Market research

Marketing Research
Prepared by
Rajveer Bhaskar
Assistant Professor, RCPIPER

Marketing Research
 Marketing research is the systematic
gathering, recording and analyzing of data
about problems relating to the marketing
of goods and services.
 Market research will give you the data you
need to identify and reach your target
market at a price customers are willing to
pay.

 Marketing research focuses and organizes
marketing information. It permits
entrepreneurs to:
 Spot current and upcoming problems in the
current market
 Reduce business risks
 Identify sales opportunities
 Develop plans of action

Market Research
 Successful marketing requires timely and
relevant market information.
 An inexpensive research program, based
on questionnaires given to current or
prospective customers, can uncover
dissatisfaction or possible new products or
services.

 Marketing research is not a perfect science.
It deals with people and their constantly
changing feelings and behaviors, which are
influenced by countless subjective factors.
 To conduct marketing research, you must
gather facts and opinions in an orderly,
objective way to find out what people want
to buy, not just what you want to sell
them.

 Market research will identify trends that
affect sales and profitability.
 Population shifts
 Legal developments
 The local economic situation should be
monitored to quickly identify problems and
opportunities
 Keeping up with competitors' market
strategies also is important.

 Every small business owner must ask
the following questions to devise
effective marketing strategies:
 Who are my customers and
potential customers?
 What kind of people are they?
 Where do they live?
 Can and will they buy?

Why do market research?
 People will not buy products or services they
do not want.
 Learning what customers want and how to
present it drives the need for marketing
research.
 Small business has an edge over larger
businesses in this regard.
 Small business owners have a sense of their
customers' needs from years of experience, but this
informal information may not be timely or relevant
to the current market.

How to do market research
 Analyze returned items.
 Ask former customers why they've switched.
 Look at competitors’ prices.
 Formal marketing research simply makes this
familiar process orderly. It provides a
framework to organize market information.

Market research - the process
 Market research can be simple or complex.
 You might conduct simple market
research.
 Example: Questionnaire in your customer bills
to gather demographic information about your
customers
 You might conduct complex research.
 Example: Hiring a professional market
research firm to conduct primary research to
aid in developing a marketing strategy to
launch a new product

 Regardless of the simplicity or complexity
of your marketing research project, you'll
benefit by reviewing the following seven
steps in the market research process.
1
2
3
4
5
6
7

Step 1: Define Marketing Problems
and Opportunities
 You are trying to launch a new product or
service.
 Awareness of your company and its
products or services is low.
 The market is familiar with your company,
but still is not doing business with you.
 Your company has a poor image and
reputation.
 Your goods and services are not reaching
the buying public in a timely manner.
Opportunity
Problem
Problem
Problem
Problem

Step 2: Set Objectives, Budget
and Timetables

Objectives
 Explore the nature of a problem so you may
further define it.
 Determine how many people will buy your
product packaged in a certain way and
offered at a certain price.
 Test possible cause- and effect-
relationships.
 For example, if you lower your price by 10
percent, what increased sales volume should
you expect?
 What impact will this strategy have on your
profit?

Budget
 Your market research budget is a portion of
your overall marketing budget.
 Allocate a small percentage of gross sales for
the most recent year to use on market
research.
 It’s usually about 2 percent for an existing
business.
 Planning to launch a new product or
business?
 You may want to increase your budget to as much
as 10 percent of your expected gross sales.
 Other methods include analyzing and
estimating the competition's budget and
calculating your cost of marketing per sale.

Timetables
 Prepare a detailed timeline to complete all
steps of the market research process.
 Establish target dates that will allow the
best accessibility to your market.
 For example, a holiday greeting card business
may want to conduct research before or
around the holiday season buying period, when
its customers are most likely to be thinking
about their purchases.

Step 3: Select Research Types,
Methods and Techniques
 Two types of research are available:
 Primary research is original information
gathered for a specific purpose.
 Secondary research is information that already
exists somewhere.

Secondary Research
 Secondary research is faster and less
expensive than primary research.
 Gathering secondary research may be as
simple as making a trip to your local
library or business information center or
browsing the Internet.
 It utilizes information already published.
 Surveys, books, magazines, etc.

Secondary Research Cont.
 Localized figures provide better information
as local conditions might buck national
trends.
 Newspapers and other local media are helpful.
 Many sources of secondary research material
are available. It can be found in:
 Libraries
 GALES' Directory is available at any public library.
 Colleges
 Trade and general business publications and
newspapers
 Trade associations and government agencies are
rich sources of information.

Example of Secondary Research
 An article may show how much working
mothers spent on convenience foods last
year.
 If you were thinking about selling a
convenience food, this information would
show you what kind of market there is for
convenience foods.
 It doesn’t show you how much they are willing
to spend on your particular product.

Primary Research
 Primary research can be as simple as
asking customers or suppliers how they
feel about a business, or as complex as
surveys conducted by professional
marketing research firms.
 Examples of primary research are:
 Direct-mail questionnaires
 On-line or telephone surveys
 Experiments
 Panel studies
 Test marketing
 Behavior observation

Primary Research
 Primary research is divided into reactive and
nonreactive research.
 Nonreactive
 Observes how real people behave in real market
situations without influencing that behavior
 Reactive research
 Includes surveys, interviews and questionnaires
 This research is best left to marketing
professionals, as they usually can get more
objective and sophisticated results.

Primary Research Cont.
 Those who can't afford high-priced marketing
research services should consider asking
nearby college or university business schools
for help.

Step 4: Design Research Instruments
 The most common research instrument is
the questionnaire. Keep these tips in mind
when designing your market research
questionnaire.
 Keep it simple. Include instructions for
answering all questions
 Begin the survey with general questions and
move toward more specific questions.
 Design a questionnaire that is graphically
pleasing and easy to read.

 Before printing the survey, ask a few
people to complete the survey and give
feedback.
 Mix the form of the questions for different
sections of the questionnaire
 Scales
 Rankings
 Open-ended questions
 Closed-ended questions
 The form or way a question is asked may
influence the answer given. Questions are
in two forms: closed-end questions and
open-end questions.

Closed-ended questions
 Types of closed-ended questions include:
 Multiple choice questions
 “Yes” or “No” questions
 Scales refer to questions that ask
respondents to rank their answers or
measure their answer at a particular point on
a scale.
 For example, a respondent may have the choice to
rank his/her feelings toward a particular
statement. The scale may range from "Strongly
Disagree" "Disagree" and "Indifferent" to "Agree"
and "Strongly Agree."

Open-ended questions
 Respondents answer questions in their own
words.
 Types of open-ended questions include:
 Word association questions ask respondents to
state the first word that comes to mind when a
particular word is mentioned.
 Fill-in-the blank
 For example, a question might
read: “When I eat toast and
jelly, I use _____brand of jelly
and it usually costs about
________ per jar.

Step 5: Collect Data
 To obtain clear, unbiased and
reliable results, collect the
data under the direction of
experienced researchers.
 Before beginning data
collection, You must to train,
educate and supervise your
research staff.
 Untrained staff conducting
primary research will lead to
interviewer bias.

Step 5 Cont.
 Stick to the objectives and rules associated
with the methods and techniques you have
set in Step 2 and Step 3.
 Be as scientific as possible in gathering your
information.

Step 6: Organize
and Analyze the Data
 Once data has been collected, it needs to
be cleaned.
 Cleaning research data involves editing,
coding and tabulating results.
 Start with a simply designed research
instrument or questionnaire.

 Look for data focusing on immediate market
needs.
 Rely on subjective information only as support
for more general findings of objective research.
 Analyze for consistency; compare the results of
different methods of your data collection.
 Look for common opinions that may be counted
together.
 Read between the lines. For example, combine
U.S. Census Bureau statistics on median income
levels for a given location and the number of
homeowners vs. renters in the area.

Step 7: Present and Use Market
Research Findings
 Once marketing information is
collected and analyzed, present
it in an organized manner to the
decision makers of the business.
 You may want to report your
findings in the market analysis
section of your business plan.
 You may want to familiarize your
sales and marketing departments
with the data or conduct a
companywide informational
training seminar using the
information.

Assess Available Information
 Assess the information that is immediately
available.
 You may have the information you need to
support your marketing plan without doing
extensive market research.
 Weigh the cost of gathering more
information against its potential
usefulness.

Gather Additional Information
 Before considering surveys or field
experiments, look at currently held
information:
 Sales records
 Complaints
 Receipts
 Other records that show where
customers live and work, and
how and what they buy.

Additional Information Cont.
 Credit records are an excellent source of
information. They give information about:
 Customers' jobs
 Income levels
 Marital status
 Employees may be the best source of information
about customer likes and dislikes.
 They hear customers' minor gripes about the store or
service - the ones customers don't think important
enough to take to the owner.
 Employees are aware of the items customers request
that you do not stock.
 They often can supply good customer profiles from
their day-to-day contacts.

 Visit the following Web site for information on how to conduct
market research:
www.sba.gov/smallbusinessplanner/manage/marketandprice
/SERV-MARKETRESEARCH.html
 If you need assistance in conducting primary market
research, contact your local SBDC office,
www.ndsbdc.org/
 Market Research Workbook
www.missouribusiness.net/docs/market_research_workbook.
asp
 Conducting market research factsheet:
http://ohioline.osu.edu/cd-fact/1252.html
Additional Resources

 Summary of marketing basics:
www.sba.gov/smallbusinessplanner/manage/mar
ketandprice/SERV_MARKBASICS.html
 Market trends and forcasts:
www.marshall.usc.edu/web/Library.cfm?
doc_id=2023#Trends
 Research and Statistics Office of Economic
Research: www.sba.gov/advo/research/

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