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.
