MARKET RESEARCH ROLE AND IMPORTANCE OF MARKET RESEARCH

MARKET RESEARCH

ROLE AND IMPORTANCE OF MARKET RESEARCH Process of collecting and analyzing data for a good/service in a market Analyzing consumer reaction to eg. Price changes, forms of promotion, packaging Impacts marketing decisions

IMPORTANCE OF A RESEARCH PLAN Reduce risk of new product launches Predict future changes Explain patterns in sales of existing products and market trends Assess most popular designs, flavors, styles, promotions and packages

STAGES OF MARKET RESEARCH Management problem identification Research objectives Sources of data (primary, secondary) Sampling (probability, non probability) Research techniques (focus groups, surveys, in depth interviews, observation) Analysis and presentation of results

MANAGEMENT PROBLEM IDENTIFICATION Most important step in process Clear idea of purpose of research of problem to be investigated What is the size of the potential market for our product? Why are sales falling? How can we challenge our competitors?

MARKET RESEARCH OBJECTIVES Must tie in with original problem Set to collect all information needed to solve problem How many people are willing to buy our product? If we advertise via newspaper, what will be the impact on sales and market share?

SOURCES OF DATA Primary: original data gathered from people in target market Secondary: use and analysis of data that already exist Secondary data may be more beneficial and should be undertaken first! Advantages: cheap, quick, identifies nature of market/helps plan for primary research, comparison of data from different sources Disadvantages: out of date, unsuitable/irrelevant, inaccurate, not available for new product developments

SECONDARY SOURCES OF DATA Government publications: social indicators report, economic trends, annual abstract of statistics, family expenditure survey Local libraries and local government offices Trade organizations: society of motor traders, furniture retailers assoc, engineering employers federation Market intelligence reports: mintel, keynotes, business monitor intl, euromonitor Newspapers and specialist publications: marketing journals, financial times Internal company records

SAMPLING Probability and non probability sampling Sample size: larger samples give better results Cost and time to consider

PROBABILITY VS NON PROBABILITY SAMPLING Simple random sampling: each member of population has an equal chance of being included in sample Convenience sampling: sample chosen based on ease of access Systematic sampling: sample is made up of every nth item from population Snowball sampling: refer from friend to friend Stratified sampling: sample is taken from different groups/layers/stratas of population (different opinions) Judgemental sampling: sample made up of suitable persons (timely) Ad hoc quotas: any person is chosen to make up pre-set quota

RESEARCH TECHNIQUES Quantitative: number of consumers who may buy a product and in what quantities Qualitative: discovering motivational factors behind consumer buying habits

QUANTITATIVE RESEARCH OBSERVATION: how consumers behave TEST MARKETING: testing limited quantity of new product on the market CONSUMER SURVEYS: directly asking consumers about preferences or opinions

Who to ask? : sample must represent population What to ask? : clear, logical questions How to ask? : self completed questionnaire or direct interview How accurate is it? : sampling bias, questionnaire bias, untruthfulness

QUALITATIVE RESEARCH FOCUS GROUPS

PRESENTATION OF RESULTS Bar charts Histograms Line graphs Pie charts

LIMITATION OF MARKET RESEARCH 90% of products fail after they have been launched! PROBLEMS WITH PRIMARY DATA Reliability of data Human behavior: untruthful, unpredictable Sampling and bias: sample may not represent population (sampling discrepancy) Badly constructed questionnaires, leading questions PROBLEMS WITH SECONDARY DATA out of date, unsuitable/irrelevant, inaccurate, not available for new product developments