Professional Documents
Culture Documents
Semester 3
Market Research
Assignment Set- 1
Q.1 a. Explain in detail how a marketing decision support system is helpful as a MIS tool.
Ans.: Marketing research is an important component of a formal network of information flow to marketing
management, known as a marketing information system (MIS). In the words of Philip Kotler, “a marketing
information system is a continuing and interacting structure of people, equipment and procedures designed to
gather, sort, analyze, evaluate and distribute pertinent, timely and accurate information for use by decision
makers to improve their marketing planning, execution and control.”
The figure on the next page shows the key components or subsystems of the marketing information system – 1)
The internal records system 2) The marketing research system 3) The marketing decision support system and 4)
The marketing intelligence system.
The marketing environment comprises target markets, marketing channels, competitors and macro-
environmental forces. Marketing managers use marketing information for planning, execution and control. Thus,
the marketing information system serves as a link between marketing managers and the marketing environment.
The Marketing Decision Support System (DSS) – This consists of two components – a) Advanced methods of
statistical analysis such as regression, correlation, factor, discriminant and cluster analysis techniques and b)
Computerized or mathematical models that are designed to help the marketing executive take decisions such as
establishing the optimum advertising budget, allocation of budget among various media types, evaluating the
progress of new products, or assigning sales representatives to their territories. Databases have no value if the
insights they contain cannot be retrieved. A decision support system not only allows the manager to interact
directly with the database to retrieve what is wanted, it also provides a modeling function to help make sense of
what has been retrieved. A common example of a DSS in action is that used by many industrial sales people –
especially those selling products that require significant customization. The salesperson frequently will be asked
whether or not the price and delivery time of a unique product configuration will meet or exceed a competitor’s
promises. Without leaving the customer’s office, the salesperson can plug a laptop computer into a phone jack
and begin communicating with a database stored in the company’s main computer memory. The salesperson
types in the product configuration and desired delivery data and these requirements are compared to the costs,
inventory, and assembly time contained in the data bank. In a matter of minutes, the sales person can propose a
price and delivery date – and perhaps close the sales. Each firm has to develop or adapt a model to support its
own decision problems. A sales force turnover model revealed that the most significant variable influencing the
turnover rate was the level of the appointment fee that representatives pay for initial materials. An order model is
that which explains the components of the average order and isolates the actionable variables such as the size
and timing of the catalogue and the gift incentives. A procurement model is that which helps determine how much
of a new product to buy, when to purchase it and the risks involved.
b. Give the meaning of internal records systems?
Ans.: Computer-based or manual system that transforms data into information useful in the support of decision-
making. Internal Record System can be classified as performing two functions:
(1) To generate reports-for example, financial statements, inventory status reports, or performance reports
needed for routine or non-routine purposes.
(2) A computer system designed to help managers plan and direct business and organizational operations.
Q.2a. Distinguish between market research and marketing research.
Ans.: Marketing Research:
The American Marketing Association officially defines marketing research as follows: 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 method for collecting information,
manages and implements the data collection process, analyses, and communicates the findings and their
implications.
This definition highlights the role of marketing research as an aid to decision making. An important feature is the
inclusion of the specification and interpretation of needed information. Too often, marketing research is
considered narrowly as gathering and analyzing of data for someone to use. Firms can achieve and sustain a
competitive advantage through the creative use of marketing information. Hence, marketing research is defined
as information input to decisions, not simply the evaluation of decisions that have been made. Marketing research
alone, however, does not guarantee success; the intelligent use of marketing research is necessary for business
achievement. A competitive edge is more the result of how information is used than of who does or does not have
the information.
Marketing research has many different applications and covers different areas such as the following -
Market research – This refers to research to determine the structure for a given market (e.g. the two wheeler
market), which would include gathering information on the number of players in the market, market shares of the
different players, growth rate of the market, latest trends and developments in the market, market feasibility or
potential for new products launched, etc.
b. Distinguish between primary and secondary data sources.
Ans.: Sources of Data
The sources of data may be classified into (a) primary sources and (b) secondary sources.
1 Primary Source of Data
Primary sources are original sources from which the researcher directly collects data that has not been previously
collected, e.g., collection of data directly by the researcher on brand awareness, brand preference, and brand
loyalty and other aspects of consumer behavior, from a sample of consumers by interviewing them. Primary data
is first hand information collected through various methods such as surveys, experiments and observation, for the
purposes of the project immediately at hand.
The advantages of primary data are –
1.It is unique to a particular research study
2.It is recent information, unlike published information that is already available
These different categorizations exist, because „research design‟ is a complex concept. In fact, there are different
perspectives from which any given study can be viewed. They are:
1) The degree of formulation of the problem (the study may be exploratory or formalized)
2) The topical scope - breadth and depth - of the study (a case or a statistical study)
3) The research environment: field setting or laboratory (survey, laboratory experiment)
4) The time dimension (one-time or longitudinal)
5) The mode of data collection (observation or survey)
6) The manipulation of the variables under study (experimental or ex post facto)
7) The nature of the relationship among variables (descriptive or causal).
Q.5 Lock gates Ltd. is carrying out quantitative as well as qualitative research to improve its products
image and sales in the market. The management wants to communicate its employees about the different
methods including the latest techniques available for qualitative research. Management has asked your
advice on carrying out this task. Please advice.
Ans.: Qualitative Research:
Qualitative research involves an in-depth understanding of consumer behavior and the reasons that govern that
behavior. Unlike quantitative research, qualitative research aims to understand the reasons behind various
aspects of behavior. Simply put, it investigates the why and how of decision-making, as compared to what, where
and when of quantitative research. Hence, the need is for smaller but focused samples, rather than large random
samples. Qualitative research categorizes data into patterns as the primary basis for organizing and reporting
results. Unlike quantitative research, which relies exclusively on the analysis of numerical or quantifiable data,
data for qualitative research comes in many forms, including text, sound, still images, and moving images.
In qualitative research, the method does not ask the consumer to limit his or her answers to pre-assigned
response categories. The responses are verbal rather than numerical and the respondent is asked to rate the
answer in his or her own words. If the answer is a true/false or a multiple-choice category, this is a quantitative
answer. If the answer is in terms of an essay, it is qualitative. In this method, the researcher may not even know
what the possible answers could be and in fact this method is adopted precisely for that reason. This approach
allows the researcher to discover the consumption motives, attitudes, opinions, perceptions, preferences,
experiences, actions, future intentions, etc. There are different techniques in qualitative research. Some of them
are described in the following paragraphs:
Focus Groups
A focus group is a form of qualitative research, in which a group of people is asked about their attitude towards a
product, service, concept, advertisement, idea, or packaging. Questions are asked in an interactive group setting,
where participants are free to talk with other group members. Focus groups are seen as an important tool for
acquiring feedback regarding new products, as well as various topics. In particular, focus groups allow companies
wishing to develop, package, name, or test market a new product, to discuss, view, and/or test the new product
before it is made available to the public. This can provide invaluable information about the potential market
acceptance of the product.
In traditional focus groups, a screened (qualified) group of respondents gathers in the same room. They are
screened to ensure that they are part of the relevant target market and that the group is a representative
subgroup of this market segment. There are usually 6 to 10 members in the group, and the session usually lasts
for 1 to 2 hours. A moderator guides the group through a discussion that probes attitudes about a client's
proposed products or services. The discussion is loosely structured, and the moderator encourages the free flow
of ideas. The moderator is typically given a list of objectives or an anticipated outline. He/she will generally have
only a few specific questions prepared prior to the focus group. These questions will serve to initiate open-ended
discussions.
Client representatives observe the discussion from behind a one-way mirror. Participants cannot see out, but the
researchers and their clients can see in. Usually, a video camera records the meeting so that, it can be seen by
others who were not able to travel to the site. Transcripts can be created from the videotape. If the participants
speak a different language than the clients, a simultaneous interpreter may be used.
Researchers examine more than the spoken words. They also try to interpret facial expressions, body language,
and group dynamics. Moderators may use straight questioning or various projective techniques, including fixed or
free association, story telling and role-playing. Focus groups are often used to garner reaction to specific stimuli
such as concepts, prototypes and advertising.
It is often suggested that, respondents feel group pressure to conform and this can contaminate the results.
Others hold that, by using trained and experienced moderators who appropriately manage the discussion, this
potential problem can be mitigated. Further, despite the potential for groupthink, marketers and sociologists find
that group dynamics are useful in developing new streams of thought and covering an issue thoroughly.
Focus group discussions are not representative of the total population of the target consumers, since this sample
is not representative. This group is a window to the customer’s mind, bringing to surface those things, which the
marketer may not have known about the consumer and his/ her views on many issues.
Types of focus groups: Different types of focus groups include:
i. Two-way focus group – one focus group watches another focus group and discusses the observed interactions
and conclusions.
ii. Dual moderator focus group – one moderator ensures the session progresses smoothly, while another ensures
that all the topics are covered.
iii. Dueling moderator focus group – two moderators deliberately take opposite sides on the issue under
discussion.
iv. Respondent moderator focus group – one or more of the respondents are asked to act as the moderator
temporarily.
v. Client participant focus groups – one or more client representatives participate in the discussion, either covertly
or overtly. vi. Mini focus groups – groups are comprised of 4 or 5 members rather than 8 to 12. vii.
Teleconference focus groups - telephone network is used. viii. Online focus groups – computers and Internet
network is used. Traditional focus groups can provide accurate information, and are less expensive than other
forms of traditional marketing research. There can be significant costs however, if a product is to be marketed on
a nationwide basis. It would be critical to gather respondents from various locales throughout the country, since
attitudes about a new product may vary due to geographical considerations. This would require considerable
expenditure in travel and lodging expenses. Additionally, the site of a traditional focus group may or may not be in
a locale convenient to a specific client, so client representatives may have to incur travel and lodging expenses
as well. The use of focus groups has steadily evolved over time and is becoming increasingly more widespread.
Quantitative Research :
Quantitative marketing research is the application of quantitative research techniques to the field of marketing. It
has roots in the modern marketing viewpoint that marketing is an interactive process in which both the buyer and
seller reach a satisfying agreement on the "four P's" of marketing: Product, Price, Place (location) and Promotion.
As a social research method, it typically involves the construction of questionnaires and scales. People who
respond (respondents) are asked to complete the survey. Marketers use the information so obtained to
understand the needs of individuals in the marketplace, and to create strategies and marketing plans. Both
descriptive and inferential statistical techniques can be used to analyse data and draw conclusions. It involves a
quantity of respondents, sometimes ranging in number from ten to ten million, and may include hypotheses and
random sampling techniques to enable inference from the sample to the population. Marketing research may
include both experimental and quasi-experimental research designs.
Steps involved in Quantitative Research: There are five important steps involved in the research process:
a. Defining the Problem: This involves problem analysis and problem definition i.e. – What is the problem?
What are the various aspects of the problem? What information is needed?
b. Research Design: This involves conceptualization and operationalisation i.e. – How exactly do we define the
concepts involved? How do we translate these concepts into observable and measurable behaviors?
Q.6 Dinesh is a sales analyst. Recently he was asked to undertake a training session for the newly joined
recruits. Dinesh wants to highlight the importance and methods of sales forecasting and why sales
forecasting is considered as an important marketing research technique. But, on the day of the training,
Dinesh has to attend an urgent sales meeting with the top management. You are asked to take over the
session. How will you achieve Dinesh’s training objectives? Apart from that, you also want to the recruits
to know about customer profiling, product and new product research.
Ans.: Importance of Sales Forecasting:
A retailer estimates its expected future revenues for a given period by sales forecasting. Forecasts may be
company wide, departmental, and for individual merchandise classifications. Perhaps the most important step in
financial merchandise planning is accurate sales forecasting, because an incorrect projection of sales throws off
the entire process. That is why many retailers have state-of-the art forecasting systems. Longs Drug Stores has
dramatically improved its cash flow by using a system from Event.
Larger retailers often forecast total and department sales by techniques such as trend analysis, time series
analysis, and multiple regression analysis. Small retailers rely more on “guesstimates”, projections based on
experience. Even for larger firms, sales forecasting for merchandise classifications within departments (or price
lines) relies on more qualitative methods. One way to forecast sales for narrow categories is first to project sales
on a company basis and by department, and then to break down figures judgmentally into merchandise
classifications.
External factors, internal company factors, and seasonal trends must be anticipated and taken into account.
Among the external factors that can affect projected sales are consumer trends, competitors‟ actions, the state of
the economy, the weather, and new supplier offerings. For example, Paralytics offers a patent.
Methodology to analyze and forecast the relationship among consumer demand, store traffic, and the weather.
Internal company factors that can impact on future sales include additions and deletions of merchandise lines,
revised promotion and credit policies, and change in hours, new outlets, and store remodeling. With many
retailers, seasonality must be considered in setting monthly or quarterly sales forecasts. Handy’s yearly snow
blower sales should not be estimated from December sales alone.
A sales forecast can be developed by examining past trends and projecting future growth (based on external and
internal factors). It is an estimate, subject to revisions. Various factors may be hard to incorporate when devising
forecast, such as merchandise shortages, consumer reactions to new products, the rate of inflation, and new
government legislation. That is why a financial merchandise plan needs some flexibility.
After a yearly forecast is derived, it should be broken into quarters or months. In retailing monthly forecast are
usually required. Jewelry stores know December accounts for nearly one-quarter of annual sales, while
drugstores know December sales are slightly better than average. Stationery stores and card stores realize that
Christmas card generate 60 percent of seasonal greeting card sales, while Valentine’s Day card are second with
about 25 percent. To acquire more specific estimates, a retailer could use a monthly sales index, which divides
each month’s actual sales by average monthly sales and multiplies the results by 100 is actual monthly sales and
monthly sales indexes. The store is seasonal, with peaks in late spring and early summer (for lawn mowers,
garden supplies, and so on), as well as December (for lighting fixtures, snow blowers, and gifts). Other monthly
indexes are computed similarly. Each monthly index shows the percentage deviation of that month’s sales from
the average months. A May index of 160 means May sales are 60 percent higher than average. October indexes
of 67 means sales in October are 33 percent below average.
Product research – This includes testing of new products through methods such as test marketing (introducing a
new product in one or two select markets and evaluating the response in those markets), and concept testing
(testing consumer reactions to a description of a product concept, rather than the actual product); testing of
alternative packaging concepts (e.g. iced tea in cans vs. tetra packs), brand name testing, product
attribute/feature testing (e.g. testing different combinations of product features among consumers, such as level
of sweetness and level of fizz in an iced tea drink) and assessing consumer perceptions of a product’s strengths
and weaknesses. In addition, product research also includes research on services, since service industries are
also users of marketing research.