Understanding Market Research

          Understanding Market Research

Market research is defined as the process of gathering data or information on goods and services provided by the form to the customers. Marketing research is done to determine whether the product or service given by the firm will satisfy customers. With the help of marketing research the firm can identify current market trends, demographics, economic shifts, customer's buying habits and important information on competition.

The firm can utilize this information to understand your target markets and establish a competitive advantage in the marketplace. For market research to be useful, the information must be timely and relevant to the business.

It is important to ask the right questions, in the right way, to the right people. Research, done poorly, can steer a business in the wrong direction.

If the firm is looking forward to launch a new product of services, following question comes in mind: Does my product or service fill a need? Who will buy my product or service? What will my price point be? What are the trends in my industry? Who are my competitors?

This information isn't just interesting or "nice to know. It can help the firm to minimize your financial risks by determining if your product or service will succeed or fail in the marketplace, and perhaps save you from making costly mistakes.

As said by William Bill of Wealth Design Group LLC in Houston "Failure to do market research is like driving a car from Texas to New York without a map or street signs,"

Marketing research process is a set of six steps which defines the tasks to be accomplished in conducting a marketing research study. These include problem definition, developing an approach to problem, research design formulation, field work, data preparation and analysis, and report generation and presentation.

Step 1: Problem Definition

The first step in any marketing research project is to define the problem. In defining the problem, the researcher should take into account the purpose of the study, the relevant background information, what information is needed, and how it will be used in decision making. Problem definition involves discussion with the decision makers, interviews with industry experts, analysis of secondary data, and, perhaps, some qualitative research, such as focus groups. Once the problem has been precisely defined, the research can be designed and conducted properly.

Step 2: Development of an Approach to the Problem

Development of an approach to the problem includes formulating an objective or theoretical framework, analytical models, research questions, hypotheses, and identifying characteristics or factors that can influence the research design. This process is guided by discussions with management and industry experts, case studies and simulations, analysis of secondary data, qualitative research and pragmatic considerations.

Step 3: Research Design Formulation

A research design is a framework or blueprint for conducting the marketing research project. It details the procedures necessary for obtaining the required information, and its purpose is to design a study that will test the hypotheses of interest, determine possible answers to the research questions, and provide the information needed for decision making. Conducting exploratory research, precisely defining the variables, and designing appropriate scales to measure them are also a part of the research design. The issue of how the data should be obtained from the respondents (for example, by conducting a survey or an experiment) must be addressed. It is also necessary to design a questionnaire and a sampling plan to select respondents for the study.

More formally, formulating the research design involves the following steps:

1.     Secondary data analysis

2.     Qualitative research

3.     Methods of collecting quantitative data (survey, observation, and experimentation)

4.     Definition of the information needed

5.     Measurement and scaling procedures

6.     Questionnaire design

7.     Sampling process and sample size

8.     Plan of data analysis

Step 4: Field Work or Data Collection

Data collection involves a field force or staff that operates either in the field, as in the case of personal interviewing (in-home, mall intercept, or computer-assisted personal interviewing), from an office by telephone (telephone or computer-assisted telephone interviewing), or through mail (traditional mail and mail panel surveys with prerecruited households). Proper selection, training, supervision, and evaluation of the field force helps minimize data-collection errors.

Step 5: Data Preparation and Analysis

Data preparation includes the editing, coding, transcription, and verification of data. Each questionnaire or observation form is inspected, or edited, and, if necessary, corrected. Number or letter codes are assigned to represent each response to each question in the questionnaire. The data from the questionnaires are transcribed or key-punched on to magnetic tape, or disks or input directly into the computer. Verification ensures that the data from the original questionnaires have been accurately transcribed, while data analysis, guided by the plan of data analysis, gives meaning to the data that have been collected. Univariate techniques are used for analyzing data when there is a single measurement of each element or unit in the sample, or, if there are several measurements of each element, each RCH variable is analyzed in isolation. On the other hand, multivariate techniques are used for analyzing data when there are two or more measurements on each element and the variables are analyzed simultaneously.

Step 6: Report Preparation and Presentation

The entire project should be documented in a written report which addresses the specific research questions identified, describes the approach, the research design, data collection, and data analysis procedures adopted, and present the results and the major findings. The findings should be presented in a comprehensible format so that they can be readily used in the decision making process. In addition, an oral presentation should be made to management using tables, figures, and graphs to enhance clarity and impact.

For these reasons, interviews with experts are more useful in conducting marketing research for industrial firms and for products of a technical nature, where it is relatively easy to identify and approach the experts. This method is also helpful in situations where little information is available from other sources, as in the case of radically new products.

Market-research basics that can help you to start -  

Types of Market Research

 Primary Research: The goal of primary research is to gather data from analyzing current sales and the effectiveness of current tourism practices considering the above definitions.

Primary research can include:

• Interviews (either by telephone or face-to-face)
• Surveys (online or by mail)
• Questionnaires (online or by mail)
• Focus groups gathering a sampling of potential clients or customers and getting their direct feedback

Some important questions might include:

• What factors do you consider when purchasing this product or service?
• What do you like or dislike about current products or services currently on the market?
• What areas would you suggest for improvement?
• What is the appropriate price for a product or service?

Secondary Research: The goal of secondary research is to analyze data that has already been published. With secondary data, you can identify competitors, establish benchmarks and identify target segments. Your segments are the people who fall into your targeted demographic people who live a certain lifestyle, exhibit particular buying behaviour patterns or age group.

Collecting Data
No small enterprises can succeed without understanding its customers, its products and services, and the market in general. Competition is often fierce, and operating without conducting research may give your competitors an advantage over you.

There are two categories of data collection: quantitative and qualitative. Quantitative methods employ mathematical analysis and require a large sample size. The results of this data shed light on statistically significant differences. To find quantitative results you have a website is (Google's suite of tools). This information can help you determine many things, such as where your leads are coming from, how long visitors are staying on your site and from which page they are exiting.

Qualitative methods help you develop and fine-tune your quantitative research methods. They can help business owners define problems and often use interview methods to learn about customers' opinions, values and beliefs. With qualitative research, the sample size is usually small.
Common Marketing Research Mistakes

ü Using only secondary research. Relying on the published work of others doesn't give you the full picture. It can be a great place to start, of course, but the information you get from secondary research can be outdated. You can miss out on other factors relevant to your business.

ü Using only web resources. When you use common search engines to gather information, you get only data that are available to everyone and it may not be fully accurate. To perform deeper searches while staying within your budget, use the resources at your local library, college campus or small-business center.

ü Surveying only the people you know. Small-business owners sometimes interview only family members and close colleagues when conducting research, but friends and family are often not the best survey subjects. To get the most useful and accurate information, you need to talk to real customers about their needs, wants and expectations.

ü Communicate effectively to your target markets through advertising and promotions. By researching your customers and their spending and buying habits, you can create marketing campaigns to meet their specific interests and needs.

ü Search the customer: - Identify and understand opportunities that exist in the marketplace. For example, through preliminary market research, you might find an opportunity to start your business in a geographic location you had not considered before, where little or no competition exists for your product or service.

ü Search the potential obstacles or problems with your business concept. Through research, you may uncover direct or indirect competitors you had not considered before who may inhibit your ability to gain a competitive advantage in the market. You might also discover future development plans that could include big-box retailers in your target market location. This information is important to discover because it can help to minimize your short-term and long-term financial risks.

ü Evaluate your success. By knowing the size of your market, how your competitors are doing and who their customers are, you can set goals to reach your market, grow your customer base, and track how you are doing in relation to the competition.

ü Methodology

• Using social media for data collection and analysis
• Data is clunky, messy, and full of garbage
• The “now what” factor: What are you supposed to do with social media insights?
• There is no way to quantify the qualitative insights
• No one in the organization is trained to do the interpretation of the data (i.e., there are tools that quantify SM data, but there aren’t enough researchers who are skilled at teasing out the useful information and making decisions based on that information)
• Researchers generally get push-back from organizations that are resistant to change and skeptical of social media
• Response rates:
• Generally low response rates, waning participation
• Difficulty getting respondents to be cognitively engaged: There is a sense that consumers have lots to say about products and services, but they are so bored by surveys that they won’t participate.
• Lack of representativeness: we’re only sampling the kinds of people who are likely to be interested in taking surveys, participating in panels, etc.
• Consumers are bombarded with too many surveys; don’t take any of them seriously
• Too many competing techniques
• Researchers are often juggling various tools that their company is testing out
• Don’t receive enough training to become proficient at any of these tools
• Privacy and security issues

     Getting data is difficult because of government regulations about privacy

Modern consumers are becoming increasingly more private and more suspicious of research organizations asking them questions about their thoughts/feelings/behaviors. This causes them to opt out of surveys, panels, interviews, etc.

2.     Clientele

• Customers expect insights far too quickly
• Big companies have trained customers to expect insights quickly. Researchers who are interested in precision over speed cannot compete
• Customers cannot articulate what they want/need, and when they finally do articulate their wants and needs, those wants and needs change quickly. Market research feels like a constant game of catch-up with a non-focused customer

3.     Outcomes

• Lack of actionable insights
• Insights are sparse, disparate, and difficult to interpret (e.g., “the ability to turn research into valuable and actionable insights. Much of research is not used because it is difficult to make actual decisions based on the outcome of the research”)
• There is the perception that suppliers and customers are often at odds when it comes to interpreting the data. Market researchers perceive that they are seeking the “truth,” while their customers are seeking confirmation of what they want to believe about their company, brand, product, etc. Making good decisions based on the data is challenging if there is utter disagreement
• Lack of timeliness
• Businesses are moving too fast and need their insights immediately. Data scientists and market researchers cannot keep up with the demand
• Even tools that promise to speed the data collection and interpretation process cannot meet the high-paced standards of businesses today
• Lack of honest/integrity by data insights providers
• Businesses feel that many market research data providers promise great insights but usually fail to deliver (e.g., “Most companies talk a good game, but are not able to execute on the analysis of big and small data.”)

Technologies

• Big data
• Big data has become a buzzword and every client wants market researchers to do something with it. However, many market researchers are beginning to perceive that no one really knows how to best handle big data
• Big question: Does big data actually gather a better, more comprehensive picture of who the consumer is? Or is it just one more data point that causes confusion?
• Mobile technologies
• Computer-delivered surveys and data collection methodologies are on the way out. They are clunky and static.
• Tomorrow’s research design involves mobile, dynamic methods for data collection that gather real-time, in-situ information

Differentiation

• Demonstrating unique value
• So much information is available that it’s difficult for a market researcher to show that there is unique value and novel contribution in his/her approach to Marketing Research
• Customers are undated with so much information that it is difficult to tease out the signal from the noise
• Staying relevant in changing times
• There is always the new up-and-comer that is more relevant.
• You must become a jack of all trades and a master of none

 Quality

• Samples are not representative
• Researchers mentioned that they often use suppliers to bring representative samples to them, but feel that these suppliers do not follow through
• There is confusion around how to get a truly representative sample that contains a cross-section of all demographic segments
• Respondents are dishonest or unthoughtful
• Data quality is poor because respondents are bored and disengaged
• Respondents are over-inundated with surveys
• Leads to incomplete, careless, and dubious responses
• Statistical assurances are not provided: Probability sampling is not used and the margin of error is not reported which interferes with interpretability
• Can’t afford the good data: Researchers perceive that high quality data is out there, but their organization cannot (and will not) allocate budget toward gaining that data. Shoddy data at a cheaper price is of higher value than expensive but excellent data

 Internal Talent

·        Lack of experience and expertise

• Young market researchers haven’t been trained in the kind of rigor that more experienced researchers have
• A general lack of academic training in statistics, research methods, etc.
• This is the generation of SurveyMonkey; young researchers seem to think that SurveyMonkey is the only way to collect data and disrespect methodologies like interviews, panels, etc.
• Why are there no experts? (e.g., “It seems so obvious to anyone that a heart surgery requires expertise. If the market research industry cannot convince the market that there is a similar obvious need for expertise then there are a lot of good reasons why this industry should shrink in the future.”)
• Lack of critical thinking
• New market researchers are perceived as being unwilling to think deeper about their findings
• It’s the day of the “obvious findings”: If an insight doesn’t jump right off the page – but, rather, requires some mental acuity and creative or critical thinking, new researchers will say that the data is bad or useless
• A transition from quality to quantity
• Time-honored, rigorous techniques are losing respect
• What is valued now is the ability to gather data/insights quickly and at high volumes, regardless of accuracy
• g., “I think this is the year when veteran researchers become the minority and disciplined research becomes rarer. Experienced research professionals who understand multiple modes of data collection and sample frames will be supplanted by newer researchers who can gather a lot of data quickly but may not have enough rigor in their background to know what bias they include”  

Big Companies

• More funding
• Bigger companies have more funding and can afford expensive, high quality respondents and data analysis
• Smaller companies can’t compete 

Case Study-

Consider this example of how research can lead you to a market opportunity: The idea for PROTEC® came to founder Michael Matthews while he was a police officer attending law school. Researching a paper in employment law, he learned about the high cost to employers of employee liability lawsuits and rapid changes in employment law. Thinking there might be a demand for employee screening services, he spent seven months interviewing employers, studying competitors, and researching public record and law databases. Today, his firm keeps clients abreast of their employee obligations and verifies prospective employees' Social Security number, criminal history, motor vehicle records, civil record, and much more. Because he took the time to research the market, competitors, and relevant legal issues, Matthews was able to develop a feasible idea into a successful business.

Whether you are buying an existing business and looking to expand into new markets or introducing a new product or service, primary and secondary market research will provide you with valuable information to help you develop a strong Marketing Plan.

Market research can provide you with information about your industry-its current size, growth potential, and general operational patterns. Market research can also tell you about customer characteristics in a particular market segment and about how your target market spends money. It can reveal motivational patterns and other psychological aspects of your target market, including customer perceptions, values, and opinions. Market research also provides you with information about your competitors and how economic, political, or environmental trends in the marketplace could affect your business.

Whichever style of market research you opt for-and you should consider a blend of several approaches-you need to focus on the value of the information, its accuracy, and relevance to your business concept. Many key business decisions will be based on the information you gather.

Marketing Environment

The term Marketing Environment refers to the forces and factors that affect the organisation ability to build and maintain good relationship with its customers. Marketing environment surrounds the organisation and it impacts upon the organisation. Marketers have to interact with internal and external people at micro and macro level and builds internal and external relationships.

Three levels of the environment are 3:

Micro (Internal) Environment – is a small force within the company that affect its ability to serve its customers. The micro-environment refers to the internal environment of the organisation, which includes all departments, such as management, finance, research and development, purchasing, operations and accounting.

 Each of these departments influences marketing decisions. For example, research and development have input as to the features a product can perform and accounting approves the financial side of marketing plans and budget in customer dissatisfaction. Marketing managers must watch supply availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to maintain a strong customer relationship.

Macro (External) environment –is the larger societal forces that affect the microenvironment. Macro environment refers to all forces that are part of the larger society and affects the micro environment. It includes concepts such as demography, economy, natural forces, technology, politics, and culture. Factors affecting organization in Macro environment are known as PESTEL, that is: Political, Economical, Social, Technological, Environmental and Legal.

P for Political factors

The political factors take the country’s current political situation. It also reads the global political condition’s effect on the country and business. When conducting this step, ask questions like “What kind of government leadership is impacting decisions of the firm?”

ü Government policies

ü Taxes laws and tariff

ü Stability of government

ü Entry mode regulations

E for Economic factors

Economic factors involve all the determinants of the economy and its state. These are factors that can conclude the direction in which the economy might move. So, businesses analyze this factor based on the environment. It helps to set up strategies in line with changes.

ü The inflation rate

ü The interest rate

ü Disposable income of buyers

ü Credit accessibility

ü Unemployment rates

ü The monetary or fiscal policies

ü The foreign exchange rate

S for Social factors

Countries vary from each other. Every country has a distinctive mindset. These attitudes have an impact on the businesses. The social factors might ultimately affect the sales of products and services.

Some of the social factors you should study are:

ü The cultural implications

ü The gender and connected demographics

ü The social lifestyles

ü The domestic structures

ü Educational levels

ü Distribution of Wealth

T for Technological factors

Technology is advancing continuously. The advancement is greatly influencing businesses. Performing environmental analysis on these factors will help you stay up to date with the changes. Technology alters every minute. This is why companies must stay connected all the time. Firms should integrate when needed. Technological factors will help you know how the consumers react to various trends.

ü Firms can use these factors for their benefit:

ü New discoveries

ü Rate of technological obsolescence

ü Rate of technological advances

ü Innovative technological platforms

L for Legal factors

Legislative changes take place from time to time. Many of these changes affect the business environment. If a regulatory body sets up a regulation for industries, for example, that law would impact industries and business in that economy. So, businesses should also analyze the legal developments in respective environments.

ü Product regulations

ü Employment regulations

ü Competitive regulations

ü Patent infringements

ü Health and safety regulations

E for Environmental factors

The location influences business trades. Changes in climatic changes can affect the trade. The consumer reactions to particular offering can also be an issue. This most often affects agri-businesses.

ü Geographical location

ü The climate and weather

ü Waste disposal laws

ü Energy consumption regulation

ü People’s attitude towards the environment

There are many external factors other than the ones mentioned above. None of these factors are independent. They rely on each other.

If you are wondering how you can conduct environmental analysis, here are 5 simple steps you could follow:

Understand all the environmental factors before moving to the next step.

Collect all the relevant information.

Identify the opportunities for your organization.

Recognize the threats your company faces.

The final step is to take action.

It is true that industry factors have an impact on the company performance. Environmental analysis is essential to determine what role certain factors play in your business. PEST or PESTLE analysis allows businesses to take a look at the external factors. Many organizations use these tools to project the growth of their company effectively.

The analyses provide a good look at factors like revenue, profitability, and corporate success. If you want to take the right decisions for your firm, employ environmental analysis. The analysis you should conduct depends on the nature of your company.

Meso environment – is settled between the macro- and the micro- level.

SWOT analysis

SWOT or situation analysis is used when wanting to look at both the internal and external environment. SWOT stands for Strength, Weakness, Opportunity and Threat. The internal factors considered are the strengths and weaknesses where the opportunities and threats are external factors that are all used and considered to help improve the overall decision making process in dynamic strategic situations the business is facing.

The strengths are positive characteristics in the internal business environment which can be capitalized on to increase the overall organisations performance. The weaknesses are factors of the internal environment which may restrict and interfere with the positive organizational performance. The internal environment factors will include finance, production, research, development and marketing. The opportunities include factors of the external environment that act like stepping stones for the organization in order to achieve their current strategic goals. The threats include the factors that have an effect and may interrupt the organization from achieving the goals. Often threats will come out of the external business environment.

Understanding Consumer Behaviour 

The goal of most companies is to get prospects to buy their products. Products are designed with the buyer in mind. Unfortunately, the same cannot always be said for the marketing and sales processes. In particular, businesses often force their customers through the company’s selling processes instead of supporting the customer’s buying process. The buying process is the set of steps that a customer chooses to go through with the goal of satisfying a need. The selling process is the set of steps that a company uses to organize and optimize the way that it sells its products. Today, the differences between buying and selling processes are significant. These differences are costing companies lost sales. The buying process described in this book expands upon the traditional five stage buying approach (traditional stages in black).

These additional stages uncover details that help marketing and sales understand critical elements in the buying decision. The buying process presented here represents that used for common, deliberated purchases. It does not represent impulse buy decisions. It does not account for the complexity of organizational buying processes. Yet, the insight provided can be useful in these other types of buying processes.

Major Factors affecting consumer buying behavior

Cultural factors affecting consumer buying behaviour: Cultural factors have a significant impact on customer behaviour. Culture is the most basic cause of a person’s wants and behaviour. Growing up, children learn basic values, perception and wants from the family and other important groups. Marketers are always trying to spot “cultural shifts” which might point to new products that might be wanted by customers or to increased demand.

Social factors affecting consumer buying behaviour: A customer’s buying behaviour is also influenced by social factors, such as the groups to which the customer belongs and social status.

Each culture contains “sub-cultures” – groups of people with share values. Sub-cultures can include nationalities, religions, racial groups, or groups of people sharing the same geographical location. Sometimes a sub-culture will create a substantial and distinctive market segment of its own. For example, the “youth culture” or “club culture” has quite distinct values and buying characteristics from the much older “gray generation”

Similarly, differences in social class can create customer groups. In fact, the official six social classes in the UK are widely used to profile and predict different customer behaviour. In the UK’s socio-economic classification scheme, social class is not just determined by income. It is measured as a combination of occupation, income, education, wealth and other variables