Explore the essence and evolution of marketing research, understanding its definitions, features, objectives, and the critical process involved. Discover how marketing research aids businesses in decision-making, reduces risks, and identifies market opportunities.
The Essence and Evolution of Marketing Research
Marketing research is a systematic and objective process to identify and solve marketing problems by gathering, recording, and analyzing data. It aims to understand customer needs, preferences, and market trends. Enabling organizations to make informed decisions about product offerings, pricing, promotion, and distribution strategies. What is the Average Cost of a Virtual Receptionist?
What is Marketing Research? Meaning and Definition
Marketing research is a vital, systematic, and objective tool for any organization. It is the methodical search for and study of facts relevant to the identification and solution of problems within the field of marketing goods and services. How to Boost Productivity with Mercor AI!
Key Definitions:
Broadly: Marketing research is the application of the scientific method to solving marketing problems.
According to the American Marketing Association (AMA): It is “the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services.”
In simpler terms: It’s about spotting customer needs and meeting them effectively. It provides the essential information base for making sound managerial decisions across all marketing components, including the marketing mix (Product, Price, Place, Promotion).
Features of Marketing Research
Marketing research is characterized by the following prominent features:
Function of Marketing Management: It is a critical function that provides executives with the right information about dynamic environmental changes (customers, competitors, etc.) to facilitate effective decision-making and determine the most appropriate marketing mix.
Integrated Effort: It requires a collaborative effort within an organization, involving planning executives, data analysts, and data processors to achieve research objectives.
Systems Approach: The process involves a sequence of activities—collection, recording, tabulating, evaluating, analyzing, and interpretation of information—executed in a systematic manner.
Inter-Disciplinary Process: It draws upon various fields like psychology, sociology, economics, and employs sophisticated statistical and mathematical techniques.
Imperfect Science: While based on the scientific method, it is an imperfect science because it deals with the unpredictable and dynamic nature of human behavior (consumer choice), resulting in inherently uncertain outcomes.
Indispensable for New Product Introduction: It is crucial for identifying suitable avenues and market acceptance for new products before they are launched.
Market-Orientation: Its core aim is to ensure that a firm produces goods and services acceptable to customers and that these products reach the market efficiently, quickly, and profitably.
Brief History and Evolution
While informal marketing research has roots going back centuries (e.g., Johann Fugger gathering textile information in 1380). Marketing research as an organized business activity began primarily between 1910 and 1920.
1911: Charles Collidge Parlin’s appointment as Manager of the Commercial Research Division at the Curtis Publishing Company is often cited as the beginning of organized marketing research.
1915-1919: Industrial firms and advertising media began establishing their own research divisions, with the first major books on commercial research being published.
Post-World War II: Saw a dramatic increase in interest and activity. By 1948, over two hundred marketing research organizations were operating in the United States, and spending on research has continued to increase tremendously.
Today: It is a relatively new field compared to the physical sciences, largely developing over the last fifty years as a new social science to bridge the widening geographical and psychological gap between the producer and the consumer (as noted by Alfred P. Sloan, Jr. of General Motors).
Objectives of Marketing Research
The key objectives that drive marketing research activities include:
To Discover New Markets: Identifying and opening up new market territories for products.
To Hold the Greater Market Share: Enabling the organization to achieve and maintain a larger share of the total industry sales.
To Evaluate Tastes and Preferences of Customers: Analyzing and monitoring consumer likings, dislikes, demand, and preferences over time.
To Anticipate the Future Sales Volume: Studying consumer behavior to forecast probable future sales, either from existing or new product lines.
To Minimise the Cost of Marketing: Determining methods to reduce excessive or unnecessary expenditure on selling, advertising, and distribution.
To Improve the Quality of Product: Identifying customer needs and wants to introduce changes and improvements that enhance product quality and build brand loyalty.
To Assist in Formulation of Suitable Price Policy: Providing valuable information about competitive pricing, packaging, quality, and discounts.
To Effectively Face Cut Throat Competition: Studying competitors’ policies, practices, and strategies to formulate effective counter-strategies.
To Make Liaison with Ultimate Consumers: Keeping in close contact with changing consumer behavior (preferences, attitudes) to inform production, pricing, and promotion decisions.
To Analyse the External Environment: Studying the impact of external factors like government policies, regulations, technological developments, and new competitors on the firm’s decision-making.
Importance and Advantages
Marketing research is highly advantageous for modern businesses:
Reduction of Risk: It minimizes the risks inherent in marketing decisions by providing current. Factual information and generalized knowledge about the marketing process.
Identifying Target and Niche Markets: It helps organizations pinpoint territories and customer segments where their products are most likely to sell, including highly specialized niche markets ignored by competitors.
Facing Competition: By studying competitors’ strategies, a firm better equipped to design its own competitive policies.
Planned Production: By estimating demand, it facilitates planned production, helping to maintain equilibrium between market supply and demand.
Understanding Customer Needs: It provides a basis for understanding unfulfilled customer wants and requirements, allowing the firm to plan new products accordingly.
Economical and Efficient Marketing: It secures economies in distribution and makes the entire marketing process efficient by eliminating wastage.
Facilitates Management Decisions: It is helpful in determining pricing, price ranges, and discount rates, and in ascertaining the reputation and market share of the firm and its products.
Dimensions of Marketing Research
Marketing research can be classified along five basic, interrelated dimensions:
Dimension
Classification
Purpose
Time Horizon
Continuous
Information gathered routinely (e.g., total sales) for monitoring performance and tracking market trends.
Ad Hoc
Research conducted for a one-off, specific purpose (e.g., viability of a new product, reason for a sales drop).
Types of Data
Quantitative
Information expressed using numerical measures (e.g., sales figures, repeat purchase rates).
Qualitative
Information based on descriptions and shades of meaning, often used in early stages of research to generate ideas or hypotheses (e.g., focused group discussions).
Research Objectives
Exploratory
To identify the nature of a marketing problem, generate ideas, or formulate hypotheses.
Conclusive
To provide information for management decisions, often by measuring variables or testing a hypothesis.
Research Purpose
Descriptive
Focuses on measuring or estimating variables and their frequency of occurrence (e.g., market size, trends, market share).
Causal
Looks at cause-and-effect relationships to explain why things happen (e.g., why market share was lost).
Data Sources
Secondary
Data from sources that already exist, usually the starting point (e.g., Internal Data: sales records, past studies; External Data: government publications, trade association data).
Primary
New data collected specifically for the research purpose (e.g., Observation, Surveys, Experimentation).
The Marketing Research Process (8 Steps)
A typical marketing research project follows these sequential steps:
Formulate the Research Problem: This is the most crucial step. It involves accurately distinguishing between a symptom (e.g., low sales) and the underlying problem (e.g., slumping economy, competitor strategy). A secondary data search is often conducted here to refine the problem definition.
Conceptualize a Research Design: Choosing the appropriate research framework (e.g., observation, survey, longitudinal study). That will guide the entire process and be most effective in solving the defined problem.
Create a Data Collection Instrument: Developing the specific tool to retrieve data. Such as a questionnaire, an observation feedback form, or an interview sheet.
Select a Sample: Scientifically choosing a subset of the population (probability or nonprobability sample) from which data will collected, ensuring the results are statistically usable.
Write the Research Proposal: Documenting the problem, hypotheses, study design, methodologies, and plans for communicating the findings to stakeholders.
Collect the Data and Enter into Database: Gathering the data ethically and sensitively. Then coding and entering it into a database for subsequent analysis.
Analyse and Interpret Data: Applying statistical techniques to the collected data and interpreting the results to draw meaningful conclusions.
Write the Research Report: Creating a clear and structured report, tailored to the audience (e.g., practitioners or researchers). That includes conclusions, recommendations, and often an executive summary.
Limitations and Disadvantages
Despite its importance, marketing research has several drawbacks:
Passive Nature: Its ultimate value depends entirely on the ability of the management executive to effectively use and implement its findings.
Not a Panacea: It only provides information for better decision-making; it does not automatically solve all marketing problems.
Limitation of Time: The process is often lengthy. If the market situation changes drastically between the start of research and the implementation of decisions, the report’s utility reduced.
Limitation of Money: It is a high-cost endeavor, often considered a luxury, which can limit the scope of the work a researcher can undertake.
Limitation of Skill: It requires a high level of expertise, well-trained staff, and proficiency in statistical analysis and data handling.
Limitation of Bias: Constraints in time, money, or skill can introduce bias, which can lead to erroneous results and defeat the purpose of the research.
Limitation of Human Behavior: Since it studies human behavior, which is often unpredictable, consumers may not always express their true feelings, leading to potentially incorrect assessments of habits and preferences.
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