Market Research

Market research is the process of assessing the viability of a new good or service
through research conducted directly with the consumer. This practice allows a
company to discover the target market and record opinions and other input from
consumers regarding interest in the product. Market research may be conducted by
the company itself or by a third-party company that specializes in the market research
field. It can be done through surveys, product testing and focus groups. Test subjects
are usually compensated with product samples and/or paid a small stipend for their
time.

Types of Marketing Research

There are different types of marketing research classified on the basis of the research
objective for which the study is to be carried out and the sources of data used to
gather the information. The widely used classification of marketing research is based
on the functional objectives of the research and are identified as:

1. Exploratory Market Research: The researcher uses the exploratory research when he
has a very little information about the research problem and needs to gain insights
about it before finding the solutions to it. It requires the researcher to clear his
concept, gain insights, formulate problems, eliminate impractical ideas and
formulate a hypothesis to check the relevancy of the research design.This can be done
by using the secondary data, i.e. information available both inside and outside the
 organization, conducting observational studies, consulting experts, and processing
feedback from the marketplace and surveys.
2. Descriptive Market Research: The descriptive research is concerned with testing the
hypothesis to find out the accurate answers of the research problem. Such as, who
are the prospective buyers of the product?, How the products are consumed?, What
fraction of the population uses the product?, What is the demand forecast? And who
are the potential competitors?The objective of the descriptive market research is to
measure the frequency with which the things occur and the extent to which the
variables under study are correlated.
3. Causal Market Research: The causal market research is conducted to establish the
cause-and-effect relationship between the variables, such as if the packaging of the
product is changed then what will be its effect on the product durability? Thus, this
research is carried out to explain the facts that why a certain change in one variable is
observed due to the change in the other.
4. Predictive Market Research: As the name suggests, the predictive research is
conducted to forecast or predict certain market variable for which the research is
designed. Such as predicting the future sales, projection of growth, test market to
predict the success of a new product, defining of firm’s product line, etc.

The marketing research can be further classified on the basis of the type of data
generated and the degree of mathematical accuracy required as:

 Qualitative Market Research

 Quantitative Market Research
Thus, there are several types of marketing research that an organization adopts on
the basis of its pursued objectives and the form of data generated.

Users of marketing research:

Marketing research highlights issues and problems relating to marketing and
consequently helps to solve many problems of marketing. It is an effective aid in
implementing marketing concepts by obtaining information that identifies the
consumers’ problems and needs.

The major users are:

1. Consumer:
It goes without saying that, in any competitive environment, consumer is the King. In
the final analysis, all sales proceeds flow from consumers. Therefore, knowledge of
consumer behaviour of a target market is a must for every business concern.
Marketing research locates the consumer requirements of goods and services and the
factors upon which they depend.

2. Market Intermediaries:
Market intermediaries are in integral link between the producers and the final buyers.
Selling a product requires a channel for bringing it to the market and distributing it to
the final buyers. Marketing research helps a manufacturer to select a right kind of
channel.

3. Business Firms:
Every business concern is interested in improving its position in the market by:
(i) Increasing its market share, and

(ii) Increasing its profitability. In these cases, marketing research is essential and
highly useful tool that is used while taking a decision.

4. Marketing research agencies:

There are numerous specialized agencies engaged in conducting marketing research
covering different segments of markets, both actual and potential. They have experts
for conducting specialized research. These research agencies can be assigned the
relevant projects, by the parties concerned. On the basis of their findings, they
prepare research reports for their clients.

5. Government:
Research in various areas is also done by Government. For example: Price indices. Per
capita income etc.
The following in the procedure generally followed in handling marketing problems
through marketing research:

6. Producers:
A competitive market is flooded with new products, new brands, and new substitutes
almost every day. The threat of cut-throat competition is always there. He finds that
the strategies that worked in the past but are no longer workable. Here, MR helps in
the analysis of the situations.

Procedure of Marketing Research

1. Defining the Problem:

In order to carry out the research programme, the researcher should know the basic
problem. He must be clear in mind as to what is exactly needed. The basic problem
i.e., marketing problem is given importance and not the marketing research problem.
A competent researcher will not accept a research project, until he understands the
problem clearly. Thus crystalizing the marketing problem is fundamental.
After identifying the problem, the researcher formulates a plan when the problem is
defined. The purpose of the project determines the nature of the problem and the
ways to solve it. When the researcher gets a clear idea of the problem, he analyses the
situation and understands more about the problem. He analyses the company, its
markets, its competition etc. The informal investigation or preliminary exploration
consists of getting background information relating to the problem.

2. Determining the Information Needed:

The researcher must consider the information and decide which is relevant and which
is irrelevant to the study. In determining the kind of information needed, the
objectives of the research must be borne in mind. The information should be
necessary and relevant. If the available data are insufficient, fresh data have to be
collected.

3. Determining the Source of Information:

The Source of information may be classified into primary source and secondary
source. When the information is obtained directly, specially for the problem, it is
known as primary data. When the information is already collected by someone for
some other purpose, and at the same time is helpful to the problem on hand, it is
known as secondary data (see collection of data).

4. Deciding Research Methods:

When secondary data are insufficient, the researcher has to be satisfied with the
primary sources of data. The sources may be by experimental method, observation
method or survey method.

5. Tabulation, Analysis and Interpretation of the Data:

After the collection of data, they are to be classified and tabulated into statistical
summarization. They may be in percentage, average, ratios etc., so as to give the
greatest value in the interpretation work. Interpretation is the important stage in the
process of research. Correct interpretation of data makes a research meaningful.

The mean or median classifies the nature of the average respondent, and the
standard deviation shows how far respondents are dispersed around the average.
Tests of significance are useful in measuring whether two occurrences are related to
each other. It is important, for example, to know whether a price decrease caused an
increase in sales, or whether the two events just happened simultaneously.

Correlation and association provide a more sophisticated method of making the same
kind of analysis done in cross tabulation. One of the most useful of these is regression
analysis, which allows the researcher to estimate the relationship between a
dependent variable and one or more independent variables and to determine whether
or not one variable causes another.

6. Preparation of the Report:

Draw conclusions from the tabulated summaries. Conclusions, recommendations and
suggestions supported by detailed analysis of findings, must be in a written form-
report of the researcher.

7. Follow up study:
Follow up will ensure the implementation of recommendations made by the
marketing researchers. Otherwise, the report may be left unopened.

Significance of Market Research

1. Identifying problem and opportunities in the market:
It helps in identifying new market opportunities for existing and new products. It
provides information on market share, nature of competition, customer satisfaction
levels, sales performances and channel of distribution. This helps the firms is solving
problems.

2. Formulating market strategies:

Today, markets are no more local. They have become global. Manufactures find it
difficult to contact customers and control distribution channels. Competition is
equally severe. The consumer needs are difficult to predict. Market segmentation is a
complicated task in such wide markets. The marketing intelligence provided through
marketing research not only helps in framing but also in implementing the market
strategies.

3. Determining consumer needs and wants:

Marketing has become customer-centric. However, large-scale production needs
intermediaries for mass distribution. Due to prevalence of multi channels of
distribution, there is an information gap. Marketing research helps in collecting
information on consumers from structured distribution research and helps in making
marketing customer oriented.

4. For effective communication mix:

In an era of micro- rather than mass-marketing, communication plays a vital role.
Marketing research uses promotional research to study media mix, advertising
effectiveness and integrated communication tools. Research on such aspects will help
in promoting effectively a company’s product in the market.

5. Improving selling activities:

Marketing research is used to analyse and evaluate performances of a company
within a market. It also studies effectiveness of a sales force. It helps in identifying
sales territories. Such information helps the companies in identifying areas of
shortcoming in sales. It also examines alternative methods for distribution of goods.

6. For sales forecasting:

The most challenging task for any production manager is to keep optimum levels of
inventory. However, production is undertaken in anticipation of demand. Therefore,
scientific forecast of sales is required. Marketing research helps in sales forecasting by
using market share method, sales force estimate method and jury method. This can
also help in fixing sales quotas and marketing plans.

7. To revitalize brands:
Marketing research is used to study and find out the existing brand position. It finds
out the recall value of brands. It explores the possibilities of brand extension or
prospects of changing existing brand names. The main purpose of marketing is to
create brand loyalty. Marketing research helps in developing techniques to popularize
and retain brand loyalty.

8. To facilitate smooth introduction of new products:

Marketing research helps in testing the new products in one or two markets on a small
scale. This helps in finding out consumer response to new product and develop a
suitable marketing mix. It reveals the problems of the customers regarding new
products. Thus, it controls the risk involved in introducing a new product.

9. Determine export potentials:

The development in transport and communication has helped in globalization and
digitalization of world trade. This has helped in boosting the growth of international
markets. Marketing research helps in conducting market survey for export. It. collects
information on marketing environment prevailing in a country. By collecting data on
consumers from different countries, it indicates export potentials.

10. Managerial decision-making:

Marketing research plays a vital role in the decision-making processes by supplying
relevant, up-to-date and accurate data to the decision-makers. Managers need up-
to-date information to access customer needs and wants, market situation,
technological change and extent of competition.