UNIT-II

Marketing Research
The environment for marketing has become dynamic and turbulent; without adequate preparation, it is difficult for organization to survive in such an environment A prerequisite for the adoption of marketing orientation is knowledge about customers and other aspects of the marketing environment that affect the companys orientation Marketing research is a key to the evolution of successful marketing strategies and programmes

Need for marketing research

Its an important tool to study Buyer behavior to changes in consumer life styles Consumption patterns Brand loyalty To forecast market changes To study competition and analyze the competitors product positioning How to gain competitive advantage Definitions Marketing research is the function that links the consumer, customer, and public to the marketer through information- information is used to identify and define marketing opportunities and problems, generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process Marketing research is about researching the whole of a companys marketing process i.e.marketing research into the elements of the marketing mix, competitors, markets and every thing to do with customers

Marketing research vs Market research Market research deals specifically with gathering of information about a market's size and trends

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Marketing research covers a wide range of activities while it may involve market research, marketing research is a more general systematic process that can be applied to a variety of marketing problems

Marketing research approaches

By the marketing department itself By the marketing research department Field work by an agency The full services of a marketing research agency is used Types of Marketing research

AD-HOC research It focuses on a specific marketing problem and collects data at one point in time from one sample of respondents E.g.: A company wants to find the impact of its latest advertisement campaign on its sales

Continuous research In this method the same respondents are interviewed repeatedly Respondents are enrolled by the research agency Information is gathered from those respondents on a periodic basis Thus it is possible to track changes within the same set of audience over a period of time Stages in the marketing research process The marketing research process has the following steps

1. Formulating the problem 2. Developing the objectives of research 3. Designing an effective research plan 4. Data collection stage 5. Evaluating the data and preparing a research report 6.

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1.Formulating the problem The purpose of conducting marketing research is to find a suitable solution for a specific and immediate problem confronted by a business manager The problem formulation is the first and the most important step of the marketing research process The problem is to be defined clearly and specifically, as an ill-defined problem may result in an ineffective solution Though errors and biases can creep into marketing research at any stage of the process, if the decision makers and researchers do not agree completely on the definition of the problems, the entire research effort will be wasted 2.Developing the objectives of the research The objectives of research should clear and specific The objectives should cover questions regarding the purpose of the study How the study should be conducted The information needs and the sources of information

3.Designing an effective research plan The design of the research plan determines the tools and techniques that are employed for conducting marketing research Normally the research design is broadly classified into exploratory research, descriptive research and casual research Exploratory research- it is the preliminary exploration of the research area prior to main quantitative data collection Descriptive research- describe something; such research meant to describe customers beliefs, attitudes, recall of advertisements and knowledge about its content Experimental research- establishes cause and effect relationship; it establishes setting up of control procedures to isolate the impact of a factor like money-off on a dependent variable like sales 4.Data collection stage The main issue in the data collection is the sample design It involves choosing the right technique to collect data from the chosen sample in such a manner that the data is unbiased representative

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Sampling process- aims at deciding who and how many people should be interviewed Sample size- the number of respondents who must be surveyed

Primary data collection: Survey metods- face to face interview, Telephone interview, Mail survey

Secondary data collection: Secondary data is collected from the internal and external sources Internal sources- Companys annual reports, Sales reports etc External sources- magazines, journals, legal documents, government gazettes etc Compared to primary data, the collection of secondary data is cheaper and less time consuming Researchers also need to ensure that the sources are free from biases 5.Evaluating the Data and Preparing a research report Once the information is collected, it is edited and coded The data after coding is tabulated and evaluated using statistical applications After data analysis, a detailed research report indicating the extent to which the objectives set for the research process have been fulfilled, is made This report is submitted to the management to contribute to effective decision making Segmentation Segmentation refers to the process of identifying the clusters of customers who desire the same value proposition

Customer value proposition Customer value proposition is a unique mix of product and service attributes, customer relations, and corporate image that a company offers It defines how the organization will differentiate itself from competitors to attract, retain and deepen relationships with target customers

Definition Segmentation is the process of dividing the market of a product or service in smaller groups of customers

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The customers in one group should Buy the product for the same purpose Use the product in the same way Buy the product in the same way

But the customers in one segment should be different from customers of any other segment in one or more of the above parameters Segmentation of a market makes sense only when the company has to design a separate value proposition for each segment Purpose of segmentation Target market selection Tailored marketing mix Differentiation Opportunities and threats Market Segmentation Bases of segmentation Demographic segmentation Geographic segmentation Behavioral segmentation Psycho graphic segmentation Demographic segmentation consists of dividing the market into groups based on variables such as age; gender family size, income, occupation, education, religion, race and nationality Age: Consumer needs and wants change with age although they may still wish to consumer the same types of product Life-cycle stage A consumer stage in the life cycle is also an important variable Infants: Baby foods like Cerelac and Farex Young child: Leo toys, Barbie dolls (Again these can be segmented by gender basis for small girls and boys)

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 Adolescent: Trendy products and services like Jeans, T-shirts, and Coffee shops Young Adults: Mobikes, music systems, mobile phones Old people: Investment instruments, health packages for old Gender: Gender segmentation is widely used in consumer marketing. The best examples include clothing, hairdressing, magazines and toiletries and cosmetics Income: income is another popular basis for segmentation Many companies target affluent consumers with luxury goods and convenience services. Good examples include Mercedes, Pizza Hut Pizzas and Parker pen Social class: Many Marketers believe that a consumer perceived social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products & services Geographic segmentation Geographic segmentation tries to divide markets into different geographical units Regions: e.g. in India, you can talk of North India, West India, as regions or zones and Delhi,Mumbai, Chennai as metropolitan cities and Jaipur, Lucknow and Baroda as smaller cities. Geographic segmentation is an important process - particularly for multi-national and global businesses and brands Many such companies have regional and national marketing programmes that alter their products, advertising and promotion to meet the individual needs of geographic units Behavioral segmentation Behavioral segmentation divides customers into groups based on the way they respond to, use or know of a product Occasions: When a product is consumed or purchased For example, cereals have traditionally been marketed as a breakfast-related product. Kelloggs have always encouraged consumers to eat breakfast cereals on the occasion of getting up. More recently, they have tried to extend the consumption of cereals by promoting the product as an ideal, anytime snack food In India, lots of home shopping takes place on the occasion of Divali. TV sets sales goes up during world cup cricket

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Usage: Some markets can be segmented into light, medium and heavy user groups Benefits Sought: You may note that this is a different and an important form of behavioral segmentation. Benefit segmentation requires Marketers to understand and find the main benefits customers look for in a product. An excellent example is the toothpaste market where research has found four main benefit segments - economic; medicinal, cosmetic and taste.

Brand loyalty: The degree of brand loyalty can be the basis for segmenting customers Some buyers are totally brand loyal, buying only one brand in a product group Most buyers switch buyers Others night show no loyalty to any individual brand but switch brands on the basis of special offers to buy By profiling the characteristics of each group a company can target each segment accordingly

Perceptions and beliefs: Perceptions and beliefs are strongly linked to behavior Consumers are grouped by identifying the people who view the products in a market in a similar way ( perceptual segmentation) and have similar beliefs ( belief segmentation)

Psycho graphic segmentation Lifestyle: Lifestyles are the ways in which people live and spend time and money Marketers are increasingly interested in the effect of consumer lifestyles on demand Citibank International Gold card is for the affluent people who travel abroad frequently Five Star Hotels are for the foreigners, top business and corporate class to whom comfort and convenience are the parameters of value Black and White TV still sells in upcountry areas, small hotels and small shops to lower middle class

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Personality: In some product categories there is relationship between brand personality and the personality of the buyer Successful personality based segmentation is found in categories such as cosmetics, alcoholic drinks and cigarettes Requirements for Effective Segmentation Measurable Size, purchasing power, and profile of segment

Accessible Can be reached and served

Substantial Large and profitable enough to serve

Differentiable Respond differently

Actionable Effective programs can be developed

Target marketing A Target market is a group of people or organizations for which a company designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually beneficial and satisfying exchanges When selecting their target markets, companies have to make choice of whether they are going to be focused on one or few segments or they going to cater to the mass market Niche Marketing: the process of targeting a small market segment with a specific, specialized marketing mix. Micromarketing- the process of targeting smaller, more narrowly defined market segments. On the individual consumer end of the continuum, a firm may decide to target individual consumers and personalize marketing efforts toward each.

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Process of target marketing Selection of target market is a three step process The requirements and characteristics of the individuals that comprise the market are understood Customers are grouped according to these requirements and characteristics into segments Finally, one or more segments are chosen for targeting or serving

Target the Mass Market versus the Individual Consumer Targeting Strategy

1.Undifferentiated marketing 2.Differentiated marketing 3.Concentrated/Focus marketing 4.Custom marketing Undifferentiated marketing There may be no strong differences in customer characteristics Under these circumstances a company will decide to develop a single marketing mix for the whole market Companies which lack a marketing orientation may practice this strategy because of lack of customer knowledge It is convenient since a single product has to be developed Differentiated marketing When market segmentation reveals several potential target segments that the company can serve profitably, specific marketing mixes can be developed to appeal to all or some of the segments A differentiated marketing strategy exploits the differences between marketing segments by designing a specific marketing mix for each segment One potential disadvantage of differential marketing strategy is loss of cost economics Concentrated/Focus Marketing A company may target just one segment with a single marketing mix

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The strategy is suited for companies with limited resources as these resources may be too stretched if it competes in many segments Focused marketing allows R&D expenditure to be concentrated on meeting needs of one set of customers and managerial activities is devoted to understanding and catering to their needs Custom marketing In some markets, the requirements of individual customers are unique and their purchasing power is sufficient to make designing a separate marketing mix for each customer a viable option FACTORS CONSIDERED IMPORTANT IN THE SELECTION OF TARGET MARKET STRATEGY

1. Companys Resources 2. Product Homogeneity 3. Product Stage in the Life Cycle 4. Market Homogeneity 5. Competitive Marketing Strategy Positioning Positioning is the preparation or the image that customers have of the company and its products

Definition IT IS THE ACT OF DESIGNING THE COMPANYS OFFERING AND IMAGE TO OCCUPY A DISTINCTIVE PLACE IN TARGET MARKETS MIND It is the customers beliefs about the companys product being, say, high quality, or low price or durable This perception is the stimulus of customers attitude towards companys products Customers positive perceptions will drive the business of the company and negative perceptions will sink it Segmentation, Targeting, and Positioning Positioning Image that customers have about a product in relation to the products competitors

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POSITIONING STRATEGIES Identifying possible competitive advantages Differentiation can be based on Products Services Channels People Image

Product Differentiation Form- size, shape or physical structure Features- supplement to basic function. Performance Quality-the level at which the products primary characteristics operates. Conformance Quality- the degree to which all the produced units are identical and meet the promised specifications. Durability- a measure of the products expected operating life under natural or stressful conditions. Reliability- a measure of the probability that a product will not malfunction within a specified time period. Reparability- a measure of the ease of fixing a product when it fails Style Quality can be communicated by choosing physical signs and cues

Services Differentiation Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair

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Personnel Differentiation Competence Courtesy Credibility Reliability Responsiveness Communication Channel Differentiation Coverage Expertise Performance Image Differentiation Image is the way the public perceives the company or its products. Identity is the way a company aims to identify or position itself or its products. Symbols, colors, slogans, atmosphere, Events and employee behavior Differentiation Variables Example 1: Example2: Example3: Example 4: Developing and communicating a positioning strategy All products can be differentiated to some extent. But not all differences are meaningful or worthwhile.

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A difference is worth establishing to the extent that it satisfies the following criteria : Important Distinctive Superior Pre-emptive Affordable Profitable

Important : The difference delivers a highly valued benefit to a sufficient numbers of buyers Distinctive : The difference is delivered in a distinctive way Superior : The difference is superior to other ways of obtaining the benefit Preemptive : The difference cannot be easily copied by competitors Affordable : The buyer can afford to pay for the difference Profitable : The company will find it profitable to introduce the difference Choosing a positioning strategy Value propositions (the whole cluster of benefits the company promises to deliver ) represent the full positioning of the brand Possible value propositions: More for More More for the Same More for Less The Same for Less Less for Much Less

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Effective positioning What consumers currently think about the product, especially in relation to competing products What the marketer wants consumers to think about the product Which positioning strategy will elevate the consumers current product image to the desired product image

Analyzing consumer markets Successful marketing requires that companies fully connect with their customers What influences the consumer behavior? Consumer behavior is the study of how individuals, groups, and organizations select buy, use, and dispose goods, services, ideas, or experiences to satisfy their needs and wants Consumer buying behavior is influenced by cultural, social and personal factors Cultural factors Culture is the most basic cause of a persons wants and behavior Culture, Sub culture and social class are particularly important influences on consumer buying behavior Growing up, children learn basic values, perception and wants from the family and other important groups Marketers are always trying to spot cultural shifts which might point to new products that might be wanted by customers or to increased demand For example, the cultural shift towards greater concern about health and fitness has created opportunities (and now industries) servicing customers who wish to buy: Low calorie foods Health club memberships Exercise equipment Activity or health-related holidays etc

Sub-cultures can include nationalities, religions, racial groups, or groups of people sharing the same geographical location Similarly, differences in social class can create customer groups

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Social factors Social factors such as reference groups, family and social roles affect our buying behavior As a consumer decision to purchase a product is influenced by the people around him/her with whom he/she interacts and the various social groups to which he/she belongs

Reference groups The groups with whom you interact directly or indirectly influence your purchase decisions and thus their study is of great importance to marketer to understand are Primary and secondary groups: Primary group consists of family, neighbors, close friends, colleagues and co- workers are examples of primary groups Secondary groups are those with which an individual interacts only occasionally and does not consider their opinion very important Formal and informal groups: Rotary, lions are some of the well known social groups in our society Informal group is loosely defined and may have no specified roles and goals; Meeting your neighbors over lunch once a month for friendly exchange of news is an instance of an informal group Membership and symbolic groups: A membership group is one to which a person belongs or qualifies for membership; All workers in a factory qualify for membership to the labor union A symbolic group is one which an individual aspires to belong to, but is not likely to be received as a member Indirect reference groups comprise those individuals or groups with whom an individual dews not have any direct face to face contact, such as film stars, TV stars, sportsman, politicians The three types of reference groups appeals most commonly used are: a) Celebrities, b) Experts, and c) The common man

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Personal factors Age and Life cycle Stage Occupation And Income Life Style Personality: personality is the sum total of an individuals enduring internal psychological traits that make him or her unique Motivation: Motivation involves the positive or negative needs, goals, and desires that impel a person to or away from certain actions The buying decision process Analyzing business markets What is organizational buying? Organizational buying is the decision making process by which formal organizations establish the need for purchased products and services identify, evaluate, and choose among alternative brands and suppliers

Factors In Organizational Buyer Behavior Organizational consumer behavior depends on Buying objectives Buying structure, and Purchase constraints Buying Objectives

Organizational buyers have these several distinct objectives in purchasing goods and services 1. Availability of items buyer is able to obtain items throughout the year or whenever necessary 2. Seller reliability based on fairness to organizational consumers in allocating items in high demand 3. Consistency of quality being able to purchase items of proper quality on a regular basis 4. Delivery goals minimized and stabilized length of time from order placement to delivery 5. Price considerations involve purchase prices and the flexibility of payment terms

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6. Customer service sellers ability to meet special requests, answer questions, address problems, and so on Buying Structure Buying structure refers to the level of formality and specialization used in the purchase process A firms buying structure depends on an organizations size, resources, diversity, and format Manufacturers and wholesalers often have purchasing agents Constraints On Purchases The major constraint on purchase behavior is derived demand Availability, ability to pay, financing availability, and risk are other constraints Government consumers are constrained by the budgeting process

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