MARKETING RESEARCH PROCEDURE

MARKETING RESEARCH PROCEDURE  

Marketing research is undertaken in order to improve the understanding about a marketing situation or problem and consequently improve the quality of decision-making related to it. The usefulness of the marketing research output will depend upon the way the research has been designed and implemented at each stage of the process. There are five steps in every marketing research process:  

A) PROBLEM DEFINITION

B) RESEARCH DESIGN

C) FIELD WORK

D) DATA ANALYSIS

E) REPORT PRESENTATION AND IMPLEMENTATION  

A) PROBLEM DEFINITION: 

A problem is any situation which requires further investigations. However, not all marketing problems need formal investigation or research. Many problems are of a routine and trivial nature which can be solved immediately after ascertaining all the facts of the case. Your distributor wants 90 days credit against the usual 60 days because he is facing certain financial problems. You can immediately check the distributor's past record in honouring his outstanding and ascertain the genuineness of his problem and make a, decision.  

Some problems faced by marketing managers are such that they can be handled on the basis of past experience and intuition. Such decisions can only be made if the manager has been in the line for at least a couple of years. Decisions made on judgement may not always turn out to be correct, but the problem may not be important enough to justify substantial time, money and effort to be spent on solving it. But when the problem is critical, spending resources to initiate formal marketing research is warranted. Also when the problem is such that the manager has no past experience to guide him (as in case of a new product launch) or the decision will have a critical impact on the future of the company (diversification into new markets, new products) it is worthwhile to undertake research and make decisions on the basis of concrete results rather than mere hunch or judgement.  

It is very important that you define the problem for research properly. It is correctly said that ‘a problem well defined is half-solved’. Clear, precise, to the point statement of the problem itself provides clues for the solution. On the other hand, a vague, general, or inaccurate statement of the problem only confuses the researcher and can lead to wrong problems being researched and useless results generated.

Contrast the two following statements of the same marketing problem.

a)  Wrong Problem Definition :

Product    :  Laptop

Market     : West Zone

Problem   : Sales not picking up at the rate they should. 

b) Right Problem Definition

Product    :  Laptop

Market    : West Zone with special emphasis on Mumbai, Pune, Nasik, Ahmedabad, Boroda

Current market Share  :  17 percent

Market Segment : Non office customers like professionals, lawyers, doctors, accountants, consultants, journalists, Engineers and others.

Current market share in segment : 5.5 percent in non-office segments.

Problem   : In the year 2005-06 our brand of laptop achieved only a 2 percent growth rate as against 8 percent projected.

Marketing research problem :  To find out the reasons in the shortfall in growth rate in the non-office market segment and suggest a specific strategy to achieve a 15 percent market share in this segment by December 2008. Sales not picking up at the rate they should. 

Since problem definition is the first stage, useful information generated is likely to be unstructured, qualitative, tentative and exploratory. Depending on the results generated at this stage you would decide whether to extend the scope of research or stop it here.

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MARKETING RESEARCH

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.

 

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APPLICATIONS OF MARKETING RESEARCH

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.  

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MATRIX ORGANISATION

Matrix Organisation

The principles of organisation apply whether you are designing the entire organisation or a department within it. The three most basic functions necessary for any business organisation are finance, production and marketing. Each of these functions is organised separately. Thus, within the organisation structure of the firm you would have distinct organisations for each function.

Broadly speaking, marketing is concerned with all aspects of the product, pricing, promotion and distribution. All sub-functions or activities relating to these four basic dimensions are included in the marketing function. You have to account for these various activities when designing the marketing organisation.

The structure of a marketing organisation can be studied at different levels, such as overall firm level or divisional level or market level.

There are many ways of organising the marketing department. We shall discuss in detail the four basic methods:

A. Functional Organisation,

B. Product Management Organisation;

C. Market Centred Organisation and

D. Matrix Organisation.  

Methods other than these four are either their derivatives or combinations.  

MATRIX ORGANISATION

We have learned companies which market different products to the same market or the same product to different markets. In the first case, organising around the product management concept provides an effective solution. In-the second case, the marketing organisation can effectively be organised around each market. But what if a company has a number of products and a number of markets to which these products are sold? A company such as Godrej has a product range which includes steel office furniture, refrigerators, almirahs, soaps and detergents, and each of these products caters to a different market. Similarly, Food Specialities Limited has a wide range of products including infant milk powder, instant coffee, ketchup, noodles each of which fulfils a different market need. How should the marketing department be organised to effectively take care of the different characteristics of the product as well as the market? The manager has to formulate and implement strategies suitable for each individual market and also keep in mind the different characteristics of each product. For managing so many products and so many markets, the manager has to cope with an immense amount of information. The sheer quantity of information and the range of its diversity usually makes it impossible for a single person to manage. Further, each product may be so different from the others that each product needs a separate manager. Similarly, the unique buyer and the characteristics of a market merit the full attention of an individual. Thus, a multi-product and multi-market firm needs both product and market managers. But how should the product managers and market managers be integrated to form a workable organisation structure.  

The solution lies in a matrix organisation where tasks may be differentiated on the basis of functions and products; functions and markets; or functions, products and markets; and integrated by means of co-ordinating functions (such as finance, R & D, information system etc.). In the functional, product and market-centred organisation discussed earlier, each manager has only one point of focus; function, or product or market. However, in the matrix organisation the points of focus are more than one. These focal points may be either functions and products; or functions and markets; or functions, markets and products. As is Obvious from these figures, the matrix may have two or more bases for differentiating the functions.

The origin of the formal matrix organisation can be traced to the aerospace industry in USA, The different manufacturers in the aerospace industry were organised functionally; but the US Government wanted each project to have specialised attention and imposed a project management type of organisation on the industry. The horizontal project groups were superimposed over the vertical functional organisations and the result was a matrix organisation. But informally, the matrix organisation has been in existence much before its introduction in USA. In an advertising agency, each client is assigned to a specific accounts executive who is responsible for understanding the client's objectives and needs and getting them translated into advertising campaigns. For translating client objectives into specific advertisements or campaigns, the accounts executive draws on the agency's functional specialists: artists, copywriter, photographers, visualisers, etc. Thus on the one side you have the functional specialists while on the other you have the accounts executive who can be thought of as a market manager (each client represents a separate market) and only a few clients are assigned to each accounts executive.

 

The distinguishing characteristics of a matrix organisation are:

-      members are allotted to two, or three groups with each group having its own boss,

-      the groups are work-related, though each on a different base (e.g., functional, product or market related),

-      the groups are formally arranged rather than evolving informally or on an ad-hoc basis,

-      information management is central to the concept and management of matrix organisation.  

Thus the matrix organisation is a blend of grouping by functions and/or markets and/or products, with the objective of retaining the advantages of specialisation and gaining the advantage of a sharper focus on a task or project. The specific advantages and disadvantages associated with the matrix organisation are described in Tables 1 and 2.  

Table 1: Advantages of a Matrix Organisation

1. Permits task/project focus without losing benefits of specialisation.

2. Provides for increased information-processing capability, catering to information needs of each group.

3. Permits greater decentralisation of decision-making since there are specialists in each area equipped with the necessary knowledge.

4. Provides a flexible structure, capable of adapting to new situations while retaining the basic framework of the structure.

5. Provides a means of coping with increased information processing needs and co-ordinating when the tasks are highly uncertain, complex and inter dependent.  

Table 2: Disadvantages of a Matrix Organisation

1. Tendency to conflict exists because the different groups are organised on different bases and each group may try to superimpose its own group objectives rather than the organisational objectives.

2. There is ambiguity in roles because each person reports to two bosses and this undermine the effectiveness of organisation.

3. Proves costly because of larger volume of information processing and the additional need of coordinating and supporting roles.

4. May be prone to power struggles and politics as each group tries to dominate.

5. Problems of designing a suitable information system, which now needs to cater to different requirements.
 

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MARKET-CENTRED ORGANISATION

Market-Centred Organisation

The principles of organisation apply whether you are designing the entire organisation or a department within it. The three most basic functions necessary for any business organisation are finance, production and marketing. Each of these functions is organised separately. Thus, within the organisation structure of the firm you would have distinct organisations for each function.

Broadly speaking, marketing is concerned with all aspects of the product, pricing, promotion and distribution. All sub-functions or activities relating to these four basic dimensions are included in the marketing function. You have to account for these various activities when designing the marketing organisation.

The structure of a marketing organisation can be studied at different levels, such as overall firm level or divisional level or market level.

There are many ways of organising the marketing department. We shall discuss in detail the four basic methods:

A. Functional Organisation,

B. Product Management Organisation;

C. Market Centred Organisation and

D. Matrix Organisation.

Methods other than these four are either their derivatives or combinations.

MARKET CENTRED ORGANISATION

We have seen that some companies with a product manager organisation have started to group together products which serve similar needs. Thus the basis for differentiation is-shifting from products to customers. A group of customers with similar needs and a common link between them constitute a market. When different markets, rather than functions or products form_, the basis for differentiating marketing roles, the organisation is known as market-centred.

A company marketing building hardware such as door and window handles, window frames and locks has two distinct customers. One, hardware retailers who sell to individual household customers and second, construction companies. These two distinct customer segments represent separate markets each requiring a different marketing mix of advertising, distribution channel, and pricing. Airlines, railways, and road transportation companies have two major distinct markets to serve. They provide transportation for people (passengers) and goods (cargo). Each market (passenger vs. cargo) has its distinct characteristics and needs a suitable marketing strategy and a matching marketing organisation with relevant skill to formulate and implement the strategy.

A market-centred firm seeks its growth by serving new needs in markets where it is already well established. Since knowledge and access to the market is the basis for organising the marketing set-up, the question to be asked is "what other needs of the markets that we know well can we serve profitably?^" For instance, an airlines company, within the passenger markets can further identify markets such as group travel, and charter flights. This constitutes an instance of growth through intensively serving a well establish need (transportation) in a well established market (people). However, a market-centred organisation also has the flexibility to grow extensively by searching out closely related needs and entering new businesses around these. The airlines may enter a new business by providing a courier service. The need is still that of transportation, but the market is not people, or cargo but important documents and parcels. Through the extensive and intensive approach, a market-centred firm seeks to grow by the meeting the greatest number of inter-related needs of every market it serves.

In terms of organisation structure, a market-centred organisation can be organised in the same way as a product management organisation. Instead of product managers, with detailed knowledge of the product you would have market managers each having thorough knowledge about his market. However, we have seen that there are problems of control and authority associated with the product manager organisation. To overcome these, a market-centre should be treated as a profit centre and its manager be assigned the role of a business manager with full accountability for generating profits. The business manager is the chief `line' officer, with full authority overall the other functions supporting and reporting to him.

At this stage, you may like to ask the question "why should I reorganise my marketing organisation to being a market-centred organisation?" There are two specific situations in which a market-centred organisation can be more effective than any other kind of organisation and if you happen to be facing any one of them, a change to a market-centred marketing organisation is advisable.

 

1.   When competitors have developed the same level of product sophistication and quality as the market leader and the leader's supremacy based on price advantage is seriously threatened. In such a situation, market centring can help the leader revive its competitive advantages, detailed knowledge of customer and retailers helps frame creative marketing strategies.

2.   When a firm wants to diversify either to expand the profit base, or gain a total hold on existing customers.  

The first objective can be served by adding on higher margin products and services to the existing product line. The second objective is served by marketing a package or system of correlated products and services, enabling the firm to act as a one-stop supplier for each market.
 

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