IMR Chapter 1

7/28/2019 IMR Chapter 1

1/11

Chapter 1: The Nature and Scope of Marketing Research

Defining Marketing Research

Marketing is the process of planning and executing the conception, pricing,

promotion and distribution of ideas, goods and services to create exchangesthat satisfy individual and organizational objectives. The marketing conceptrequires consumer satisfaction rather than profit maximization to the goal of theorganization. In other words, the organization should be consumer oriented andshould try to understand consumers requirements and satisfy them quickly andefficiently in ways that are beneficial to both the consumer and theorganization.Marketing research is a vital part of an organizations marketing informationsystem; it helps to improve management decision making by providing relevant,accurate and timely (RAT) information. Every decision poses unique needs forinformation, and relevant strategies can be developed on the basis of theinformation gathered through marketing research.Whether the organization serves customers in competitive market environmentsor clients in a public sector enterprise, it is necessary to understand and satisfythe changing needs of diverse groups of people. Marketing research can providethis information to decision makers.An important feature in the definition is the inclusion of the specification andinterpretation of needed information. Firms can achieve and sustain competitiveadvantage through the creative use if market information. Hence, research isdefined as an information input to decisions, not simply the evaluation ofdecisions that have been made. Market research alone, however, does not

guarantee success; the intelligent use if market research is the key to businessachievement.

Role of Marketing Research in the Marketing Management Process

Marketing decisions involves issues that range from fundamental shifts in thepositioning of a business or the decision to enter a new market to narrowtactical questions of how best to stock a grocery shelf.

The context for these decisions is the marketing management process (theprocess of managing the marketing of a specific product or service by analyzingfour stages sequentially: (1) situation analysis, (2) strategy development, (3)

marketing program development and (4) implementation. This is a never-ending process, so the evaluation of past strategic decisions serves as an inputto the situation analysis.

1 I.M.R. Chapter 1: The Nature & Scope of Marketing Research16987643


2/11

Marketing Management Process

Understand the environment and the market

Identify threats and opportunities

Assess the competitive position

Define the business scope and served market segments

Establish competitive advantages

Set performance objectives

Product and channel decisions

Communication decisions

Pricing decisions

Personal selling decision

Performance monitoring

Refining strategies and program

During each stage, marketing research can make a major contribution toclarifying and resolving issues and then providing help to decision makerschoose among decision alternatives.

Situation Analysis

Effective marketing strategies are built on an in-depth understanding of themarket environment of the business and the specific characteristics of themarket. A situational analysis is an analysis of internal and external factors todetermine strengths, weaknesses, opportunities and threats.

The macro-environment includes political and regulatory trends, economic andsocial trends, and technological trends. Marketing researchers tend to focus onthose trends that affect the demand for products and services.Understanding customers who they are, how they behave, why they behave as

they do and how they are likely to respond in the future is at the heart of


SituationalAnalysis

StrategyDevelopment

MarketingProgram

Development

Implementation


3/11

marketing research.A major responsibility of the marketing research function is providinginformation that will help detect problems and opportunities and then, ifnecessary, learning enough to make decisions as to what marketing programwould result in the greatest response.

Various research approaches are used to analysis the market, e.g. pastinformation from previous studies, customer comments or focus groups. Oncethe situational analysis is complete, the next stage in the marketing planningprocess is strategy development.

Strategy Development

Strategy development is the process of selecting target markets, deciding onpositioning, and setting objectives. During this stage, the business decides onanswers to these three critical questions:

What business should we be in?

How will we compete?

What are the objectives of the business?

What business should we be in?

Specifically, what products or services should we offer? What technologies willwe use? Which market segments should we emphases?

These questions have become especially compelling in markets that are matureand saturated. One such route to growth in this competitive environment is tocreate highly targeted products that appeal to the tastes of smaller market

segments. Research supports this search for niches with large-scale quantitativemarket studies that describe buyer behavior, consumer beliefs and attitudes,and exposure to communications media. Large samples are needed to delineatethe segments, indicate their size and determine what the people in eachsegment are seeking in a product.

How will we compete?

Next the management team has to decide why the business is better than thecompetition in serving the needs of the target segments and what has to be

done to keep it in front. Competitive superiority is revealed in the market aseither differentiation along attributes that are important to target customers orthe lowest delivered cost position. Marketing research is essential for gettinganswers to three key questions about differentiation:

What are the attributes of the product or service that create value for thecustomer?

Which attributes are most important?

How do we compare with the competition?

The attributes of value go well beyond physical characteristics to encompass

the support activities and system for delivery and service that make up the



4/11

augmented product. Each market has unique attributes that customers use tojudge the competitive offerings, which can be understood only through carefulanalysis of usage patterns and decision processes within that market. Thisknowledge comes from informed sources and in-depth customer surveys.An understanding of competitive advantage also requires detailed knowledge of

the capabilities, strategies and intentions of present and prospectivecompetitors. Marketing research contributes here in two ways: identifying thecompetitive set, and collecting detailed information about each competitor.

What are the objectives for the business?

An objective is a desired performance result that can be quantified andmonitored. Increasingly, firms are adopting objectives for services levels andcustomer satisfaction. Marketing research is needed to establish both themarket share and the level of current customer satisfaction. Sometimes shareinformation we have X% of the Y market is readily available from secondarysources.

Marketing Program Development

Once strategy has been developed, the third stage in the marketing planningprocess is marketing program development. Marketing program

development is the process of designing marketing mux elements inaccordance with strategy. Programs embrace specific tasks. An action programusually focuses on a single objective in support of one element of the overallbusiness strategy. This is where the bulk of ongoing marketing research isdirected. An idea of the possibilities of and needs for research can be gatheredwhich describes some of the representative program decisions that useinformation about market characteristics and customer behavior:

Segment decisions (which segment is targeted)

Product decisions (what product features should be included)

Distribution decisions (should a few outlets be used or many?)

Advertising and promotion decisions (which advertising media should beused?)

Personal selling decisions (how many sales people are needed?)

Price decisions (what price level should be changed?)

Branding decisions (how can brand loyalty be increased?)

Customer satisfaction decisions (how should C.S. be measured?)

Marketing Program Implementation

Implementation is the process of turning marketing programs into executableactions. For research to be at this stage, it is important that specific measurable



5/11

objectives be set for all elements of the marketing program. Thus, there shouldbe sales goals by geographic area; distribution goals, and advertising goals. Therole of marketing research is to provide measures against these objectives andto provide more focused studies to determine why results are below or aboveexpectations.

There is overlap among the phases of the marketing process. In particular, thelast phase, identifying problems with the marketing program - and perhapsopportunities as well eventually blends into the situation analysis phase of afollow-up marketing program.In summary, marketing research can provide valuable information at all stagesof the marketing management process where decisions have to be made. Notall decisions will require research and research does not guarantee success.

Overview of the Marketing Research Process

Marketing research is a tool to provide information to help managers makemarketing-related decisions. Marketing decisions need to be made at all fourstages of the marketing management process. Once the need for information tomake a decision has been identified, the research process can begin.Problem Definition

Problem definition is the initial step in the marketing research process. It occurswhen management I either faced with a problem or sense an opportunity forwhich further information is required before a decision can be made and actiontaken. This is the impetus to begin the research process. Before research canproceed, time must be spent clarifying the decision to be made and determining

the specific information requirements: that is, clearly defining the researchproblem. This stage of the research process linking a management decision tospecific information needs is unquestionably the most important stage in theresearch process. If the problem is defined incorrectly, the research is doomedto fail, and information obtained will be irrelevant. At the completion of thisstage, consideration must be given ti the cists and benefits of the researchbefore proceeding.

Research Design

Once a decision is made to proceed with research a plan or blueprint for

gathering the data required to meet the research objectives must be devised.The first source of information that should be consulted in any research issecondary data, or data that already exists. If secondary data are insufficient toanswer all the research objectives, the researcher must decide on a way togather primary data. The three basic designs are exploratory research,descriptive research and casual research. Many projects will involve acombination of these designs.

Sampling

Once a research design has been determined and before data can be collecteddecisions must be made regarding sampling; that is, who is going to provide the



6/11

information, how will they be selected and how many respondents will berequired.

Data Analysis

With the design phase completed, it remains to implement the plan and collectthe data, once raw data are collected, they must be analyzed in relation to eachresearch objective and interpreted to provide usable information.

Presenting the Results

The analysis stage turns the raw data into information on the basis of theresearch objectives. Conclusions then have to be drawn in terms of the researchproblem and, in turn, recommendations need to be made to solve themanagement problem. Note that research provides information, but managersstill have to make the final decision. However, the presentation of the researchfindings can have a large impact on managements willingness to accept andimplement the outcomes.Finally, the research outcomes are fed back into the marketing system, to helpin future decisions and to be available as secondary data for any future researchproblems. In addition, the results of the research may raise more questions ormanagement decisions to be made, hence the link back to problem definition.Although these stages are linked n a sequential process, note that earlydecisions are always made by looking ahead to later decisions. Early decisionsare constantly being modified for new insights and possibilities presented byinformation obtained in later stages.

Factors to consider before undertaking Marketing ResearchMarketing research is not an immediate or an obvious path to finding solutionsto all managerial problems. A manager faced with a particular problem shouldnot instinctively resort to conducting marketing research to find a solution tothe problem. A manager should consider several factors before orderingmarketing research. Hence, the first decision to be made is whether marketresearch is called for in a particular situation.

The key factors that influence this initial decision in conducting orcommissioning marketing research include: relevance, the type and nature of

the information sought, timing, the availability of resources, and an analysis ofcosts and benefits.

Relevance

Research should not be conducted to satisfy curiosity or confirm the wisdom ofprevious decisions. Relevance comes through support of strategic ad tacticalplanning activities, that is, by anticipating the kinds of information that will berequired. As new circumstances arise and decision alternatives become morespecific, research projects may be undertaken. Throughout the planning of

these projects, the focus must be constantly on decisions.



7/11

Type and Nature of information sought

The decisions whether to conduct marketing research depends on the type andnature of the information sought. If the information required for decision makingalready exists within the organization, in the form of results of a study

conducted for a different problem or in the form of managerial experience andtalents, marketing research is not called for. Under these circumstances, furtherresearch would be redundant and a waste of money.

Timing

Research decisions are constrained by deadlines. Often these decisions arefixed in time and must be taken according to a specific schedule, usingwhatever information is available. One role of the planning system is toschedule needed market research so that it can be conducted in time toinfluence decisions. The formation of responses to competitive actions puts thegreatest time pressure on researchers, for the results are always wantedyesterday. There are of course so many situations in which the timing ofdecisions is contingent upon the research results. Even so, the.re is still timepressure stemming from the recognition that failure to take corrective action orto pursue an opportunity as quickly as possible will result in opportunity costs.

The advent of the Internet and subsequent rise of e-business has also exertedincreased time pressure on researchers.

Availability of resources

Although the need for resources to be available may appear to be obvious, inseveral instances managers have called for marketing research without properlyunderstanding the resources required including both financial and humanresources. Lack of funds can result in improper and inefficient execution of amarketing research project. The results of such research often will beinaccurate. Again, if funds are available to conduct research but are insufficientto implement the results of the research the marketing research is madeuseless. Also, the availability of skilled researchers is a vital issue in deciding

whether to conduct extensive marketing research. This is particularly so whenthe research is being conducted by an external source. When poorly qualifiedresearchers are hired, the weaknesses in their training and lack of insightproduce unimpressive and often inapplicable results.

Cost-Benefit Analysis

Before conducting marketing research, a prudent manager should perform acost-benefit analysis to determine the value of the information sought throughthe research. Willingness to acquire additional decision-making information by

conducting marketing research depends on a managers perception of theincremental quality of the information vis--vis its cost and the time with would



8/11

take to conduct the research. Hence, before conducting marketing research, it isnecessary to have some estimate of the value of the information being sought.Such an estimate will help determine how much, if anything, should be spent onthe research.

Marketing Research as a Business Tool

Marketing research is only a tool that can be used by managers to provideinformation to help make better decisions. Marketing research providesinformation to reduce the risk and uncertainty surrounding decisions. Researchseldom eliminates all uncertainty; it merely reduces it. Managers still have tomake decisions.In addition, although research is conducted to generate information, managersmight not readily use the information to solve their problems. The factors thatinfluence a managers decision to use research information include researchquality conformity to expectations, clarity of presentation, political acceptabilitywithin the organization and challenge to the status quo.Researchers and managers agree that the technical quality of research is themain determinant of research use. Also, managers are less inclined to useresearch that does not conform to previous notions or is not politicallyacceptable. Some researchers argue that the use of information is a function ofthe direct and indirect effects of environmental, organizational, informationaland individual factors.It is easier to conduct research and generate information than to understand theconsequences of the information. Many companies with excellent marketingresearch experience have failed in their efforts to capture the actual needs of

consumers.

Ethics in Marketing Research

Ethics refers to moral principles or values that generally govern the conduct ofan individual or group. Researchers have responsibilities to their profession,clients and respondents, and must adhere to high ethical standards to ensurethat both the function and the information are not brought into disrepute.Normally, three parties are involved in a marketing research project:

Client/Sponsor: party that commissions a marketing research project

Supplier: a party that designs and executes the marketing research

Respondent/Participant: a party that provides information.

The issue of ethics in marketing research involves all three players in a researchproject. Many countries have professional associations representing themarketing research industry. These associations usually have codes of conductfor their members.

The Clients Ethics

The research client, or sponsor, has to abide by a number of ethical or moral



9/11

rules and regulations when conducting a research study. The more commonsources of ethical problems in the client establishment stem from covertpurposes, dishonesty in dealing with suppliers, and misuse of researchinformation.

Overt and covert purposes

Most researchers have encountered situations in which the main purpose oftheir efforts was to serve someones organizational goals. Thus, research can beused to postpone an awkward decision or to lend respectability to a decisionthat has been made already. A related purpose is to avoid responsibility. Whenthere are competing factions, the manager who must make a difficult choicelooks to research to guide the decision. This has the further advantage that ifthe decision is later proven wrong, the manager can find someone else toblame. Some times a covert purpose will open the way to ethical abuses thatpresent difficult dilemmas to researchers. Serous abuses are created whenthere is subtle (or not-so-subtle) pressure to design research to support aparticular decision or enhance a legal position.

Dishonesty in dealing with suppliers

A few client companies have been known to indulge in picking the brains ofresearch suppliers by asking them to submit elaborate bids that detail theresearch design and methodology the suppler would adopt in conducting theresearch. Later, the client organization uses these ideas and conducts theresearch on its own. Another technique is to make a false promise of future

contract sin an effort to obtain a low price for the current project. In addition,some client organizations are guilty of promising suppliers information that theycannot provide.

Misuse of research information

The client organization should not misuse information gathered throughmarketing research projects. Sadly, there are a number of situations in whichthe research study is simply a disguise for a sales pitch. Many people havereceived phone calls, ostensibly to ask some research question, which lead onlyto a canned sales message for life insurance, financial planning or holiday

schemes. This is not only unethical behavior because it has no merits on itsown, but is also a serious abuse of respondent rights. Not surprisingly,respondents are more suspicious after a few of these encounters and mayrefuse to participate in any research study.

The Suppliers Ethics

The more common unethical issues for the research supplier are:

Violating client confidentiality: disclosing any information about the client

that the supplier has gathered from the research project amounts to a violationof client confidentiality,



10/11

Improper execution of research: suppliers are required to conductmarketing research projects in an objective manner, free from personal biasesand motives. Improper execution includes using biased sampling, ignoringrelevant data or misusing statistics, all of which lead to erroneous andmisleading results.

In addition to codes of conduct, the marketing research industry may have tofollow government legislation designed to protect the rights of respondents inthe country where research is being conducted.

The Respondents Ethics and Rights

A respondent who of his or her own free will agrees to participate in a marketingresearch project has the ethical obligation to provide the supplier, and hencethe client, with honest and truthful answers. The respondent can abstain from

answering a sensitive question, but falsifying the answer is unethicallyimproper.Any respondent who participates in a research project has the following rights:

The right to privacy

The right to safety

The right to know the true purpose of the research

The right to know the research results

The right to decide which questions to answer.

Marketing Research in Different Contexts

Other markets or segments of markets also use marketing research, such assmall businesses and the business-to-business market. In addition,organisations are increasingly conducting research outside their domesticmarket, that is, internationally. The same research principles apply to all ofthese contexts, but each context also presents some features that addcomplexities to the research process. These contexts are:

International Marketing Research

The increase in international trade and the emergence of global corporationsresulting from increased globalisation of business have had a major influence onall facets of business, including marketing research. Marketing research is notan easy task even within a single country and cross-national differencesmust be considered.International marketing research can be defined as marketing researchconducted either simultaneously or sequentially to facilitate marketing decisionsin more than one country. The international marketing research process is morecomplicated, and the international marketing researcher faces that differentfrom those of a domestic researcher, such as the necessity to ensure construct,

measurement, sampling and analysis equivalence before any cross-cultural



11/11

study is conducted.The increase in the importance of global business has caused an increase inawareness of the problems related to international research. Thorough researchof the proposed international market is very important before launching a newproduct or service.

Small Business Marketing Research

Small businesses employ fewer than 20 people. These businesses often are notlarge enough to employ specialist marketing staff, let alone specialist marketingresearchers. Indeed, they may also not have the financial resources to fundexternal suppliers of research. This situation brings special challenges whenconducting research.

Business-to-Business Marketing Research

The business-to-business context has some clear differences from consumermarketing, including fewer and larger buyers, closer supplier and customerrelationships, a geographic concentration of buyers and more professionalbuying processes. These characteristics have implications for several stages ofthe research process.


Documents

IMR Chapter 1