Week 2

Marketing Research & Demand Forecasting

Lecture Outline

Marketing Research: Meaning and Scope

Sources of Data Collection

The Marketing Research Process
Demand Forecasting and Measurement
Marketing Research is emerging as a Vital Tool in the Value Delivery
Endeavour

Learning Outcomes

To be able to identify what constitutes good marketing research.

To understand how companies more accurately measure and forecast
demand.

To able to develop estimates of market potential and sales forecast.

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.
"Marketing research is the function that links the consumer, customer, and public
to the marketer through information - information used to identify and define
marketing opportunities and problems; generate, refine, and evaluate marketing
actions; monitor marketing performance; and improve understanding of
marketing as a process. Marketing research specifies the information required to
address these issues, designs the methods for collecting information, manages and
implements the data collection process, analyzes, and communicates the findings
and their implications.
American Marketing Association

Market Research

'Market' research is simply research into a specific market. It is a very narrow

concept. 'Marketing' research is much broader. It not only includes 'market'

research, but also areas such as research into new products, or modes of
distribution such as via the Internet.

We put it simply:
Marketing research into the elements of the marketing mix, competitors, markets,

and everything to do with the customers.

The Marketing Research Process

Define the problem

Develop research plan
Collect information
Analyze information
Present findings

Make
decision

Step 1: Define the Problem

Define the problem:

It should not be too broad or too narrowly defined.
If it too vague it will lead to wastages of resources. And if too narrow it
will lead to collection of inadequate data and information required to take an
effective decision.
Specify decision alternatives: What is to be researched and why it is to be
researched.
State research objectives: Defining the problem and research objectives must be
in reference to the end result which organization is looking for

Step 2: Develop the Research Plan

Data
Sources

Research
Approach

Research
Instruments

Sampling
Plan

Contact
Methods

Research Approaches
Observation
Ethnographic
Focus Group
Survey
Behavioral Data
Experimentation

Focus Group in Session

Research Instruments

Questionnaires
Questionnaire Dos and Donts
Ensure questions are free of
bias
Make questions simple
Make questions specific
Avoid jargon
Avoid sophisticated words
Avoid ambiguous words

Avoid negatives
Avoid hypotheticals
Avoid words that could be
misheard
Use response bands
Use mutually exclusive
categories
Allow for other in fixed
response questions

Question TypesDichotomous
In arranging this trip, did you contact Indian Airlines?
Yes No
Question TypesMultiple Choice
With whom are you traveling on this trip?
No one
Spouse
Spouse and children
Children only
Business associates/friends/relatives

An organized tour group

Question TypesLikert Scale

Indicate your level of agreement with the following statement: Small airlines
generally give better service than large ones.
Strongly disagree
Disagree
Neither agree nor disagree
Agree
Strongly agree

Question TypesSemantic Differential

Indian Airlines
Large ...Small
Experienced.Inexperienced
ModernOld-fashioned
Question TypesImportance Scale
Airline food service is _____ to me.
Extremely important
Very important
Somewhat important
Not very important
Not at all important

Question TypesRating Scale

Indian Airlines food service is _____.
Excellent
Very good
Good
Fair
Poor
Question TypesCompletely Unstructured
What is your opinion of Indian Airlines?

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Question TypesWord Association

What is the first word that comes to your mind when you hear the following?
Indian-----------------------------------------------------------------------------------------

Travel---------------------------------------------------------------------------------------Airline--------------------------------------------------------------------------------------Question TypesSentence Completion

When I choose an airline, the most important consideration in my decision is:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Question TypesStory Completion
I flew Indian Airlines a few days ago. I noticed that the exterior and interior of
the plane had very bright colors. This aroused in me the following thoughts and
feelings. Now complete the story.

Question TypesPicture
(Empty Balloons)

Question TypesThematic Apperception Test

Make up a story that reflects what you think is happening in this picture

Qualitative Measures

Word Association
Projective Techniques
Visualization
Brand Personification
Laddering

Technological Devices

Galvanometers
Tachistoscope

Eye cameras
Audiometers
GPS

Sampling Plan

Sampling Unit: Who is to be surveyed?

Sample Size: How many people should be surveyed?

Sampling Procedure: How should the respondents be chosen?

Types of Samples
Probability Samples

Non-Probability Samples

Simple random

Convenience

Stratified random

Judgment

Cluster

Quota

Contact Methods

Mail Questionnaire

Telephone
Interview
Personal
Interview
Online
Interview

Marketing Decision Support System

Marketing Decision Support System is a coordinated collection of data,
systems, tools, and techniques with supporting hardware and software by which
an organization gathers and interprets relevant information from business and
environment and turns it into a basis for marketing action.

Barriers Limiting the Use of Marketing Research

A narrow conception of the research
Uneven caliber of researchers
Poor framing of the problem
Late and occasionally erroneous findings
Personality and presentational differences

Typical Problems in Rural Research

Low literacy levels require innovations in questionnaire design scales
Wide geographical dispersion requires long travels
A large number of languages and dialects, requiring multiple translations
Non-availability of working population at normal places of residence
Poor access to women respondents
Villages layout based on caste lines, requiring innovative sampling

Characteristics of Good Marketing Research

Scientific Method

Research Creativity

Multiple Methods

Interdependence

Value and Cost of Information

Healthy Skepticism

Ethical Marketing

Demand forecasting
Accurate demand forecasting is essential for a firm to enable it to produce the
required quantities at the right time and arrange well in advance for the
various factors of production, viz., raw materials, equipment, machine
accessories, labour, buildings, etc.

In a developing economy like India, forecasting seems more important. However,

the situation is changing rapidly.
The National Council of Applied Economic Research.
Factors involved in Demand Forecasting

How far ahead ?

a. Long term e.g. petroleum, paper, shipping. Tactical decisions. Within the
limits of resources already available.
b. Short-term e.g. clothes. Strategic decisions. Extending or reducing the
limits of resources.

2. Undertaken at three levels:

a.

Macro-level

b.

Industry level e.g. trade associations

c.

Firm level

3. Should the forecast be general or specific (product-wise)?

4. Problems or methods of forecasting for new vis--vis well established
products.

5. Classification of products producer goods, consumer durables,

consumer goods, services.
6. Special factors peculiar to the product and the market risk and

uncertainty. (e.g. ladies dresses)

Purposes of forecasting
Purposes of short-term forecasting
a.

Appropriate production scheduling.

b.

Reducing costs of purchasing raw materials.

c.

Determining appropriate price policy

d.

Setting sales targets and establishing controls and incentives.

e.

Evolving a suitable advertising and promotional campaign.

f.

Forecasting short term financial requirements.

Purposes of long-term forecasting

a.

Planning of a new unit or expansion of an existing unit.

b.

Planning long term financial requirements.

c.

Planning man-power requirements.

The Measures of Market Demand

Potential
Market

Available
Market

Target
Market

Penetrated
Market

Ninety types of Demand Measurement

Companies can prepare as
estimates.

many demand as 90 different types of demand

Determinants of Demand
Non-Durable Consumer Goods:
A. Purchasing Power disposable personal income (personal income direct
taxes and other deductions). Published by C.S.O.

Discretionary income :Disposable income less (a) imputed income and income in
kind, (b) major fixed outlay payments, (c ) essential expenditures such as food and
clothing.

B. Price.
C. Demography: d= f (Y, D, P)
E.g., cotton cloth vs. cost of food grain.

2. Durable Consumer Goods:

A. Choice Between (a) using the goods longer by repairing it, or

(b) disposing it off and replacing it with a new one.

(c) Require special facilities for their use, e.g., roads for automobiles.
B. Household demand vis--vis individual demand.
C. Family characteristics.
D. Total demand consists of

a. New-owner demand and, b. Replacement

demand (scrappage rate)

E. Price and credit conditions.
3. Capital goods: used for further production. Demand will depend upon the
specific markets they serve and the end uses for which they are bought.
Data required for estimating the demand for capital goods:
a.

The growth prospects of the user industries.

b.

The norm of consumption of capital goods per unit of installed capacity.

c.

The velocity of their use.

How Can We Estimate Current Demand?

Total Market Potential

Area Market Potential

Market Buildup Method
Multiple-Factor Index Method

Estimating Future Demand

Survey of Buyers Intentions
Composite of Sales Force Opinions

Expert Opinion
Past-Sales Analysis
Market-Test Method

For You To Discuss?

What is the best type of Marketing Research?

Take a position:
1.

Marketing research should be Quantitative.

or

2.

Marketing research should be Qualitative.