Marketing research is defined as the objective and formal process of systematically obtaining, analyzing and interpreting data for actionable decision making in marketing.
This definition lays stress on two aspects, namely, objectivity and systematic process in the collection and analysis of data. In fact, marketing research should not be allowed to be influenced by personal views and considerations.
Before undertaking any research study it is essential to delimit the primary objectives of the project and define the methodology of undertaking the project in as much details as possible.
Marketing research as an integral part of a MIS, should prove a flow of information inputs, mainly from external sources, useful in marketing decisions making. Marketing research is carried on in the effort to learn something reliable about a specific marketing problem encountered by the management.
1. Introduction to Market Research 2. Meaning of Market Research 3. Definition 4. Objectives 5. Importance 6. Process 7. Areas 8. Approaches 9. Basics 10. Acceptance 11. Primary Marketing Research 12. Integration 13. Evaluating the Benefits 14. Issues.
Market Research: Definition, Objectives, Importance, Process, Areas, Approaches, Acceptance, Integration and Issues
- Introduction to Market Research
- Meaning of Market Research
- Definition of Market Research
- Objectives of Market Research
- Importance of Market Research
- Market Research Process
- Areas of Market Research
- Approaches to Market Research
- Basics of Market Research
- Acceptance of Market Research
- Primary Market Research
- Integration of Market Research
- Evaluating the Benefits of Market Research
- Issues in Market Research
Market Research – Introduction
Marketing programme starts from the product idea and does not end until customer wants are adequately satisfied. Customer is the pivot around whom the entire marketing operations revolve. Alpha and omega of marketing is consumer satisfaction. Beginning and end of marketing management is marketing research. Learning more about consumers and dealers and about marketing mix generally is the heart of marketing research.
As a business grows larger and as management becomes more remote from the market place, marketing management has to rely more heavily on marketing research as a managerial tool in solving any problem in the field of marketing. It is an invaluable tool in decision-making based on scientific investigation and analysis of a marketing problem.
Advertising has its own problems and pitfalls. We have to be sure about our targeting and segmenting. We will have to understand what makes the consumers buy. We will have to find out whether the right audience watches our sponsored programmes. What is the effect of ads on sales? There are some questions, which the advertisers face everyday. While deciding about such questions, advertisers need inputs of some research.
Mostly they rely on marketing research (MR) which is systematic collection, processing and interpretation of data regarding any problem of markets ranging from product, distribution, price, and promotion to consumers, markets and forecasting. Marketing research is broader than the outdated term market research, which is information about only a particular market.
Marketing research includes advertising research and media research. Though marketing research is an invaluable input to advertising decision making, it only supplements our intuition, experience and judgement.
Marketing Research is not a new activity. However, it has been revitalized, enlarged, and formalized since World War II. With the development and recognition of the so-called “marketing concept” in recent years, having the objective of furnishing consumer satisfaction, marketing research has been recognized as one of the major marketing activities, co-equal in status with sales, advertising, new product development, pricing, distribution, and marketing services.
Market Research – Meaning
Research is the process of gathering, recording and analyzing of critical and relevant facts about any problem in any branch of human activity. It indicates critical and searching study and investigation of a problem, a proposed course of action, a hypothesis or a theory.
Marketing research is a systematic, objective and intensive search for and analysis of the data (facts and figures) relevant to the identification and solution of any problem in the field of marketing.
Market research includes:
1. Size of market,
2. Location of customers,
3. Description of customers (age, sex, income, education, standard of living, etc.)
4. Analysis of market demand,
5. Customer needs, habits, buying motives, etc.,
6. Dealer wants and preferences,
7. Degree of competition.
Market Research – Definition
Most formal definitions are similar to that adopted by the American Marketing Association- “Marketing research is the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services.” Operationally this means finding out facts about the market for goods, the numbers and types of consumers, the product itself, channels of distribution, and consumer motivation and behaviour, plus developing advertising and sales promotion ideas, and eventually testing them.
Some of the commonly used names of marketing research are – market research, product or consumer research, distribution research, motivation research, copy research (in advertising), and sales planning and control research.
The American Marketing Association defines marketing research as – “The systematic gathering, recording and analysis of data about problems relating to marketing of goods and services”.
According to Kotler, “Marketing research is the systematic design, collection analysis and reporting of data and findings relevant of a specific marketing situation facing the company.”
The key word in the above definition is ‘systematic’. This is the difference between research and haphazard gathering of findings. For a study/research to be systematic there must be two qualities in the least. First, it should be orderly so that the measurement has accuracy and there is a fair cross-section. Second, it should be impartial in analysis and interpretation.
Now for a research to be systematic it should be planned in advance. Moreover to complete it, it should be interpreted. We thus arrive at a definition of Marketing Research; “Marketing research is the planning of and systematic gathering, recording, analysis and interpreting data about problems (or opportunities) relating to the, marketing of goods and services”.
Market Research – Objectives
(1) Marketing Research is used in the formulation of all marketing plans, policies, programmes and procedures.
(2) It is employed for evaluation of these plans, policies, etc. when they are brought into practice.
(3) It is used in reducing and minimising all marketing costs, particularly, selling, advertising, promotion and distribution costs.
(4) Marketing problems demanding best solution through marketing research can be classified under three major heads – (a) Problems relating to the product itself; products includes branding, packaging and labeling, (b) Problems relating to consumer markets, (c) Problems relating to each phase of the entire marketing process.
(5) Programmes of marketing research incidentally provide insurance cover for the survival and growth of the business in a dynamic economy.
(6) Marketing Management through marketing research can bring about the sale of right product (brand and package) through right channels to right customers at right places and at right prices by evolving right plans, policies and programmes with the help of right personnel.
(7) The main objective of marketing research is to enable manufacturers to make goods acceptable and saleable and to see that they reach the market more easily, quickly, cheaply and profitably without sacrificing consumer interest.
What can Marketing Research do for Business? There are six faithful service-men at the disposal of market researchers.
Marketing research finds out for the manufacturer, where are his customers, what they want, when they want it, and where, and how much they are willing to pay for it. Marketing research ascertains for the marketing middlemen (wholesalers and retailers) what goods to purchase, when and at what prices, how to advertise and display goods, how much to charge, what delivery and other services to provide.
Marketing research demonstrates to ‘the advertiser how to do a better job of telling the people about particulars of goods or services so that they become presold goods after advertising.
With adequate knowledge obtained by marketing research – (1) Producers need not make unwanted goods, need not offer those through wrong outlets to persons who are not interested. (2) Merchants need not stock unwanted goods, offer them at the wrong season in the wrong quantities or at wrong prices. (3) Advertisers need not make mistakes in what they say, to whom they appeal, and how they appeal to the audience.
To short, marketing research enables producers, merchants, distributors and advertisers to avoid mistakes either in manufacturing or in marketing. To that extent it can minimise business failures and maximise profitability. Please note that there are specialised consultancy service organisations offering expert advice and services relating to marketing research, advertising research, etc., and enable top management to solve marketing problems.
Market Research – Importance
Mass production by power-driven machinery in anticipation of demand for ever-widening market created special problems of distribution.
(a) Widening of Communication Gap:
Ever-expanding markets required numerous middlemen between producer and consumer. Each middleman erected a sort of wall which blocked the backward flow of communication regarding consumer needs and dealer needs to the manufacturer. Size and specialisation within the business unit and intervention of numerous middlemen between producer and consumer created a chronic gap of communication — lack of returned flow or feeding back of information from consumer to producer.
The widening of communication gap is the chief single factor for increasing importance of marketing research to fill up the communication gap between consumer and the producer. Marketing research alone can provide first-hand knowledge of consumers and changes in the pattern of demand.
(b) Emergence of Buyers’ Market:
Emergence of buyers’ market and increasing competition demanded continuous need of marketing research to ensure maximum consumer satisfaction and repeat purchases and to lay down appropriate marketing strategies to meet competition, to survive and grow in a competitive market. Marketing research can establish best positive correlation between the product/brand and consumer needs and preferences.
(c) New Marketing Concept:
The marketing concept was first articulated in 1952 by Ralph Cardines, the top marketing executive of General Electric Corporation of the U.S.A. Marketing research has become the corner-stone of the marketing concept. No business firm can be market-oriented or customer-centered without the effective use of marketing research.
The moment customer becomes the center of the marketing universe, marketing research assumes unique importance and it becomes an invaluable management tool to formulate accurate and realistic plans and programmes of marketing, advertising and sales promotion based on realistic information of consumer demand — changing tastes, preferences, whims, fancies, etc. Marketing research can ensure quick way to profit viz. to serve the customers in the ways in which he/she wants to be served.
(d) Marketing Change:
There is nothing permanent except change. Change alone is constant. Change is the essence of life. Change means progress. Change is the common denominator in planning, organising, motivating and controlling marketing activity. Marketing research enables management to anticipate, meet and adapt creatively to accelerating conditions of change, particularly in consumer demand.
The real challenge to marketing management is to firmly believe that changing a business—finding its new role, new customers, new products, new markets – is even more important than efficient operations of the business. Marketing research can easily help the management in managing profitably marketing change.
(e) Changes in Technology:
Marketing research can solve the problem of catching up with new developments brought about by unprecedented growth of science and technology. It can help management to bring about prompt adjustments and innovations in product design, packaging, advertising, sabs promotion and distribution policies so that the business can keep itself up-to-date in the dynamic market place.
Market Research – Process
Research follow a step-by-step sequence as given below:
In practice, we have clear-cut advertising problems in most of the cases. However, sometimes the problem is hidden and must be ferreted out. What decisions are we going to take in the light of research input? This helps us in identifying the problem correctly. Once the problem is identified, we must put research goals clearly.
Some typical research goals are:
(i) To measure awareness about our product in the target audience after 2 months’ campaign.
(ii) To assess attitudes of consumers to rival products so as to know their brand’s vulnerable points.
(iii) To assess which ad concept is more effective out of the two developed.
We can collect our data from our internal records, library, directories, literature, etc. The list of getting such secondary data is long. When our research project needs more data, we will have to collect primary data. Primary data can be collected by our research department or by an outside research agency.
This step consists in analyzing the secondary data to throw light on the problem on hand.
When primary data is needed, we will have to decide from which group of people or organisations to collect it. It is our universe or population. If all members of the population are questioned for getting the data, it becomes census. This is rarely done.
It is too expensive and time-consuming. We can obtain reliable results by questioning only a portion of population called sample. The members who form this sample are our respondents or subjects.
The sample must be a representative of the overall population. A blood test is a good analogy. A sample to body’s blood drawn from finger in enough to tell about the blood in the entire body. The reason is that this finger blood is just like other blood in the body, i.e., it is a representative. Had it not been so, this sample would not work.
There are two categories of samples. Probability sample provides a chance of being included to all members of the population. Simple random sample is an example. Here, each member of population has an equal chance of being included in the sample.
Another probability sample is a stratified sample in which a population is put into several strata, e.g., doctors are put into GPs, specialists and surgeon’s categories. Then random samples are selected from each stratum. Cluster sample isolates cluster of people which resemble the overall population.
Non-probability sample does not give a chance of being included to all members of the population. A quota sample considers certain numbers of various subgroups in the population. Judgement samples select the members on the basis of researcher’s judgement of being appropriate. Convenience sample is chosen for the sheer convenience of interviewing.
In advertising, non-probability samples are generally used. It is not always possible to identify all the subjects of the entire population and then do random selection. Besides, for many problems, sample data need not be projected to the entire data population.
The quality of the research depends upon the selection of the sample. Sample selection needs grounding in statistical techniques.
After identifying the sample, we begin to collect the data. Data can be collected either by a quantitative or a qualitative technique.
Quantitative data put responses in number and statistics. They answer questions like how many, how much and how often. Most common method of collecting quantitative data is by means of a survey of the sample conducted either personally or by mail or on telephone. In any survey, a questionnaire is administered. It is a list of questions that the respondents must answer.
The question can be dichotomous or yes-no type binary questions, or multiple choice questions or rating questions or open-ended questions. Instead of a survey, sometimes it is observed what people do to record data. It is called observation method. An experiment is the third method in which a hypothesis is tested by controlling variables.
Qualitative research looks for in-depth answers beyond the realm of quantitative research. It examines attitudes, motivations and behaviour. Mostly this research is exploratory. Depth interviews are used to allow people to open up and reveal their attitudes and opinions. Focus groups are a group of respondents who are subjected to probing questions. Direct questions are put to the members.
Projective techniques provide an opportunity to provide answers to vague questions by rationalizing. They project their feeling to objects and people. Some projective techniques are sentence completion and word association test, put words into cartoon balloons, picture drawing and Thematic Apperception Test (TAT). In TAT, the respondents are asked to react to a picture.
Though qualitative research has come to be used increasingly, it requires expertise and careful handling. Mostly quantitative methods which are simple, are used.
Whatever data we collect from the sample is not in a usable form. These data must be processed. They must be then analysed and interpreted. Several techniques are available for analysis of data. Tabulation is a useful technique at this stage.
Computers have helped a great deal in the analysis of data. Relationship between the data must be established to make them meaningful. Afterwards, we must present the research results. Generally, researchers and advertisers do not share a common vocabulary.
Advertisers do not have the technical background of the researchers. It is for this reason that the research results must be in plain English, devoid of jargon and complex statistical computations. The findings must be logical and concise.
Market Research – 5 Major Areas: Market, Product, Price, Promotion and Distribution
Marketing research is interested in five vital areas of marketing:
4. Promotion, and
Market covers consumer/dealer research, competition and sales forecasting.
Promotion covers personal selling, advertising, sales promotion and public relations.
Distribution covers transport, ware-housing, order processing, Inventory control, and channel choice.
Marketing research offers active help in the evolution of optimum marketing mix. The following diagram depicts the role of marketing research, in all decision areas of marketing mix.
Marketing research is useful at four stages in the problem- solving process in any branch of marketing:
1. To identify and define the problem including causes,
2. To recommend reasonable and profitable solutions or an alternative course of action,
3. To determine most profitable and the best courses of action in order to solve our problem,
4. To test the feasibility of particular solution or course of action decided upon by marketing manager.
In an ever-changing market and national economy, marketing research acts as a powerful investigative arm of marketing manager.
1. Market research,
2. Sales research,
3. Product research,
4. Advertising and sales promotion research,
5. Research on sales methods and sales policies,
6. Dealers’ research,
7. Distribution research, and
8. Pricing research.
Marketing research can be useful at four stages in the problem solving process in any branch of marketing:
1. To identify and define the problem including causes.
2. To suggest reasonable and profitable alternative courses of action.
3. To determine most desirable alternative courses of action and to ensure optimum use of resources.
4. To test the feasibility of particular alternative course of action decided upon by management.
Marketing research is interested in five vital areas of marketing:
4. Promotion, and
Market survey indicates information on consumer demand. Marketing mix consisting of 4 Ps indicates marketing offering and effort to serve the demand.
Market Research – Approaches
The approaches to marketing research can be characterized by four procedures. The historical method involves the gathering of past data so that comparisons and contrasts can be drawn and predictions made. The observational method gathers data by direct measurement of consumer and market phenomena as it is going on.
The experimental method sets up experiments with proper control procedures so that the effects of specific marketing actions can be determined. The survey method, which is perhaps the most widely used, gathers data by asking questions of knowledgeable informants usually selected by some sampling technique.
The procedure in any one investigation usually includes at least the following steps – A situation analysis is made to orient the research and develop hypotheses. The researcher makes a preliminary investigation of the company, its products, the underlying channels of distribution, etc.
The informal investigation extends the preliminary search by informal conversations with people who have special knowledge of the company or industry. Definition of the problem with great precision is then necessary so that effort can be focused only on the important problem areas.
The formal investigation is then planned very carefully so that time and money will not be wasted, and the proper data actually gathered. Data must be collected and analyzed, and this is really the heart of the project. Interpretations and recommendations must be made in a form and manner most useful for those who requested the study.
The most interesting and widely known part of marketing research is the consumer survey with its attendant questionnaires and sampling procedures. The premise underlying marketing surveys is that people generally can and will give information of value to marketers, provided no “leading questions” are asked, and that in other ways the approach will not give biased results.
For example, people will tell interviewers which products they use, when, where, and how much. If asked, they will also try to express preferences and reasons for them. If a new flavour is developed for a food product, potential consumers (a consumer panel) will try the new flavour, compare it to the old one, and express a preference.
Actually, data from panels of people continue to grow in importance. Just as the company can now ask on-line questions of its internal data, just so a panel can be queried continuously on its changing perceptions and behaviour. The data are especially valuable as an early warning signal.
A growing problem with individual interviews is the growing reluctance of people to be interviewed. Even the Census finds it necessary to mount an extensive public relations campaign to elicit compliance. Marketing research interviewers have an even more difficult job imposing on people’s time and patience year after year.
The continuing problem is that many door-to-door sales presentations are couched initially in the guise of a survey. It is difficult for a genuine interviewer to establish credibility and elicit cooperation from people who have been thus betrayed.
Market Research – Basics
Doing your own market research isn’t difficult, although it does tend to be time consuming. If you own a small business, you’re probably researching your markets continually informally. Every time you talk to a customer about what he or she wants, or chat with a supplier or sales rep, you’re conducting market research.
The Market Research Grid shows the two types of data sources and the three areas of research that are important to any business. You need to gather information from and about your customers to focus your marketing efforts, maintain and improve your customer service, and to guide your efforts in developing new products and/or services.
Looking at the Market Research Grid, information gathered about the competition can help you determine what works and what hasn’t worked, give you ideas for improving your products and/or services, and provide insight into how to increase or shift your share of the market.
The environment section of the Market Research Grid refers to those economic, social, and political forces that shape business. Gathering information about the environment allows you to stay abreast of and respond to particular trends or events that impact your small business. Whether it’s a predicted drop in interest rates, or the closure of a local mill, you need to be aware of it and judge the ripple effect on your business, for good or ill.
Think of secondary data sources as market research data that’s already been collected by someone else. Telephone books, government publications, and sources such as Statistics Canada, trade journals, and surveys conducted by other companies are all examples of information that’s already been gathered that you can use to get a fix on what your customers want, what the competition has done, and what the environment is like.
Primary sources provide firsthand information. When you survey your customers or question the competition, you’re gathering information directly from the source. While this kind of market research data can be the most costly and time-consuming to gather, it can also be the most valuable, because it’s the most current and the most specific.
Market Research – Primary Marketing Research
Primary marketing data are collected from consumers or customers usually on a sample basis. The stereotypical market research interviewer, standing on the street corner accosting passersby or walking the streets, clipboard in hand, knocking on closed doors, probably collects only a very small part of the data available to any organization. However, these are particularly important data, because they often provide the only true listening part of the dialogue with the consumer.
Many organizations offer market research services, for only very large and sophisticated organizations will have the resources to handle all aspects of their own research.
These suppliers can offer two types of research to clients:
1. Syndicated research and
2. Custom research
1. Syndicated Research:
These suppliers usually offer the easiest and quickest service and, typically, have ongoing or ad hoc research programs, the results of which they sell to a number of clients. Some of this can be standard research, such as the ACNielsen store audits that provide information on retail purchases by consumers. Shared cost is one advantage of such an approach, but the quality of the research is even more important.
Some research can be ad hoc in that a supplier (often one specializing in the industrial field) sees a topic that it believes will be of interest to a number of companies; it then conducts the research and sells the results off the shelf. Some researchers with ongoing programs (especially those conducting opinion polls) will sell space or, more accurately, interviewer time on the back of their omnibus surveys (discussed below), so that one or two simple questions will be asked of a large sample at a relatively low cost.
Apart from the ease and speed of obtaining the research information, the great advantage of all these approaches is usually cost. Because the overall cost is shared among a number of customers, the cost to any one client is that much lower. This allows research that few individual organizations could afford to carry out themselves. In most cases it is also quick and easy to organize and therefore serves as a pilot for more complex studies.
The main types of syndicated research are retail audits, panel research, and omnibus surveys. Retail audits are one of the most sophisticated market research operations in terms of logistics. The concept, however, is simple. An auditor regularly visits each retail outlet on the panel, which has been recruited randomly. The auditor carries out a physical stock check on the products being surveyed.
The change in stock from the previous visit (combined with the other stock movements, receipt of stock, and so on, which are obtained from the store’s records) gives the consumer sales.
Such retail audits are generally believed to offer the most accurate results of the volume of consumer sales and, in particular, of the value of such sales. These data are the main basis for brand-share calculations, for the all-important figures of price and distribution levels, and for the level of retailers’ stocks, which is often very important where supply management in response to promotions is a feature.
Panel research is another way to measure consumer behavior. At its best, this may approach the accuracy of retail audits, with the added advantage that it offers consumer profiles. These panels adopt a variety of techniques and cover a range of subjects. The two main approaches are the home audit and the diary method. In the home audit the panel member is required to save packaging in a special receptacle.
Once a week, an auditor checks the contents of the receptacle and the stocks of products in the house and asks the householder a short list of questions. This technique is particularly successful if respondents have a low attrition rate and provide long-term feedback. With the diary method the householder records the required information in a diary, which is collected by the interviewer (or, less successfully but more cheaply, returned by mail).
Both methods have, over long periods, been shown to provide accurate share data. Most importantly, these panels can show trend data, repeat purchasing, and brand-switching information, which are almost impossible to obtain when using other methods.
Omnibus surveys are very similar to ad hoc surveys, except that space on the questionnaire is “sublet” to different researchers, providing, in effect, their own mini survey. Omnibus surveys are often run on the back of ongoing research, such as political or opinion polls. The cost benefits can be significant, because field- work forms the major element of most market research costs.
Such surveys may also provide a faster turnaround of results, particularly if the survey is conducted by telephone. However, the questionnaire needs to be short, its questions cannot be complex, and the context may be unpredictable because the questions asked by the other researchers cannot be controlled. Such surveys can also be used to locate individuals belonging to target groups so that they can be followed up by conventional ad hoc surveys.
As computer ownership rises within the general population, it will also be more likely for respondents to participate in electronic research. Large cyber panels will make it easier to receive input from highly targeted populations, thus providing better information at relatively lower cost. Given the rapid developments in technology, it may well be that electronic surveys and cyber panels become dominant forms of data collection.
2. Custom Research:
Custom research is the staple diet of the market research industry. The research organization is commissioned by a client to undertake a specific research task, and it accepts responsibility for all aspects of the research. There is usually quite a distinct split between organizations that specialize in the consumer fields—the province of the large random surveys—and those in the industrial field, where research often revolves around extended interviews with individual organizations.
There are also clear divisions between those involved in retail audits, those conducting questionnaire surveys on individual consumers, and those conducting group discussions or in-depth psychological interviews. In addition, many research firms concentrate mainly on the measurement of marketing performance—by investigating, for example, the effectiveness of advertisements. This latter form of research is growing quite rapidly, particularly because of the expansion of interactive media.
For example, Nielsen Media Research founded a joint venture with Internet Profiles in order to provide firms with information about individuals using the Internet to visit a World Wide Web home page. With the help of a profile card filled out by browsers, firms can then structure follow-up activities.
Within the market research community, firms often specialize in performing research subtasks. For example, an agency that has been commissioned by a client will typically plan and design the research itself but may appoint a subcontractor to provide the sample based on a specialist database, another organization to pretest the research, a further company to conduct the main series of interviews in the field, and yet another to analyze the results.
Market Research – Integration
The problems of integrating marketing research into a business organisation are of two kinds. The first group of problems are those associated with the difficulties or obstacles in the way of introducing marketing research into the company structure for the first time. The second group of problems are concerned with the difficulties of integrating the use and the results of marketing research into management thinking and planning.
The first group problem is concerned with fitting marketing research into the organisation, developing awareness of what marketing research is and what it is able to do (and, equally important, what it cannot do) and communicating effectively with operating management. Generally speaking, fitting marketing research into the organisation will be easier in those companies which already have central marketing departments or are applying the marketing concept in their day-to-day operations.
Under these circumstances, the role of marketing research will almost certainly have been discussed. Top management will have been exposed to such discussions and the need of research for planning purposes recognised. Therefore, the ground is likely to prove more fertile and the nature of the resistances to the setting up of a research department, at any rate, understood, if not overcome. Thereafter, the use to which marketing research is put will depend upon practical and measurable benefits of first and subsequent applications.
Selling the idea of marketing research to management will be more difficult in firms which have no marketing departments or to whom the application of the ‘marketing concept’ is something of a mystery. It is in such circumstances that the barriers to research go up as management and other executives see ‘all this marketing and research business’ as a potential threat to their security, status and authority.
People’s fear of the unfamiliar is perhaps the major obstacle—fear that they will be made redundant or moved to other and perhaps less congenial jobs within the firm, that their position and authority will be undermined by the slide-rule experts, that the change will be taken as a criticism of their past ways of operating and managing, that their functions will have to change and new modes of thought and techniques will have to be learnt, that their freedom of action and judgment will be curtailed and so on. These are all genuine fears and misgivings and will not disappear by being overlooked.
Executive acceptance and use of marketing research (and this applies to any management innovation) will be in direct proportion to how well they understand it, how it is likely to affect them, and the degree to which they are kept in the picture as to what is going on.
It is imperative that anyone connected with or likely to be affected by its operation and use should be so informed and have explained to them how it will benefit them and the company as it has benefited others. It is as well to recognise at the very outset that there will be a problem of communication regardless of whether there is a marketing-minded management or not.
Where top management is sold on the idea of marketing research but anticipates great difficulty in its introduction and application it is sometimes helpful to call on the services of consultants to determine whether and how a research department should be set up, what information it should provide, how it should be staffed and how it should be ‘presented’ to management and executive personnel. Some consultants are able to advise on the selection of research managers and executives and to prepare job descriptions and executive specifications.
Furthermore, independent consultants are frequently able, by virtue of their wide experience of company research problems in divers fields and of the varying degrees of management sophistication in research, to recommend a marketing research set-up tailored to the particular needs of the company, bearing in mind such factors as the existing organisation structure, the type of products and markets with which the company deals, its methods of distribution and selling, breadth of marketing perspective, and internal political factors.
They can arbitrate between what is the desirable ‘ideal’ and what is practically attainable. The advice one gets from those who do not exercise executive responsibility within a firm is necessarily but honorably different from that given by those who share or are affected by executive responsibility for decision and action.
The integration of a newly formed marketing research department is likely to be easier if it is under some form of central control, preferably a top or marketing management executive, who is sympathetic to its development within the company.
Not only will such an arrangement afford status and importance to the work undertaken by the department, but, being under the wing of senior management, it is more likely to be used on longer-range problems and applications of importance to senior management and, thereby, better able to prove itself during the early and, in many ways, most critical stages of its development.
The second group of problems are concerned with the integration of an already established marketing research operation into management thinking and planning so as to ensure smoother and more effective working cooperation between the marketing research department and other departments and operating divisions of the business.
The main problem areas are the same as those that must be faced when setting up a marketing research department for the first time, namely organisation obstacles, determining what management’s problems are and how marketing research can best contribute to their solution and communicating effectively with management.
Even in the most mature marketing organisations where major organisational defects appear to be absent and where marketing researchers work closely and continuously with management executives and, therefore, presumably know and understand their problems, the problem of communication remains. The problem is a two-way one.
On the one hand, there is the difficulty arising from the professional jargon used by many specialist research executives which other executives in the business do not understand and in terms of which they are not accustomed to thinking and talking. On the other hand, the research man, equally unfamiliar with business management and accounting terminology, may be hard put to it to express himself clearly and convincingly in management language.
With the growing number of specialists engaged in business—economists, psychologists, sociologists, mathematicians, statisticians, operations research workers and so on—the problem of communication assumes new dimensions. The problems of putting these specialists to work effectively in the business world, of understanding how and when to employ their techniques and of coping with the flood of information they can make available, are now urgent.
How then can the communications gap be bridged and a common language be developed that will enable these diverse activities to be related and directed towards a common end? Meetings, training programmes, management and executive development schemes designed to familiarise people with the ever-increasing flow of new ideas and techniques for researching, planning and controlling business operations will help, of course, but it is not the whole answer to the problem.
Clearly, there is a growing need for Marketing Research Directors and Managers to be generalists (to distinguish them from research specialists) with specific responsibility for:
1. Studying and learning about the resources of other intellectual disciplines which would be of assistance to general and marketing management.
2. Developing satisfactory working relationships and communications between general and marketing management.
3. Developing a thorough appreciation of management problems and to initiate and plan a programme of research that will help towards their solution.
4. Ensuring that the right internal and external technical specialists are called into action, individually or as members of a team, at the most appropriate time and on the basis of a precise and agreed brief.
5. Liaising between general and marketing management and research technicians during the carrying out of the research programme.
6. Helping general and marketing management to understand research and its uses, its strengths and its limitations.
7. Preparing budgets for and controlling the costs of the total company marketing research effort including the purchase of external services.
The discipline of money applies with no less force to marketing research as to any other business activity. Hence, the research budget is the main instrument of control. The Marketing Director or Manager must estimate what scale of research effort is required to meet the company’s needs and must seek approval of his estimates. In this, he must usually allow for the costs of unplanned or unexpected projects.
It is advisable for management to allocate a definite budget for a programme of research providing for future needs, first, to ensure that research costs do not exceed a certain authorised amount, and second, to avoid having to justify costs on a day-to-day basis. Most research cannot be justified on such a basis—it may be some while before the return on a research programme is realised and it may not even be measurable in financial terms.
Buying outside research services is no different from buying any other product or service externally The onus is on the buyer either to prepare a job or product specification which the contracting supplier undertakes to meet at a specified cost or to accept the supplier’s quotation based on his own specification of the job to be done.
Once the contract has been signed, the specification should only be changed by written agreement by both parties. Complete mutual confidence is necessary if the work is to be brought to a successful conclusion.
As a leading industrial marketing researcher has commented – ‘Unless the marketing research agency is aware of the purpose behind the research—particularly in the complex field of industrial marketing research—it cannot contribute to the identification of the buyer’s real, as opposed to apparent, problems’.
In the pursuit of research, much more material is acquired than is subsequently used. If the marketing researcher is not a confidant of management, he can unwittingly throw out the baby with the bath-water by not being aware of the relevance of some of the information he has obtained.
Market Research – Acceptance
Marketing research has been accepted by the majority of large corporations, advertising agencies, and media. This is indicated by the rapid growth in formal departments, numbers and quality of people involved and relative increase in status.
The marketing research operation is organized in many ways in such companies. Almost all large consumer goods companies have large, formally organized departments. These developed earlier and tend to be larger, more frequently found, and more sophisticated than in industrial goods companies.
In smaller companies of both types, the activity is often restricted to one or two persons, often attached to the sales manager, and in very small companies it may be a part-time activity of an inadequately trained person.
Some of the larger and more diversified research departments are in advertising agencies. There may be 100 or more persons including a director, manager, research account executives (research liaison and planning), plus functional departments for economic analysis, survey planning and administration, print media TV and radio research, copy research, motivation research and operations research, plus communications, public relations, and sales consultants.
Most media—magazines, newspapers, TV and radio networks—have extensive marketing and media research departments.
While it is not yet predominant, the most logical organizational and reporting structure for marketing research is as a staff function reporting to the marketing manager. Under this concept the Marketing Research Department is co-equal to Advertising. Sales Promotion, Sales Management. New Product Development, Pricing, Distribution, and any other marketing functions. Reporting to the marketing manager, marketing research is the eyes and ears of all other marketing functions and can work effectively in helping them all.
If, as is still common, it is organized as part of one other marketing function—Sales, for example—its role is often restricted to that function’s work, and it is not used at all by other marketing functions. A good general reporting principle is that marketing research should be independent from but available to any other marketing function.
On a less formally documented plane, however, acceptance is not so real, and very serious problems exist. Crash programs are probably still the norm as against systematic, long-range planning of research. Often, research results are not accepted if they conflict with marketing experience and judgment. There is serious controversy over the extent to which research inhibits reactivity. In too many cases research is used as a status symbol, rather than as a marketing tool.
The future, however, looks relatively bright. It is probable that as marketing becomes more of a science than an art, depending more on long-range planning than intuition, marketing research will achieve high status and full integration.
Market Research – Evaluating the Benefits
Marketing research requires both time and money—two typically scarce commodities. To make a justifiable case for allocating resources to research, management must understand what the value of the research will be. It should clearly aid management in improving the decision making process and thus should aim at managerial rather than statistical significance. At the same time, market research should be recognized as a tool and not a substitute for judgment.
Enough of the “right” information is never obtained within the time constraints to dictate the action or course to follow. However, research will help avoid gross errors and compensate for inadequate experience or unreliable intuition.
The value of research can be assessed from two perspectives. One approach analyzes the benefits the firm receives from research; the other identifies the downside risk that the firm incurs if it does not carry out research.
The context of the decision under consideration must be evaluated when determining the extent and expense of research. The value of a decision with the benefit of research should be greater than the value of the same decision without research by an amount exceeding the cost of the research. In addition, the firm needs to have adequate resources to act on the insights gained by the research. Otherwise, the findings will not contribute to the decision-making process, and the research would be a waste of resources.
Often, however, researchers neglect to assess this cost-benefit relationship, particularly when the individual risks and benefits are difficult to quantify (which frequently happens). If insufficient attention is paid to the outcome of research and its cost, the firm risks conducting either too much or insufficient research.
Using a cost-benefit justification for research, however, may place the researcher at risk, because once the research is carried out, the actual benefits are measurable and can be compared with the anticipated ones. If the benefits do not materialize, the researcher may be charged with having inappropriately inflated the benefit expectations.
As an alternative to the benefit strategy, the researcher can construct “what if’ scenarios that outline the risks the company may incur by operating without sufficient information. Such risks might include a loss of market penetration effectiveness or creation of ill will that precludes any further expansion. In the long run, this justification is easier for the researcher to use than the benefit formula, because he or she can point out that some of the worst-case scenarios have not materialized.
Market Research – Issues
Among the more important controversies in the field today are the following:
Should marketing researchers simply report the facts or should they go further and make marketing recommendations? The general tendency is toward the latter role, and with the further development of the research “generalist,” who understands both research and marketing, more extensive involvement in marketing planning will probably develop.
Who should pay for marketing research—advertisers or advertising agencies? This problem becomes more acute as agencies offer more collateral services and become more marketing oriented. At present there is no general solution, but more and more advertising agencies are performing comprehensive research on a fee basis.
Should advertising agencies do research at all? This problem is perhaps most acute when it involves advertising effectiveness studies. The problem is complex and involves, as negatives, possible bias, sloppy work, and extra costs, as against the positives of deep product knowledge, research sophistication, and enlightened self-interest.
Qualitative vs. quantitative research? This problem became acute with the development of motivation research, which makes extensive use of the social sciences, such as sociology, psychology, and anthropology, in finding out how and why people react to products and advertising, and which in the beginning made little use of more accepted sampling techniques. The problem is less acute now as the qualitative and quantitative approaches resolve their differences and in many respects enrich each other.
One extreme form of quantification is the application of management science techniques to marketing management. Independent operations research firms may set up and manage computerized customized marketing models. Or a small number of operations research people, in a rather uneasy, even hostile, relationship to the regular marketing research department, may be employed by the firm as a separate unit.
Whatever the manner of interaction, the estrangement and lack of communication between the two groups can be painful for all concerned. Usually, the estrangement develops when it becomes known that an operations research group has been called in to work on a project, notwithstanding excellent planning, field work, analysis, interpretation, and practical recommendations for marketing action on the part of the marketing research personnel.
At the same time, it soon becomes obvious that the operations research group is setting up total business or marketing models, based on continuing discussions with top management, and is monitoring the allocation of resources and measuring results on a continuing basis. In effect it is managing by giving specific, continuing advice on what to do, when, and the probable consequences.
Top management has become used to such systems working miracles in production, refinery, distribution, and logistics problems, and expects to see similar results in the more esoteric realms of marketing. Reasonable progress has indeed been made in some of the more mechanical areas of marketing, e.g., media allocation and sales effort allocation.
Less progress has been made in such areas as the measurement of specific results of certain kinds of creativity in advertising communications. Whether such operations research activity is marketing research or is not depends upon definition. Nevertheless, it is always a critical decision for a firm as to how to conceptualize and integrate orthodox, well executed marketing research with its more exotic cousin.
Whenever the company is not as large or sophisticated as to have such applications of operations research and models, it will probably resort to more obviously articulated, almost common-sense, “what if” or “what is the relationship of,” kinds of questions to be answered from internally generated data. What if we collapsed this sales district with that – what if we reduced our promotional effort on that line; or combined this product with that, or added a new flavour?
Continuous monitoring of sales, especially at the retail level, is another example of greatly expanded speed and capacity. Virtually instantaneous retrieval of data from computer systems allows almost continuous access to sales by category and brand and almost immediate remedy of problems. Most of these studies are simple enough in principle and practice so that most executives can understand and participate fully rather than be made uneasy and alienated.