Marketing Research & Demand Forecasting

Week 2

Lecture Outline

• Marketing Research: Meaning and Scope

• Sources of Data Collection

• The Marketing Research Process

• Demand Forecasting and Measurement

• Marketing Research is emerging as a Vital Tool in the Value Delivery

Endeavour

• To be able to identify what constitutes good marketing research.

• To understand how companies more accurately measure and forecast

demand.

• To able to develop estimates of market potential and sales forecast.

Learning Outcomes

Marketing Research

Marketing Research is the systematic design, collection, analysis, and reporting

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

"Marketing research is the function that links the consumer, customer, and public

to the marketer through information - 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 methods for collecting information, manages and

implements the data collection process, analyzes, and communicates the findings

and their implications.“

American Marketing Association

Market Research

'Market' research is simply research into a specific market. It is a very narrow

concept. 'Marketing' research is much broader. It not only includes 'market'

research, but also areas such as research into new products, or modes of

distribution such as via the Internet.

We put it simply:

Marketing research into the elements of the marketing mix, competitors, markets,

and everything to do with the customers.

The Marketing Research Process

Define the problem

Develop research plan

Collect information

Analyze information

Present findings

Make

decision

Step 1: Define the Problem

• Define the problem:

It should not be too broad or too narrowly defined.

If it too vague it will lead to wastages of resources. And if too narrow it

will lead to collection of inadequate data and information required to take an

effective decision.

• Specify decision alternatives: What is to be researched and why it is to be

researched.

• State research objectives: Defining the problem and research objectives must be

in reference to the end result which organization is looking for

Step 2: Develop the Research Plan

Data

Sources

Contact

Methods

Research

Instruments

Sampling

Plan

Research

Approach

Research Approaches

Observation

Focus Group

Survey

Behavioral Data

Experimentation

Ethnographic

Focus Group in Session

Research Instruments

Questionnaires

Questionnaire Do’s and Don’ts

» Ensure questions are free of

bias

» Make questions simple

» Make questions specific

» Avoid jargon

» Avoid sophisticated words

» Avoid ambiguous words

• Avoid negatives

• Avoid hypotheticals

• Avoid words that could be

misheard

• Use response bands

• Use mutually exclusive

categories

• Allow for ―other‖ in fixed

response questions

Question Types—Dichotomous

In arranging this trip, did you contact Indian Airlines?

Yes No

Question Types—Multiple Choice

With whom are you traveling on this trip?

No one

Spouse

Spouse and children

Children only

Business associates/friends/relatives

An organized tour group

Question Types—Likert Scale

Indicate your level of agreement with the following statement: Small airlines

generally give better service than large ones.

Strongly disagree

Disagree

Neither agree nor disagree

Agree

Strongly agree

Question Types—Semantic Differential

Indian Airlines

Large ………………………………...……………………………………Small

Experienced………………….…………………………………Inexperienced

Modern…………………………………………………………Old-fashioned

Question Types—Importance Scale

Airline food service is _____ to me.

Extremely important

Very important

Somewhat important

Not very important

Not at all important

Question Types—Rating Scale

Indian Airlines’ food service is _____.

Excellent

Very good

Good

Fair

Poor

Question Types—Completely Unstructured

What is your opinion of Indian Airlines?

-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------

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Question Types—Word Association

What is the first word that comes to your mind when you hear the following?

Indian-----------------------------------------------------------------------------------------

Travel----------------------------------------------------------------------------------------

Airline---------------------------------------------------------------------------------------

Question Types—Sentence Completion

When I choose an airline, the most important consideration in my decision is:

-------------------------------------------------------------------------------------------------

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Question Types—Story Completion

I flew Indian Airlines a few days ago. I noticed that the exterior and interior of

the plane had very bright colors. This aroused in me the following thoughts and

feelings.‖ Now complete the story.

(Empty Balloons)

Question Types—Thematic Apperception Test

Make up a story that reflects what you think is happening in this picture

Question Types—Picture

Qualitative Measures

Word Association

Projective Techniques

Visualization

Brand Personification

Laddering

Technological Devices

Galvanometers

Tachistoscope

Eye cameras

Audiometers

GPS

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?

Types of Samples

Probability Samples

Simple random

Stratified random

Cluster

Non-Probability Samples

Convenience

Judgment

Quota

Contact Methods

Mail Questionnaire

Telephone

Interview

Personal

Interview

Online

Interview

Marketing Decision Support System

Marketing Decision Support System is a coordinated collection of data,

systems, tools, and techniques with supporting hardware and software by which

an organization gathers and interprets relevant information from business and

environment and turns it into a basis for marketing action.

Barriers Limiting the Use of Marketing Research

• A narrow conception of the research

• Uneven caliber of researchers

• Poor framing of the problem

• Late and occasionally erroneous findings

• Personality and presentational differences

Typical Problems in Rural Research

• Low literacy levels require innovations in questionnaire design scales

• Wide geographical dispersion requires long travels

• A large number of languages and dialects, requiring multiple translations

• Non-availability of working population at normal places of residence

• Poor access to women respondents

• Villages layout based on caste lines, requiring innovative sampling

Characteristics of Good Marketing Research

Scientific Method Research Creativity

Multiple Methods Interdependence

Value and Cost of Information Healthy Skepticism

Ethical Marketing

Accurate demand forecasting is essential for a firm to enable it to produce the

required quantities at the right time and arrange well in advance for the

various factors of production, viz., raw materials, equipment, machine

accessories, labour, buildings, etc.

In a developing economy like India, forecasting seems more important. However,

the situation is changing rapidly.

The National Council of Applied Economic Research.

Factors involved in Demand Forecasting How far ahead ?

a. Long term – e.g. petroleum, paper, shipping. Tactical decisions. Within the

limits of resources already available.

b. Short-term – e.g. clothes. Strategic decisions. Extending or reducing the

limits of resources.

Demand forecasting

2. Undertaken at three levels:

a. Macro-level

b. Industry level e.g. trade associations

c. Firm level

3. Should the forecast be general or specific (product-wise)?

4. Problems or methods of forecasting for ―new‖ vis-à-vis ―well established‖

products.

5. Classification of products – producer goods, consumer durables,

consumer goods, services.

6. Special factors peculiar to the product and the market – risk and

uncertainty. (e.g. ladies’ dresses)

Purposes of forecasting

Purposes of short-term forecasting

a. Appropriate production scheduling.

b. Reducing costs of purchasing raw materials.

c. Determining appropriate price policy

d. Setting sales targets and establishing controls and incentives.

e. Evolving a suitable advertising and promotional campaign.

f. Forecasting short term financial requirements.

Purposes of long-term forecasting

a. Planning of a new unit or expansion of an existing unit.

b. Planning long term financial requirements.

c. Planning man-power requirements.

The Measures of Market Demand

Potential

Market

Penetrated

Market

Target

Market

Available

Market

Ninety types of Demand Measurement

Companies can prepare as many demand as 90 different types of demand

estimates.

Determinants of Demand

Non-Durable Consumer Goods:

A. Purchasing Power – disposable personal income (personal income – direct

taxes and other deductions). Published by C.S.O.

Discretionary income :Disposable income less (a) imputed income and income in

kind, (b) major fixed outlay payments, (c ) essential expenditures such as food and

clothing.

B. Price.

C. Demography: d= f (Y, D, P)

E.g., cotton cloth vs. cost of food grain.

2. Durable Consumer Goods:

A. Choice Between (a) using the goods longer by repairing it, or

(b) disposing it off and replacing it with a new one.

(c) Require special facilities for their use, e.g., roads for automobiles.

B. Household demand vis-à-vis individual demand.

C. Family characteristics.

D. Total demand consists of a. New-owner demand and, b. Replacement

demand (scrappage rate)

E. Price and credit conditions.

3. Capital goods: – used for further production. Demand will depend upon the

specific markets they serve and the end uses for which they are bought.

Data required for estimating the demand for capital goods:

a. The growth prospects of the user industries.

b. The norm of consumption of capital goods per unit of installed capacity.

c. The velocity of their use.

How Can We Estimate Current Demand?

Total Market Potential

Area Market Potential

Market Buildup Method

Multiple-Factor Index Method

Estimating Future Demand

• Survey of Buyers’ Intentions

• Composite of Sales Force Opinions

• Expert Opinion

• Past-Sales Analysis

• Market-Test Method

For You To Discuss?

What is the best type of Marketing Research?

Take a position:

1. Marketing research should be Quantitative.

or

2. Marketing research should be Qualitative.