Marketing Research
Marketing Research
Marketing Research
Marketing research is charged with helping to reduce such uncertainties, "...but will never remove it. At best, marketing research will increase the probability that the decisions which management has to take will help attain the organisation's marketing ob ectives.
Chapter Objectives
!he ob ectives of this chapter are to" Define the role of marketing research in decision making #utline the contents of a research brief #utline the contents of a research proposal, and $%plain in detail each of the principal steps in research design.
dimensions of the product, price and distribution. Marketing researchers work with probabilistic models of the form" y ' f(%-)..(f%.)...f(%n)... !his reflects the fact that in order for a target market share to be reached some promotion (amount unknown) is necessary but will not be sufficient, on its own, to achieve the target. / is a function of a number of variables and the interactions between them. !he model is further complicated by the fact that these interactions are themselves often not understood. It is for these reasons that marketing researchers cannot guarantee that decisions based on their information will always prove 'successful'. 0ather the best that a competent researcher and a well designed study will be able to offer is a reduction in the amount of uncertainty surrounding the decision.
servicing facilities only to be surprised when the mill failed to gain acceptance. In !hailand, smallholders take their rice to a miller. 3ince they do not have sufficient cash to pay for milling their rice the millers get paid in 'brokens'. !he miller then sells the 'brokens' for animal feed. !he more effective milling machine simply did not fit into the !hai rice processing system. !he company's assessment of the market was hardly ob ective. !hey saw the 'brokens' as a problem which their product solved. !he prospective customer did not see it as a problem at all. !he third of the key terms in the definition given a little earlier was analytical. !he marketing researcher's task goes beyond the collecting of data. &e6she must also interpret the data in terms of what the it means to the organisation which commissioned the research. 7nowing that 89: of those interviewed thought that product A was superior to product ; is, in itself, of little value. !he organisation needs to know the alternative ways it can respond to this data. Data is e,uivalent to the raw materials of manufacturing2 it has to be converted into information before it becomes useful in decision making. !he process of convening data into information is achieved through analysis. Although the need for precision and thoroughness in marketing research has been stressed here, it is to be remembered that, in practice, there is a perpetual conflict between the demands of e%pediency and the search for truth. !he reality is that management is fre,uently under pressure to make timely decisions. !herefore management often seeks answers through marketing research in the shortest time possible and, moreover, at minimum cost. #n such occasions its methods tend to be less theoretically rigorous and its analysis more superficial. The market research brief Marketing research can be concerned with any of a variety of aspects of the market" the product, sales, buyer behaviour, promotion, distribution, pricing, packaging, etc. 3ince the researcher cannot investigate everything about a market, he6she must be selective. !he ,uestion remains as to how the researcher decides where to focus the study, and to what depth each issue should be investigated. !he answer should lie in a document called the research brief. !he research design is a set of guidelines given to the researcher by the person(s) who have commissioned the research and6or the individual(s) who are to make use of the results in their decision making. !he brief must inform the researcher which aspects of the market are particularly important. In particular, the research brief should include" the purpose of the research the ob ectives stated in a clear, concise, attainable, measurable and ,uantifiable way a time hori<on a resource allocation, including the budget and facilities a reporting period. $ach of these components of the brief is e%plained in a little more detail in the section that follows.
tree5lifters were currently being sold but this is not the same as the ob ective set by the marketing manager. !he market potential for any new brand is a function of at least > things, as shown in *igure -.-. Figure 1 1 The components of market potential
It was possible to test customer reaction to the concept of the new tree5lifter by showing pictures, line drawings and by supplying product specifications to prospective buyers. &owever, since the company had not decided their pricing policy an important element could not be tested. In large measure, it was also possible to gauge the likely reaction from competitors. !he researchers began by looking at the basis of competition to determine whether it was on price, product ,uality or uni,ue product features. !he researchers were able to look at precedents. !hey e%amined the pattern of response on past occasions when one or other of those companies already in the market had launched a new product. An audit of the environment was undertaken too, but the missing component was the company's' own plans for e%ploiting the market. 3ince the company had no involvement in the agricultural engineering sector, prior to ac,uiring the rights to the tree5lifter, they had no agreements with distributors, no idea of which, if any, of the distributors would be prepared to stock their product2 they had no salesmen trained in selling into this industry and so on. !he product's potential depended very much on such initiatives. !he solution would have been to undertake a study which would have described the market in detail in terms of customers, competitors and the environment. !he company could then have put a marketing plan together and conducted a follow5up study to test their propositions out on the marketplace.
!here are essentially two approaches to establishing the resource allocation to a particular marketing research e%ercise. Management can start with the problem and work out how much it will cost to solve it. Alternatively, they can decide how much the management can afford to spend, at the time, and seek the best answer they can for the time, money and manpower allocated. In practice the decision5makers prefer the latter approach and the researchers the former. In the end, some kind of compromise develops. !he researcher rarely gets all of what he6she udges is re,uired to reach a satisfactory conclusion but if the research proposal is well thought out and persuasively presented some concessions can be obtained. Ahichever the approach to resource allocation adopted, it is imperative that the researcher is aware of the financial and other constraints within which he6she must complete the work.
A reporting period
!he researcher must also know from the outset of the study the points in time when interim reports are re,uired, if any, and the deadline for the final report. !he form of interim reports should also be specified at the outset, whether verbal or written, and whether presentations are to be made to a group (nature and si<e of the group) or an individual. In addition there are several characteristics of a good research brief and these are that it" means the same thing to all concerned does not ask for irrelevant information defines the relevant populations to be measured identifies the correct variables to be measured specifies the degree of accuracy really needed within the main results specifies an order of priorities when the sample has to be broken down for the purposes of analysing data for subgroups, and does not pre5 udge the selection of research techni,ues and procedures.
to be followed. !he eight steps are set out in figure -... !hese are only briefly discussed here since the remainder of this te%tbook consists of a detailed e%planation of each step. Figure 1 " The research design
alternative findings which the study might come up with. !his process fre,uently proves of great value to the decision5maker in that it helps him think through the ob ectives and perhaps select the most important of the ob ectives. Ahilst seeking to clarify the ob ectives of the research it is usually worthwhile having discussions with other levels of management who have some understanding of the marketing problem and6or the surrounding issues. #ther helpful procedures include brainstorming, reviews of research on related problems and researching secondary sources of information as well as studying competitive products. 7erlinger . suggests that a well5defined marketing research problem tends to have three common characteristics as shown in figure -.B.
A hypothesis is a con ectural statement regarding the relation between two or more variables. !here are two key characteristics which all hypotheses must have" they must be statements of the relationship between variables and they must carry clear implications for testing the stated relations. !hese characteristics imply that it is relationships, rather than variables, which are tested2 the hypotheses specify how the variables are related and
that these are measurable or potentially measurable. 3tatements lacking any or all of these characteristics are not research hypotheses. *or e%ample, consider the following hypothesis" "0ed meat consumption increases as real disposable incomes increase." !his is a relation stated between one variable, "red meat consumption", and another variable, "disposable incomes". Moreover, both variables are potentially measurable. !he criteria have been met. &owever for the purposes of statistical testing it is more usual to find hypotheses stated in the so5called null form, e.g. "!here is no relationship between red meat consumption and the level of disposable incomes." +onsider a second hypothesis" "!here is no relationship between a farmer's educational level and his degree of innovativeness with respect to new farming technologies." Again there is a clear statement of the relationship being investigated but there are ,uestion marks over the measurability with respect to at least one of the variables i.e. "...a farmer's degree of innovativeness." Ae may also encounter difficulties in agreeing an appropriate measure of the other variable, i.e. "level of education". If these problems can be resolved then we may indeed have a hypothesis. &ypotheses are central to progress in research. !hey will direct the researcher's efforts by forcing him6her to concentrate on gathering the facts which will enable the hypotheses to be tested. !he point has been made that it is all too easy when conducting research to collect "interesting data" as opposed to "important data". Data and ,uestions which enable researchers to test e%plicit hypotheses are important. !he rest are merely interesting. !here is a second advantage of stating hypotheses, namely that implicit notions or e%planations for events become e%plicit and this often leads to modifications of these e%planations, even before data is collected. #n occasion a given hypotheses may be too broad to be tested. &owever, other testable hypotheses may be deduced from it. A problem really cannot be solved unless it is reduced to hypothesis form, because a problem is a ,uestion, usually of a broad nature, and is not directly testable.
Figure 1 ) Three t&pes of marketing research stud& *+plorator& research# !he chief purpose of e%ploratory research is to reach a better understanding of the research problem. !his includes helping to identify the variables which should be measured within the study. Ahen there is little understanding of the topic it is impossible to formulate hypotheses without some e%ploratory studies. *or e%ample, crop residues such a straw are high in lignin (a wood5like substance) and low in nutrients. !his makes them a poor animal feed since the lignin acts against digestibility and the low nutrient content means poor food value. &owever, if treated in a strong alkali, plus a little heat, the lignin breaks down and the nutrient content increases. A company was established to e%ploit this technology and did so successfully for > seasons. After this period sales began to slow down. !hree other manufacturers had entered the market by this time. !he company, Animal *eed 3ystems, did not know whether the whole industry had slowed down or if only their product was suffering. 4or did they know if the problem was temporary in that perhaps the market comprised of "early adopters" had been saturated but it was only a matter of time before other farmers began to buy their systems when they saw how well they worked. It was also possible that if a problem did e%ist it could lie in any one of a number of areas" animal populations might be declining, distributors may not be promoting the product aggressively, customers may be e%periencing difficulties in getting the chemicals, and so on and on. !his is a good e%ample of a situation where insufficient knowledge prevented the development of clear ob ectives, since the problem could not be articulated with any precision and therefore research of an e%ploratory nature was re,uired. 3uch research can take the form of literature searches, informal personal interviews with distributors and users6non5users of the product and6or focus group interviews with farmers and6or distributors. $%ploratory research is intended to help researchers formulate a problem in such a way that it can be researched and suggest testable hypotheses. (escriptive research# As the name suggests, descriptive research is concerned with describing market characteristics and6or marketing mi% characteristics. !ypically, a descriptive study specifies the number and si<e of market segments, the alternative ways in which products are currently distributed, listing and comparison of the attributes and features of competitive products, etc. !his type of study can involve the description of the e%tent of association between variables. *or e%ample, the researcher may observe that there is an association between the geographical location of consumers and their tendency to consume red meat. 4ote that the researcher is able to describe the relationship rather than e%plain it. 4onetheless if the relationship between the two is fairly stable this descriptive information may be sufficient for the purposes of prediction. !he researcher may, for e%ample, be able to predict how fast the per capita consumption of red meat is likely to rise over a given time period.
!he principal difference between e%ploratory and descriptive research is that, in the case of the latter, specific research ,uestions have been formulated before the research is undertaken. Ahen descriptive research is conducted the researcher must already know a great deal about the research problem, perhaps because of a prior e%ploratory study, and is in a position to clearly define what he6she wants to measure and how to do it. Causal research# +ausal research deals with the "why" ,uestions. !hat is, there are occasions when the researcher will want to know why a change in one variable brings about a change in another. If he6she can understand the causes of the effects observed then our ability to predict and control such events is increased. In summary then there are three distinct types of marketing research study" e%ploratory, descriptive and causal. !he purpose of each is summarised in figure -.>. In some cases, a research programme will be of one kind or another, but in other instances these three typologies will represent phases within a single marketing research investigation.
If a computer program is to be used at the data analysis stage, have the ,uestions been properly codedC &ave the ,uestions been scaled correctly for the chosen statistical techni,ueC (e.g. a t5 test cannot be used on data which is only ranked) !here is little point in spending time and money on collecting data which subse,uently is not or cannot be analysed. !herefore consideration has to be given to issues such as these before the fieldwork is undertaken.
!he ne%t consideration is whether the samples being compared are dependent (i.e. related) or independent of one another (i.e. unrelated). 3amples are said to be dependent, or related, when the measurement taken from one sample in no way affects the measurement taken from another sample. !ake for e%ample the outline of test ; above. !he measurement of the responses of fruit uice drinkers to the trial formulation in no way affects or influences the responses of the sample of non5fruit uice drinkers. !herefore, the samples are independent of one another. 3uppose however a sample were given two formulations of fruit uice to taste. !hat is, the same individuals are asked first to taste formulation D and then to taste formulation /. !he researcher would have two sets of sample results, i.e. responses to product D and responses to product /. In this case, the samples would be considered dependent or related to one another. !his is because the individual will make a comparison of the two products and his6her response to one formulation is likely to affect his6her reaction or evaluation of the other product. !he third factor to be considered is the levels of measurement of the data being used. Data can be nominal, ordinal, interval or ratio scaled. !able -.- summarises the mathematical properties of each of these levels of measurement. #nce the marketing researcher knows how many samples are to be compared, whether these samples are related or unrelated to one another and the level of measurement then the selection of the appropriate statistical test is easily made. !o illustrate the importance of understanding these connections consider the following simple, but common, ,uestion in marketing research. In many instances the age of respondents will be of interest. !his ,uestion might be asked in either of the two following ways" Elease indicate to which of the following age categories you belong (a) -=5... #ver B9 years FFF (b) &ow old are youC FFF /ears Table 1 1 /evels of measurement 0easurement 0easurement /evel *+amples scale 4ominal *re,uency counts Eroducing categories 0athematical properties grading +onfined to a small number of tests using the mode and fre,uency years 5 B9 years FFF FFF
#rdinal
0anking of items
Elacing brands of Aide range of cooking oil in order of nonparametric tests which preference test for order
Interval
0elative differences 3coring products on a Aide range of parametric of magnitude between -9 point scale of tests items like6dislike Absolute differences 3tating how much All arithmetic operations of magnitude better one product is than another in absolute terms.
0atio
+hoosing format (a) would give rise to nominal (or categorical) data and format (b) would yield ratio scaled data. !hese are at opposite ends of the hierarchy of levels of measurement. If by accident or design format (a) were chosen then the analyst would have only a very small set of statistical tests that could be applied and these are not very powerful in the sense that they are limited to showing association between variables and could not be used to establish cause5and5effect. *ormat (b), on the other hand, since it gives the analyst ratio data, allows all statistical tests to be used including the more powerful parametric tests whereby cause5and5effect can be established, where it e%ists. !hus a simple change in the wording of a ,uestion can have a fundamental effect upon the nature of the data generated. *igure -.8 provides a useful guide to making that final selection. Figure 1 - Selecting statistical tests !he individual responsible for commissioning the research may be unfamiliar with the technicalities of statistical tests but he6she should at least be aware that the number of samples, their dependence or independence and the levels of measurement does affect how the data can be analysed. !hose who submit marketing research proposals involving ,uantitative data should demonstrate an awareness of the factors that determine the mode of analysis and a capability to undertake such analysis. Marketing researchers have to plan ahead for the analysis stage. It often happens that data processing begins whilst the data gathering is still underway. Ahether the data is to be analysed manually or through the use of a computer program, data can be coded, cleaned (i.e. errors removed) and the proposed analytical tests tried out to ensure that they are effective before all of the data has been collected. Another important aspect relates to logistics planning. !his includes ensuring that once the task of preparing the data for analysis has begun there is a steady and uninterrupted flow of completed data forms or ,uestionnaires back from the field interviewers to the data processors. #therwise the whole e%ercise becomes increasingly inefficient. A second logistical issue concerns any plan to build up a picture of the pattern of responses as the
data comes flowing in. !his may re,uire careful planning of the se,uencing of fieldwork. *or instance, suppose that research was being undertaken within a particular agricultural region with a view to establishing the si<e, number and type of milling enterprises which had established themselves in rural areas following market liberalisation. It may be that the Aest of the district under study mainly wheat is grown whilst in the $ast it is mai<e which is the ma or crop. It would make sense to coordinate the fieldwork with data analysis so that the interim picture was of either wheat or mai<e milling since the two are likely to differ in terms of the type of mill used (e.g. hammer versus plate mills) as well as screen si<es and end use (e.g. the proportions prepared for animal versus human food).
conclusions
and
making
!he final chapter of this te%tbook is devoted to the topic of report writing. &owever, it is perhaps worth noting that the end products of marketing research are conclusions and recommendations. Aith respect to the marketing planning function, marketing research helps to identify potential threats and opportunities, generates alternative courses of action, provides information to enable marketing managers to evaluate those alternatives and advises on the implementation of the alternatives. !oo often marketing research reports chiefly comprise a lengthy series of tables of statistics accompanied by a few brief comments which verbally describe what is already self5evident from the tables. Aithout interpretation, data remains of potential, as opposed to actual use. Ahen conclusions are drawn from raw data and when recommendations are made then data is converted into information. It is information which management needs to reduce the inherent risks and uncertainties in management decision making. +ustomer oriented marketing researchers will have noted from the outset of the research which topics and issues are of particular importance to the person(s) who initiated the research and will weight the content of their reports accordingly. !hat is, the researcher should determine what the marketing manager's priorities are with respect to the research study. In particular he6she should distinguish between what the manager" could know must should know know
!his means that there will be information that is essential in order for the marketing manager to make the particular decision with which he6she is faced (must know), information that would be useful to have if time and resources within the budget allocation permit (should know) and there will be information that it would be nice to have but is not at all directly related to the decision at hand (could know). In writing a research proposal, e%perienced researchers would be careful to limit the information which they firmly promise to obtain, in the course of the study, to that which is considered 'must know' information. Moreover, within their final report, e%perienced
researchers will ensure that the greater part of the report focuses upon 'must know' type information.
Chapter Summar&
Marketing research serves marketing management by providing information which is relevant to decision making. Marketing research does not itself make the decisions, nor does it guarantee success. 0ather, marketing research helps to reduce the uncertainty surrounding the decisions to be made. In order to do so effectively, marketing research has to be systematic, ob ective and analytical. !he manager or other individual initiating the research must provide guidance to the researcher in the form of a research brief. !his document should state the purpose of the research, its ob ectives, the time by which it must be completed, the budget to which the researcher must work in developing the research design and the timing and fre,uency of any interim reports which the researcher is e%pected to make. &aving read, ,uestioned and understood the research brief the onus is then upon the marketing researcher to respond by preparing the research design. 0esearch design begins with an accurate and, as far as is possible, precise definition of the problem. !his is followed by the generation of hypotheses. !here will then be an intermediate stage whereby the hypotheses are restated in a testable form, i.e. the null form. !his will probably only be done if it is intended that statistical analysis is to be undertaken. Ahere the research is more ,ualitative in nature then it is still recommended that hypotheses should be developed. !hese should include alternative hypotheses2 depending upon what is already known about the research problem one of three types of study might be undertaken, i.e. an e%ploratory study, a descriptive study or a causal study. ;efore proceeding further, the researcher has to develop an analysis plan. It is only when the analysis plan has been considered that fieldwork, in the form of data collection, should be undertaken. !he final step in the research design would be to write the report. +ustomer oriented marketing researchers will have noted from the outset of the research which topics and issues are of particular importance to the person(s) who initiated the research and will weight the content of their reports accordingly.