DOI link for Market research
Market research book
Market research is critical to developing an effective business marketing program. Research used properly helps marketers identify and solve problems. While consumer research focuses most on advertising and packaging, business research is more often focused on developing market potential. Consumer research deals with a large number of consumers, each of whom is generally looked upon as equal, while business research generally deals with very small populations where a few respondents control the largest portion of sales volume. Understanding the make-up of the DMU or buying center is a critical task of market research, and once this understanding is developed, market research can be far more effective. The Internet has made developing secondary data far easier, since virtually all published information is available somewhere on the web. However, one must be careful in using Internet information without confirmation from many sources.
Most sophisticated firms attempt to develop a complete marketing information system, including a decision support system to help managers use the information to make decisions. Developing both an effective marketing information system and a decision support system is a difficult project requiring consistent effort.
When developing market research, the most important step is to define exactly what information is needed. To do this, a firm must decide what use the information will be put to and who will be making decisions based on the information developed. Clear research objectives are critical if a research project is to be successful. After reviewing all secondary research, the firm then decides whether to move ahead with primary research. The Internet allows focus groups and interviews to be completed far less expensively. However, it may be impossible to draw a representative sample through the Internet. Since there are far fewer members of any particular population in a market segment, it may be possible to interview a small number of individuals to develop realistic and projectable results using focus groups, desk-side, or telephone interviews. The advantage of the personal approach is that products can be demonstrated and more in-depth questions can be used. Firms must be careful that instruments such as questionnaires or focus group moderation guides can be used in various markets across the world. While all qualitative market research techniques have been used successfully in various countries, pre-testing of these instruments is necessary to be sure of the validity of the responses. When analyzing quantitative data, cross-tabulated tables are used to show the differences between various sub-segments of the respondent pool. Qualitative research is analyzed using software which can identify words or groups of words used frequently or by old-fashioned reading and discussion methods.
Market research is used often by business marketers to develop market potential. Once a market segment is developed, research is often used to develop critical ratios, such as the percentage of individuals who may decide to buy a new software product within the next year. These ratios are then applied to known data to develop a market potential. Once the market potential is developed, sales forecasts and sales quotas are usually determined. Since the salesforce is so critical in business marketing, developing attainable sales quotas is important. Some firms use the Delphi technique to forecast the future, requiring a group of experts to give their opinions in several rounds. Firms also use the salesforce composite method, using a bottom-up approach from the salesforce. However, this approach tends to give very optimistic forecasts. Scenario analysis is also useful, especially in international research where unpredictable events happen quickly.
While a few firms hold all market information functions within the firm, most outsource at least data collection, hiring focus group moderators or telephone or Internet researchers when required. Keeping all research within the firm obviously protects sensitive data. However, the extremely high cost of keeping specialists on staff who may not be fully employed deters most firms from doing this. Many firms have a combined centralized and decentralized approach to research, the centralized function developing projects affecting the entire firm and the decentralized function completing research which focuses only on a particular division or product line. When hiring an outside research vendor, specific proposals must be obtained. A firm must qualify the vendor’s expertise in market, product, and method. When commissioning a research project, a firm must be careful not to underfund the project. To be successful, a project must have the support of top management. When management understands the role of market research and the costs involved, the most successful projects are completed.
Benchmarking is the process of identifying best practices in organizations and then attempting to emulate these to improve the way things are done within a firm. The benchmarking process resembles the market research process in many ways, and care must be taken to select the proper candidates and to develop the correct research instruments. Once best practices are identified, the firm must have an action plan to make sure these practices are implemented. The most successful firms try to exceed these best practices to establish real competitive advantage.