Nature and importance of Market Research

Nature and importance of Market Research: According to American Marketing Association “marketing research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services.”

According to Green and Tull, “marketing research is the systematic and objective search for and analysis of information relevant to the identification and solution of any problem in the field of marketing”.

Professor Philip Kotler defines marketing research as “Systematic problem analysis, model-building and fact-finding for the purpose of improved decision making and control in the marketing of goods and services.”

Importance of Marketing Research

The following points explain the importance of marketing research:

1. Identifying problem and opportunities in the market

It helps in identifying new market opportunities for existing and new products. It provides information on market share, nature of competition, customer satisfaction levels, sales performances and channel of distribution. This helps the firms is solving problems.

2. Formulating market strategies

Today, markets are no more local. They have become global. Manufactures find it difficult to contact customers and control distribution channels. Competition is equally severe. The consumer needs are difficult to predict. Market segmentation is a compli­cated task in such wide markets. The marketing intelligence provided through marketing research not only helps in framing but also in implementing the market strategies.

3. Determining consumer needs and wants

Marketing has become customer-centric. However, large-scale production needs intermediaries for mass distribution. Due to prevalence of multi channels of distribution, there is an information gap. Marketing research helps in collecting information on consumers from structured distribution research and helps in making marketing customer oriented.

4. For effective communication mix

In an era of micro- rather than mass-marketing, communica­tion plays a vital role. Marketing research uses promotional research to study media mix, adver­tising effectiveness and integrated communication tools. Research on such aspects will help in promoting effectively a company’s product in the market.

5. Improving selling activities

Marketing research is used to analyse and evaluate performances of a company within a market. It also studies effectiveness of a sales force. It helps in identify­ing sales territories. Such information helps the companies in identifying areas of shortcoming in sales. It also examines alternative methods for distribution of goods.

6. For sales forecasting

The most challenging task for any production manager is to keep optimum levels of inventory. However, production is undertaken in anticipation of demand. Therefore, scientific forecast of sales is required. Marketing research helps in sales forecasting by using market share method, sales force estimate method and jury method. This can also help in fixing sales quotas and marketing plans.

7. To revitalize brands

Marketing research is used to study and find out the existing brand position. It finds out the recall value of brands. It explores the possibilities of brand extension or prospects of changing existing brand names. The main purpose of marketing is to create brand loyalty. Marketing research helps in developing techniques to popularize and retain brand loyalty.

8. To facilitate smooth introduction of new products

Marketing research helps in testing the new products in one or two markets on a small scale. This helps in finding out consumer response to new product and develop a suitable marketing mix. It reveals the problems of the customers regarding new products. Thus, it controls the risk involved in introducing a new product.

9. Determine export potentials

The development in transport and communication has helped in globalization and digitalization of world trade. This has helped in boosting the growth of international markets. Marketing research helps in conducting market survey for export. It. collects information on marketing environ­ment prevailing in a country. By collecting data on consumers from different countries, it indicates export potentials.

10. Managerial decision-making

Marketing research plays a vital role in the decision-making processes by supplying relevant, up-to-date and accurate data to the decision-makers. Managers need up-to-date information to access customer needs and wants, market situation, technological change and extent of competition.

Nature and importance of Market Research

To begin with the marketing research, following steps has to be followed:

1. Define the Problem

The foremost decision that every firm has to undertake is to find out the problem for which the research is to be conducted. The problem must be defined adequately because if it is too vague, then it may result in the wastage of scarce resources and if it is too narrow, then the exact conclusion cannot be drawn. In order to define the problem appropriately, each firm must have a clear answer to the questions viz. What is to be researched (content and the scope)? And Why the research is to be done (decisions that are to be made)?

2. Develop the Research Plan

This step involves gathering the information relevant to the research objective. It includes:

(a) Data Sources: The researcher can collect the data pertaining to the research problem from either the primary source or the secondary source or both the sources of information. The primary source is the first-hand data that does not exist in any books or research reports whereas the secondary data is the second-hand data which is available in the books, journals, reports, etc.

(b) Research Approaches: The Secondary data are readily available in books, journals, magazines, reports, online, etc. But the primary data have to be collected and to do so, the following research can be conducted:

• Observational Research: The researcher can collect the information by just observing the happenings in the market and sometimes having a friendly conversation with the customers to know about their purchase experiences.
• Ethnographic Research: It is one of the forms of an observation research where the researcher studies an individual in the real-life situation and not under any market setup or a lab. The purpose of this research is to know the way people live (their lifestyles), What they do to earn their livelihood, how they consume goods and services, what they need in their personal and professional lives etc.
• Focus Group Research: It is a form of group discussion wherein six to ten people gather and discuss the common topic given by the moderator. A moderator is a person who conducts the group discussion and is skilled in group dynamics. He also keeps the discussion focused on the topic so that relevant information can be obtained from the group members.
• Survey Research: These are the descriptive research generally conducted to know the about the customer’s knowledge about the product, their preferences, and satisfaction level. The best way to conduct surveys is through the Questionnaires.
• Behavioural Data: The customer’s actual purchases at the store reflects its behavior and the choice of products. Thus observing what customers are buying gives more accurate information about the customer rather than the planned answers given by them in the surveys.
• Experimental research: This is done to find out the cause and effect relationships. This research is undertaken to study the effects of change in the customer’s behavior due to the change in the product’s attributes.

(c) Sampling plan: Once the research approach is decided, the researcher has to design a sampling plan and have to decide on the following:

• The sampling Unit i.e. whom, shall we survey?
• The sample size, i.e., How many units in the population shall be surveyed?
• The sampling procedure, i.e. How the respondents shall be chosen?

(d) Contact Methods: The researcher has to choose the medium through which the respondents can be contacted. The respondents can be reached via emails, telephone, in person or online.

3. Collect the Information

This is one of the most expensive methods of marketing research. At this stage, the researcher has to adopt the methods to collect the information, he may find it difficult to gather the correct information because of the respondent’s biasedness, unwillingness to give answers or not at home.

4. Analyze the Information

Once the information is collected the next step is to organize it in such a way that some analysis can be obtained. The researchers apply several statistical techniques to perform the analysis, such as they compute averages and measures of dispersion. Also, some advanced decision models are used to analyze the data.

5. Present the Findings

Finally, all the findings and the research are shown to the top management level viz. Managing director, CEO, or board of directors to make the marketing decisions in line with the research.

6. Make the Decision

This is the last step of the marketing research, once the findings are presented to the top level management it is up to them either to rely on the findings and take decisions or discard the findings as unsuitable.

Thus, marketing research is done to gather all the relevant information about the market and design the marketing strategies accordingly.

Scope of Marketing Research

The scope of marketing research stretches from the identification of consumer wants and needs to the evaluation of consumer satisfaction. It comprises of research relating to consumers, products, sales, distribution, advertising, pricing and sales forecasting. A clear view of the scope marketing research may be obtained by the following classification of marketing research activity.

The whole approach of marketing pivots around the tenet of meeting the consumer wants. It is essential to understand what the consumer wants, how he/she perceives the product (service), what exactly (ideally) does he/she wants to derive out of the product (service), how does he/she make the brand choice decision, what are the sources of information and influence processes, etc.

In order to take decisions any marketer would constantly monitor such information and obtain a continuous feedback of the trends in the market. As such, marketing research is an effective tool for measuring the consumers’ aspirations, trade channel behaviour, competitive actions etc.

It provides a linkage between the corporate environment and the marketing organization. Marketing research, thus, may be viewed as an important tool used as an aid for tackling problems in marketing.