MARKETING RESEARCH

DEFINITION OF MARKETING RESEARCH

The American Marketing Association defines marketing research as ^"the systematic gathering, recording and analysing of data about problems related to the marketing of goods and services^". Crisp has defined marketing research as "...the systematic, objective and exhaustive search for and study of the facts relevant to any problem in the field of marketing".

It would be useful to add the word ‘continuous’ to these two definitions to make them even more meaningful. A study conducted today may lose much of its relevance by next year and may need updating, modification or even an entirely new effort. The rate of change in information would depend on the specific product and customer segment with which you-are dealing. If your firm is marketing bathroom fittings you are dealing with functional products. The functions these fittings will serve in 2005 are the same as what they serve today. Therefore, you may not use extensive marketing research to understand the changes in customer tastes, because the variations in the designs (given the functional character of the product) which you can introduce are very limited. However, you would like to know what new colours and materials are preferred by the customers and undertake research for this purpose. If your firm is marketing ready-made clothes for teenagers you are dealing with a market where rapid change is its distinguishing characteristic. You would need continuous and extensive market research to find out what designs, fabrics, colours and prices will appeal to this market segment, this winter, the coming summer and the following winter and so on. You would also need to monitor the fashion scene in Europe and America and see what new trends can be successfully adapted for the Indian market. No matter whether you are in a product line which is greatly affected by changing customer tastes, habits, values, attitudes, or dealing in a product which is not that susceptible to environmental influences, you need marketing research to improve and be at least one step ahead of your competitors. In the latter case (ready-made clothes) marketing research is a critical input for the mere survival of the firm; in the former (bathroom fittings) case it can yield valuable ideas to make the firm a market innovator and leader. Marketing research can be used for consumer products, industrial products and services. 

 

PURPOSE OF MARKETING RESEARCH     

The basic purpose of marketing research is to facilitate the decision-making process. A manager has before him a number of alternative solutions to choose from in response to every marketing problem and situation. In the absence of market information he may make the choice on the basis of his hunch. By doing so the manager is taking a big risk because he has no concrete evidence to evaluate this alternative in comparison with others or to assess its possible outcome. But with the help of information provided by marketing research the manager can reduce the number of alternate choices to one, two or three and the possible' outcome of each choice is also known. Thus the decision-making process becomes a little easier.

The second purpose of marketing research is that it helps to reduce the risk associated with the process of decision-making. The risk arises because of two types of uncertainties: uncertainty about the expected outcome of the decision, and uncertainty about the future. , Uncertainty about the expected outcome of the decisions will always remain no matter how much information you may have collected to base your decision on hard facts. Unforeseen factors have the uncanny ability of upsetting even the most stable apple cart. In the mid-1950s, Ford Motor Company in USA had a 25 per cent market share of the automobile market. The company wanted to introduce a new car model which would appeal to young executives and professionals. The decision was based on research which revealed that this market segment accounted for 25 per cent market and was expected to grow to about 40 percent. Ford spent colossal amounts researching and designing the new model which was named Edsel. When introduced in the market the car was a total flop. This happened because of occurrence of three unforeseen events. Firstly, the youthful car market segment did not grow as rapidly as the market research had indicated. Secondly, the recession also set in at about this time and people began looking for more economical means of transportation. Thirdly, there was a sudden change in customer tastes, with people turning away from flashy exteriors, and the flamboyant Edsel was totally out of tune with new taste for austerity and functional simplicity. This example highlights the fact that despite best research effort the outcome can still be unpredictable. As Reynolds, a former ford executive, commenting on the Edsel fiasco, commented, "It is hard to see how anyone could, given the kind of car market that existed in 1955 and 1956 have anticipated such trends...^". The risk also arises because of uncertainty of what will happen in the future, the way the customers or distributors would behave, the manner in which the competition will react and so on. To the extent that research provides information about the future, it anticipates the future, thus providing the manager with a solid basis for his decision-making. However, it cannot provide perfectly exact or accurate information. But since the techniques of marketing research are based on scientific methods of collecting, analysis and interpreting data, its findings and projections, at the least, provide a definite trend of scenarios for future decision-making.

The third purpose of market research is that it helps firms in discovering opportunities which can be profitably exploited. These opportunities may exist in the form of untapped customer needs or wants not catered to by the existing firms. Food Specialities Limited (manufacturers of Nescafe Coffee, Lactogen powder milk) have introduced in the Indian market a dairy whitener (as a substitute for milk) called ‘Every Day' to be used for making tea, coffee. The product has proved to be a success because it is most convenient for use in offices, where tea and coffee is consumed in large quantities, but milk is not easy to procure. Every Day fulfils a slot in the market for powder milk which was not being catered to by the existing milk powders.  

SCOPE OF MARKETING RESEARCH  

Marketing research (MR) is concerned with all aspects of marketing, relating to product design and development, product-mix, pricing, packaging, branding, sales, distribution, competition, target customer segments and their buying behaviour, advertising and its impact. Specifically, the scope of MR includes customers, products, distribution, advertising_, competitive information and macro-level phenomenon.  

i)      Marketing is concerned with identifying and fulfilling customer needs and wants. Thus, MR should precede marketing. The unfulfilled wants should first be identified and translated into technically and economically feasible product ideas, which then should be marketed to the customers. But mere identification of customer wants is not enough. Marketing requires continuous effort to improve the existing product, increase sales and beat the competition. For this it is important to know who the customers are for your products (whether housewives, teenagers, children), what their socio-economic profile is (in terms of income, education, cultural, religious and professional background) and where they are concentrated in terms of location. Besides this information, it is also important for you to know the process by which a prospective customer arrives at a decision to buy your product. If you know the sequential steps in the purchase process and the influencing variables in each, you can design appropriate strategies to exert a positive impact on them, and thus ensure an actual purchase. The study of consumers and their purchase behaviour is so important that there is a separate, special body of knowledge known as Consumer Behaviour.

ii)     The second area which is of direct concern for MR is product and product design. MR is helpful in determining the final design of the product and its physical attributes of colour, size, shape, packaging, and brand name. It is useful in arriving at the right combination of product mix, the number of variations of the basic product, accessories and attachments. It can also help decide the quantities to be produced according to the projected demand estimates. MR can also be used to gauge customer reactions to different prices.

iii)   Marketing research helps in discovering what types of distribution channels and retail outlets are most profitable for your product. On the basis of comparative information for different channels and different types of outlets you can choose the combination most suitable for your product. Distributor, stockist, wholesaler, retailer may represent one kind of distribution channel in contrast to another in which you may use only the distributor and retailer. Consider an example:

A firm is marketing refrigerators through distributors and retailers in the Eastern zone. The understanding between the firm and distributors is that the latter will provide the after-sales-service. Analysing the sales figures, the firm finds that the sales level in East zone is much lower than in the other zones. Marketing research reveals that one of the reasons for this low sales performance is the poor after sales service provided by the distributor. In a high value, durable product such as refrigerator the quality of after sales service is an important factor influencing the customers' purchase decision regarding the specific brand to buy. The firm decides to do away with the distributor and instead opens its own branch office. The new distribution channel comprising branch office and retailers is operationally more expensive, but the company can now control the quality of after sales service as well as the other marketing inputs. The result is improved sales and the incremental cost associated with the new distribution network is justified.

iv)   Most companies provide advertising support for their products. In some cases the amount spent on advertising may be small, while in others it may run into crores of rupees. Irrespective of the actual amount spent on advertising, each firm would like to maximise the return on every rupee that it spends. Marketing research can help the firm to do this. Research can provide information on the most cost-effective media help determine the advertising budget, measure the effectiveness of specific advertisements; advertising campaigns and the entire advertising strategy. Research also provides information on the size and type of audiences for different advertising media channels. This information can be used to refine the advertising strategy to make it more relevant and sharply focused. Advertising research is also useful in determining customer perceptions about the image of specific branches and companies.

v)    Marketing research is being increasingly used at the macro-level. Government spends colossal amounts on various socio-economic development schemes and projects. If the objectives of these projects are not in tune with the prevailing consumer tastes, attitudes and values, the entire amount may prove to be a total waste. Just as a business organisation needs MR to monitor the efficacy of its strategy in achieving the objectives, so does the government, and its departments.  

For these purpose Doordarshan conducted audience research for determining the most popular and unpopular programmes and the consumer preference for changes in programme content and timings. For conducting this research, Doordarshan inserted a detailed questionnaire in the leading national newspapers and invited viewers to fill it in and send it back to them. On the basis of this information, Doordarshan plans to revamp its programmes and timing schedules to cater to the large majority of viewers.