What is market research?

Market research investigates and analyzes a target market. Researchers use

market research to collect consumer data within a marketplace. It deals with
the collection, analysis, and use of market intelligence and market statistics.
Market research deals with only one of Marketing’s four Ps – Place. In this
context, place means a specific segment or market.

Market researchers collect, analyze, and study data about:

 An existing product or service, or a developing concept

 An existing marketplace
 Clients and customers 
Researchers use market research to gauge the marketplace’s wants, needs,
behavior, purchase behavior, and other characteristics. It helps them
understand and compare their products and services with their competitors
and industry standards. Businesses use market research to understand the
behavior of their customers towards newly launched products and services. It
is also used to explore fresh markets and understand consumers’ needs in the
marketplace – both existing and new.

The market research process

1. Identify issue
2. Choose the research team (internal or external research experts)
3. Choose the most fitting technique and approach
4. Gather data
5. Organize, analyze, and interpret data
6. Create reports
7. Make data-based decisions

Market Research
Definition: The process of gathering, analyzing and interpreting information about a market, about a
product or service to be offered for sale in that market, and about the past, present and potential
customers for the product or service; research into the characteristics, spending habits, location and
needs of your business's target market, the industry as a whole, and the particular competitors you face
Accurate and thorough information is the foundation of all
successful business ventures because it provides a wealth of information about
prospective and existing customers, the competition, and the industry in general.
It allows business owners to determine the feasibility of a business before
committing substantial resources to the venture.

Market research provides relevant data to help solve marketing challenges that a

business will most likely face--an integral part of the business planning process.
In fact, strategies such as market segmentation (identifying specific groups
within a market) and product differentiation (creating an identity for a product
or service that separates it from those of the competitors) are impossible to
develop without market research.

Market research involves two types of data:

 Primary information. This is research you compile yourself or hire

someone to gather for you.
 Secondary information. This type of research is already compiled and
organized for you. Examples of secondary information include reports
and studies by government agencies, trade associations or other
businesses within your industry. Most of the research you gather will
most likely be secondary.

When conducting primary research, you can gather two basic types of
information: exploratory or specific. Exploratory research is open-ended, helps
you define a specific problem, and usually involves detailed, unstructured
interviews in which lengthy answers are solicited from a small group of
respondents. Specific research, on the other hand, is precise in scope and is used
to solve a problem that exploratory research has identified. Interviews are
structured and formal in approach. Of the two, specific research is the more
expensive.

When conducting primary research using your own resources, first decide how
you'll question your targeted group: by direct mail, telephone, or personal
interviews.

If you choose a direct-mail questionnaire, the following guidelines will increase

your response rate:
  Questions that are short and to the point
 A questionnaire that is addressed to specific individuals and is of interest
to the respondent
 A questionnaire of no more than two pages
 A professionally-prepared cover letter that adequately explains why
you're doing this questionnaire
 A postage-paid, self-addressed envelope to return the questionnaire in.
Postage-paid envelopes are available from the post office
 An incentive, such as "10 percent off your next purchase," to complete the
questionnaire

Even following these guidelines, mail response is typically low. A return rate of
3 percent is typical; 5 percent is considered very good. Phone surveys are
generally the most cost-effective. Here are some telephone survey guidelines:

 Have a script and memorize it--don't read it.

 Confirm the name of the respondent at the beginning of the conversation.
 Avoid pauses because respondent interest can quickly drop.
 Ask if a follow-up call is possible in case you require additional
information.

In addition to being cost-effective, speed is another advantage of telephone

interviews. A rate of five or six interviews per hour is typical, but experienced
interviewers may be able to conduct more. Phone interviews also can cover a
wide geographic range relatively inexpensively. Phone costs can be reduced by
taking advantage of less expensive rates during certain hours.

One of the most effective forms of marketing research is the personal interview.
They can be either of these types:

 A group survey. Used mostly by big business, group interviews or focus

groups are useful brainstorming tools for getting information on product
ideas, buying preferences, and purchasing decisions among certain
populations.
 The in-depth interview. These one-on-one interviews are either focused
or nondirective. Focused interviews are based on questions selected ahead
of time, while nondirective interviews encourage respondents to address
certain topics with minimal questioning.
Secondary research uses outside information assembled by government
agencies, industry and trade associations, labor unions, media sources, chambers
of commerce, and so on. It's usually published in pamphlets, newsletters, trade
publications, magazines, and newspapers. Secondary sources include the
following:

 Public sources. These are usually free, often offer a lot of good

information, and include government departments, business departments
of public libraries, and so on.
 Commercial sources. These are valuable, but usually involve cost factors
such as subscription and association fees. Commercial sources include
research and trade associations, such as Dun & Bradstreet and Robert
Morris & Associates, banks and other financial institutions, and publicly
traded corporations.
 Educational institutions. These are frequently overlooked as valuable
information sources even though more research is conducted in colleges,
universities, and technical institutes than virtually any sector of the
business community.

Public Information Sources

Government statistics are among the most plentiful and wide-ranging public
sources. Helpful government publications include the following.

The State and Metropolitan Area Data Book provides a wide variety of

statistical information on states and metropolitan areas in the United States.
Published by the U.S. Census Bureau, it's available online for $31 through
the U.S. Government Printing Office and at larger libraries.

The Statistical Abstract of the United States provides tables and graphs of

statistics on the social, political and economic conditions in the United States.
Published by the Census Bureau, it's available online for $48 through the U.S.
Government Printing Office and at larger libraries.

U.S. Industry and Trade Outlook presents recent financial performances of

U.S. manufacturers and identifies emerging trends. Published by the Commerce
Department in cooperation with McGraw-Hill, it's available online for $76
through the U.S. Government Printing Office and at larger libraries.
The U.S. government online bookstore at the U.S. Government Printing
Office has an abundance wealth of publications on topics ranging from
agriculture, aviation, and electronics, to insurance, telecommunications, forest
management, and workers' compensation.

The U.S. Census Bureau website also contains valuable information relevant

to marketing. The Bureau's business publications cover many topics and trades--
such as sales volume at furniture stores and payrolls for toy wholesalers--and
are useful for small businesses as well as large corporations in retail, wholesale
trade, and service industries. Also available are census maps, reports on
company statistics regarding different ethnic groups, and reports on county
business patterns.

One of the most important information resources you'll find is the SBA. The
SBA was created by Congress in 1953 to help American entrepreneurs start,
run, and grow successful small enterprises. Today there are SBA offices in
every state, the District of Columbia, the U.S. Virgin Islands, Puerto Rico, and
Guam. Among the services offered by the SBA are financial assistance,
counseling services through Small Business Development Centers (SBDCs),
management assistance through programs like SCORE, and low-cost
publications. The counselors at SCORE can provide you with free consultation
on what type of research you need to gather and where you can obtain that
information. They may also be able to suggest other means of gathering the
information from primary sources. SBDCs generally have extensive business
libraries with lots of secondary sources for you to review.

One of the best public sources is the business section of your public, or local
college or university, library. The services provided vary from library to
library but usually include a wide range of government publications with market
statistics, a large collection of directories with information on domestic and
foreign businesses, and a wide selection of magazines, newspapers and
newsletters.

Almost every county government publishes population density and distribution

figures in accessible census tracts. These show the number of people living in
specific areas, such as precincts, water districts or even ten-block
neighborhoods. Some counties publish reports that show the population ten
years ago, five years ago, and currently, thus indicating population trends.
Other public information resources include local chambers of commerce and
their business development departments, which encourage new businesses to
locate in their communities. They will supply you (usually for free) information
on population trends, community income characteristics, payrolls, industrial
development and so on.

Don't overlook your bank as a resource. Bankers have a wealth of information at

their fingertips and are eager to help their small business customers get ahead.
All you have to do is ask.

Commercial Information Sources

Among the best commercial sources of information are research and trade
associations. Information gathered by trade associations is usually limited to
that particular industry and available only to association members, who have
typically paid a membership fee. However, the research gathered by the larger
associations is usually thorough, accurate, and worth the cost of membership.
Two excellent resources to help you locate a trade association that reports on the
business you are researching include the Encyclopedia of Associations (Gale
Research), and the Encyclopedia of Business Information Sources (Gale Group).

Local newspapers, journals, magazines, and radio and TV stations are some of
the most useful commercial information outlets. Not only do they maintain
demographic profiles of their audiences (their income, age, gender, amount of
disposable income, and types of products and services purchased, what they
read, and so on), but many also have information about economic trends in their
local areas that could be significant to your business. Contact the sales
departments of these businesses and ask them to send you their media kit, since
you're working on a marketing plan for a new product and need information
about advertising rates and audience demographics. Not only will you learn
more about your prospective customers, you'll also learn more about possible
advertising outlets for your product or service.

Dun & Bradstreet is another commercial source of market research that offers
an abundance of information for making marketing decisions. It operates the
world's largest business database and tracks more than 62 million companies
around the world, including 11 million in the United States. For more
information, visit the Dun & Bradstreet Small Business Solutions website.
 Finally, there are educational institutions that conduct research in various ways,
ranging from faculty-based projects often published under professors' bylines, to
student projects, theses, and assignments. You may be able to enlist the aid of
students involved in business classes, especially if they're enrolled in an
entrepreneurship program. This can be an excellent way of generating research
at little or no cost, by engaging students who welcome the professional
experience either as interns or for special credit. Contact the university
administration and marketing or management studies departments for further
information.

1. Define the Problem-The foremost decision that every firm has to

undertake is to find out the problem for which the research is to be
conducted.The problem must be defined adequately because if it is too vague,
then it may result in the wastage of scarce resources and if it is too narrow, then
the exact conclusion cannot be drawn.In order to define the problem
appropriately, each firm must have a clear answer to the questions viz. What is to
be researched (content and the scope)? And Why the research is to be done
(decisions that are to be made)?

2. Develop the Research Plan– This step involves gathering the information
relevant to the research objective. It includes:

 Data Sources: The researcher can collect the data pertaining to the
research problem from either the primary source or the secondary source or
both the sources of information.The primary source is the first-hand data that
does not exist in any books or research reports whereas the secondary data is
the second-hand data which is available in the books, journals, reports, etc.
 Research Approaches: The Secondary data are readily available in
books, journals, magazines, reports, online, etc. But the primary data have to
be collected and to do so, the following research can be conducted:
 Observational Research: The researcher can collect the information
by just observing the happenings in the market and sometimes having a
friendly conversation with the customers to know about their purchase
experiences.
 Ethnographic Research: It is one of the forms of an observation
research where the researcher studies an individual in the real life situation
and not under any market setup or a lab.The purpose of this research is to
know the way people live (their lifestyles), What they do to earn their
 livelihood, how they consume goods and services, what they need in their
personal and professional lives etc.
 Focus Group Research: It is a form of group discussion wherein six
to ten people gather and discuss the common topic given by the
moderator.A moderator is a person who conducts the group discussion and
is skilled in group dynamics. He also keeps the discussion focused on the
topic so that relevant information can be obtained from the group members.
 Survey Research: These are the descriptive research generally
conducted to know the about the customer’s knowledge about the product,
their preferences, and satisfaction level. The best way to conduct surveys is
through the Questionnaires.
 Behavioral Data: The customer’s actual purchases at the store
reflects its behavior and the choice of products. Thus observing what
customers are buying gives more accurate information about the customer
rather than the planned answers given by them in the surveys.
 Experimental research: This is done to find out the cause and effect
relationships. This research is undertaken to study the effects of change in
the customer’s behavior due to the change in the product’s attributes.
 Sampling plan: Once the research approach is decided, the researcher
has to design a sampling plan and have to decide on the following:
 The sampling Unit i.e. whom, shall we survey?
 The sample size, i.e., How many units in the population shall be
surveyed?
 The sampling procedure, i.e. How the respondents shall be chosen?
 Contact Methods: The researcher has to choose the medium through
which the respondents can be contacted. The respondents can be reached via
emails, telephone, in person or online.

3. Collect the Information: This is one of the most expensive methods of

marketing research. At this stage, the researcher has to adopt the methods to
collect the information, he may find it difficult to gather the correct information
because of the respondent’s biasedness, unwillingness to give answers or not at
home.
4. Analyze the Information: Once the information is collected the next step
is to organize it in such a way that some analysis can be obtained. The
researchers apply several statistical techniques to perform the analysis, such as
they compute averages and measures of dispersion. Also, some advanced
decision models are used to analyze the data.
5. Present the Findings: Finally, all the findings and the research are shown
to the top management level viz. Managing director, CEO, or board of directors
to make the marketing decisions in line with the research.
6. Make the Decision: This is the last step of the marketing research, once
the findings are presented to the top level management it is up to them either to
rely on the findings and take decisions or discard the findings as unsuitable.

Thus, marketing research is done to gather all the relevant information about the
market and design the marketing strategies accordingly.

Scope of Marketing Research
relivingmbadaysDecember 10, 2012Marketing Research

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Bulk of research is done to measure consumer wants and needs. Also, marketing
research is carried out to assess the impact of past marketing actions. Some
research is done to understand the competitive, technological, social, economic
cultural, political or legal environments of the market.

Another way of looking at the function of marketing research is to look at the

particular decision area where research results are used

Sales Analysis

Much research is done in the following areas which are broadly referred as sales
analysis,

 Measurement of market potential/demand projection,

 Determination of market characteristics;
 Market share estimation;
 Studies of business trends.

 
In fact, some of the more detailed studies to be carried out under the broad ambit
of sales analysis could be as follows,

 The types of consumers that constitute the potential market

 The size and location of the market;
 The growth and. concentration of the market over certain period of time,
 The competitive picture for the product;
 The major strategies of leading competitors with respect to price, offerings
distribution etc.
 The purchase habits of key market segments;
 What is the pattern of pre-purchase deliberations made by the
consumers’?
 Who are involved in the decision making?
 What are the roles of different members in the decision making?
 How does the product fit into the consumer’s life styles? (Operation if it is
an industrial product);
 Do consumers prefer to buy some particular brands’? (i.e. Assess the
degree of brand loyalty).

The above list is not exhaustive. Here research is basically done with a view to
know consumers’ motivation, attitude, cognition and perceptions etc. Thus
information wilI be collected in a manner so that they have some implications for
various marketing decisions.

Sales Methods and Policies

Marketing research studies are also conducted with a view to evaluate the
effectiveness of present distribution system. Such studies are used in
establishing or revising sales territories.. They are also helpful in establishment of
sales quotas, design of territory boundary, compensation to sales force, physical
distribution and distribution cost analysis etc. Marketing research is also done to
assess the effectiveness of different promotional activities such as premiums,
deals, coupons, sampling etc.

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Product Management

Every marketer tries to formally or informally utilize information to manage the

existing and new products. It examines market feedback about competitive
product offerings. Also, some companies make use of marketing research to
form market segments through choice of alternative bases. Companies also carry
out different research studies to assess consumer feedback to new products and
their likely potential. Of late, in India many consumer products have been
launched after making rigorous amount of research. Moreover, researches have
enabled to diagnose how consumers perceive various brands of a product. Such
studies have enabled the companies to position their brands.

Marketing research studies have been conducted to monitor the performance of

the test brand (in terms of trial and repeat purchase) launched in select shops in
the market. Studies are popularly known as simulated test marketing (STM)
models.

Pricing studies, packaging research, design or physical characteristics, have also

been sometimes conducted.

Advertising Research

Media research: Three National Readership Surveys (NRS) have so far been
conducted in India. These studies have basically estimated the readership of
leading newspapers. The last NRS has also assessed qualitatively, readers’
feedback on the editorial content.

Moreover, some marketing research have evaluated the relative effectiveness of

different media in specific product fields, and in context of achieving specific
tasks such as creating brand awareness or a particular product benefit.

Copy research: Advertising agencies have been regularly engaged in this activity
where they test out alternative copy designs by obtaining the feedback from to
consumers.
 

Studies of advertisement effectiveness – Advertising agencies regularly make

use of marketing research studies to assess and monitor effectiveness of
different advertising campaigns.

Corporate Research

Large scale corporate image studies among different target publics – They
involve an assessment of knowledge about company activities, association of
company with sponsored activities and company perceptions on specific
dimensions. These types of corporate image studies are done periodically to
monitor any change in image over time among different publics.

Social values research: Knowledge, attitude and practices on family planning,

anti-dowry, smoking, drinking etc.

Political studies: In recent times marketing studies have been conducted to

ascertain the public opinion about the election results.

Customer service studies: Many banks and large industrial houses have resorted
to marketing research to know the consumers’ changing need for service and
possible grievances about existing operations.

Syndicated Research

Several research agencies collect and tabulate marketing information on a

continuing ‘basis. Reports are sent periodically (Weekly, monthly or quarterly) to
clients who are paid subscribers. Such services are found especially useful in the
spheres of movement of consumer goods through retail outlets (ORG Retail
Audit), incidence of disease and use of branded drugs (MARL- prescription
audit), Television Program viewing (the Television Rating Points), Newspaper &
Magazine readership (NRS – discussed earlier under media research),
assessment of market potential of a city with population one lakh and above
(Thompson Indices), study of nation’s attitudes and psychographics (PSNAP and
IMRB’s life style research on the cigarette market).