By N2H

The Role and Development of Market Research

October 24, 2007

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The Role and Development of Market research:

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Before the industrial revolution there was no need for market research. Markets were small, local and customers were few. With industrialization all that changed improve transport and communications made it possible and desirable to expand markets. In order to sell in new markets business needed to understand these markets and customers better.Market research is about providing useful data to managers so that they can make good decisions which will enable the organization to reap reward of many years of product development.

Philip Kottler defines market research as “systematic problem analysis, model building, and fact finding for the purpose of improved decision making and control in the marketing of goods and services”. While the British marketing Research Society defines it as ‘the modus used by those who provide goods and services to keep themselves in touch with the needs and wants of those who buy and use these goods and services.

While the American Marketing Association defines it as ‘the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services.

History of Market Research:

The earliest application of Market research occurred in 1879 by an American advertising agency NKL Ayer & Son 1879. They carried out a survey into grain production across the US to develop an advertising schedule for agricultural machinery.

In 1895 & 1897 Prof Gale used mail questionnaires in an opinion survey on advertising.

Market research then grew on. The basic purpose of Market Research is to try and understand and predict human behaviour. It basically focuses on human and organizational behaviour and consumption habits.

Divisions of Market Research:

Market Research basically is divided into:

a) Product Research:

This is concerned with the design, development and testing of new products.

- Improvement on existing products

- Forecasting of likely trends in consumer preferences related to styling, product performance, quality of materials etc.

Global competition among business are becoming stiff thus organizations need to meet the ever demanding expectations of their customers. As this happens design has become more important factor in winning customers.

b) Sales & Distribution Research:
Sales research involves a thorough examination of the selling activities of the company. This is accomplished by looking at the sales outlets and/or sales territories and formulating the data so that direct comparisons can be made. Distribution research involves evaluating all of an organizations selling arrangements along with looking at alternative methods of distribution.

c) Customer Research
This research studies the social, economic and psychological influences affecting purchase decisions. It looks into the behaviour of buyers. The research may include customer surveys to study the opinions and behaviour of ultimate users of the products.

d) Pricing Research:
Pricing is a critical factor when it comes to gaining competitive advantage, competitor may also bring in substitute products thus an organization might want to carry out a research on what price their products are favorable to consumers. Determination of a pricing strategy must always take into account Market Research.

d) Promotion Research:
This is concerned with testing and evaluating the effectiveness of the various methods of promoting an organization product or services.

f) Services Research:
Market Research should be used to design, develop and distribute specific services. Most organization are now shifting into the services industry and its important for them to have useful information before making critical decisions.

Designing and Developing a Market Research: Methodologies of Market Research:
For a Market Research to be useful one needs to carry out the research in a systematic and organized manner, there should be a framework for the entire research process.

There are basically 3 types of research design, these are

(a) Exploratory Design
This design attempts to study what it is you will ultimately research ie. the real nature of research problems.

(b) Descriptive Studies:
This seeks specific information. It is done when one has substantial knowledge about the marketing problem. E.g census, public opinions etc. These are basically descriptive reports eg customer profile, market demand etc

(c) Casual Studies:
Attempts to identify factors which underlie market behaviour and evaluate other relationships and interactions.

There are basically 2 categories of research.

Reactive: Where data originates from interaction with investigators and respondents as in interviews, questionnaires or experiments.

Normactive : (non-reactive): This relates to surveys involving observation or library research, where there is no dependence on respondents directly.

One should use a variety of reactive and normative research testing to provide the widest range of data collection.

a) Exploratory Research:
This design method is used for generating hypothesis and identifying areas to study further. In exploratory research one gathers information from various sources which are likely to provide useful insights. The researcher is less concerned with carrying out probability sampling, he is more concerned with allowing use to communicate or provide their ideas.

b) Descriptive Research: This seeks specific information. It is done when one has substantial knowledge about the marketing problem. E.g census, public opinions etc. These are basically descriptive reports eg customer profile, market demand etc

c) Casual Research: Attempts to identify factors which underlie market behaviour and evaluate other relationships and interactions.

Collecting Data: This may involve a variety of activities thus it requires a large number of personnel. The researcher must decide what type of data to use either primary data, secondary data or some combination of the two.

Secondary data: is the use of data that had been collected earlier for some other purpose – secondary data is cheaper and easier to gather. If a researcher goes or chooses to use primary data then he can use various techniques to collect this data.

Observation: Involves monitors and recording actions of customers and events in the market place according to Gilbert A. Churchill Jr. observation can be useful for learning about competitors and their products.
Surveys: this is another technique. It is the collection of data through questionnaires. The researcher can conduct survey through mail, telephone or the person. Survey are useful to the marketer, they are volatile and can generate important information.

(d) Analyzing and Interpreting data
The research examines the data collected through questionnaires or observation. The researcher the codes (-assigns human symbols to the answers) and then he tabulates the data. (counting number of cases that fall into each category of response).

The tabulated data is then used as a basis of carrying out statistical analysis. The researcher then evaluates the results so as to uncover situations where the researcher can provide more helpful information by modifying the research design.

(e) Preparing the research report
The researcher then puts information generated by the analysis into a report. The research report should contain: