UNIT 1 MR

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UNIT 1

PART 1: INTRODUCTION OF MARKETING RESEARCH

MARKETING RESEARCH: It is a systematic & objective identification, collection, analysis, dissemination,

and use of information for the purpose of improving decision making related to identification and solution

of problems and opportunities in marketing.

AIM AND OBJECTIVE OF MARKETING RESEARCH

1. To understand why customers buy a particular product.

2. To know the marketing opportunities.

3. To understand the marketing problems.

4. To help in the selection of right course of action.

5. 5. To know about customer acceptance of the product.

6. 6. To understand the distribution network of the product.

7. 7. To forecast the probable volumes of the future sales.

8. 8. To analyze the expected market share.

9. 9. To assess the competitive strengths and policies.

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APPLICATION AND SCOPE OF MARKETING RESEARCH

1. RESEARCH ON MARKETING: The purpose of market research is to gather facts about markets

and the forces operating therein. The areas of market research broadly include

Analyzing market potential for the existing products and estimating demand for the new ones

Sales forecasting

Studying the characteristics of product markets

Studying the market trends

2. RESEARCHON PRODUCT/ SERVICE

Customer acceptance of the proposed new product

Comparative study of competitive products

Determining new uses of the present products

Test marketing the proposed product

Product line research

Packaging and design research

Studying the extent of customer satisfaction with the product

3. RESEARCH ON PROMOTION

Evaluating advertising effectiveness

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Analyzing advertising and selling practices

Selecting advertising media

Establishing sales territories

Evaluating the present and the proposed sales methods

Studying competitive pricing

Analyzing the salesmen’s effectiveness

4. RESERACH ON DISTRIBUTION

Location and design of distribution centers

Handling and packing of merchandise

Cost analysis of transportation methods

Dealer supply and storage requirements

5. RESEARCH ON PRICES Demand elasticity

Perceived prices

Cost analysis

Margin analysis

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MARKETING INFORMATION SYSTEM

A marketing information system (MIS) is a set of procedures and methods designed to generate, analyse,

disseminate, and store anticipated marketing decision information on a regular, continuous basis. An

information system can be used operationally, managerially, and strategically for several aspects of

marketing.

A marketing information system can be used operationally, managerially, and strategically for several

aspects of marketing.

We all know that no marketing activity can be carried out in isolation, know when we say it doesn’t work in

isolation that means there are various forces could be external or internal, controllable or uncontrollable

which are working on it. Thus to know which forces are acting on it and its impact the marketer needs to

gathering the data through its own resources which in terms of marketing we can say he is trying to gather

the market information or form a marketing information system. This collection of information is a

continuous process that gathers data from a variety of sources synthesizes it and sends it to those

responsible for meeting the market places needs. The effectiveness of marketing decision is proved if it has

a strong information system offering the firm a Competitive advantage. Marketing Information should not

be approached in an infrequent manner. If research is done this way, a firm could face these risks:

1. Opportunities may be missed.

2. There may be a lack of awareness of environmental changes and competitors’ actions.

3. Data collection may be difficult to analyse over several time periods.

4. Marketing plans and decisions may not be properly reviewed.

5. Data collection may be disjointed.

6. Previous studies may not be stored in an easy to use format.

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7. Time lags may result if a new study is required.

8. Actions may be reactionary rather than anticipatory.

The total information needs of the marketing department can be specified and satisfied via a marketing

intelligence network, which contains three components.

1. Continuous monitoring is the procedure by which the changing environment is regularly viewed.

2. Marketing research is used to obtain information on particular marketing issues.3. Data warehousing involves the retention of all types of relevant company records, as well as the

information collected through continuous monitoring and marketing research that is kept by the

organization.

Depending on a firm’s resources and the complexity of its needs, a marketing intelligence network may or

may not be fully computerized. The ingredients for a good MIS are consistency, completeness, and

orderliness. Marketing plans should be implemented on the basis of information obtained from the

intelligence network.

A Marketing Information System offers many advantages:

1. Organised data collection

2. A broad perspective

3. The storage of important data

4. An avoidance of crises

5. Coordinated marketing plans

6. Speed in obtaining sufficient information to make decisions

7. Data amassed and kept over several time periods

8. The ability to do a cost-benefit analysis

The disadvantages of a Marketing information system are high initial time and labour costs and the

complexity of setting up an information system. Marketers often complain that they lack enough

marketing information or the right kind, or have too much of the wrong kind. The solution is an

effective marketing information system.

The information needed by marketing managers comes from three main sources:

1. Internal company information – E.g. sales, orders, customer profiles, stocks, customer service reports

etc.

2. Marketing intelligence – This can be information gathered from many sources, including suppliers,customers, and distributors. Marketing intelligence is a catchall term to include all the everyday

information about developments in the market that helps a business prepare and adjust its marketing

plans. It is possible to buy intelligence information from outside suppliers (e.g. IDC, ORG, MARG) who set

up data gathering systems to support commercial intelligence products that can be profitably sold to all

players in a market.

3. Market research – Management cannot always wait for information to arrive in bits and pieces from

internal sources. Also, sources of market intelligence cannot always be relied upon to provide relevant or

up-to-date information (particularly for smaller or niche market segments). In such circumstances,

businesses often need to undertake specific studies to support their marketing strategy – this is marketresearch.

4. Analytical Marketing System (two parts)

http://www.marketing91.com/strategy/

http://www.marketing91.com/strategy/

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a) Statistical Bank

b) Model Bank

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EVALUATION AND CONTROL OF MARKETING RESEARCH

Management can use certain tools to evaluate & control research projects. They are as follows:

Check list: It serves as a reminder for the types of problems that are likely to come up during the

course of projects.

Flow charts: It enables management to maintain an overall control over the project.

Gnatt Chart: It enables the management to develop an overall research schedule by allocating a

time period to each component.

Advisory Committee: It comprises representatives from all functions and is the most effective way

of evaluating and controlling the total MR activity. Its main task is to give directions.

Marketing Research Audit

Budget Control: Some % of sales or each department decides its budget or Ad hoc basis

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VALUE OF INFORMATION IN DECISION MAKING

Unless the information collected does not lead the manager to change or modify his decision, the

information has no value. Generally, information is most useful in cases

1. Where one is unsure of what is to be done

2. Where huge values, say, huge profits or losses, are involved.

The value of information used in decision making is:

(Value of the outcome with the Information) – (value of the outcome without the Information)

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STEPS IN MARKETING RESEARCH

1: Problem Identification and Definition

This is the introductory phase of the marketing research process. Basically, it involves a clear and precise

understanding of the problem at hand. It is crucial that the research team identifies, understands and

defines the problem in its entire capacity, as it affects all the subsequent activities involved in the research

process. Research teams make use of customer feedback, internal and external data reports, sales graphs,

purchasing patterns, etc. to come up with an accurate problem definition.

2: Designing a Proper Approach

The next step is to come up with a near-flawless approach which is aimed at solving the identified problem.

During this process, the research team has to analyze and examine a variety of factors such as the

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company's targets, goals and objectives, financial resources, skill sets, manpower, industry environment,

changing business trends, etc. This phase often involves joint discussions between the research team,

industry experts and higher management.

3: Developing the Actual Research Design

This is the decisive step, wherein, the research design is the very fulcrum of the entire marketing research

process. The solidity of the research design alone decides the success or failure of the research program to

a large extent. Naturally, this step is the most time-consuming of all the steps and it needs careful thinkingand precise execution. Different activities involved in this process include feedback analysis, qualitative and

quantitative analysis, preparing questionnaires as well as sampling of data and processes.

4: Data Collection and Survey

This process mainly involves a lot of field-related work activities such as outdoor interviews, survey

campaigns and feedback sessions which are done by specially assigned data collection agents or field

agents. Almost all of those doorbell-ringing pamphlet guys or the irritating tele-callers who telephone at

the most untimely of hours, are data collection agents who are just doing their duty, as part of their

company's marketing research process. Data collection and surveying is also implemented by means of

Internet surveys, group discussions, mail surveys, etc.

5: Data Structuring and Analysis

Once the data collection and surveying activities have yielded sufficient and relevant data, it is time to

systematically organize the data so that it can be interpreted and analyzed by decision makers. This

typically involves activities such as data mining, clustering of data, preparing statistical graphs and curves,

etc.

6: Report Generation and Presentation

All the effort that goes into designing an approach, developing a research design, collecting data and finally

analysing the data, completely goes waste, if the findings and the results are not presented properly. It is

imperative that the whole marketing research project be properly documented and accounted for. The

entire purpose of the research campaign is to enable the higher management to make informed decisions

which will benefit the progress and the sales of the concerned product or service. Hence, it is crucial that

the research findings be presented accurately, clearly and relevantly. For this purpose, the use of

appropriate statistics, graphs, pie-charts, etc. is recommended.

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PART 2: RESEARCH DESIGN

RESEARCH DESIGN: A research design is a framework or blueprint for conducting the marketing research

project. It details the procedures necessary for obtaining the information needed to structure or solve

marketing research problems.

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EXPLORATORY RESEARCH

It is most commonly unstructured, informal research that is undertaken to gain background

information about the general nature of the research problem.

Exploratory research is systematic and flexible and allows the researcher to investigate whatever

sources he or she desires.

Such research may consist of going to the library and reading published secondary data; of asking

questions, salespersons acquaintances for their opinions about a company, its products and

services, and prices; or of simply observing everyday company practices.

REASON TO USE

Formulate a problem or define a problem more precisely

Identify alternative courses of action

Develop hypotheses

Isolate key variables and relationships for further examination

Gain insights for developing an approach to the problem

Establish priorities for further research

METHODS OF EXPLORATORY RESEARCH

Survey of experts

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Pilot surveys

Secondary data analyzed in a qualitative way

Qualitative research

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DESRIPTIVE RESEARCH

Which provides answers to questions such as who, what, where, where and how, as they are

related to the research problem.

Who- may be defined as a firms (competitors) customers?

What- defined as brands, brands, sizes that are being purchased.

Where- places where customers are purchasing products?

Why we cannot conclusively answer the question of why using descriptive research. Need to use

causal research designs.

REASON TO USE

To describe the characteristics of relevant groups, such as consumers, salespeople,

organizations, or market areas.

To estimate the percentage of units in a specified population exhibiting a certain behavior.

To determine the perceptions of product characteristics.

To determine the degree to which marketing variables are associated.

To make specific predictions.

METHODS OF DESCRIPTIVE RESEARCH

Secondary data analyzed in a quantitative as opposed to a qualitative manner Surveys

Panels

Observational and other data

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REASON TO USE CASUAL RESEARCH

A type of conclusive research where the major objective is to obtain evidence regarding cause-and-

effect (causal) relationship.

It requires a planned & structured design.

PURPOSE

To understand which variables are cause (independent variables) & which variables are the effect

(dependent variables) of a phenomenon.

To determine the nature of the relationship between the causal variables & the effect to be

predicted.

METHOD: Experiments

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CROSS- SECTIONAL DESIGNS

Involve the collection of information from any given sample of population elements only once.

In single cross-sectional designs, there is only one sample of respondents and information is

obtained from this sample only once.

In multiple cross-sectional designs, there are two or more samples of respondents, and

information from each sample is obtained only once. Often, information from different samples

is obtained at different times.

Cohort analysis consists of a series of surveys conducted at appropriate time intervals, where

the cohort serves as the basic unit of analysis. A cohort is a group of respondents who

experience the same event within the same time interval.

MULTIPLE CS DESIGN

A CS design in which there are two or more samples of respondents, and information from each

sample is obtained only once.

SINGLE CS DESIGN

A CS design in which one sample of respondents is drawn from the target population and

information is obtained from the sample once.

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LONGITUDINAL DESIGNS

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A fixed sample (or samples) of population elements is measured repeatedly on the same

variables

A longitudinal design differs from a cross-sectional design in that the sample or samples remain

the same over time

The sample remains the same over time, thus providing a series of pictures which when viewed

together portray an illustration of the situation & the changes that are taking place over time.

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SOURCES OF EXPERIMENTAL ERRORS

Several potential sources of error can affect a research design. The errors are as follows:

TOTAL ERROR

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It is the variation between the true mean value in the population of the variable of interest and the observed mean

value obtained in the marketing research project. Example: Avg income acc. to census record is different from the

marketing research project estimate. It consists of 2 types of error:

1. RANDOM SAMPLING ERROR

The error due to the particular sample selected being an imperfect representation of the population of

interest.

It can be defined as the variation between the true mean value for the sample and the true mean value of

the population.

2. NON- SAMPLING ERROR

Non-sampling errors can be attributed to sources other than sampling, and they may be random or nonrandom:

including errors in problem definition, approach, scales, questionnaire design, interviewing methods, and data

preparation and analysis.

It consists of 2 types of error:

1. NON- RESPONSE ERROR

A type of non-sampling error that occurs when some of the respondents included in the sample do notrespond.

This error may be defined as the variation between the true mean value of the variable in the original

sample and the true mean value in the net sample.

2. RESPONSE ERROR

A type of non-sampling error arising from respondents who do respond but give inaccurate answers

or their answers are misreported or misanalysed.

It may be defined as the variation between the true mean value of the variable in the net sample

and the observed mean value obtained in the research project.

It consists of 3 types of error:

A. RESEARCH ERROR: A type of response error made by the researcher is called researcher error. Researcher error

includes:

1. Surrogate information error: Surrogate information error may be defined as the variation between the

information needed for the research and the information sought by the researcher. Example: Instead of

obtaining information on consumer choice ,researcher gets it on consumer preference

2. Measurement error: Measurement error may be defined as the variation between the information sought

and the information generated by the measurement process employed by the researcher. Example: likingscale instead of satisfaction scale

3. Population definition error: It may be defined as the variation between the actual population relevant to

the problem at hand and the population as defined by the researcher.

4. Sampling frame error: It may be defined as the variation between the population defined by the researcher

and the population as implied by the sampling frame used. Example: the telephone directory used to

generate a list of no. does not accurately represent the population because of unlisted, disconnected and

new no. in service.

5. Data analysis error: It occurs when raw data is transformed into research findings using an inappropriate

statistical procedure, resulting in incorrect interpretation and findings.

B. INTERVIEWER ERROR: Response errors can be made by the interviewer also. This kind of error is known as

interviewer error. Interviewer error includes:

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1. Respondent selection error: It occurs when interviewers select respondents other than those specified by

the sampling design.

2. Questioning error: Errors made in asking questions of the respondents or in not probing when more

information is needed are called questioning errors.

3. Recording error: Recording error arises due to errors in hearing, interpreting, and recording the answers

given by the respondents.

4. Cheating error: Cheating error arises when the interviewer fabricates answers to a part or all of the

interview. Example: Not asking sensitive question related to respondent debt but later fills in the answers

based on personal assessment.

C. RESPONSE ERRORS: Response errors made by the respondent are called respondent errors. Respondent errors

includes:

1. Inability error: It result’s from the respondent’s inability to provide accurate answers. Respondents may

provide inaccurate answers because of unfamiliarity, fatigue, boredom, faulty recall, question format and

other factors.

2. Unwillingness error: It arises from the respondent’s unwillingness to provide accurate information.

Respondents may intentionally misreport their answers because of a desire to provide socially acceptable

answers, avoid embarrassment, or please the interviewer.

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In formulating a research design, the researcher should minimize the total error.

Increasing the sample size may decrease sampling error but may increase non sampling error (Interviewer

error).

Non sampling error is likely to be more problematic than sampling error.

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