations

Weight recent observations much more heavily than very old

observations:

weight

today

Decreasing weight givento older observations

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Lets Stop....

cb - session 14 - market research

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