MARKET RESEARCH

Introduction and Some Basics

Marketing is a dynamic and increasingly important business activity. It can

determine a firm's competitive edge, deliver new customers, and Increase sales and profits.

Marketing research is a key element in successfully developing and implementing marketing programs to achieve these goals. The goal of survey research is to be thought of as a consulting expert on how to market your products and services based on what your customer or your potential customer thinks Research is being looked at more as a part of the marketing function.

One useful way to describe research is based on the specificity of its purpose. Applied marketing research is conducted to address a specific marketing decision for a specific firm or organization. Basic marketing research is conducted without a specific decision in mind, and it usually does not address the needs of a specific organization. It attempts to expand the limits of marketing knowledge in general, and as such it is not aimed at solving a particular pragmatic problem.

The Scientific Method:

All marketing research, whether basic or applied, involves the scientific method. The scientific method is the way researchers go about using knowledge and evidence to reach objective conclusions about the real world. It is analogous to physics and chemistry when certain research work is undertaken and thereafter it becomes principle or fact

In basic research, testing these prior conceptions or hypotheses and then making inferences and conclusions about the phenomena leads to the establishment of general laws about the phenomena. Use of the scientific method in applied research ensures objectivity in gathering facts and testing creative ideas for alternative marketing strategies. The essence of research, whether basic or applied, lies in the scientific method. Thus, the techniques of basic and applied research differ largely in degree rather than in substance.

Marketing is a powerful tool in growing a business because it provides the vehicle to get and keep customers.

An important role of marketing research is to help marketers: 1. Define the individual (consumer) or organizational buyer who has the need, desire, and ability to buy the product or service; 2. Identify unsatisfied customers' needs and wants that might provide new business opportunities for the firm; 3. Attract new customers to existing products, services, and brands. Marketing professionals are responsible for developing the strategy and tactics which enable firms to produce and deliver the appropriate goods and services to potential customers. These activities include: product development, packaging, pricing, distribution, warehousing, order-taking, selling, advertising many other functions

Marketing research plays a key role in: determining needs and wants; testing new product ideas; and
And understanding how one brand measures up against another

brand in the customer's mind.

In other words, marketing, assisted by marketing research, provides the bridge between a firm's offerings and the customer. Marketing is the sum total of activities which maintain the firm's focus on the customer.

Success in business is also highly dependent on a firm's ability to generate, maintain, and use information, especially to measure customer behavior. Marketing Professional, with the aid of marketing research, is capturing more information than ever before. But having descriptive data is only one side of the equation. Marketing Professional must also be able to draw appropriate conclusions from this information. Thus, marketing strategists and marketing researchers must work together to collect, interpret, and apply information to business decisions. In order to be an effective marketing researcher and to contribute more than information to a client, those who conduct research must be familiar with marketing theory and practice. Marketing researchers must understand the firm's objectives in seeking information, its strategic vision and relevant marketing concepts, its products and services, and its competitive position. Only then will they be equipped to participate in decisions about applications and courses of action based on their research. Marketing management involves the coordination of all of the marketing functions within the firm. In planning marketing activities, the manager's responsibilities include: Setting marketing objectives that are measurable and consistent with corporate objectives Determining marketing strategy, including selecting the target market and developing the marketing mix Developing implementation programs that put the marketing plan into operation Measuring and monitoring results, including comparison of performance against objectives

Managing marketing activities and making marketing decisions require access to relevant marketing information that is frequently provided by the marketing research professional.

The Marketing Mix:

The marketing mix consists of a set of variables that are under the firm's control and is frequently referred to as "the 4 P's":

Product Price Promotion Place (distribution)

Marketing mix decisions cannot be made in a vacuum. At the center of all decisions is the customer, and influencing the customer's needs as well as the firms capabilities are the marketing environment. In determining the combination of elements in the marketing mix, a manager must respond to the changing environment by adjusting to environmental influences and by anticipating changes in customer demand. By clearly defining each of the 4 P's in relation to the customer and the environment, the firm can achieve an advantage over its competition.

Products and Services

Products and services are the offerings a firm brings to the market. Ideally, these are developed in response to an identified customer need. Products cannot be defined only in terms of physical attributes (such as size, shape, or color), since often they may be purchased for intangible reasons (such as status, security, or service). Products are also defined in terms of the buyer whether it is a consumer who is purchasing for personal or family use or an industrial buyer who is purchasing items for resale or for use in the production of final products. Services (such as a haircut, brokerage advice, or a car rental) are largely intangible and are defined by the benefits received, the method of performance, and the overall experience. The relationship between the provider and the customer is the key to successful service marketing. This relationship is established during service delivery and may be reinforced through follow-up activities. While products and services may differ in their definition, from a marketing perspective the customer focus, environmental considerations, and a firm's capabilities and objectives must all be considered in designing effective marketing programs for both products and services.

Life Cycles

Though life cycles for different products may vary in length, the lifecycle concept generally identifies four stages: Introduction Growth Maturation Decline

There are recommended treatments of the 4 P's that correspond to each stage. For example, as products move through maturity toward decline, marketers must decide whether to plan extinction of the product or revive it by improving and re-launching it to extend the PLC. Such considerations as customer needs, competition, and the firm's product portfolio its mix of new, growing and mature products is important in this strategic decision.

Market Segmentation
In developing its target market strategy, a firm divides the market into several subgroups or segments (segments can be defined based on benefits sought, product usage, and lifestyle, as well as demographic and geographic factors) and assesses each group's need or desire and ability to purchase its product. The marketing manager then makes a determination whether or not to employ: Undifferentiated or mass marketing. Concentrated marketing that targets a specific segment, or Differentiated marketing that uses different approaches to two or more different segment.

Market Positioning
In making its appeal to the defined market segment(s), the firm positions the product relative to that of its competitors. Positioning does not involve physically changing the product, but rather it attempts to influence how the customer perceives the product. This is accomplished through marketing communication (advertising, PR, promotion, and personal selling) and through such product-related elements as pricing, packaging, and distribution.

Sales Forecasting and Market Forecasting:

Following market segmentation and target market selection, the marketing planning process also involves the development of sales forecasts. This activity estimates the market potential (size of the market for the product category) and the sales forecast (amount of sales that will occur for the brand) for a specified time period. Two basic methods are used: 1. The first method studies past purchase patterns of the same or related products. 2. The second method predicts future behavior using such methods as customer surveys, market tests, and executive judgment. Forecasting helps the firm allocates its resources more efficiently in a variety of areas such as: Planning personal selling efforts Budgeting selling expenses Establishing sales quotas Determining production-run size Selecting distribution channels Developing advertising budgets

Market Forecasting
Market forecasting predicts what the future marketplace will look like. Market forecasting attempts to provide a picture of the demographic, social, political, financial, and business environments in some future time, usually three to five years.

Pricing
Price is considered one of the most important of the controllable variables influencing a purchase. As defined in the customer's terms, price is what the purchaser is willing to give up obtaining the product or service. Thus, the value of the good or service is not only a monetary one, but also may include such intangible components as: reducing a perceived risk,

providing time, or Offering a future trade-in value.

Therefore, customer research can be an important component of pricing decisions. Pricing decisions should be tied to the positioning and target market. The established price for a product or service should be integrated with the rest of the marketing mix, so that, for example, the price establishes the product's value, the channels of distribution add value, and the promotional messages communicate that value. Pricing decisions should be tied to the positioning and target market. The established price for a product or service should be integrated with the rest of the marketing mix, so that, for example, the price establishes the product's value, the channels of distribution add value, and the promotional messages communicate that value.

Of course, profitability is also a strong component of pricing. Profit includes the cost of developing, producing, promoting, and distributing the product, and profitability goals must support corporate objectives. In addition, demand factors such as elasticity (consumers' price sensitivity), environmental influences, and competition must also enter into the consideration of alternative pricing strategies.

Marketing Research and the Marketing Function:

Marketing research provides the vehicle through which the marketer can develop an understanding of the firm's current and potential customers. Through qualitative and quantitative studies, the researcher uncovers problems and opportunities, identifies distinctive market characteristics, and measures market potential, all of which help drive the development of effective marketing strategy. Because businesses are highly dependent on information, the marketing researcher and the marketer must work closely to integrate their efforts to make and implement marketing decisions. Without information and data relating to the market, the environment, customers, and competitors, each organization would not have been able to make effective decisions or to develop appropriate marketing strategies for these new products.

Consumers and Organizational Buyers:

Consumers and organizational buyers are both customers. However, they differ in the nature of their purchase decisions. Consumers purchase goods and services for personal or household use. Their interest is in satisfying the needs of one or a few people, and sometimes they base purchase decisions on emotional considerations (perceived status, peer influence, self esteem) as well as product features and price. Organizational buyers purchase goods and services which are used in the operation of the firm, further production of goods and services, or for resale to final consumers. Their purchase decisions are generally based on more rational factors such as conformity to specifications (for example, 3/8-inch flathead aluminum pins), service from the vendor, delivery time, and price. Such purchases are generally made in large quantities and are repeated periodically. Therefore, promotion and distribution strategies differ for these two types of customers.

Channels of Distribution:
The distribution function links the producer and its products with the customer. Channels involve all of the organizations and individuals who contribute to the distribution function. From the customer's perspective, distribution makes the product available to be purchased conveniently and when needed, and can actually enhance its value. From the firm's point of view, distribution is a highly complex activity that requires careful planning and integration with the other elements of the marketing mix.

Costs as well as profits can be severely affected by the selection of an inappropriate distribution channel. Distribution channels are comprised of a series of channel members, each of which plays a different role in the distribution function. Because channel members operate somewhat independently, conflict may occur.

Horizontal conflict occurs between different types of retailers who sell the same product (e.g., the battle over price discounting). Vertical conflict occurs between channel members at different levels (e.g., a wholesaler boycotting a manufacturer who sells directly to large retail discounters).

Channel conflict can have a negative impact on channel efficiency, cause gaps in product availability, and/or cause price increases. Thus, it is in the marketer's best interest to minimize channel conflict and maximize cooperation among channel members.

Creating Customer Awareness:

Products and services cannot be sold unless customers are aware of them. Awareness can be created in many ways, most of which fall under the category of promotion. The role of promotion is to make sure that customers know about and have positive feelings toward a company's offerings. Promotion represents the communication elements of marketing, and is comprised of four major activities: 1. Advertising -- Paid-for mass communication through broadcast, print, outdoor, the Internet, or other media 2. Publicity/public relations -- Non-paid communication through the media 3. Personal selling -- Face-to-face communication 4. Sales promotion -- Paid-for communication activities such as giveaways, coupons, and demonstrations Selecting the appropriate communication element(s) is a complex decision and must include such considerations as: Target market Budget Objectives Competition Stage of the product's life cycle

This decision must also be coordinated with the other elements of the marketing mix. New channels of communication are entering the promotion mix as a result of new technology, such as the Internet. In addition, where advertising was once considered the primary form of promotion for most consumer products, today direct marketing is advancing rapidly as an effective means of creating customer awareness, particularly among targeted customer groups.

Customer Satisfaction:
In today's competitive environment, those companies that survive and prosper will place an emphasis on customer satisfaction. In doing so, they will meet or exceed customersexpectations. Satisfaction can be defined as the difference between the customer's expectations and the outcome of the purchase experience. Expectations are frequently established through marketing communication (advertising, etc.) or word-of-mouth (friendly advice). By understanding these expectations (through marketing research) and managing them (through excellent customer service) the firm can deliver superior value to its customers and establish long-term customer loyalty.

Domestic and International Marketing:

Increasing competition in the domestic marketplace, as well as easier access to existing markets and the opening of new markets overseas, has caused many organizations to consider expanding internationally. In order to market successfully abroad, the skills and strategies applied at home must be analyzed carefully and perhaps altered. In order to develop an effective international marketing program, for each new market the firm must consider several key areas: Competition Economy Culture Geography Technology

Politics the legal system

Societal and Ethical Dimensions of Marketing:

Marketing has been widely criticized from a variety of perspectives, including poor product quality, misleading and deceptive advertising, too many intermediaries in the distribution channel resulting in excessive costs and higher prices, increasing price competition, etc. Some of the objections do have merit and are being addressed through industry self-regulation and consumer-oriented legislation. However, most problems can be attributed to individual organizations. In making marketing decisions, firms must consider the consequences of their actions on all of their constituents, including customers, competitors, stockholders, and society. In general, the marketing system as a whole works very well, and, in fact, contributes a great deal to the overall quality of life.