When companies want to launch a new product, enter a new market or assess an existing product, they will always carry out a series of market researches. Why they do so?
When companies want to launch a new product, enter a new market or
assess an existing product, they will always carry out a series of
market researches. Why they do so? Because they need to minimize
risks, otherwise they would probably make loss rather than profit. In
this essay, I would explain what market research is, why and how it is
invaluable.
Market research is defined as "the systematic gathering, recording,
and analyzing of data about problems relating to the marketing of
goods and services."(Boyd, Westfall & Stasch, 1985) I would rather
say that it is a study of why and what people buy, so that companies
will be able to work out appropriate market strategies to make the
sale of goods more successful, and it can also make a valuable
contribution to companies' understanding of its products, its markets,
and its overall business strategy when properly structured.
`The two basic purposes of research are:
Ø To reduce uncertainty when plans are being made, whether these
relate to the marketing operation as a whole or to individual
components of the marketing mix such as advertising or sales
promotion.
Ø To monitor performance after the plans have been put into
operation. In fact, the monitoring role has two specific functions:
it helps to control the execution of the company's operational plan
and it makes a substantial contribution to long-term strategic
planning.'(Birn, 1988)
It can be seen obviously from the two purposes which companies would
benefit from market research in both short-term and long-term.
Broadly speaking, the data available to the market researcher are
either primary or secondary data. Primary data are generated by a
study specifically designed to accommodate the data needs of the
problem at hand, e.g. Primary data can be obtained by carrying out
research among people within the market. It is used extensively among
large companies to obtain primary data in the form of survey or
promotion when they want to develop new products, because it provides
the latest information gathered in the market place, therefore speed
up the decision-making process. But it is very expensive to carry out
primary research (approximately £5000 for 1000 questionnaires or per
promotion). Secondary data, on the other hand, can be obtained
internally, e.g. accounting records or externally, e.g. government
reports, trade association reports, commercial services. Secondary
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research among people within the market. It is used extensively among
large companies to obtain primary data in the form of survey or
promotion when they want to develop new products, because it provides
the latest information gathered in the market place, therefore speed
up the decision-making process. But it is very expensive to carry out
primary research (approximately £5000 for 1000 questionnaires or per
promotion). Secondary data, on the other hand, can be obtained
internally, e.g. accounting records or externally, e.g. government
reports, trade association reports, commercial services. Secondary
research provides a very good overview of a market. Information will
be obtained quicker, for it is based on existing researches. Since
the majority of marketing research is concerned with either individual
brands or a change in company marketing activities, much primary data
must be gathered. When sufficient secondary data are available,
researchers can use those data to evaluate the market. But secondary
data is always not up-to date, so its usage is somewhat restricted,
for the market is constantly changing.
The main types of market research are qualitative research and
quantitative research. I would like to focus on the former one which
benefits company much more than the ladder one.
A good qualitative research provides company invaluable information
about market fundamentals: market size, market potential and market
shares, hence, appropriate market strategy could be worked out by
referencing to it.
Qualitative research can also be called motivational research,
exploratory research, psychological research, unstructured research,
etc. These names reflect the different forms of qualitative
research. The development of qualitative research was the result from
an increasing awareness that questionnaire surveys did little to
explain or predict consumer behaviour with the existence of variety of
bias such as statistical bias, bias in questions, interviewer bias,
bias in the interviewee. It is generally accepted that direct
questioning of the consumer will often fail to get equally direct,
honest answers because the consumer may not be aware of the real
reasons for his or her behaviour, or may be aware of them but be
unwilling to explain them. Qualitative research use indirect methods
to understand and evaluate those attitudes, beliefs, wants and needs
which influence and determine consumer behaviour. It is a way of
gathering primary data.
The two techniques are employed widely by the qualitative researcher
are the in-depth interview and the group discussion. `The depth
interview is a development from the psycho-analytic free association
technique which encourages the free flow of words, ideas, feelings,
thoughts and images in response to stimulus subjects or words.'
(Aucamp, 1971) This kind of interview normally takes place in the
respondent's own home-a familiar and warm environment where the
interviewee can be relaxed. The depth interviewer must be a friendly
and relax individual( In most cases, interviewers are psychologists)
and aware not only of what the interviewee says but also of how he
says it, and the gestures, expressions, hesitations and mood changes
which accompany the remarks in order to asses the validity of what
interviewee says. `The group discussion is a technique must
acknowledge its origins as lying in the areas of social psychology and
psychotherapy, but again there have been modifications and again there
are differences.' (Aucamp, 1971) The group discussion interviewer
not only has the ability to encourage the interviewees to talk,
discuss and interact as a group, he (she) also utilizes his own
posture and expressions as cues and stimuli for interviewees. These
two techniques have the similar purpose. Both of them are looking for
the consumer's underlying motivations, want and needs, but different
in the number of interviewees. Group discussion gives a more relax
environment so that interviewees will not be influenced easily by
biases.
Although market research provides lots of invaluable data for
companies, it also has many defects. For example, researcher may find
very difficult to choose the right sample for the research. This may
lead to the invalidity of data. Market research is often very
costly. As I mentioned before, it is approximately £5000 for
professional researchers to do 1000 questionnaires or to employ
psychologists to gain primary data by carrying out qualitative
researches, or for a sales promotion.
However, market research needn't to be very expensive. With the
development of IT, the Internet has become an important tool for
gathering marketing information, and a number of [1]free market
research sources are available to small business owners. Library or,
when available, a business library can also prove invaluable. There
are varieties of useful business and industry resources that can be
found in libraries, including company and trade directories,
electronic databases, industry surveys, etc. Those are secondary
data, which save both money and time to do the research.
In conclusion, market research, from my perspective, is invaluable
only when unbiased questions are set and right sample of interviewees
are selected. Although invalidities may occur in some cases, it still
enables decision-makers to make the right decision, thus improve the
efficiency of allocation. Since nothing in the world is absolute in
such a constantly changing market, what companies can do is to
minimize risks by analysing gathered information from market research
which reflects the market fundamentals as accurate as possible,
researches showing brand loyalty or consumer preference are good
references to companies of whether they should launch a homogeneous
product, enter a new market or assess an existing product. The ways
of research I explained in this essay can be used according to what
kind of data companies are looking for. Apart from decision-making
and minimizing risks, market research can also help sales planning and
sales organization by assessing the effectiveness of sales methods and
consumers' purchase criteria. Therefore, market research is so
valuable that it has an indispensable role in marketing.
Bibliography
Adler M (1971) Leading Cases in Market Research Business Books
Limited, London, United Kingdom
Augamp J (1971) The Effective Use of Market Research Staples Press
Ltd, London, United Kingdom
Birn R (1988) The Effective Use of Market Research Kogan Page Ltd,
London, United Kingdom
Boyd H, Westfall R & Stasch S (1985) Marketing research Text and Cases
6^th Edition Richard D. Irwin, Inc, Homewood, Illinois, United States
of America
Brewer M, Gillespie A, Hammond A, Marcouse I, Martin B, Ruscoe C,
Surridge M, Swift I, Wall N & Watson N (1999) Business Studies Hodder
& Stoughton, Kent, United Kingdom
Business Owner's Manual--A guide to starting your small business in
New York http://www2.nypl.org/smallbiz/business/index.html
References
1. http://www2.nypl.org/smallbiz/business/marketing/marketing_library.htm#general
