February 23, 2017

Marketing Research and Market Demand Forecasting

Marketing Management Revision Article Series

Marketing Information System

Every marketing department has to put in place marketing information system.

Marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely and accurate information to marketing decision makers. (Kotler)

Internal records on orders, sales, prices, inventory levels, receivables, payables etc. are part of the marketing information system and they have to be organized for providing information to marketing personnel. The internal records provide information about the actual results.

Marketing Intelligence System

Marketing intelligence system is a set of procedures and sources used by marketers to obtain every day information about pertinent developments in the marketing environment (Kotler)

Marketing intelligence focuses on current happenings.

Marketing Research System

Marketing research is formal study of future opportunities and current problems.

Kotler's definition of marketing research:
"Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.

Kotler emphasised market research, research into a particular market is only one component of marketing research activities. Kotler gave as illustration of marketing research product-preference test, sales forecast by region and advertising evaluation.

John Tanner and Mary Anne Raymond (chap. 10) list more applications of marketing research.

Developing product ideas and designs
Determining if there is demand for a product
Identifying market segments for the product
Pricing preferences of customers
Evaluating packaging types
Marketing channel preferences
Evaluating in-store promotions
Measuring the satisfaction of  customers
Evaluating the effectiveness of the Web site
Testing the effectiveness of ads and their placement
Measuring the satisfaction of  channel partners

The Marketing Research Process

Five steps are involved in marketing research

1. Defining the problem and research objectives

The starting for research is the research problem and its objectives. The marketing manager sponsoring the research and the marketing researcher have to agree on them. Kotler explained this step using the example of a proposal to provide phone call facility to airline passengers. The telecommunication company indicated that cost will be $1000 for flight. So an initial idea was that the call can be charged at $25 and around 40 persons using the service would result in breakeven. But when the research question or problem was finalized, the issue was broadened to give a wider scope to the issue. The problem was stated as "Will offering an in-flight phone service create enough incremental preference and profit for American Airlines to justify its cost against other possible investments that American might make?"

Further more detailed questions were the following:
1. What are the main reasons that airline passengers need to make phone calls while flying?
2. What category of passengers are likely to make most phone calls?
3. How many phone calls will be made at different price levels?
4. Will more passengers travel by the Airline due to this service?
5. How much good will will be earned by the Airline by becoming the first airline to provide this service?
6. How important is phone service provision in relation to improving flight schedules, food quality and baggage handling.

Thus the questions are very specific in this example of research study. But in every research study, such specific questions may not be possible.

Some research can be exploratory. In exploratory research preliminary data is gathered to shed light on the nature of the marketing situation. (At this stage the research has no prior guidance or knowledge of the phenomenon either through internal information or through external information) Research projects can also be descriptive. In this type of study, magnitudes can be estimated. How many persons will you a particular product? (To estimate magnitudes, first based on exploratory research, relevant variables which are to be measured have to be decided. Then scales or measuring instruments for measuring them have to be developed). Research studies can also find cause-effect relations which investigate the response of people to certain actions given as stimulus. Marketers are interested to know the response of users to increased advertisement, sales promotion etc.

2. Developing the research
Research plan development includes decisions on data sources, research approaches, research instruments, sampling plan and contact methods.

Data Sources: For answering some research questions, secondary data may be available. If secondary data is not available primary data is to be gathered. Gathering primary data will result in higher expenses.

Research Approaches: Observation, Focus group discussion, Surveys, Behavioral data, and Experiments.

Behavioral research is based on store buying data linked to various socioeconomic data. This gives the behavior people classified into various clusters.

In experiments, various stimuli  in terms of advertisement, sales promotion, packaging can be tried on experimental groups and control groups and the difference in behavior can be observed to answer the research questions.

Research Instruments:  Questionnaires, Qualitative Measures, Technological Devices

Sampling Plan

Sampling Unit and Sampling Frame

Sample Size

Sampling Procedure: Normally random samples are preferred as we get error estimates.

Contact Methods: Mail contacts, Telephone contacts, Personal contacts, Online contacts,

3. Collection of the information
Data is collected using the instruments developed for the project.

4. Analysis of the information
The information is tabulated and measures that give the desired answer are calculated.

5. Presentation of the findings.
The research report is to be prepared for circulation to various decision makers.

In the fifteenth edition, Kotler and Keller, the marketing research question is slightly changed to reflect the current prices of providing internet services. The answer was provided that at $25 per the trip 5 persons will use the wi-fi service and at $15, six will use the service. Therefore, pricing the service at $25 is advisable. Per service, the revenue is $125. We can calculate the annual revenue by multiplying by number of days the service is offered in a year.

6. Make a Decision

The Characteristics of Good Marketing Research

Kotler listed seven characteristics

1. Research creativity
Research is done to help in marketing decision making. Right from defining the objective of research to the submission of the report, effort has to be made by people involved, to come out with ideas that would help the firm in a significant way. Creativity means generation of number of alternatives so that the best way of doing a project or task of a project is selected and pursued.

2. Scientific method

3. Multiple methods: Business decisions involve expenditures to get expected profits. Using multiple methods to confirm a finding is preferred rather than stopping with a method that gives a positive answer.

4. Interdependence of models and data: The model chosen for doing the research determines the data to be collected based on the concepts involved in the model.

5. Value and cost of information: Marketing researchers have to understand the value of the information and come out with designs that cost less than the value of the information.

6. Healthy skepticism: Researchers should not accept opinions and conclusions made by marketers about the marketing issues and have to develop research studies that test these opinions and conclusions. This is healthy skepticism.

7. Ethical marketing: Good marketing research has to benefit both the sponsoring company and consumers. Self serving research studies increase consumer resentment. Marketing research companies have to develop unbiased approach to doing marketing research studies.

Updated 26 February 2017,  15 Jan 2015, 10.12.2012


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  4. Read on 25 February 2017 as per revision plan.

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