Introduction to Market Research
The Scientific Method
Research as defined is a careful consideration of
study regarding a particular concern or a problem
using scientific methods. As future marketing
professionals, marketing students must equip
themselves with the knowledge of research in
marketing.
In structure, if not always in application, the scientific
method is simple and consists of the following steps:
1. Observation. This is the problem-awareness
phase, which involves observing a set of
significant factors that relate to the problem
situation.
2. Formulation of hypotheses. In this stage, a
hypothesis (i.e., a generalization about reality
that permits prediction) is formed that
postulates a connection between seemingly
unrelated facts. In a sense, the hypothesis
suggests an explanation of what has been
observed.
3. Prediction of the future. After hypotheses
are formulated, their logical implications are
deduced. This stage uses the hypotheses to
predict what will happen.
4. Testing the hypotheses. This is the
evidence collection and evaluation stage.
From a research project perspective this is
the design and implementation of the main
study. Conclusions are stated based on the
data collected and evaluated.
Marketing research is about collecting information.
Fundamental research seeks to extend the
boundaries of knowledge in a given area and doesn’t
necessarily solve your immediate problems.
Applied research gathers information to solve a
specific problem or set of problems.
Problem Solving Research covers
a) Segmentation researches determine the
basis of segmentation, establish market
potential and responsiveness for various
segments, select target markets and create
lifestyle profiles: demography, media, and
product image characteristics
b) Product Researches includes test concept,
determine optimal product design, package
tests, product modification, brand positioning
and repositioning, test marketing, and control
score tests
c) Pricing research covers the importance of
price in brand selection, pricing policies,
product line pricing, price elasticity of
demand, initiating and responding to price
changes
d) Promotional research includes optimal
promotional
budget,
sales
promotion
relationship, optimal promotional mix, copy
decisions,
media
decisions,
creative
advertising testing, claim substantiation,
evaluation of advertising effectiveness
e) Distribution Research determines the types
of distribution, attitudes of channel members,
intensity of wholesale and resale coverage,
channel margins and location of retail and
wholesale outlets
The Basic Research Process
Stage
1:
Problem
Formulation.
Formulating research starts with a problem
that management is facing. This problem needs to be
understood, the cause diagnosed, and solutions
developed. However, most management problems
are not always easy to research.
Stage 2: Method of Inquiry
The scientific method is the standard pattern for
investigation. It provides an opportunity for you to use
existing knowledge as a starting point and proceed
impartially.
The terminology is similar to the stages in the
research process.
Stage 3: Research Method
Experimental research gives you the advantage of
controlling extraneous variables and manipulating
one or more variables that influences the process
being implemented.
Non-experimental research allows observation but
not intervention. You simply observe and report on
your findings.
Stage 4: Research Design
The research design is a plan or framework for
conducting the study and collecting data. It is defined
as the specific methods and procedures you use to
acquire the information you need.
Stage 5: Data collection techniques
Interviews require you to ask questions and receive
responses.
Common
modes
of
research
communication include interviews conducted face-toface, by mail, by telephone, by email, or over the
internet. This broad category of research techniques
is known as survey research. These techniques are
used in both non-experimental research and
experimental research.
Stage 6: Sample design
Marketing research project will rarely
examine an entire population. It’s more practical to
use a sample—a smaller but accurate representation
of the greater population.
Focusing on Research Design
Exploratory Studies
An exploratory study forces marketers to focus
the scope of a project. It helps marketers anticipate
the problems and variables that might arise in a
project.
Exploratory studies generally encompass three
distinct methods:
1. Literature search. This means marketers go to
secondary sources of information: the internet, the
public library, company or government records. These
sources are usually easy and inexpensive to access.
2. Expert interviews. After the literary search, the
next step is to interview experts. These experts might
include company executives or consumers. They
would also talk to people who used similar products.
The team would seek out professionals who have
careers relating to the research project.
3. Case studies. Every research project will have
pitfalls. Thus, case studies become a vital tool
because they allow marketers to examine another
business’s managerial problems and solutions. If
another study deals with similar issues, marketers
can avoid these pitfalls by learning from its mistakes.
Case studies include histories of other projects and
simulations of possible alternatives. A good “What if?”
can save a lot of time and resources
Descriptive Studies
Who are marketers selling to? An exploratory
study helped marketers establish what marketers are
selling, but the descriptive study will help marketers
find the market and understand the customer. Since
marketers will not be able to sell to everyone, a
descriptive study is necessary to focus the project and
resources.
Causal Studies
Even though descriptive studies describe and
sometimes predict relationships, results, or events,
marketers may want to know why. If marketers can
discover the reasons behind the solutions, then
marketers can assemble the own predictive models.
Such models can be used in the future. As a
marketing researcher, knowing why will make the job
easier. Causal studies try to find out the relationship
between a specific cause and a specific effect.
FIGURING OUT CAUSAL RELATIONSHIPS
1. Associative variation. This involves taking two
variables and seeing how often they are associated.
The more they show up in studies, the more likely they
are related. Associative variation can be broken down
into two distinctions: association by presence and
association by change.
Association by presence measures how closely
presence of one variable is associated with presence
of another. However, association by change
measures the extent to which a change in the level of
one variable is associated with a change in the level
of the other.
2. Sequence of events. In order to establish a
cause/effect relationship, marketers must first
establish that the causal factor occurred first. For
example, in order for salesperson training to result in
increased sales, the training must have taken place
prior to the sales increase. If the cause does not
precede the effect, then there is no causal
relationship.
3. Absence of other possible causal factors.
Marketers must also demonstrate that other factors
did not cause the effect. Once marketers have proved
this, marketers can logically conclude that the
remaining factor is the cause. For example, if we can
control all other factors affecting the sales item, then
we have to conclude that the increase in sales comes
from training.
Sources of Marketing Information
There are four major sources for finding
marketing information. These four sources include:
1. Secondary sources. Secondary information
is information that someone else researched
for a solution to a problem other than yours.
Even though this information wasn’t intended
for the project, it could provide valuable
insights.
2. Respondents. Information from respondents
plays a huge role in research. Customers’
verbal and behavioral responses provide
useful information.
3. Natural and Controlled Experiments.
Natural experiments are just what they would
seem. The investigator only measures
results, having no control over the elements
of the experiment.
4. Simulation.
Experimentation
can
be
expensive and time-consuming. It might be
more cost effective to create a simulation
model
instead
of
doing
real-world
experiments. Simulations are effective when
the project has a scope larger than regular
experiments can cover. Environmentally rich
models (containing complex interactions and
nonlinear relationships) are usually too
difficult to solve by standard analytical
methods such as calculus or other
mathematical programming techniques.
Rather, the analyst views a simulation model
as a limited imitation of the process or system
under study and attempts to run the system
on a computer to see what would happen if a
particular set of conditions were put into
effect.
Simulations are often developed for
marketing systems, and include marketingmix elements (new- product, price,
advertising, and sales-force variables).
A. Respondent Selection Errors
1. Population Specification Error. This type of
error occurs when the researcher selects an
inappropriate population or universe from
which
to
obtain
data.
The more
homogeneous the population (meaning
people who are similar), the smaller the
sampling error, and as sample size
increases, sampling error decreases. If a
census were conducted (i.e., all elements of
the population were included) there would be
no sampling error.
2. Selection Error. This is the sampling error
that occurs when a sample is selected by a
nonprobability method. Selection error often
reflects people who are easily reached, are
better dressed, have better kept homes, or
are more pleasant. These types of samples
rarely represent the desired population.
Having clear, written procedures that specify
how to select respondents can help to reduce
selection error.
3. Frame Error. A sampling frame supposedly
represents all the members of the population.
It is usually a listing of the respondent’s
marketers want to sample. A perfect frame
identifies each member of the targeted
population once, but only once, and does not
include members outside of that specific
population.
4. Survey Non-Response Error. This error
occurs when respondents and nonrespondents are too different. The
respondents should accurately represent the
population marketers want to sample. If nonrespondents are not equally distributed
across the population, marketers will not
have an accurate sample.
5. Surrogate Information Error. In some
research situations, the needed information
cannot be obtained. Instead, marketers may
accept substitute data that will act as a
surrogate for the required information. The
need for substitute information arises from
either the inability or unwillingness of
respondents to provide the information
requested.