Chapter 1: The Nature and Scope of Marketing Research Defining Marketing Research Marketing is the process of planning and

executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. The marketing concept requires consumer satisfaction rather than profit maximization to the goal of the organization. In other words, the organization should be consumer oriented and should try to understand consumers requirements and satisfy them quickly and efficiently in ways that are beneficial to both the consumer and the organization. Marketing research is a vital part of an organizations marketing information system; it helps to improve management decision making by providing relevant, accurate and timely (RAT) information. Every decision poses unique needs for information, and relevant strategies can be developed on the basis of the information gathered through marketing research. Whether the organization serves customers in competitive market environments or clients in a public sector enterprise, it is necessary to understand and satisfy the changing needs of diverse groups of people. Marketing research can provide this information to decision makers. An important feature in the definition is the inclusion of the specification and interpretation of needed information. Firms can achieve and sustain competitive advantage through the creative use if market information. Hence, research is defined as an information input to decisions, not simply the evaluation of decisions that have been made. Market research alone, however, does not guarantee success; the intelligent use if market research is the key to business achievement. Role of Marketing Research in the Marketing Management Process Marketing decisions involves issues that range from fundamental shifts in the positioning of a business or the decision to enter a new market to narrow tactical questions of how best to stock a grocery shelf. The context for these decisions is the marketing management process (the process of managing the marketing of a specific product or service by analyzing four stages sequentially: (1) situation analysis, (2) strategy development, (3) marketing program development and (4) implementation. This is a neverending process, so the evaluation of past strategic decisions serves as an input to the situation analysis.

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Marketing Management Process Situational Analysis Understand the environment and the market Identify threats and opportunities Assess the competitive position

Strategy Development

Define the business scope and served market segments Establish competitive advantages Set performance objectives

Marketing Program Development

Product and channel decisions Communication decisions Pricing decisions Personal selling decision

Implementation

Performance monitoring Refining strategies and program

During each stage, marketing research can make a major contribution to clarifying and resolving issues and then providing help to decision makers choose among decision alternatives. Situation Analysis Effective marketing strategies are built on an in-depth understanding of the market environment of the business and the specific characteristics of the market. A situational analysis is an analysis of internal and external factors to determine strengths, weaknesses, opportunities and threats. The macro-environment includes political and regulatory trends, economic and social trends, and technological trends. Marketing researchers tend to focus on those trends that affect the demand for products and services. Understanding customers who they are, how they behave, why they behave as they do and how they are likely to respond in the future is at the heart of 2 I.M.R. Chapter 1: The Nature & Scope of Marketing Research 16987643

marketing research. A major responsibility of the marketing research function is providing information that will help detect problems and opportunities and then, if necessary, learning enough to make decisions as to what marketing program would result in the greatest response. Various research approaches are used to analysis the market, e.g. past information from previous studies, customer comments or focus groups. Once the situational analysis is complete, the next stage in the marketing planning process is strategy development. Strategy Development Strategy development is the process of selecting target markets, deciding on positioning, and setting objectives. During this stage, the business decides on answers to these three critical questions: What business should we be in? How will we compete? What are the objectives of the business? What business should we be in? Specifically, what products or services should we offer? What technologies will we use? Which market segments should we emphases? These questions have become especially compelling in markets that are mature and saturated. One such route to growth in this competitive environment is to create highly targeted products that appeal to the tastes of smaller market segments. Research supports this search for niches with large-scale quantitative market studies that describe buyer behavior, consumer beliefs and attitudes, and exposure to communications media. Large samples are needed to delineate the segments, indicate their size and determine what the people in each segment are seeking in a product. How will we compete? Next the management team has to decide why the business is better than the competition in serving the needs of the target segments and what has to be done to keep it in front. Competitive superiority is revealed in the market as either differentiation along attributes that are important to target customers or the lowest delivered cost position. Marketing research is essential for getting answers to three key questions about differentiation: What are the attributes of the product or service that create value for the customer? Which attributes are most important? How do we compare with the competition? The attributes of value go well beyond physical characteristics to encompass the support activities and system for delivery and service that make up the 3 I.M.R. Chapter 1: The Nature & Scope of Marketing Research 16987643

augmented product. Each market has unique attributes that customers use to judge the competitive offerings, which can be understood only through careful analysis of usage patterns and decision processes within that market. This knowledge comes from informed sources and in-depth customer surveys. An understanding of competitive advantage also requires detailed knowledge of the capabilities, strategies and intentions of present and prospective competitors. Marketing research contributes here in two ways: identifying the competitive set, and collecting detailed information about each competitor.

What are the objectives for the business? An objective is a desired performance result that can be quantified and monitored. Increasingly, firms are adopting objectives for services levels and customer satisfaction. Marketing research is needed to establish both the market share and the level of current customer satisfaction. Sometimes share information we have X% of the Y market is readily available from secondary sources. Marketing Program Development Once strategy has been developed, the third stage in the marketing planning process is marketing program development. Marketing program development is the process of designing marketing mux elements in accordance with strategy. Programs embrace specific tasks. An action program usually focuses on a single objective in support of one element of the overall business strategy. This is where the bulk of ongoing marketing research is directed. An idea of the possibilities of and needs for research can be gathered which describes some of the representative program decisions that use information about market characteristics and customer behavior: Segment decisions (which segment is targeted) Product decisions (what product features should be included) Distribution decisions (should a few outlets be used or many?) Advertising and promotion decisions (which advertising media should be used?) Personal selling decisions (how many sales people are needed?) Price decisions (what price level should be changed?) Branding decisions (how can brand loyalty be increased?) Customer satisfaction decisions (how should C.S. be measured?) Marketing Program Implementation Implementation is the process of turning marketing programs into executable actions. For research to be at this stage, it is important that specific measurable 4 I.M.R. Chapter 1: The Nature & Scope of Marketing Research 16987643

objectives be set for all elements of the marketing program. Thus, there should be sales goals by geographic area; distribution goals, and advertising goals. The role of marketing research is to provide measures against these objectives and to provide more focused studies to determine why results are below or above expectations. There is overlap among the phases of the marketing process. In particular, the last phase, identifying problems with the marketing program - and perhaps opportunities as well eventually blends into the situation analysis phase of a follow-up marketing program. In summary, marketing research can provide valuable information at all stages of the marketing management process where decisions have to be made. Not all decisions will require research and research does not guarantee success. Overview of the Marketing Research Process Marketing research is a tool to provide information to help managers make marketing-related decisions. Marketing decisions need to be made at all four stages of the marketing management process. Once the need for information to make a decision has been identified, the research process can begin. Problem Definition Problem definition is the initial step in the marketing research process. It occurs when management I either faced with a problem or sense an opportunity for which further information is required before a decision can be made and action taken. This is the impetus to begin the research process. Before research can proceed, time must be spent clarifying the decision to be made and determining the specific information requirements: that is, clearly defining the research problem. This stage of the research process linking a management decision to specific information needs is unquestionably the most important stage in the research process. If the problem is defined incorrectly, the research is doomed to fail, and information obtained will be irrelevant. At the completion of this stage, consideration must be given ti the cists and benefits of the research before proceeding. Research Design Once a decision is made to proceed with research a plan or blueprint for gathering the data required to meet the research objectives must be devised. The first source of information that should be consulted in any research is secondary data, or data that already exists. If secondary data are insufficient to answer all the research objectives, the researcher must decide on a way to gather primary data. The three basic designs are exploratory research, descriptive research and casual research. Many projects will involve a combination of these designs. Sampling Once a research design has been determined and before data can be collected decisions must be made regarding sampling; that is, who is going to provide the 5 I.M.R. Chapter 1: The Nature & Scope of Marketing Research 16987643

information, how will they be selected and how many respondents will be required. Data Analysis With the design phase completed, it remains to implement the plan and collect the data, once raw data are collected, they must be analyzed in relation to each research objective and interpreted to provide usable information. Presenting the Results The analysis stage turns the raw data into information on the basis of the research objectives. Conclusions then have to be drawn in terms of the research problem and, in turn, recommendations need to be made to solve the management problem. Note that research provides information, but managers still have to make the final decision. However, the presentation of the research findings can have a large impact on managements willingness to accept and implement the outcomes. Finally, the research outcomes are fed back into the marketing system, to help in future decisions and to be available as secondary data for any future research problems. In addition, the results of the research may raise more questions or management decisions to be made, hence the link back to problem definition. Although these stages are linked n a sequential process, note that early decisions are always made by looking ahead to later decisions. Early decisions are constantly being modified for new insights and possibilities presented by information obtained in later stages. Factors to consider before undertaking Marketing Research Marketing research is not an immediate or an obvious path to finding solutions to all managerial problems. A manager faced with a particular problem should not instinctively resort to conducting marketing research to find a solution to the problem. A manager should consider several factors before ordering marketing research. Hence, the first decision to be made is whether market research is called for in a particular situation. The key factors that influence this initial decision in conducting or commissioning marketing research include: relevance, the type and nature of the information sought, timing, the availability of resources, and an analysis of costs and benefits. Relevance Research should not be conducted to satisfy curiosity or confirm the wisdom of previous decisions. Relevance comes through support of strategic ad tactical planning activities, that is, by anticipating the kinds of information that will be required. As new circumstances arise and decision alternatives become more specific, research projects may be undertaken. Throughout the planning of these projects, the focus must be constantly on decisions. 6 I.M.R. Chapter 1: The Nature & Scope of Marketing Research 16987643

Type and Nature of information sought The decisions whether to conduct marketing research depends on the type and nature of the information sought. If the information required for decision making already exists within the organization, in the form of results of a study conducted for a different problem or in the form of managerial experience and talents, marketing research is not called for. Under these circumstances, further research would be redundant and a waste of money. Timing Research decisions are constrained by deadlines. Often these decisions are fixed in time and must be taken according to a specific schedule, using whatever information is available. One role of the planning system is to schedule needed market research so that it can be conducted in time to influence decisions. The formation of responses to competitive actions puts the greatest time pressure on researchers, for the results are always wanted yesterday. There are of course so many situations in which the timing of decisions is contingent upon the research results. Even so, the.re is still time pressure stemming from the recognition that failure to take corrective action or to pursue an opportunity as quickly as possible will result in opportunity costs. The advent of the Internet and subsequent rise of e-business has also exerted increased time pressure on researchers.

Availability of resources Although the need for resources to be available may appear to be obvious, in several instances managers have called for marketing research without properly understanding the resources required including both financial and human resources. Lack of funds can result in improper and inefficient execution of a marketing research project. The results of such research often will be inaccurate. Again, if funds are available to conduct research but are insufficient to implement the results of the research the marketing research is made useless. Also, the availability of skilled researchers is a vital issue in deciding whether to conduct extensive marketing research. This is particularly so when the research is being conducted by an external source. When poorly qualified researchers are hired, the weaknesses in their training and lack of insight produce unimpressive and often inapplicable results. Cost-Benefit Analysis Before conducting marketing research, a prudent manager should perform a cost-benefit analysis to determine the value of the information sought through the research. Willingness to acquire additional decision-making information by conducting marketing research depends on a managers perception of the incremental quality of the information vis--vis its cost and the time with would 7 I.M.R. Chapter 1: The Nature & Scope of Marketing Research 16987643

take to conduct the research. Hence, before conducting marketing research, it is necessary to have some estimate of the value of the information being sought. Such an estimate will help determine how much, if anything, should be spent on the research. Marketing Research as a Business Tool Marketing research is only a tool that can be used by managers to provide information to help make better decisions. Marketing research provides information to reduce the risk and uncertainty surrounding decisions. Research seldom eliminates all uncertainty; it merely reduces it. Managers still have to make decisions. In addition, although research is conducted to generate information, managers might not readily use the information to solve their problems. The factors that influence a managers decision to use research information include research quality conformity to expectations, clarity of presentation, political acceptability within the organization and challenge to the status quo. Researchers and managers agree that the technical quality of research is the main determinant of research use. Also, managers are less inclined to use research that does not conform to previous notions or is not politically acceptable. Some researchers argue that the use of information is a function of the direct and indirect effects of environmental, organizational, informational and individual factors. It is easier to conduct research and generate information than to understand the consequences of the information. Many companies with excellent marketing research experience have failed in their efforts to capture the actual needs of consumers. Ethics in Marketing Research Ethics refers to moral principles or values that generally govern the conduct of an individual or group. Researchers have responsibilities to their profession, clients and respondents, and must adhere to high ethical standards to ensure that both the function and the information are not brought into disrepute. Normally, three parties are involved in a marketing research project: Client/Sponsor: party that commissions a marketing research project Supplier: a party that designs and executes the marketing research Respondent/Participant: a party that provides information.

The issue of ethics in marketing research involves all three players in a research project. Many countries have professional associations representing the marketing research industry. These associations usually have codes of conduct for their members. The Clients Ethics The research client, or sponsor, has to abide by a number of ethical or moral 8 I.M.R. Chapter 1: The Nature & Scope of Marketing Research 16987643

rules and regulations when conducting a research study. The more common sources of ethical problems in the client establishment stem from covert purposes, dishonesty in dealing with suppliers, and misuse of research information. Overt and covert purposes Most researchers have encountered situations in which the main purpose of their efforts was to serve someones organizational goals. Thus, research can be used to postpone an awkward decision or to lend respectability to a decision that has been made already. A related purpose is to avoid responsibility. When there are competing factions, the manager who must make a difficult choice looks to research to guide the decision. This has the further advantage that if the decision is later proven wrong, the manager can find someone else to blame. Some times a covert purpose will open the way to ethical abuses that present difficult dilemmas to researchers. Serous abuses are created when there is subtle (or not-so-subtle) pressure to design research to support a particular decision or enhance a legal position. Dishonesty in dealing with suppliers A few client companies have been known to indulge in picking the brains of research suppliers by asking them to submit elaborate bids that detail the research design and methodology the suppler would adopt in conducting the research. Later, the client organization uses these ideas and conducts the research on its own. Another technique is to make a false promise of future contract sin an effort to obtain a low price for the current project. In addition, some client organizations are guilty of promising suppliers information that they cannot provide. Misuse of research information The client organization should not misuse information gathered through marketing research projects. Sadly, there are a number of situations in which the research study is simply a disguise for a sales pitch. Many people have received phone calls, ostensibly to ask some research question, which lead only to a canned sales message for life insurance, financial planning or holiday schemes. This is not only unethical behavior because it has no merits on its own, but is also a serious abuse of respondent rights. Not surprisingly, respondents are more suspicious after a few of these encounters and may refuse to participate in any research study. The Suppliers Ethics The more common unethical issues for the research supplier are: Violating client confidentiality: disclosing any information about the client that the supplier has gathered from the research project amounts to a violation of client confidentiality, 9 I.M.R. Chapter 1: The Nature & Scope of Marketing Research 16987643

 Improper execution of research: suppliers are required to conduct marketing research projects in an objective manner, free from personal biases and motives. Improper execution includes using biased sampling, ignoring relevant data or misusing statistics, all of which lead to erroneous and misleading results. In addition to codes of conduct, the marketing research industry may have to follow government legislation designed to protect the rights of respondents in the country where research is being conducted. The Respondents Ethics and Rights A respondent who of his or her own free will agrees to participate in a marketing research project has the ethical obligation to provide the supplier, and hence the client, with honest and truthful answers. The respondent can abstain from answering a sensitive question, but falsifying the answer is unethically improper. Any respondent who participates in a research project has the following rights: The The The The The right right right right right to to to to to privacy safety know the true purpose of the research know the research results decide which questions to answer.

Marketing Research in Different Contexts Other markets or segments of markets also use marketing research, such as small businesses and the business-to-business market. In addition, organisations are increasingly conducting research outside their domestic market, that is, internationally. The same research principles apply to all of these contexts, but each context also presents some features that add complexities to the research process. These contexts are: International Marketing Research The increase in international trade and the emergence of global corporations resulting from increased globalisation of business have had a major influence on all facets of business, including marketing research. Marketing research is not an easy task even within a single country and cross-national differences must be considered. International marketing research can be defined as marketing research conducted either simultaneously or sequentially to facilitate marketing decisions in more than one country. The international marketing research process is more complicated, and the international marketing researcher faces that different from those of a domestic researcher, such as the necessity to ensure construct, measurement, sampling and analysis equivalence before any cross-cultural 10 I.M.R. Chapter 1: The Nature & Scope of Marketing Research 16987643

study is conducted. The increase in the importance of global business has caused an increase in awareness of the problems related to international research. Thorough research of the proposed international market is very important before launching a new product or service. Small Business Marketing Research Small businesses employ fewer than 20 people. These businesses often are not large enough to employ specialist marketing staff, let alone specialist marketing researchers. Indeed, they may also not have the financial resources to fund external suppliers of research. This situation brings special challenges when conducting research. Business-to-Business Marketing Research The business-to-business context has some clear differences from consumer marketing, including fewer and larger buyers, closer supplier and customer relationships, a geographic concentration of buyers and more professional buying processes. These characteristics have implications for several stages of the research process.

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