Marketing research is the function that links the consumer, customer, and public to the marketer through information. This information is used to identify and define marketing opportunities and problems; to generate, refine, and evaluate marketing actions; to monitor marketing performance; and to improve understanding of the marketing process. Marketing research specifies the information, manages and implements the data-collection process, analyzes the results, and communicates the findings and their implications. Marketing research is concerned with the application of theories, problem-solving methods, and techniques to identify and solve problems in marketing. In order to offset unpredictable consumer behavior, companies invest in market research.
Increased customer focus, demands for resource productivity, and increased domestic and international competition has prompted an increased emphasis on marketing research. Managers cannot always wait for information to arrive in bits and pieces from marketing departments. They often require formal studies of specific situations. For example, Dell Computer might want to know a demographic breakdown of how many and what kinds of people or companies will purchase a new model in its personal computer line. In such situations, the marketing department may not be able to provide from existing knowledge the detailed information needed, and managers normally do not have the skill or time to obtain the information on their own. This formal study, whether performed internally or externally, is called marketing research.
The marketing research process consists of four steps: defining the problem and research objectives, developing the research plan, implementing the research plan, and interpreting and reporting the findings.
The marketing manager and the researcher must work closely together to define the problem carefully and agree on the research objectives. The manager best understands the decision for which information is needed; the researcher best understands marketing research and how to obtain the information.
Managers must know enough about marketing research to help in the planning and to interpret research results. Managers who know little about the importance of research may obtain irrelevant information or accept inaccurate conclusions. Experienced marketing researchers who understand the manager's problem should also be involved at this stage. The researcher must be able to help the manager define the problem and to suggest ways that research can help the manager make better decisions.
Defining the problem and research objectives is often the hardest step in the research process. The manager may know that something is wrong without knowing the specific causes. For example, managers of a retail clothing store chain decided that falling sales were caused by poor floor set-up and incorrect product positioning. However, research concluded that neither problem was the cause. It turned out that the store had hired sales persons who weren't properly trained in providing good customer service. Careful problem definition would have avoided the cost and delay of research and would have suggested research on the real problem.
When the problem has been defined, the manager and researcher must set the research objectives. A marketing research project might have one of three types of objectives. Sometimes the objective is exploratory—to gather preliminary information that will help define the problem and suggest hypotheses. Sometimes the objective is descriptive—to describe things such as the market potential for a product or the demographics and attitudes of consumers who buy the product. Sometimes the objective is casual—to test hypotheses about cause-and-effect relationships.
The second step of the marketing research process calls for determining the information needed, developing a plan for gathering it efficiently, and presenting the plan to marketing management. The plan outlines sources of secondary data and spells out the specific research approaches, contact methods, sampling plans, and instruments that researchers will use to gather primary data.
A marketing researcher can gather secondary data, primary data, or both. Primary data consists of information collected for the specific purpose at hand. Secondary data consists of information that already exists somewhere, having been collected for another purpose. Sources of secondary data include internal sources such as profit and loss statements, balance sheets, sales figures, and inventory records; and external sources such as government publications, periodicals, books, and commercial data. Primary data collection requires more extensive research, more time, and more money. Secondary sources can sometimes provide information that is not directly available or would be too expensive to collect.
Secondary data also present problems. The needed information may not exist. Researchers can rarely obtain all the data they need from secondary sources. The researcher must evaluate secondary information carefully to make certain of its relevance (fits research project needs), accuracy (reliably collected and reported), currency (up to date enough for current decisions), and impartiality (objectively collected and reported). Researchers must also understand how secondary sources define basic terms and concepts, as different sources often use the same terms but mean slightly different things, or they attempt to measure the same thing but go about it in different ways. Either way, the result can be that statistics found in secondary sources may not be as accurate or as relevant as they appear on the surface.
Observational research is the gathering of primary data by observing relevant people, actions, and situations. Observational research can be used to obtain information that people are unwilling or unable to provide. In some cases, observation may be the only way to obtain the needed information.
Survey research is the approach best suited for gathering descriptive information. A company that wants to know about people's knowledge, attitudes, preferences, or buying behavior can often find out by asking them directly. Survey research is the most widely used method for primary data collection, and it is often the only method used in a research study. The major advantage of survey research is its flexibility. It can be used to obtain many different kinds of information in many different marketing situations. In the early and mid-1980s, some cola companies created a taste test against their competitors. This is an example of survey research. Participants were allowed to taste different cola brands without knowing which was which. The participant then decided which brand was preferred.
Whereas observation is best suited for exploratory research and surveys for descriptive research, experimental research is best suited for gathering causal information. Experiments involve selecting matched groups of subjects, giving them different treatments, controlling unrelated factors, and checking for differences in group responses. Thus, experimental research tries to explain cause-and-effect relationships.
Research may be collected by mail, telephone, e-mail, fax, or personal interview. Mail questionnaires can be used to collect large amounts of information at a low cost per respondent. Respondents may give more honest answers to more personal questions on a mail questionnaire than to an unknown interviewer in person or over the phone. However, mail questionnaires lack flexibility in that they require simply worded questions. They can also take a long time to complete, and the response rate—the number of people returning completed questionnaires—is often very low.
Telephone interviewing is the best method for gathering information quickly, and it provides greater flexibility than mail questionnaires. Interviewers can explain questions that are not understood. Telephone interviewing also allows greater sample control. Response rates tend to be higher than with mail questionnaires. But telephone interviewing also has its drawbacks. The cost per respondent is higher than with mail questionnaires, people may regard a phone call as more of an inconvenience or an intrusion, and they may not want to discuss personal questions with an interviewer. In the latter part of the 1990s, laws were also passed to guard against the invasion of privacy. If a person wishes to be taken off a solicitation or interview list, companies can be sued if they persist in calling.
Personal interviewing consists of inviting several people to talk with a trained interviewer about a company's products or services. The interviewer needs objectivity, knowledge of the subject and industry, and some understanding of group and consumer behavior. Personal interviewing is quite flexible and can be used to collect large amounts of information. Trained interviewers can hold a respondent's attention for a long time and can explain difficult questions. They can guide interviews, explore issues, and probe as the situation requires. The main drawbacks of personal interviewing are costs and sampling problems. Personal interviews may cost three to four times as much as telephone interviews.
Marketing researchers usually draw conclusions about large groups of consumers by studying a relatively small sample of the total consumer population. A sample is a segment of the population selected to represent the population as a whole. Ideally, the sample should be representative so that the researcher can make accurate estimates of the thoughts and behaviors of the larger population. If the sample is not representative, it may lead the company to draw the wrong conclusions and misuse its resources.
The marketing researcher must design a sampling plan, which calls for three decisions:
In collecting primary data, marketing researchers have a choice of two main research instruments—the questionnaire and mechanical devices. The questionnaire is by far the most common instrument. A questionnaire consists of a set of questions presented to a respondent for his or her answers. In preparing a questionnaire, the marketing researcher must decide what questions to ask, the form of the questions, the wording of the questions, and the ordering of the questions. Each question should be checked to see that it contributes to the research objectives.
Although questionnaires are the most common research instrument, mechanical instruments are also used. Two examples of mechanical instruments are people meters and supermarket scanners. These techniques are not widely used because they tend to be expensive, require unrealistic advertising exposure conditions, and are hard to interpret.
The researcher must now collect the data. This phase is generally the most expensive and the most liable to error. In the case of surveys, four major problems arise. Some respondents will not be at home and will have to be replaced. Other respondents will refuse to cooperate. Still others will give biased or dishonest answers. Finally, some interviewers will occasionally be biased or dishonest.
Following are the characteristics of good marketing research
The last step in market research is the presentation of a formal plan. At this stage, the marketing researcher should summarize the plan in a written proposal to management. A written proposal is especially important when the research project will be large and complex or when an outside firm carries it out. The proposal should cover the management problems addressed and the research objectives, the information to be obtained, the sources of secondary information or methods for collecting primary data, and the way the results will help management decision making. A written research plan or proposal makes sure that the marketing manager and researchers have considered all the important aspect of the research and that they agree on why and how the research will be done.
In spite of the rapid growth of marketing research, many companies still fail to use it sufficiently or correctly. Several factors can stand in the way of its greater utilization.
James C. Koch
Revised by Deborah Hausler
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