MARKETING RESEARCH PROCESS:

Effective marketing research involves the five steps:

Step 1: Define the Problem and Research Objectives

The first step in the marketing research procedure is to identify the marketing problem which needs to be solved quickly. The problem may be related to product, price, market competition, sales promotion and so on. The research process will start only when the marketing problem is identified and defined clearly. The researcher has to identify and define the marketing problem in a clear manner. Management must not define a problem too broadly or too narrowly.

The researcher has to formulate hypothesis to fit the problem under investigation. It is a tentative explanation of a problem under study. For example, the sales are declining. According to the researcher, this may be due to poor quality and high price or due to limited interest taken by middlemen or that the product has become outdated. If the first reason is accepted, the same will be investigated in full. If the first cause is rejected, he will move to the second for detailed study through data collection.

Step 2: Develop the Research Plan

The second stage of marketing research calls for developing the most efficient plan for gathering the needed information. The marketing manager needs to know the cost of the research plan before approving it. Designing a research plan calls for decisions on the data sources, research approaches, research instruments, sampling plan, and contact methods.

·       Data Sources: The researcher can gather secondary data, primary data, or both. Secondary data are data that were collected for another purpose and already exist somewhere. Primary data are data gathered for a specific purpose or for a specific research project.

Ø Secondary Data Sources:

A.  Internal Sources: Sales Analysis, Invoice Analysis, Accounting Records

B.   External Sources: Libraries, Literature, Periodicals, Census And Registration Data, Trade Associations, Government Departments, Private Sources, Commercial Data, Financial Data, International Organizations, References and Bibliography, Volumes of Statistics, Advertising Agencies.

·       Research Approaches: Primary data can be collected in five ways: observation, focus groups, surveys, behavioral data, and experiments.

Ø Observational research: Fresh data can be gathered by observing the relevant actors and settings. Under this method, the information is sought by way of investigator’s own direct observation without asking from the respondent.

Ø Focus-group research: A focus group is a gathering of six to ten people who are invited to spend a few hours with a skilled moderator to discuss a product, service, organization, or other marketing entity. The moderator needs to be objective, knowledgeable on the issue, and skilled in group dynamics. Participants are normally paid a small sum for attending. The meeting is typically held in pleasant surroundings and refreshments are served. Focus-group research is a useful exploratory step. Consumer-goods companies have been using focus groups for many years, and an increasing number of newspapers, law firms, hospitals and public-service organizations are discovering their value. However, researchers must avoid generalizing the reported feelings of the focus-group participants to the whole market, because the sample size is too small and the sample is not drawn randomly.

Ø Survey research: Surveys are best suited for descriptive research. Companies undertake surveys to learn about people’s knowledge, beliefs, preferences, and satisfaction, and to measure these magnitudes in the general population.

Ø Behavioral data: Customers leave traces of their purchasing behavior in store scanning data, catalog purchase records, and customer databases. Much can be learned by analyzing this data. Customers’ actual purchases reflect revealed preferences and often are more reliable than statements they offer to market researchers. People often report preferences for popular brands, and yet the data show them actually buying other brands. For example, grocery shopping data show that high-income people do not necessarily buy the more expensive brands, contrary to what they might state in interviews; and many low-income people buy some expensive brands.

Ø Experimental research: The most scientifically valid research is experimental research. The purpose of experimental research is to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. To the extent that the design and execution of the experiment eliminate alternative hypotheses that might explain the results, the research and marketing managers can have confidence in the conclusions. It calls for selecting matched groups of subjects, subjecting them to different treatments, controlling extraneous variables, and checking whether observed response differences are statistically significant. To the extent that extraneous factors are eliminated or controlled, the observed effects can be related to the variations in the treatments.

·       Research Instruments: Marketing researchers have a choice of two main research instruments in collecting primary data: questionnaires and mechanical devices.

Ø  Questionnaires: A questionnaire consists of a set of questions presented to respondents for their answers. Because of its flexibility, the questionnaire is by far the most common instrument used to collect primary data. Questionnaires need to be carefully developed, tested, and debugged before they are administered on a large scale. In preparing a questionnaire, the professional marketing researcher carefully chooses the questions and their form, wording, and sequence.

The form of the question asked can influence the response. Marketing researchers distinguish between closed-end and open-end questions. Closed-end questions pre-specify all the possible answers. Open-end questions allow respondents to answer in their own words. Closed-end questions provide answers that are easier to interpret and tabulate. Open-end questions often reveal more because they do not constrain respondents’ answers. Open-end questions are especially useful in exploratory research, where the researcher is looking for insight into how people think rather than in measuring how many people think a certain way.

Ø  Mechanical Instruments: Mechanical devices are occasionally used in marketing research. Galvanometers measure the interest or emotions aroused by exposure to a specific ad or picture. The Tachistoscope flashes an ad to a subject with an exposure interval that may range from less than one hundredth of a second to several seconds. After each exposure, the respondent describes everything he or she recalls. Eye cameras study respondents’ eye movements to see where their eyes land first, how long they linger on a given item, and so on. An audiometer is attached to television sets in participating homes to record when the set is on and to which channel it is tuned.

·       Sampling Plan: After deciding on the research approach and instruments, the marketing researcher must design a sampling plan. This plan calls for three decisions:

Ø Sampling unit: Who is to be surveyed? The marketing researcher must define the target population that will be sampled. In the American Airlines survey, should the sampling unit be business travelers, vacation travelers, or both? Should travelers under age 21 be interviewed? Should both husbands and wives be interviewed? Once the sampling unit is determined, a sampling frame must be developed so that everyone in the target population has an equal or known chance of being sampled.

Ø Sample size: How many people should be surveyed? Large samples give more reliable results than small samples. However, it is not necessary to sample the entire target population or even a substantial portion to achieve reliable results. Samples of less than 1 percent of a population can often provide good reliability, given a credible sampling procedure.

Ø Sampling procedure: How should the respondents be chosen? To obtain a representative sample, a probability sample of the population should be drawn. Probability sampling allows the calculation of confidence limits for sampling error. When the cost or time involved in probability sampling is too high, marketing researchers will use Non- probability sampling.

·       Contact Methods: Once the sampling plan has been determined, the marketing researcher must decide how the subject should be contacted: mail, telephone, personal, or on-line interviews.

Ø Mail questionnaire: It is the best way to reach people who would not give personal interviews or whose responses might be biased or distorted by the interviewers. Mail questionnaires require simple and clearly worded questions. Unfortunately, the response rate is usually low or slow.

Ø Telephone interviewing: It is the best method for gathering information quickly; the interviewer is also able to clarify questions if respondents do not understand them. The response rate is typically higher than in the case of mailed questionnaires. The main drawback is that the interviews have to be short and not too personal. Telephone interviewing is getting more difficult because of answering machines and people becoming suspicious of telemarketing.

Ø Personal interviewing: It is the most versatile method. The interviewer can ask more questions and record additional observations about the respondent, such as dress and body language. Personal interviewing is the most expensive method and requires more administrative planning and supervision than the other three.

Step 3: Collect the Information:

Data are to be collected as per the method selected for data collection. If mail survey method is selected, questionnaires will be sent by post to respondents. If personal interview method is selected, interviewers will be given suitable guidance, information and training for the conduct of personal interview. Data collection should be quick and data collected should be reliable, adequate and complete in all respects.

Step 4: Analyze the Information

The next-to-last step in the marketing research process is to extract findings from the collected data. The researcher tabulates the data and develops frequency distributions. Averages and measures of dispersion are computed for the major variables. The researcher will also apply some advanced statistical techniques and decision models in the hope of discovering additional findings.

Step 5: Present the Findings

As the last step, the researcher presents the findings to the relevant parties. The researcher should present major findings that are relevant to the major marketing decisions facing management. Of course, these findings could suffer from a variety of errors, and management may want to study the issues further.

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