APPLICATIONS OF MARKETING RESEARCH
The broad areas of
application for marketing research are sales and market analysis, product
research, advertising, business economics and corporate research, and corporate
responsibility.
A. Sales and Market Analysis
a) Determination of market
potential: The market potential
is the total amount of a product or product group which could be sold to a
market in a specified time period and under given conditions. Market potential
is applicable in case of a new product, a modified version of an existing
product, or an existing product to be introduced in a new geographical market.
b) Determination of market share: In case of an existing
product, a company may be interested to know the percentage share of the market
which their brand commands.
c) Sales forecasting: Sales forecasting is
an attempt to predict the sales level at a given point in the future on the
basis of the existing information. Sales forecasting is applicable to both
existing products as well as new products. The sales may be calculated either
in units or in value. Basically, there are two types of forecasts - short-term
and long-term. The short-term forecast takes into account seasonal
variations, seasonal trends and cycles. The long-term forecast has its basis
more in the growth pattern of the industry to which the product belongs and the
business cycle operating in the industry.
d) Design of
market segmentation studies: A market is a group of potential customers which has something
in common. The common factor may be a geographical area, sex (after shave
lotion is used only by men), age (toys for children under 5, between 5-7,
etc.), physical characteristic (weak eyesight, over weight), income,
life-style.
Children
comprise the market for toys. But in this broad category, the market can be
viewed to be made up of many smaller markets or segments: one market for
pre-school children, another for school-going children, one market comprised of
educational toys, one for mechanical toys, one for electrical toys, one for
indoor games, etc. The choice before the marketing manager is whether to cater
to the broad market of toys or to only one or two of the specific market
segments. MR can help answer questions such as "To what extent should the
market segmentation strategy be pursued?" and "What should be the
basis for segmentation?"
e) Test market: This is a controlled
experiment to predict sales or profit consequences of the various marketing
strategies. It refers to trying out something in a particular market before
extending it on a larger scale. You may have noticed advertisements for soaps,
or snack foods which sometimes carry the message ‘available only in Hyderabad'
or ‘available only in Calcutta'. The firm selling these product is probably
test marketing the product. The results of the market test provide the research
data for taking a decision whether to extend the marketing to other areas or
drop the idea totally. Test marketing also yields information which helps to
modify the product and marketing strategy to give it a better chance for
success.
Test
marketing is used not only for new product but also for researching into the
impact on sales of retail level promotional displays and promotional schemes
such as coupons and discounts.
f) Distribution channel
studies: Market research can be used to determine
the most effective and profitable distribution channels for different types of
products.
g) Determination of market
characteristics: Research surveys can
be conducted to collect information about the market characteristics which
would help a new entrant plan his entry or help an existing company focus its
strategy more sharply for increasing market share. Information can be collected
on the number of brands competing in the market, state-of-technology prevailing
in the market, geographical concentration and dispersal of customers, nature of
outlets selling the products, number of such retail outlets, etc.
h) Determination of competitive information: Research can provide information on the marketing strategies
used by various competing brands and the `unique selling proposition' of each.
B. Product Research
This can be used for:
a)
Evaluation of new
product ideas
b)
Testing for new
product acceptance
c)
Evaluating the need
for change in product formulation
d)
Testing package design
in term of aesthetic appeal., protection for the product, and ability to
withstand transportation and stocking ordeals.
e)
Testing for product
positioning. Should a new brand of tea be positioned on the basis of its
fragrance and taste, or colour and strength, or price:
C. Business Economics
and Corporate Research
a) Studies of business trends to determine
industries with growth potential and those facing a stagnant future.
b) Pricing studies to estimate the demand
level at different prices. Such studies reveal the extent to which customers
are sensitive to price changes, and provide valuable clues to the market or in
assessing the impact of price increase or decrease on the sales.
c) Diversification studies:
These provide information on the profitable new opportunities of business
growth which a firm can consider for diversification. The diversification may
be into totally new and unknown areas or into allied areas.
d) Product-mix studies: If a firm is
considering diversifying into allied product areas, it may like to find out the
product-mix combinations which would optimise its existing resources and
provide synergy for growth. A company in the business of cooking oil would like
to do research into one or more of the following products for arriving at a
`synergistic' product-mix: butter, vanaspati, ghee, spices, dehydrated foods,
frozen foods, instant food mixes, custard powder, branded wheat flour and rice.
e) Plant and warehouse location studies: Research is also needed to determine the best possible location
for setting up a new plant. Before arriving at a decision, a firm would need to
research into factors such as availability of raw material and labour,
proximity to market place, telecommunication and transport infrastructure,
financial, taxation and other incentives applicable to each location. In case
of warehouse location, you would research into movement patterns of goods to
different cities, high sale potential areas versus low sale potential areas,
number of checks for quality needed en route the destination to final customer,
benefit of conducting these checks against the cost of acquiring and
maintaining a warehouse and convenient rail/road connections.
D. Advertising Research
a) Audience measurement for advertisements appearing in different media such as
newspapers, magazines, journals, radio, TV, outdoor hoardings, kiosks, bus side
panels; etc. The objective of this type of research is to estimate the audience
size of each media channel (e.g. press) and within that the specific media
vehicle (India Today, Readers Digest, The Indian Express, etc.). Given the
audience size, you would be interested in knowing its age, sex, socio-economic
and cultural profile to focus your advertising strategy.
b) Determining the most
cost-effective media plan: Each media channel
has its unique advantages and disadvantages, and each media vehicle has its own
cost structure. Research can be used to find out the best media vehicle by
matching your product characteristics with the audience profiles of different
media vehicles and the respective cost of advertising in these.
c) Copy testing: One approach for researching into the effectiveness of the
copy is to test the following elements:
- basic themes, ideas, appeals
- headlines baseline, pictures, jingle,
story sequence
- pre-testing whole advertisements in rough
or finished form
- pre-testing the effect of repetition to
simulate a campaign (all the above can be tested under simulated conditions)
- after the advertisements have been
released, post-testing them individually in their normal media
- The other approach for conducting
research is to assess the copy or the entire advertisement/campaign for the
following:
- assessing for its attention value,
interest value and arousal,
- test for communication clarity;
- test for their effect on consumer
attitudes,
- test for their effect on purchase
behaviour.
d) Determining advertising
effectiveness: After the
advertisements have been released, it is important to monitor their impact in
terms of achieving the intended objective (s). To what extent has the
advertising achieved its objective of creating brand awareness, creating
corporate image, educating the customers about the product usage, and so on.
The effectiveness is always determined in relation to the cost incurred.
E. Consumer Behaviour Research
a) To determine who the customers of the
product (men, women, children, working women, housewives, retired people) are
and profile them in terms to their socio-economic background, age, religion and
occupation.
b) To
find out where the customers are located.
c) To
determine their motivations to purchase your brand of product.
d) To
determine their buying behaviour pattern in terms of identifying sources of
information and influence, and sequence of purchase decision.
e) To
find out the post-purchase satisfaction level of customers.
