Introduction to Marketing Research.

Sources of Data - Primary and Secondary

There are two main sources of data - primary and secondary. Primary research is conducted from scratch. It is original and collected to solve the problem in hand. Secondary research, also known as desk research, already exists since it has been collected for other purposes.

Primary Research.

There are many was to conduct primary research. We consider some of them:

1. Interviews

2. Mystery shopping

3. Focus groups

4. Projective techniques

5. Product tests

6. Diaries

7. Omnibus Studies

1.0 Interviews

This is the technique most associated with marketing research. Interviews can be telephone, face-to-face, or over the Internet.

1.1 Telephone Interviews

Telephone ownership is very common in developed countries. It is ideal for collecting data from a geographically dispersed sample. The interviews tend to be very structured and tend to lack depth. Telephone interviews are cheaper to conduct than face-to-face interviews (on a per person basis).

Advantages of telephone interviews

• Can be geographically spread
• Can be set up and conducted relatively cheaply
• Random samples can be selected
• Cheaper than face-to-face interviews

Disadvantages of telephone interviews

• Respondents can simply hang up
• Interviews tend to be a lot shorter
• Visual aids cannot be used
• Researchers cannot behaviour or body language

1.2 Face-to-face Interviews

Face-to face interviews are conducted between a market researcher and a respondent. Data is collected on a survey. Some surveys are very rigid or 'structured' and use closed questions. Data is easily compared. Other face-to-face interviews are more 'in depth,' and depend upon more open forms of questioning. The research will probe and develop points of interest.

Advantages of face-to-face interviews

• They allow more 'depth'
• Physical prompts such as products and pictures can be used
• Body language can emphasize responses
• Respondents can be 'observed' at the same time

Disadvantages of face-to-face interviews

• Interviews can be expensive
• It can take a long period of time to arrange and conduct.
• Some respondents will give biased responses when face-to-face with a researcher.

1.3 The Internet

The Internet can be used in a number of ways to collect primary data. Visitors to sites can be asked to complete electronic questionnaires. However responses will increase if an incentive is offered such as a free newsletter, or free membership. Other important data is collected when visitors sign up for membership.

Advantages of the Internet

• Relatively inexpensive
• Uses graphics and visual aids
• Random samples can be selected
• Visitors tend to be loyal to particular sites and are willing to give up time to complete the forms

Disadvantages of the Internet

• Only surveys current, not potential customers.
• Needs knowledge of software to set up questionnaires and methods of processing data
• May deter visitors from your website.

1.4 Mail Survey

In many countries, the mail survey is the most appropriate way to gather primary data. Lists are collated, or purchased, and a redesigned questionnaire is mailed to a sample of respondents. Mail surveys do not tend to generate more than a 5-10% response rate. However, a second mailing to prompt or remind respondents tends to improve response rates. Mail surveys are less popular. With the advent of technologies such as the Internet and telephones, especially call centres.

2.0 Mystery Shopping

Companies will set up mystery shopping campaigns on an organizations behalf. Often used in banking, retailing, travel, cafes and restaurants, and many other customer focused organizations, mystery shoppers will enter, posing as real customers. They collect data on customer service and the customer experience. Findings are reported back to the commissioning organization. There are many issues surrounding the ethics of such an approach to research.

3.0 Focus Groups

Focus groups are made up from a number of selected respondents based together in the same room. Highly experienced researchers work with the focus group to gather in depth qualitative feedback. Groups tend to be made up from 10 to 18 participants. Discussion, opinion, and beliefs are encouraged, and the research will probe into specific areas that are of interest to the company commissioning the research.

Advantages of focus groups

• Commissioning marketers often observe the group from behind a one-way screen
• Visual aids and tangible products can be circulated and opinions taken
• All participants and the research interact
• Areas of specific interest can be covered in greater depth

Disadvantages of focus groups

• Highly experienced researchers are needed. They are rare.
• Complex to organize
• Can be very expensive in comparison to other methods

4.0 Projective techniques

Projective techniques are borrowed from the field of psychology. They will generate highly subjective qualitative data. There are many examples of such approaches including: Inkblot tests - look for images in a series of inkblots Cartoons - complete the 'bubbles' on a cartoon series Sentence or story completion Word association - depends on very quick (subconscious) responses to words Psychodrama - Imagine that you are a product and describe what it is like to be operated, warn, or used.

5.0 Product tests

Product tests are often completed as part of the 'test' marketing process. Products are displayed in a mall of shopping centre. Potential customers are asked to visit the store and their purchase behaviour is observed. Observers will contemplate how the product is handled, how the packing is read, how much time the consumer spends with the product, and so on.

6.0 Diaries

Diaries are used by a number of specially recruited consumers. They are asked to complete a diary that lists and records their purchasing behaviour of a period of time (weeks, months, or years). It demands a substantial commitment on the part of the respondent. However, by collecting a series of diaries with a number of entries, the researcher has a reasonable picture of purchasing behaviour.

7.0 Omnibus Studies

An omnibus study is where an organisation purchases a single or a few questions on a 'hybrid' interview (either face-to-face or by telephone). The organisation will be one of many that simply want to a straightforward answer to a simple question. An omnibus survey could include questions from companies in sectors as diverse as heath care and tobacco. The research is far cheaper, and commits less time and effort than conducting your own research.

Secondary Research

Secondary (or desk) research uses data that has been collected for other objectives than your own i.e. it already exists. There are a number of such sources available to the marketer, and the following list is by no means conclusive:

• Trade associations
• National and local press Industry magazines
• National/ international governments
• Web sites
• Informal contacts
• Trade directories
• Published company accounts
• Business libraries
• Professional institutes and organisations
• Omnibus surveys
• Previously gathered marketing research
• Census data
• Public records

We have given a general introduction to marketing research. Marketing research is a huge topic area and has many processes, procedures, and terminologies that build upon the points above.

 The Marketing Environment

The marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment' and the 'internal environment'.

The micro-environment

This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence.

The macro-environment

This includes all factors that can influence an organisation, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalisation means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology.

The internal environment

All factors that are internal to the organization are known as the 'internal environment'. They are generally audited by applying the 'Five Ms’, which are Men, Money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external. As marketers we call the process of managing internal change  Essentially we use marketing approaches to aid communication and change management.

The external environment can be audited in more detail using other approaches such as SWOT Analysis, Michael Porter's Five Forces Analysis or PEST Analysis. Click on the options below. 

Ansoff's Matrix - Planning for Growth

This well-known marketing tool was first published in the Harvard Business Review (1957) in an article called ‘Strategies for Diversification’. Marketers who have the objectives for growth use it.

Ansoff’s matrix offers strategic choices to achieve the objectives. There are four main categories for selection.

Ansoff's Product/Market Matrix

Market Penetration 

Here we market our existing products to our existing customers. This means increasing our revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and we do not seek any new customers.

Market Development 

Here we market our existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.

Product Development 

This is a new product to be marketed to our existing customers. Here we develop and innovate new product offerings to replace existing ones. Such products are then marketed to our existing customers. This often happens with the auto markets where existing models are updated or replaced and then marketed to existing customers.

Diversification

This is where we market completely new products to new customers. There are two types of diversification, namely related and unrelated diversification. Related diversification means that we remain in a market or industry with which we are familiar. For example, a soup manufacturer diversifies into cake manufacture (i.e. the food industry). Unrelated diversification is where we have neither previous industry nor market experience. For example a soup manufacturer invests in the rail business.

Ansoff’s matrix is one of the most well know frameworks for deciding upon strategies for growth.