4.4 Marketing Research

Market Research The process of collecting, recording, and

analyzing data about customers, competitors, and the market

Why conduct market research?

1. Reduce the risks of launching a new product

2. Predict future demand changes

3. Explain patterns in sales of existing products and market trends

4. To identify the favored designs, flavors, styles, promotions, and packaging

Marketing Research Secondary Research

A collection of data from second-hand sources. Often called “desk” research.

Second-hand research should be conducted first. It is less expensive and reveal a lot of information.

Primary Research A collection of first-hand data that is directly related to the

researcher’s needs. Primary Research can be expensive yet specific to your

needs.

Primary Research Quantitative Research

Research that leads to numerical results that can be analyzed and presented.

The average person dines out 3X per week.

Qualitative Research Research into the motivations behind buying

behaviors and opinions.All fast food restaurants are cheap.

Methods of Primary Research Surveys Interviews Focus Groups Observations Test Marketing

Methods of Primary Research

Surveys - Directly asking consumers or customers about their opinions and preferences

4 things to consider Who to ask What to ask How to ask How accurate is it?

Issues with Surveys1. Who to ask?

You cannot ask everyone, so a SAMPLE is taken.

2. What to ask? Construct a unbiased questionnaire.

3. How to ask? Telephone, self-complete, interviews

4. How accurate is it? Assess the accuracy and validity research

Methods of Primary Research

Survey DESIGN Don't ask too many questions – only the most

important ones! Group income levels unless it is absolutely

necessary quantitative information Open ended questions are difficult to tabulate Closed questions are easy to tabulate but may

not provide much insight Avoid questions that lead to an answer

Methods of Primary ResearchInterviews – Are conducted by interviewer

usually in a public place or at the respondents home.

A skilled interviewer will Avoid bias in when asking questions Questions can be explained to the interviewee Follow up questions can be asked Expensive method

Methods of Primary ResearchFocus Groups – A group who are asked about

their attitude towards a product, service, advertisement, or new style of packaging.

Encourages active discussion All members are free to talk The discussions are usually filmed Responses are typically seen as more accurate

than a survey response

Methods of Primary ResearchObservation – A qualitative method of collecting

and analyzing information obtained through directly or indirectly watching and observing others.

Data is collected through direct observation Cookies on a computer Nielsen TV ratings Traffic counts and congestion patterns Loyalty cards

Methods of Primary ResearchTest Marketing – Marketing a new product in a

geographical region before a full-scale launch.

Promoting and selling to a limited geographical area Record consumer reaction to product on a small

scale Reduces risk of a full-scale launch failing Not always accurate if the test market does not

share same characteristics of larger market

Secondary DataSecondary data can provide a company with a great

deal of information. But.....

Never completely up to date May not provide specific answers to your question Is available to your competitors too

Where do you get Secondary Data Market intelligence analysis reports Academic journals Government publications Local libraries and local government offices Trade Organizations Media reports and specialist publications Internal company records The Internet

Advantages / Disadvantages of Secondary Data

Advantages Disadvantages

Typically inexpensive May be out dated

Can assist with planning primary research

Originally collected for another purpose so it may not entirely suitable for your purposes

Can be obtained quickly Data collection methods and accuracy may be unknown

Comparison of data from different sources

May not be available

Marketing Ethical Considerations Researches should have permission of the people they

will be studying Data collection methods should not cause physical harm Objectivity vs subjectivity should be considered Surveys and observations should be kept anonymous Researchers should not take advantage of easy-to-

access groups Presentation and analysis should be an accurate

representation of what was told or gathered by researchers

Sampling Sample

A group of people taking part in market research selected to represent the target market.

Sampling Error Error in research caused by using a sample for

data collection instead of the whole target population

Who to ASK? Random Sampling

Each member of the target population has an equal chance to be selected.

You should: Have a list of all the people in the target

population Sequential numbers are assigned A list of random numbers are generated

Who to ASK? Stratified Sampling

The target population containsmany layers (men, women, children, teenagers, elderly)

The sample should include representation from all the layers in the target population as a percentage of their group.

Who to ASK? Cluster Sampling

If the target population is geographically diverse, clusters of samples may be taken from a few different locations instead of every location.

Who to ASK? Quota Sampling

The population is segmented into mutually exclusive groups (example: women, men)

The selection of the sampling is not scientific. The interviewer or researchers determine how many to interview from each group.

Who to ASK? Snowball Sampling

The first respondent refers a friend, who refers a friend, who refers a friend.

This type is likely to be biased because friends tend to have similar lifestyles and opinions.

Who to ASK? Convenience Sampling

Selecting people because of ease of availability or because the volunteered

The sample may not represent the target population as a whole and may be biased towards a group of people.

For example, you interview people for 3 hours at the grocery store on Thursday afternoon. You may have an overly represented group of elderly.

Results from SurveysData from must be analyzed and presented.

Presentation methods include: Tables Line Graphs Bar Charts Pie Charts Histograms Pictograms

Averages can also be used:

Mean – the statistical averageMedian- the middle pointMode - most frequently occurring