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SM 1.51 MARKETING MANAGEMENT

May 1999

Lecture 3

Part 3

RESEARCHING AND SELECTING MARKETING

OPPORTUNITIES

Marketing Research and Analysis

Market Segmentation, Targeting and Positioning

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Marketing Research and Analysis

1. Aims and Scope of Marketing Research2. Marketing Research Method (The Research Process)

3. Market Research

4. Information Sources

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Scope of Marketing Research

1. Product Studies

new product development

new uses for existing product packaging problems

2. Distribution Analysis

modes of market coverage and channel comparisons retail buying policies

reseller selling and merchandising methods

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Scope of Marketing Research

3. Pricing Research and Analysis

market price compatability

discounting policies price positioning

4. Promotional Research

media research: coverage, rates, etc. measuring ad-effectiveness, ad-testing

awareness and ad-recall research

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Scope of Marketing Research

5. Economic and Business Research

research and analysis of market shares sales analysis

forecasting of general economic trends

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2. Marketing Research Method

The Research Process (6 steps)

Define the problem Design a suitable research procedure

Selecting the sample

Execute the research work (Data collection)

Process the data collected

Reach conclusions and report the findings

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1. Define the problem

The problem (or aim) of the particular piece of research

must be clearly defined.

Marketers must decide exactly what they want to know,

and set down a precise, specific problem to be solved

by the research.

2. Design a suitable research procedure

The next step is to design an appropriate research

procedure:

to select the tools and method best suited to achievingthe specific aim or resolving the problem defined in

Step 1

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3. Selecting the sample

A sample is a segment of the population selected to

represent the population as a whole.

Ideally, the sample should be representative so that

the researcher can make accurate estimates of the

thoughts and behaviours of the larger population. Designing the sample size calls for 3 main decisions:

- First, who is to be surveyed (sampling unit)

- Second, how manypeople should be surveyed

(sample size)- Third, howshould the people in the sample be

chosen (sampling procedure)

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4. Execute the research work (Data collection)

Step 4 is to execute the secondary and/or primary

research.

Data collection involves 2 types of data -

- secondary data (equally important data that already

exists.

- primary data (fieldwork)

5. Process the data collected

The fifth step is to assemble, collate, and analyse the

data.

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6. Reach conclusions and report the findings

Finally, conclusions must be drawn from the research

findings.

These must presented in a clear, business-like report

which makes it easy for people to act on the findings.

The formal report is an important record for the

organisations data bank.

It should contain the major findings, conclusions, and

recommendations for action.

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3. Market Research

Definition and Scope of Market Research

Market Research seeks data concerning thematching of markets and products and the formation

of offers and strategies appropriate to those markets

and products

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The Aim of your Market Research should be to find

out:

what goods and services people are likely to buy

if you already have an idea for a product or service,

are people really likely to buy it what changes to make to a product to better suit the

market

where, when, and how often customers will buy

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The Aim of your Market Research should be to find

out:

how products or services should be presented

how many potential customers there are in a givenarea

what sort of people these are

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3 Main Market Research Questions

Does a market exist?

If so, what is the size and composition?

What offer(s) should be made to it and how are

they best presented

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1. Does a market exist?

Aim is to acquire factual evidence that every new

launch will meet and fill a customer want.

2. Market size

Reliable estimates rest on adequate research of several

factors such as

total number of customers in the overall market

the number of those customers the firm can reach

with an offer

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Market size

the approximate value after researching

- the average price expected to be paid for a product- relevant customer buying patterns - seasonality,

frequency, and size of normal purchase

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3. Customer Profile

3 broad categories

Demographic - age groups, income range, sex,occupation, household size

Geographic - region, city size, diversity of settlement

(urban, suburban, rural, remote)

Psychographic - life style, social class, culturalbackground, ethnic background

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4. Information Sources (Sources of primary and

secondary data)

3 Major information sources:

what people say

what people do

what people have done

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a) What people say

Direct - questioning actual and potential customers

Indirect - expert opinions from professionals in

contact with relevant markets

Disadvantages

problem of designing appropriate samples and

survey methods

respondent and interviewer biases

at times, data can be misleading

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b) What people do

Informal observation of shoppers by marketing staff

Customer flow studies

Studies of behavioural patterns by specialists

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Primary Data Methods (Field Research)

1. Surveys

2. Observation

3. Experiment

1. Surveys

Personal interview

Mail survey Telephone

Group discussion

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Some pointers on Questionnaires

Close ended or Open ended or Both

Wording the questions (should be clear and simple)

Rating scales - 2 types

1. Likert Scale - asks respondents to indicate their

degree of agreement with each statement presented

to them

eg. Reebok tennis shoes are expensive

Strongly Agree/Agree/Undecided/Disagree/Strongly Disagree

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Some pointers on Questionnaires

2. Semantic Differential - requires respondents to

indicate the position of their response along a

continuum (from one extreme to another) for each of

the several characteristics.

Eg. Reebok tennis shoes

Expensive 7 : 6 : 5 : 4 : 3 : 2 : 1 : Inexpensive

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Comparison of Typical Characteristics of the

3 Survey Methods

Refer to T1

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Group discussion or focus group interview

involves loosely structured interviews with groups of

6 to 10 people who focus on a product. During a

group dynamics session, individuals give theircomments and reactions to new product ideas or

explain why they buy (or do not buy) certain items.

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2. Observation

the systematic recording of behaviour, objects, or

events as they are witnessed

3. Experiment

a research design that allows the investigator to

change one or two variables while observing the

effects of these changes on another variable

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c) What people have done

information that already exist

Sources of secondary data

company records, previous reports, sales records

government statistics

libraries - trade and academic journals, magazines,

etc.

commercial market research reports

newspapers - business press

trade associations

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Secondary Data (Desk Research)

1. Advantages

they are almost always less expensive

they can be obtained rapidly, ie. timely

2. Disadvantages

secondary data is previously collected data and is,

therefore old and possibly out dated

some data is collected only periodically

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Secondary Data (Desk Research)

data may not have have been collected in the form

preferred

users of secondary data may not be able to assess

its accuracy

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Factors to consider when collecting data

impartiality - make sure that you are very fair in

collecting the data. No biasness in the data and the

results and conclusions

validity - make sure it is representative, properly

sampled

reliability - make sure it is from proper sources,

should be checked especially for secondary data

homogeneity - consistency in the collection of thedata

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Potential value of marketing research

should exceed its estimated cost

Refer to T2

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END OF LECTURE 3

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