Market & Marketing Research

Dr. Vesselin Blagoev

MBA’2010-11

Lecture Objectives

By the end of the lecture, you should be able to:

Define the differences between market and marketing research

Understand the role and use of MR information in marketing

Explain the elements of a MIS and stages of the MR process

Marketing research

defined

Definitions of MR

“Marketing Research is the function that links the consumer, customer, and public to the marketer through information... used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as process. Marketing research specifies the information required to address these issues, design the method for collecting information, manages and implements the data collection process, analyses the results, and communicates the findings and their implications.” (McDaniel, Jr. & Gates, 2010)

Definitions of MR

Marketing Research is: “the collection and analysis of data from a sample of individuals or organisations relating to their characteristics, behaviour, attitudes, opinions or possessions. It includes all forms of marketing and social research such as consumer and industrial surveys, psychological investigations, observational and panel studies” Market Research Society (1997) - UK

www.mrs.org.uk

Definitions of MRChisnall (2005)“… there was originally a difference between the scope of activities [covered by market and marketing research]…

The responsibilities of market research extend comprehensively, whereas marketing research is limited

to findings out information about the market for a particular product.”

× but this narrow view restricts the focus for the purposes of marketing as a wider management function.

MR should be: applied, scientific, pragmatic, objective, impersonal, factual

MR definition summary

Market Research aims to describe and analyse markets (size, structure, growth etc)

Marketing Research covers a much broader range of topics - customers, products, competitors, channels, suppliers etc. Strictly speaking, Marketing Research is broader than Market Research

“Most marketers don’t need more information, they need the right information and the managers need to be able to determine how to use this information appropriately and effectively so as to enhance performance.”Kotler, Wong, Saunders and Armstrong (2005); Similar point argued by McDaniel, Jr. & Gates (2010), Malhotra (2010) and Keegan and Green (2011)

Do you agree with this? Why?

Information

Short cut

Marketing research is the systematic and objective search for and analysis of information relevant to the identification and solution of any problem in the field of marketing

Armstrong and Kotler (2011), Malhotra (2010)

Definition Systematic: It is planned, following a

sequence of logically ordered steps, starting with problem definition and ending with its use in problem solution

Objective: Data are collected using scientific methods and are analyzed using proven statistical processes

Marketing Research

Problem-Identification Research

Problem-Solving Research

•Market Potential Research•Market Share Research•Image Research•Market Characteristics Research•Sales Analysis Research•Forecasting Research•Business Trends Research

•Segmentation Research•Product Research•Pricing Research•Promotion Research•Distribution Research

Malhotra (2010, p.40)

Types of marketPotential market

• Consumers have some stated interest in a product or service.Available market

• Set of consumers who have the interest, income and access to the product or services.

Qualified available market• Set of consumers who have the interest, income, access and

qualifications for a particular product or service.Served or ‘target’ market

• Part of the qualified market that the company decides to pursue.Penetrated market

• Set of consumers that have already bought a particular product or service.

Measuring market demand

The total market demand is the total volume of a product or service that would be bought by a defined consumer group in a defined geographic area, in a defined time period in a defined marketing environment under a defined level and mix of industry marketing effort.

Measuring market demand

Kotler, Wong, Saunders and Armstrong (2005)

Types of demand

The primary demand is the total demand for all brands of product and services.

The selective demand is a specific demand for a given brand of product.

Estimating market demand

Q= n x q x pWhere

• Q = total market demand• n = number of buyers in the market• q = quantity purchased by an

average buyer per year• p = price of an average unit

Forecasting future demand

Environmental forecast Inflation, Unemployment, Interest rates,

Consumer spending and saving, Business investment, Government expenditure.

Industry forecast What is currently happening?

Company sales forecast Buyers’ intentions, Composite of sales force

opinions, Expert opinion. Test market method. Time series analysis, Leading indicators,

Statistical demand analysis, Information analysis.

Forecasting future demand

Kotler, Wong, Saunders and Armstrong (2005)

Sources of information

Internal recordsMarketing intelligenceCompetitor intelligenceMarketing research

MR Research Dimensions Continuous versus Ad hoc

On-going researchOne-off

Qualitative versus QuantitativeWhy? (motivations, attitudes, behaviours)How many, how often?

Secondary versus PrimaryData that already exists and was collected for another

purposeData collected for the specific purpose at hand

Get a research method

Primary collection methods Primary data can be collected in 4 ways:

observational researchfocus-group researchsurvey researchexperimental research

2 main research instruments used are:questionnaires (open-end and closed-end)mechanical instruments

• e.g. Eyetracking of screen use on internet/TV

Marketing Research Step11. Defining the problem and research objectives

• Exploratory research• Gathering preliminary information that will help to

better define problems and suggest hypotheses.• Descriptive research• Defining marketing problems, situations or markets,

such as the market potential for a product or the demographics and attitudes of consumers.

• Causal research• Marketing research to test hypotheses about cause

and effect relationships.

Marketing Research Step 22. Developing the research plan for collection of

information• Determining information needs

• Secondary data: information that already exists, having been collected for another purpose.

• Primary data: information collected for the specific purpose at hand.

• Qualitative researchExploratory research used to uncover consumers’ motivations, attitudes and behaviour.

• Quantitative researchResearch data which involves interviews from a sufficient volume of customers to allow statistical analysis.

Marketing Research Step 3

3. Presenting the research plan• Outline of research construct.• Summarised written proposal.

Marketing Research Step 4

4. Implementing the research plan, collecting and analysing the data

• Interpreting and reporting the findings.• Present the relevant data so that the

information can be used to make meaningful decisions.

• Team effort between marketers and researchers and joint responsibility.

Table 9.6 Types of question

Table 9.6 Types of question (continued)

Table 9.6 Types of question (continued)

Demand estimation Estimation of market demand is essential for effective

marketing and as illustrated below, demand is measured on a number of levels.

Figure 9.3 Ninety types of demand measurement (6 5 3)

Secondary Sources Internal sales records, databases, customer

feedback, experienced employees Government reports Chambers of Commerce

• often available on gov.uk website

Trade Associations Industry Reports & Country-based reports e.g. GMID/Euromonitor (available via www.port.ac.uk/library)

Marketing area specific articles/reports• e.g. Promotions

MR: key criterion MR information has the purpose of supporting marketing

decisionsOrganisations as they grow in size tend to lose close

customer contactNew markets entered may be geographically distant and

unfamiliarNew products require research into their potential appeal to

customersCommunications need researching - are the right messages

being given and received Need to think clearly about the issue to be decided, before

spending money on MR

Marketing Research in practice

Marketing research is concerned with investigating and understanding buyer behaviour

Buying behaviour is merely one element of human behaviour; it is complex and influenced by many factors

Motivations may be a mixture of business specific, personal, economic, psychological, sociological and demographic variables

Behavioural sciences give insights into consumption

Marketing research in small businesses and non-profit organisations

Often limited by budgetary constraints, but the following can be accomplished:Observation of market, competitors

and industrySecondary data collectionSurveys Experiments

Main divisions of MR

Product Customer Pricing Sales Promotion

Overview of MR divisionsType Product Customer Pricing Sales Promotion

Examples of issues

needing investigation through MR

Failure, reduced demand, portfolio inequity, lack of USP, poor quality

Target segment profile, preference, loyalty, Macro/Micro env. issues, habits, motivation

Sensitivity, ceiling, match to other mix elements, competition, incentives needed, vs. perception of quality,

Increasing cost of sales, comparative mkt performance, falling sales, force organisation, distribution methods

Relevant methods to audience, rising costs, reduced exposure/coverage, effectiveness, integration,

Types of info.

Demand, sales, market share, competitive advantage

Demographics, purchase behaviours, level of influence of int./ext. factors

Costs, profit objectives, mkt/competitive prices, trade /channel vs. consumer prices

Value, volume, quantity sold, mkt coverage, latent potential, buyer power

Media usage / availability, readership/ viewer rates, public image, awareness, perceptual positioning, brand strength

Why MR is important

Traditionally, small firms have close links with their customers

Large-scale operations have widened the gap between producers and consumers

Modern communities are knowledgeable, experienced and critical

• Effective penetration of markets requires specialised and sophisticated approaches to identify, assess and satisfy market demands.

• Effective marketing information and research enables an organisation to make better decisions on the most appropriate market entry and competitive strategies.

Marketing information system (MIS)

The marketing information system (MIS) is comprised of:peopletechnology procedures

to gather, sort, analyse, evaluate and distribute necessary, timely and accurate information to marketing decision makers.

Marketing Information

System (MIS)

Brassington & Pettitt, 2007

Effective system of organising,

structuring and managing the

storage, access and

dissemination of market research

data

The Marketing Research Process

Brassington & Pettitt, 2007

Useful statistics??

MR in the Marketing Process MR information needed at all stages: new product idea generation and

product development marketing testing launch implementation brand performance management positioning and repositioning etc

Market research ethics

Increasing consumer resentment has become a major problem in the research industry due to how the market research has been used and abused.Consumers fear researchers may use

sophisticated techniques to obtain information that may be intrusive and infringe consumer rights.

There is also the fear that the research findings may be manipulated and misinterpreted to suit the company paying for the research.

To minimise abuse the research industry has developed broad standards such as ESOMAR’s International Code of Marketing and Social Research Practice.

Summary Marketing research aids decision making by providing

management with specific kinds of information which should form the foundation of all strategic decision making and tactical planning

Marketing Research is vital in identifying, anticipating and satisfying customer needs profitably

Accurate information enables intelligent decision making in pursuit of organisational objectives

Information must be continuously collected, monitored, analysed and communicated all around the organisation (via a MIS)

All businesses can conduct research, whether in-house or via an external consultancy

Further reading suggestions

Armstrong, G. and Kotler, P. (2011), Marketing, 9th ed., Pearson

Cooper, D. & Schindler, P. (2006), Marketing research. Boston: McGraw Hill

Keegan, W.J.& Green, M. (2011), Global Marketing, 6th ed., Pearson

Kotler, P. & Armstrong, G. (2010), Principles of Marketing, 13rd ed., Pearson

Malhotra, N. (2010), Marketing Research. An Applied Orientation, 6th ed. Pearson

McDaniel, Jr. C. and Gates, R. (2010), Marketing Research, John Wiley & Sons, 8th ed.