MODULE 5

MARKETING RESEARCH

Marketing research is a systematic process to define marketing opportunities and

problems. Through marketing research, one can find the information required to
address these issues and design the method for collecting information.
Marketing research manages and implements the data collection process, analyses the
results, and communicates the findings and their implications.

According to American Marketing Association (AMA), marketing research is “the

systematic gathering, recording, and analyzing of data about problems relating to the
marketing of goods and services.”

According to Philip Kotler, “marketing research, is systematic problem analysis, model

building and fact-finding for the purpose of improved decision making and control in
the marketing of goods and services.”

FEATURES OF MARKETING RESEARCH:

 Clear Goals:
Marketing research begins with a problem and attempts to find measures to
solve that problem. So the primary goal of marketing research is to find out
solution for the problems identified.
 Continuous Process:
The process of marketing is continuous in nature. The reason is that there is no
end for the problems in marketing. After solving one problem, another arises.
Thus, research is required throughout the course of marketing.
 Systematic:
Marketing research is a systematic process. It utilises well designed method to
collect the data and analyse the results. Marketing research adopts systematic
problem solving which ascertains crucial variables in the problem and studies
relationships between them.
 Wide scope:
Marketing research deals with the entire aspects of marketing. Introduction of
new products, identification of suitable markets, selection of appropriate
strategies, study of market competition and consumer preferences, introduction
of suitable advertising and sales promotion strategies are some of the areas
covered by marketing research.
 Beneficial to the company and the Consumers:
Marketing research is helps to solve the problems and choose the best
marketing strategies. Thus, it is highly useful for improving the performance
and profits of the company. Consumers get best goods and more satisfaction as
a result of marketing research.
 Inputs for Decision Making:
Marketing research is helps to solve the problems and choose the best
marketing strategies. Thus, it is highly useful for improving the performance

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 and profits of the company. Consumers get best goods and more satisfaction as
a result of marketing research.
 Applied Research:
Marketing research is an applied area of research. It uses the various
techniques of research in marketing for solving specific marketing problems.

OBJECTIVES OF MARKETING RESEARCH

 To facilitate firms to formulate objective and prompt marketing
decisions.
 To provide valuable piece of information, facts and figures to managers
so that they can effectively discharge marketing functions such as
development of products, formulation of pricing, functions such as
development of products, formulation of pricing,, distribution and
promotion strategies.
 To help organisations to solve various marketing problems.
 To identify best opportunities and choose best marketing programmes
and strategies.
 To help organisations to modify their existing products.
 To help organisations explore new uses and new markets for existing
products.
 To support organisations in modifying their products, marketing
programmes and strategies, in accordance with the changes’in business
environment.

SCOPE OF MARKETING RESEARCH

1. Product Research:
This includes development and testing of new products, improving the existing
products.
2. Customer Research:
Customer research covers areas like customer buying behaviour, the economic, social,
cultural, personal and psychological influences of buying.
3. Sales Research:
It involves decisions concerning selection of location, channels of distribution, sales
force motivation and compensation. The purpose of sales research is to effectively
reaching the target customers.
4. Promotion Research:
promotion research covers all efforts by the companies to communicate the products
and services to customers. This includes advertising, publicity, public relations and
sales promotion.

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PROCESS OF MARKETING RESEARCH
1. Identification of the problem:
The first step in the marketing research process is to identify the specific marketing
problem. The problem may be
development of new products, identification of
marketing needs or establishment of the distribution network. The problem must be
clear and specific for the smooth conduct of the research.
2. Clarification of the problem:
The initial problem identified may be too large or broad in scope. In such situations,
the researcher has to clarify and define the problem. The researcher must understand
the problem correctly. He must find out the scope of the problem, the type of
information needed, etc. If the problem is not defined properly, then it will result in
waste of money and resources.
3. Formulation of Objectives:
Objectives are the goals set out by the researcher to attain through the study.
Research begins with a problem and attempts to find measures to solve that problem.
So the primary objective of every research is to find out the solution for the problem.
For this, the researcher has to clearly formulate the major objectives and the direction
of his research.
4. Preparation of the Research Design:
Research design is the conceptual structure within which research would be
conducted. The function of research design is to provide for collection of relevant
information with minimal expenditure of effort, time and money. Every research
adopts a definite course of action to explore the measures to solve the problem
undertaken by it.
5. Determining the Sample Design:
Researchers usually draw conclusions about large population by taking a sample.
Sample design is an important area in the process of marketing research. A Sample is
a segment of the population selected to represent the population as a whole.
Appropriate sample design improves the quality ol marketing research.
6. Collection of Data:
Once the research design is prepared, the actual study begins with the collection of
data. The collection of data is a critical step in providing the information needed to
answer the research question. A researcher gathers data relevant to the research
problem. The data includes reports, records, statements, opinions, events,
happenings, and observations.
7. Analysis of the Data:
The worth of the collected data relies on the method applied by the researcher to
analyse it in order to wheedle out its exact meaning. Analysing data involves a number
of operations which are performed with the purpose of summarising the collected data
and organising these in a manner that they answer the research questions.
8. Reporting the Findings:
Writing the report is the last, and for many, the most difficult step of the research
process. The report informs the world, the content and findings of research. The report
should be written in an academic style. Language should be formal and simple.

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9. Follow up:
The last step in a marketing research process is to do a Mow up. this stage, the
marketing firm makes changes in the product, price, marketing policies, etc. as per
the recommendations of the research report.

ADVANTAGES OF MARKETING RESEARCH

1. Marketing research provides information on various aspects of marketing. It suggests

relative strengths and weakness of the company.
2. Marketing research gives accurate and current information about the marketing
environment.
3. Marketing research enables a manufacturer to introduce appropriate sales promotion
techniques.
4. It is useful to a firm in making sales forecasts for its products.
5. It is useful in ascertaining the reputation of the firm and its products.
6. It is helpful to the management in fixing the actual prices of the products.
7. It helps to know the exact relationship between the product brand and needs and
preferences of the consumers.
8. It helps the manufacturers to know the best way of approaching the potential market.
9. It helps the manufacturer to find out the drawbacks of the existing product and take
measures to improve it.
10. It helps the manufacturer to adjust production according to the conditions of demand.
11. Marketing research identifies the deficiencies of product, price and promotion.

LIMITATIONS OF MARKETING RESEARCH

1. Marketing research is highly expensive.
2. It is a complex and time consuming process.
3. The problems of relevance and accuracy as a result of the use of secondary data in
marketing research.
4. It gives only suggestions not concrete solutions to marketing problems.
5. Lack of qualified and experienced personnel to conduct marketing research.

MARKETING RISK
Risk is the possibility or chance of loss. In marketing, there are many known and unknown
risk factors. The existence of these risk factors causes deviations in the earnings (return) from
the marketing activities. The chance of loss in marketing activities is known as marketing risk.

REASONS or SOURCES OF MARKETING RISKS

1. Obsolescence of Technology :
This is one of the major risk factors in marketing. A product or service may become obsolete or
out of date as a result of a shift in technology. This type of risk is high in the case of
electronics and IT industry where technology changes very fast.
2. Changes in Needs of Consumers:
The process of marketing begins with the identification of needs. Change in the needs of
consumers is a major risk factor in marketing. In such situations, the consumers will prefer
some other products in the place of existing products.

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3. Brand Risk:
The term brand refers to a type of product manufactured by a particular company under a
particular name. Brand risk means anything that threatens the existence of a brand in the
market. Introduction of new brands, competitive pricing and innovations may changes in the
brand preferences of consumers.
4. Advertising Risk:
The major risk in advertising is the mismatch between the cost of advertisement and sales.
Companies are spending huge amount of money in expectation of increased sales. But,
expectations may go when the actual sales are lower than the cost incurred for advertising.
5. Economic Risk:
The changes in the economic conditions may cause several risks in marketing. In an
inflationary situation, the cost of production and marketing rises. This reduces the profitability
of the marketing activities. In the case of deflation, sales declines as a result of the decline in
the purchasing power of consumers.
6. Political Risk:
Changes and uncertainties in the political environment pose threats to the marketing
activities. The policies of the political parties and the system of governance influence the
marketing functions.
7. Legal Framework:
The marketing activities are greatly influenced by the legal framework. The laws, statutes and
regulations of the enforcement agencies may impose restrictions on marketing activities which
obstruct companies from attaining the anticipated results.

MARKETING AUDIT
Marketing audit is a programme to evaluate marketing activities and ensure that they are
going in the right direction. The audit process helps companies to analyse and marketing
strategies, activities, goals and results. A marketing audit analyses the business objectives and
understands and helps the management to make decisions on their future marketing
direction. Marketing audit is an extensive, systematic, independent and regular examination of
a company’s marketing activities.

Marketing audit evaluates marketing environment, objectives, plans, policies and strategies of
a company. After evaluation, it identifies various problems, and weaknesses faced by the
company in its marketing activities. It is usually conducted to suggest measures solve
problems in marketing. It tries to explore new marketing opportunities for a company.

CHARACTERISTICS OF MARKETING AUDIT:

1. It is a comprehensive process which covers all the marketing activities of a company.
2. It is a systematic process which strictly follows the standard procedures of auditing.
3. It is an independent process conducted by an external person.
4. It is a periodic process which is conducted regularly at frequent intervals.
5. It is a critical evaluation of the marketing activities of a firm.
6. It tries to find out the strengths and weaknesses of the marketing strategies adopted
by the firm.

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OBJECTIVES OF MARKETING AUDIT:
1. To evaluate the marketing activities in order to ensure that they are going in the right
direction.
2. To improve marketing performance.
3. To effectively face the challenges of competition.
4. To evolve appropriate marketing strategies.
5. To improve profitability.
6. To modify the product, price, place and promotion in accordance with the changes in
marketing environment.

STEPS IN MARKETING AUDIT

1. Setting the Objectives and Scope:

The first step in marketing audit is to study the nature of the marketing operations and
setting the audit objectives. The auditor has to prepare a plan of audit with specific objectives,
scope, data sources, and time period for the audit.
2. Evaluation of Marketing Activities:
This is the working phase of marketing audit. The auditor critically examines the marketing
activities performed by the company and finds out the drawbacks and weaknesses.
3. Preparing and Presenting the Report:
In this stage, the auditor will develop conclusions based on his audit and prepares a detailed
report containing some valuable suggestions and recommendations. A clear report of audit is
highly essential for meeting the objectives of marketing audit. A good audit with unclear report
makes the process useless. After the preparation of the audit report, it has to be submitted to
the top management for the follow-up actions.
4. Follow-up Actions:
In this stage, the marketing managers, take the necessary steps to implement the
recommendations and suggestions laid down in the audit report. The entire audit process will
be a waste of time and resources, if the management fails to make the follow-up actions.

TYPES OF MARKETING AUDIT

1. Marketing Environment Audit:
In this audit, the auditor conducts a detailed examination of the environmental factors of
marketing. The environment of marketing comprises macro and micro environments. The
macro environment factors include demographic factors (age, race, sex, economic status. level
of education, income level and employment of people, technology, social and_ cultural factors.
Micro environment factors include customers suppliers, market intermediaries and
competitors.
2. Marketing Strategy Audit:
It covers evaluation of the various marketing strategies implemented by the company. The
strategy audit helps to find out the strengths and weaknesses of the marketing strategies
adopted by organisation.
3. Marketing Organisation Audit:
It covers a critical examination of the organisational structure and operational efficiency of the
company doing marketing activities.

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4. Marketing Systems Audit:
In this audit, the auditor examines the various systems of marketing such as the marketing
information system, marketing planning system, marketing control system and the system for
developing new products.
5. Marketing Productivity Audit:
The auditor evaluates the productivity or output of marketing such as the profitability analysis
and cost efficiency analysis.
6. Marketing Function Audit:
It is a detailed examination of all the functions of marketing. It includes evaluation of the
product, price, promotion, place and people.

ADVANTAGES OF MARKETING AUDIT:

1. Detection of Problems in Marketing:
Marketing audit helps to discover the shortcomings of the marketing activities. It helps to
make a review of the programmes, policies and strategies of marketing.
2. Modifications and Corrections:
gives valuable inputs for modifications and corrections of marketing activities. Auditing locates
failures and mistakes of the strategies adopted by the organisation.
3. Clear Understanding of the Present:
Auditing is a fact finding mechanism. It helps a firm to have a clear understanding of the
current state of marketing.

4. Improves Marketing Efficiency:

The marketing efficiency of an organisation can be improved through auditing. The
opportunities for corrections through auditing help to replace weak marketing programmes
and policies with right ones. This ultimately improves the efficiency of an organisation.
5. Effective Tool for Performance Measurement:
A marketing audit is a careful examination and evaluation of marketing practices. It acts as an
effective tool for performance measurements and a framework for formulating effective
marketing strategies.

LIMITATIONS OF MARKETING AUDIT:

1. Marketing audit is costly and time consuming process.

2. The success of marketing audit dependence on the independency and expertise of the
auditor. If the auditor is biased and does not possess the required skills, then the audit
becomes a waste exercise.
3. Marketing audit meets its objectives only after the follow-up actions. If the recommendations
of the audit are not taken into account, it is of no use to the organisation.
4. Marketing audit is only a tool used in the analysis of marketing function. There is no
guarantee for complete and perfect (error free) analysis of the marketing activities.
5. Marketing audit is a serious process which requires a systematic programme. Incomplete
and weak audit programme reduces the reliability of marketing audit.

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