Role of Marketing Research and Process

Module - 2Role of Marketing Research and Process.

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Topics to be coveredBusiness Research : An overview Research process Problem formulation Management problem v/s Research Problem Steps involved in preparing business research plan/proposal


Business Research An overviewRole of Marketing Research Marketing Research serves two major functions; i) It provides information for decision making, and ii) develops new knowledge. The use of information gathered by the marketing research reduces the risks involved in decision-making. It influences decisions such as pricing of the product, scale of advertising etc. The information collected directly affects the planning of the product. Market research is put to substantial use by firms that produce branded products and are in competition with other brands to know and maintain the popularity of their products among consumers.


Uses of Marketing Research1. Research relating to markets: a) To find out market potential for existing products. b) Sales research forecasting c) Finding and analysing market trends 2. Research relating to producers: a) Comparative study of competitors products b) Identify multiple uses for existing products c) Test marketing of products d) Product line research e) Packaging of products f) Consumer grievanceshttp://www.facebook.com/mr.fortyseven

3. a) b) c) d) e) 4. a) b) c) d) 5.

a)b) c) d)

Research related to promotion: Measure effectiveness of advertisement Analyse effectiveness of salesmen Media selection studies Study patterns of competitors pricing Motivational studies Research related to distribution: Design and locate outlets Handling operation Transportation Storage Research on pricing Cost Analysis Margin Analysis Price Analysis Demand Analysis


Research ProcessDefine and Formulate the Problem Develop a Working Hypothesis Rejected Research Proposal Stop

Pilot Testing

RESEARCH DESIGN

Sampling Design Data Collection Design Instrument Design

Draw Sample

Instrumen t Revision

Data Collection Reporting of Resultshttp://www.facebook.com/mr.fortyseven

Data Analysis

Hypothesis Testing

Data Interpretation & Generalisations

Formulating the Problem Problem formulation is the key to research process. For a researcher, the problem formulation means converting the management problem to a research problem. Example : Management Problem: Want to increase the sale of product A. Research Problem: What is the current standing of the product A? There is a famous saying that problem welldefined is half-solved. This statement is strikingly true in marketing research, because if the problem is not stated properly, the objectives will not be clear. If the objective is not clearly defined, the data collection becomes meaningless.http://www.facebook.com/mr.fortyseven

Developing a Working Hypothesis A hypothesis is a tentative assumption regarding the solution to the problem under study. The kind of data to be collected, the tools of analysis are influenced by the hypothesis. The hypothesis is a predictive statement which is made in the light of the available facts relating to the problem under study. E.g. The following hypotheses were formulated in relation to the research question on store loyalty: H1 : Customers who are store loyal are less knowledgeable about the shopping environment. H2 : Store loyal customers are more risk averse than are non loyal customers. These hypotheses guided the research by ensuring that variables measuring knowledge of the shopping environment and propensity to take risks were included in the research design.http://www.facebook.com/mr.fortyseven

Research Proposal A research proposal is a brief summary outlining the research objectives, the proposed methodology of research, benefits of study along with a detailed bibliography. The research proposal is like a road map to the researcher showing where he has to start and where to go and how to get there.


Research Design a) Should the research be exploratory or conclusive? Exploratory Research: Example, Causes for the decline in sales of a specific companys product in a specific territory under a specific salesman. The researcher may explore possible reasons as to why sales are falling. Faulty product planning Higher price Less discount Less availability Inefficient advertising/salesmanship Poor quality of salesmanship Less awareness Not all the factors are responsible for decline in sales. Conclusive Research: Narrow down the option. Only one or two factors are responsible for decline in sales.


Sampling Design Include a decision on the sampling unit, the sample size and the sampling method. Sampling unit is the most elementary unit which would be a part of the study e.g. in a survey on newspaper readership pattern, a single household comprising of all the members of the household can be regarded as a sampling unit. The size of the sample depends on factors like the availability of time and funds to the researcher, the ability of the researcher, the size of the population and the nature of the population.http://www.facebook.com/mr.fortyseven

Method of drawing a sample Probability method of sampling involves giving every member a known and unbiased chance of being a part of the sample. In non-probability method, an element of bias is involved. The probability of a unit being a part of the sample is not known. Data collection Design The method of gathering the data is planned in data collection design. Few data collection techniques arehttp://www.facebook.com/mr.fortyseven

Instrument Design The researcher while designing the questionnaire must think in terms of : Type of data Communication Approach Question Structure Question Wording

Data Collection The search for answers to research questions is called data collection. The sources of data may be classified as a) primary data b) secondary data.http://www.facebook.com/mr.fortyseven

Data Analysis Editing The data collected should be scanned to make sure that it is complete and that all the instructions are followed. This process is called editing. Coding Coding means assigning numbers to each of the answers, so that they can be tabulated and analyzed easily. Tabulation The process of orderly arrangement of data in a tabular form. Statistical Analysis In the last stage, the tabulated data is analyzed using various statistical techniques like averages, percentages, trend analysis, co-relation and regression techniques etc.http://www.facebook.com/mr.fortyseven

Hypothesis Testing Hypothesis testing will help a researcher in establishing the validity of his results. It would help him to state clearly that whether the difference, if any, between the two values is due to chance and hence can be attributed as insignificant or if the difference is actual and significant. Data Interpretation and GeneralisationFor studies in which no hypothesis has been tested, data interpretation is done with the intention of seeking explanation for the research results on the basis of existing theories. In case of hypothesis testing research studies, after the data has been analysed and tested repeatedly for arriving at conclusive results, generalizations are made to build a new theory.http://www.facebook.com/mr.fortyseven

Reporting of Results The last step is concerned with bringing in public the results of the research so that the findings can be put to some use. i. The preliminary section containing the title of the report, table of contents, list of tables, graphs, preface and an executive summary. ii. A main text section which contains the problem background, research objectives, a note on research methodology used, the importance of conducting the research and the conclusion arrived thereof. iii. The end section which includes appendices supporting the research with items like questionnaires and schedules used, glossary of terms and any other matter which although not a part of the main research but required in order to support the research can be included.http://www.facebook.com/mr.fortyseven

Case Study A STUDY ON CUSTOMER SATISFACTION IN A PUBLIC SECTOR BANK

A bank is interested in knowing the level of satisfaction of its customers. For this purpose it decided to conduct a survey and designed a framework for conducting the same. It included the research objectives and the methodology for carrying out the survey.


Problem What is the current level of customer satisfaction in a public sector bank at branch XYZ? Research objectives : The study is being conducted to find out the satisfaction level of customers on the following counts : I. The work efficiency of the bank II. The customer care service in the bank III. The value added services provided by the bank Population : All the customers of the public sector bank at branch XYZhttp://www.facebook.com/mr.fortyseven

Sampling Design : Sampling Unit : The existing customers of the bank Sample Size : 200 respondents Sampling Technique : Systematic sampling technique i.e. probability sampling technique Sources of data : Secondary data on the meaning and methods of conducting customer satisfaction is studied through books and earlier researches done on customer satisfaction. Information about the working of the bank, the value added services being provided and customer care facilities and its customers is taken from the bank records. Primary data will be collected through questionnaires. http://www.facebook.com/mr.fortyseven

Importance of Defining the ProblemProblem Definition is the most important step of marketing research. Problem definition involves stating the general problem and identifying the specific components of the marketing research problem. Only when the marketing research problem has been clearly defined can research be designed and conducted properly. Of all the tasks in a marketing research project, none is more vital to the ultimate fulfillment of a clients needs than a proper definition of the research problem.http://www.facebook.com/mr.fortyseven

All of the effort, time and money spent from this point on will be wasted if the problem is misunderstood or ill defined. Inadequate problem definition is a leading cause of failure of marketing research projects. Better communication and more involvement in problem definition are the most frequently mentioned ways of improving the usefulness of research.http://www.facebook.com/mr.fortyseven

Proper Definition of the Marketing Research ProblemMarketing Research Problem

Broad Statement

Specific Components


While formulating the problem, clearly define: 1. Who is the focus? 2. What is the subject matter of research? 3. To which geographical territory/area the problem refers to? 4. To which period does the study pertains to? Example : Why does the upper-middle class of Bangalore shop at Lifestyle during the Diwali season? Here all the above four aspects are covered. The characteristic of interest to the researcher are: 1) Variety offered at Lifestyle, 2) Discount offered by way of promotion, 3)Ambience at the Lifestyle, and 4) Personalised service offered.http://www.facebook.com/mr.fortyseven

Case-Problem FormulationThe motorcycle manufacturer Harley Davidson made such an important comeback in the early 2000s that there was a long waiting list to get a bike. In 2001, Harley Davidsons revenues exceeded $3.3 billion. Although distributors urged Harley Davidson to build more motorcycles, the company was skeptical about investing in new production facilities. The years of declining sales taught top management to be more risk averse than risk prone. Harley Davidson was now performing well again, and investing in new facilities meant taking risk. Would the demand follow in the long run or would customers stop wanting Harleys when the next fad came along? The decrease in motorcycles quality linked to the fast growth of Harley had cost the company all its bad years. Top management was afraid that the decision to invest was too early.


On the other hand, investing would help Harley Davidson expand and possibly become the market leader in the heavyweight segment. Discussions with industry experts indicated that brand loyalty was a major factor influencing the sales and repeat sales of motorcycles. Secondary data revealed that the vast majority of motorcycle owners also owned automobiles such as cars, SUVs and trucks. Focus groups with motorcycle owners further indicated that motorcycles were not used primarily as a means of basic transportation but as a means of recreation. The focus groups also highlighted the role of brand loyalty in motorcycle purchase and ownership.http://www.facebook.com/mr.fortyseven

Forecasts called for an increase in consumer spending on recreation and entertainment well into the year 2010. Empowered by the Internet, consumers in the 21st century had become increasingly sophisticated and value conscious. Yet, brand image and brand loyalty played a significant role in buyer behavior with well-known brands continuing to command a premium. Clearly, Harley Davidson had the necessary resources and marketing and technological skills to achieve its objective of being the dominanthttp://www.facebook.com/mr.fortyseven

The management decision problem is: Should Harley Davidson invest to produce more motorcycles? The marketing research problem is: Determine if customers would be loyal buyers of Harley Davidson in the long term.

The research objectives are: Who are the customers? What are their demographic and psychographic characteristics? Can different types of customers be distinguished? Is it possible to segment the market? How do customers feel regarding their Harleys? Are the customers loyal to Harley Davidson? http://www.facebook.com/mr.fortyseven What is the extent of brand loyalty?

One of the research questions examined and the associated hypotheses were: RQ : Can the motorcycle buyers be segmented based on psychographic characteristics? H1 : There are distinct segments of motorcycle buyers. H2 : Each segment is motivated to own a Harley for a different reason. H3 : Brand loyalty is high among Harley Davidson customers in all segments. This research was guided by the theory that brand loyalty is the result of positive beliefs, attitude, affect and experience with the brand. Both qualitative research and quantitative research were conducted. First, focus groups of current owners, would-be owners and owners of other brands were conducted to understand their feelings about Harley. Then 16000 surveys were mailed to get the psychological, sociological and demographic profiles of customers.http://www.facebook.com/mr.fortyseven

The process of defining the ProblemTasks Involved

Discussions with Decision Makers

Interviews with Experts

Secondary Data Analysis

Qualitative Research

Environmental Context of the Problem

Step 1 : Problem Definition

Management Decision Problem

Marketing Research Problemhttp://www.facebook.com/mr.fortyseven

Tasks InvolvedDiscussions with Decision Makers- The DM needs to understand the capabilities and limitations of research. Research provides information relevant to management decisions , but it cannot provide solutions because solutions require managerial judgment. Conversely, the researcher needs to understand the nature that decision managers face and what they hope to learn from the research. The problem audit provides a useful framework for interacting with the DM and identifying the underlying causes of the problem. Eg. McDonalds, when losing market share to Subway, discussed with decision makers to introduce new menu varieties or reduce price to increase sales.http://www.facebook.com/mr.fortyseven

Interviews with Industry ExpertsInterviews with industry experts, individuals knowledgeable about the firm and the industry, may help formulate the marketing research problem. These experts may be found both inside and outside the firm. Typically, expert information is obtained by unstructured personal interviews, without administering a formal questionnaire. Eg. The Repositioning of Diet Cherry Coke. The product failed in the beginning but later after interviewing industry experts, they repositioned it specifically for youth and thus became successful.http://www.facebook.com/mr.fortyseven

Secondary Data Analysis Analysis of available secondary data an essential step in problem definition. Secondary data include information made available by business and government sources, commercial marketing research firms and computerized databases. Secondary data are an economical and quick source of background information.

Qualitative Research Qualitative Research is undertaken to gain an understanding of the problem and its underlying factors. Qualitative Research is unstructured, exploratory in nature, based on small samples and may utilize popular qualitative techniques such as focus groups, word association and depth interviews.http://www.facebook.com/mr.fortyseven

Environmental Context of the Problem To understand the background of a marketing research problem, the researcher must understand the clients firm and industry. In particular, the researcher should analyze the factors that have an impact on the definition of the marketing research problem.


Factors to be Considered in the Environmental Context of the Problem

Past Information and Past Forecasts Information

Resources and ConstraintsObjectives Objectives

Buyer Behavior Legal Environment Economic Environment Marketing and Technological Skillshttp://www.facebook.com/mr.fortyseven

Sources for Problem Identification Research reports already published may be

referred to define a specific problem. Assistance of any research organisation, which handles a number of projects of the companies, can be sought to identify the problem. Professors working in reputed academic institution can act as guides in problem identification. Company employees and competitors can assist in identifying the problem. Cultural and technological changes can act as sources for research problem identification. Seminars/symposiums/focus groups can act as a useful source. http://www.facebook.com/mr.fortyseven

Criteria of a good Research ProblemOriginality Cost and Time Feasibility Criteria of a good Research Problem

Clarity and Unambiguity

Feasibility with researchers abilities

Interest and Curiosity

Important and Applicable


Criteria of a good Research ProblemOriginality The first thing that a researcher should keep in mind is that a good research problem is original and is not a duplication of existing work. A researcher may work on existing studies but with the objective of reinterpreting the known findings. Clarity and Unambiguity A second feature should be that the problem is clearly stated and expresses relationship between variables. Eg. Studying the relationship between family conditions and performance of students is a poorly stated problem. In this problem the term family conditions is very vague and does not specify the meaning of family conditions.http://www.facebook.com/mr.fortyseven

Interest and Curiosity The problem should be captivating and interesting enough to hold the interest of the researcher. If the problem does not capture a researchers interest it will not be able to reach its logical end. Important and Applicable The problem should contribute towards the existing knowledge database. The outcome or the results of the research should find an application in solving a problem being faced by the society, organisation or a government.http://www.facebook.com/mr.fortyseven

Feasibility with Researchers Abilities The researcher should choose a problem that is within his capabilities. It should match the competence and qualifications of the researcher.

Cost and Time Feasibility The researcher should take care that he has the financial resources required to undertake the research. Further he should carefully evaluate the time schedule required to complete the project and make sure that he has the ability and resources to complete it within the specified time.http://www.facebook.com/mr.fortyseven

Management Problem Vs Research ProblemManagement Decision Problem The problem confronting the decision maker. It asks what the decision maker needs to do. Marketing Research Problem A problem that entails determining what information is needed and how it can be obtained in the most feasible way.


Differences between Management Decision Problem and Marketing Research Problem

MANAGEMENT DECISION PROBLEM Asks what the decision maker needs to do

MARKETING RESEARCH PROBLEM Asks what information is needed and how it should be obtained

Action oriented

Information oriented

Focuses on symptoms

Focuses on underlying causes


Case Defining the ProblemDM: We have seen a decline in the patronage of our store. R: How do you know that? DM: Well, it is reflected in our sales and market share. R: Why do you think your patronage has declined? DM: I wish I knew. R: What about competition? DM: I suspect we are better than competition on some factors and worse than them on others. R: How do the customers view your store? DM: I think most of them view it positively, although we may have a weak area or two.http://www.facebook.com/mr.fortyseven

After a series of dialogues with the DM and other key managers, analysis of secondary data, and qualitative research, the problem was identified as follows: Management Decision Problem What should be done to improve the patronage of Sears? Marketing Research Problem Determine the relative strengths and weaknesses of Sears, vis--vis other major competitors, with respect to factors that influence store patronage.http://www.facebook.com/mr.fortyseven

Examples of Distinction between Management Decision problem and Marketing Research ProblemManagement Decision Problem Marketing Research Problem

Should a new product be introduced ?

To determine consumer preferences and purchase intentions for the proposed new product?To determine the effectiveness of the current advertising campaign? To determine the price elasticity of demand and the impact on sales and profits of various levels of price changes.

Should the advertising campaign be changed?

Should the price of the brand be increased?


Develop the package for a new product?

Evaluate the effectiveness of alternative package design. We should conduct an investigation to determine suitable media. Evaluate the impact of the media in terms of reach. Assess current amount of repeat purchase behavior. Design a test market through which the likely acceptance of new product can be gauged.

To select a media for product advertising.

Increase the amount of repurchase behavior of the customer. Introduce new product.


Steps involved in preparing Business Research Plan/Proposal A Research proposal is an outline, a draftplan of the research work proposed by the researcher. A research proposal is also termed as synopsis. It contains a statement of the problem, the proposed methodology, the benefits of the research and the resources required to conduct the research. It also informs the decision maker, the time taken to complete the investigation and also the cost to be incurred.http://www.facebook.com/mr.fortyseven

Contents of Research Proposal 1. Purpose of proposed research: a. Goals and objectives to be stated. b. Scope of the study (what will be included and what will not be included). c. Limitations if any due to time and money constraints, etc. d. What questions will the investigation answer? 2. Type of study: a. Is the study exploratory, descriptive or causal? b. Explain how secondary data will be used? c. Describe the method of gathering primary data.http://www.facebook.com/mr.fortyseven

3. Target population/group to be defined: From whom is the data collected. 4. Sample size Sample size is to be determined. At research proposal stage, this will be approximate, since the response rate and accuracy required cannot be predicted. If accuracy required is more, one has to choose bigger sample size and vice versa. This would mean more cost and time. 5. Sample design Is the sample probabilistic or non probabilistic? If probabilistic, what kind of sample? Is it random sampling or systematic randomhttp://www.facebook.com/mr.fortyseven

6. Data Collection Will questionnaire be used? If yes, is it structured or unstructured, disguised or undisguised. Is the study descriptive or causal or exploratory? Will the questionnaire be filled in presence of researcher or to be filled by respondent at their home without the presence of interviewer. If the data collection is by mail questionnaire, what incentive is being given in order to ensure response. Data collection may include qualitative phase and could involve focus group, depth interview etc. 7. Research instrument Questionnaire or any other tool used to collect data and suitable scales used as tools to analyze the data.http://www.facebook.com/mr.fortyseven

8. Benefits Description / explanation of cost-benefit analysis. How the value of information is going to help the decision makers.9. Estimation of the cost of the project Total cost of the project (proposed budget) and likely payoff. Also how long will it take to complete the project. 10. Profile of the research firm Background of the firm, overview and skill of the researcher such as qualification, experience etc.http://www.facebook.com/mr.fortyseven

11. Presentation Presentation should include the methodology used by the research firm and all the above contents. It should be designed in such way, to answer all the possible doubts of the clients about the research. Researcher should also convince the client about the validity and reliability of the research to be undertaken and its methodology.


Sample Research ProposalA leading private sector bank has recently issued a platinum card to its card holders, who have membership with the bank for more than 15 years and have sound credit history. In addition to the facilities available on the existing credit card, platinum card provides additional facilities such as free health check up, free membership to golf club, cash back of 20% of any purchase, 20% discount in any 5 star hotel and host of other facilities. Now company wants to understand the customer behavior and usage pattern of this card. M/S XYZ is appointed as a research agent to conduct the research. M/S XYZ submits the research proposal.http://www.facebook.com/mr.fortyseven

Research Proposal

A study on customer usage pattern of platinum card 1. Purpose: It is proposed to collect information regarding attitude, behavior and other demographic information of platinum card holders. Management of the bank has a host of questions regarding the popularity of the card and usage pattern. Towards this management wants answers to the following questions: i. Is the card being used by the existing card holder to whom it has been issued? ii. How do the card holders view the facilities provided under this card? iii. How often the card holders use this card? iv. For what privileges the card has been used? v. What other benefits do the card holders expect from this card?http://www.facebook.com/mr.fortyseven

2. Type of study: The study to be done will be in two stages: i. Exploratory ii. Descriptive It will be exploratory with respect to a) Shortcomings of the card b) Annual fee to be charged c) Privileges provided under this card It will be descriptive with respect to a) Usage pattern b) Awareness of privileges c) How often it is used 3. Target population: Current platinum card holders of the bank.http://www.facebook.com/mr.fortyseven

4. Sample size: To be chosen based on the level of accuracy required. 5. Sample design: Probability sampling will be adopted for the study. Respondents will be drawn from among the platinum card holders, based on random sampling technique. 6. Data collection: A structured, non-disguised questionnaire to be administered by skilled field force. A gift is proposed to encourage participation by the respondent. 7. Research instrument/techniques: Scales will be used to measure attitude and behavioral components of respondents. Suitable statistical techniques to be used to analyze the data.http://www.facebook.com/mr.fortyseven

8. Benefits: i. Profile of platinum card holders will be known. ii. Knowing the profile, customers can be segmented and appropriate promotion strategy can be developed for each segment. iii. Usage pattern can be tracked. iv. Any new privileges to be introduced will be known.


9. Cost estimation of the project:Sl.no. Item Cost in Rs

1.2. 3. 4. 5. 6.

Questionnaire designAdministrative cost Data collection Data coding Report Preparation cost Total cost

Rs. 1200Rs. 300 Rs. 860 Rs. 900 Rs. 400 Rs. 3660

10. Profile of the research firm: Research will be conducted by M/S XYZ. The company is located in Mumbai. The company has experience in conducting MR studies for many multinational and publichttp://www.facebook.com/mr.fortyseven

enterprises. Mr. X the chief of marketing research coordinator is an engineer from IIT with PG from IIM-C. He has over 20 years of experience and has conducted several studies in various sectors like retailing, banking, insurance, consumer goods.


Questions

What are editing and coding? ( 3 Marks) What is a research proposal? (3 Marks) What is a research problem? (3 Marks) What is a hypothesis? ( 3 Marks) What is the significance of problem formulation in market research?(3 Marks) Is it rightly said that problem well defined is half solved. Comment ( 7 Marks) Differentiate management problem and research problem with two illustrations. ( 7 Marks) What are the features of a good research study? (7 Marks) Describe the specific steps that are required to formulate a research problem. (7 Marks) Discuss the various steps in the process of designing and implementing a research study. ( 10 Marks) Explain the various steps involved in marketing research process.( 10 Marks) What are the steps in research process? (10 Marks) Company XYZ Ltd. Wants to test the advertisement effectiveness of its recently released advertisement on television. Outline detailed research plan for the above. ( 10 Marks)


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Role of Marketing Research and Process