MGT 2306MARKETING MANAGEMENT

Lesson 5

LESSON 5 OBJECTIVES

• Define what is marketing research

• Examine the purposes of marketing research and how market research helps businesses.

• Describe the market research process

WHAT IS MARKET RESEARCH?

• Market research is the process of collecting valuable information to help you find out if there is a market for your proposed product or service.

WHY DO BUSINESSES REQUIRE INFORMATION?

Businesses need information about customer wants, market demand, competition, distribution channels etc. This information needs to be updated regularly because businesses operate in a dynamic environment, characterised by frequent:

- Changes in technology

- Changes in consumer tastes

- Changes in the product ranges of competitors

- Changes in economic conditions

HOW MARKET RESEARCH HELPS BUSINESSES

• Gain a more detailed understanding of consumers’ needs

• Reduce the risk of product/business failure

• Forecast future trends

IMPLEMENTATION OF MARKETING RESEARCH

• Implemented by the marketers (Do it yourself)

• By appointing outsiders (Higher Learning Institutions, Research Institutions, Custom marketing research firms and specialized research agencies)

• A combination of both

THE MARKET RESEARCH PROCESS

This is a typical sequence implementation of a marketing research process

1. IDENTIFY THE RESEARCH ISSUES

• The starting phase is always identifying the reason or problem for which research is to be conducted.

2. DESIGN THE RESEARCH PLAN

• Now that you know your problem or issue, it is time to plan out the type of research that will best obtain the necessary data.

• There are 3 categories of research:

a) Explorative research

b) Descriptive research

c) Causal research

EXPLORATORY RESEARCH

• It is used when you don’t know what the real problem or issue is and you need to uncover the causes

• Example: Why do Muslims

nowadays brave

themselves to travel

to countries where

they would not travel

previously?

DESCRIPTIVE RESEARCH

• Used to describe the market problem or situation for example: a) measure market demandb) develop a profile of the target market c) measure the attitudes of consumers

• The research yields quantitative data Example : The new generation prefer fuss-free economical fast-food compared to the older generation who prefer home-cooked food. How much of it is true?

CAUSAL RESEARCH

• This research tests hypotheses about cause and effect relationships, example, a relationship between two variables.Example:

Does advertising bring sales up?How do price and quantity co-relate?Are fat people more likely to get diabetes and hypertension?

3. GATHERING DATA : THE RESEARCH APPROACH

• There are a few instruments of research typically used by organizations to gather data:-

a) Thru’ Observation

b) Performing a survey

c) Conducting experiments

d) Forming focus Group

e) Recording Behavioral data

CONTACT METHODS

Mail questionnaire

Telephone interview

Personal interview

Online interview

Pay attention to the advantagesand disadvantages of each method

4. ANALYZE YOUR INFORMATION

• Data analysis consists of recording and summarizing (ringkasan/ kesimpulan) the responses for each question or observation for every participant.

5. REPORT YOUR RESEARCH FINDINGS

• Interpreting the information and drawing conclusion for use in managerial decision.

CHARACTERISTICS OF GOOD MARKETING RESEARCH

Scientific method – be thorough, factual, with proof

Research creativity – get response Multiple methods – use more than one way

to obtain information Interdependence – keep close to research

methodology Value and cost of information - minimal Overall conclusion (Healthy skepticism) Ethical (complying with etiquette)

WHAT IS MARKET FORECASTING?

A market forecast is a core component of a market analysis. It projects the future numbers, characteristics, and trends in your target market.

A standard analysis shows the projected number of potential customers divided into segments.

MARKET FORECASTING TERMS

Demand measurement :

• Product Stage : Number of orders secured when production starts

• Space Stage : How the orders are distributed to wholesalers, retailers & consumers

• Time stage – What is the quantity of orders you would need to product in the next 3-6 months?

Buyer Groups• Actual buyers: are those who have heard of our

products, used your products before and that will definitely buy from you

• Potential Buyers: consumers who have not heard from you, are hesitant to buy from you or those who are unsure if they would buy from you.

• Non buyers: consumers who will not buy from you

Marketers thus focus on those who are buying and those who are likely to buy.

Demand forecasting

• Company Demand is the sales volume that a company wants to achieve in its business

• Company Sales Prediction is the sales volume estimated by accumulating every single salesperson’s estimation of sales to be done

• Company potential sales is the sales volume that may be achieved bearing NO CHANGES in whatever situation it currently is in.

Current demand estimation• Total market potential is the sales volume

achievable in every stage, space and time at a stipulated period.

• Market area potential breaks the sales volume into segments like LOCATION and TIME

Potential demand estimation

• Survey of Buyers’ Intentions : Ask consumers what, where, when they would buy

• expert opinion : Ask panel or industry experts

• test market method : Test the market by selling the product and observe the response.