MARKETING MANAGEMENT NOTES

MBA 1st Semester

Unit-5 By- Ruba Nasim

What Is Market Research?

Market research is the process of determining the viability of a new service or product
through research conducted directly with potential customers. Market research allows a
company to discover the target market and get opinions and other feedback from
consumers about their interest in the product or service.

This type of research can be conducted in-house, by the company itself, or by a third-party
company that specializes in market research. It can be done through surveys, product
testing, and focus groups. Test subjects are usually compensated with product samples
and/or paid a small stipend for their time. Market research is a critical component in
the research and development (R&D) of a new product or service.

How Market Research Gathers Information

Market research consists of a combination of primary information, or what has been
gathered by the company or by a person hired by the company, and secondary information,
or what has been gathered by an outside source.

1. Primary Information
Primary information is the data that the company has collected directly or that has been
collected by a person or business hired to conduct the research. This type of information
generally falls into two categories: exploratory and specific research.

Exploratory research is a less structured option and functions via more open-ended
questions, and it results in questions or issues being presented that the company may need
to address. Specific research finds answers to previously identified issues that are often
brought to attention through exploratory research.

2. Secondary Information
Secondary information is data that an outside entity has already gathered. This can include
population information from government census data, trade association research reports,
or presented research from another business operating within the same market sector.

Need and Importance of Marketing Research!

The most important task of a marketer is to get the right product at the right place with the
right price to the right person. Besides, it was also necessary to go back and find whether
consumer is getting optimum satisfaction, so that consumer remains loyal. These aspects
made it imperative for the marketers to conduct marketing research.
The following points explain the need for and importance of marketing research:
1. Identifying problem and opportunities in the market:
It helps in identifying new market opportunities for existing and new products. It provides
information on market share, nature of competition, customer satisfaction levels, sales
performances and channel of distribution. This helps the firms is solving problems.

2. Formulating market strategies:

Today, markets are no more local. They have become global. Manufactures find it difficult
to contact customers and control distribution channels. Competition is equally severe. The
consumer needs are difficult to predict. Market segmentation is a complicated task in such
wide markets. The marketing intelligence provided through marketing research not only
helps in framing but also in implementing the market strategies.

3. Determining consumer needs and wants:

Marketing has become customer-centric. However, large-scale production needs
intermediaries for mass distribution. Due to prevalence of multi channels of distribution,
there is an information gap. Marketing research helps in collecting information on
consumers from structured distribution research and helps in making marketing customer
oriented.

4. For effective communication mix:

In an era of micro- rather than mass-marketing, communication plays a vital role. Marketing
research uses promotional research to study media mix, advertising effectiveness and
integrated communication tools. Research on such aspects will help in promoting
effectively a company’s product in the market.

5. Improving selling activities:

Marketing research is used to analyse and evaluate performances of a company within a
market. It also studies effectiveness of a sales force. It helps in identifying sales territories.
Such information helps the companies in identifying areas of shortcoming in sales. It also
examines alternative methods for distribution of goods.

6. For sales forecasting:

The most challenging task for any production manager is to keep optimum levels of
inventory. However, production is undertaken in anticipation of demand. Therefore,
scientific forecast of sales is required. Marketing research helps in sales forecasting by using
market share method, sales force estimate method and jury method. This can also help in
fixing sales quotas and marketing plans.

7. To revitalize brands:
Marketing research is used to study and find out the existing brand position. It finds out the
recall value of brands. It explores the possibilities of brand extension or prospects of
changing existing brand names. The main purpose of marketing is to create brand loyalty.
Marketing research helps in developing techniques to popularize and retain brand loyalty.

8. To facilitate smooth introduction of new products:

Marketing research helps in testing the new products in one or two markets on a small
scale. This helps in finding out consumer response to new product and develop a suitable
marketing mix. It reveals the problems of the customers regarding new products. Thus, it
controls the risk involved in introducing a new product.

9. Determine export potentials:

The development in transport and communication has helped in globalization and
digitalization of world trade. This has helped in boosting the growth of international
markets. Marketing research helps in conducting market survey for export. It. collects
information on marketing environment prevailing in a country. By collecting data on
consumers from different countries, it indicates export potentials.

10. Managerial decision-making:

Marketing research plays a vital role in the decision-making processes by supplying

relevant, up-to-date and accurate data to the decision-makers. Managers need up-to-date
information to access customer needs and wants, market situation, technological change
and extent of competition.

Marketing Research Process

1. Define the Problem-The foremost decision that every firm has to undertake is to find out
the problem for which the research is to be conducted.The problem must be defined
adequately because if it is too vague, then it may result in the wastage of scarce resources
and if it is too narrow, then the exact conclusion cannot be drawn.In order to define the
problem appropriately, each firm must have a clear answer to the questions viz. What is to
be researched (content and the scope)? And Why the research is to be done (decisions that
are to be made)?

2. Develop the Research Plan– This step involves gathering the information relevant to the
research objective. It includes:

• Data Sources: The researcher can collect the data pertaining to the research problem from
either the primary source or the secondary source or both the sources of information.The
 primary source is the first-hand data that does not exist in any books or research reports
whereas the secondary data is the second-hand data which is available in the books,
journals, reports, etc.

• Research Approaches: The Secondary data are readily available in books, journals,
magazines, reports, online, etc. But the primary data have to be collected and to do so, the
following research can be conducted:
o Observational Research: The researcher can collect the information by just observing the
happenings in the market and sometimes having a friendly conversation with the
customers to know about their purchase experiences.
o Ethnographic Research: It is one of the forms of an observation research where the
researcher studies an individual in the real life situation and not under any market setup or
a lab.The purpose of this research is to know the way people live (their lifestyles), What
they do to earn their livelihood, how they consume goods and services, what they need in
their personal and professional lives etc.
o Focus Group Research: It is a form of group discussion wherein six to ten people gather and
discuss the common topic given by the moderator.A moderator is a person who conducts
the group discussion and is skilled in group dynamics. He also keeps the discussion focused
on the topic so that relevant information can be obtained from the group members.
o Survey Research: These are the descriptive research generally conducted to know the about
the customer’s knowledge about the product, their preferences, and satisfaction level. The
best way to conduct surveys is through the Questionnaires.
o Behavioral Data: The customer’s actual purchases at the store reflects its behavior and the
choice of products. Thus observing what customers are buying gives more accurate
information about the customer rather than the planned answers given by them in the
surveys.
o Experimental research: This is done to find out the cause and effect relationships. This
research is undertaken to study the effects of change in the customer’s behavior due to the
change in the product’s attributes.
• Sampling plan: Once the research approach is decided, the researcher has to design a
sampling plan and have to decide on the following:
o The sampling Unit i.e. whom, shall we survey?
o The sample size, i.e., How many units in the population shall be surveyed?
o The sampling procedure, i.e. How the respondents shall be chosen?
• Contact Methods: The researcher has to choose the medium through which the
respondents can be contacted. The respondents can be reached via emails, telephone, in
person or online.

3. Collect the Information: This is one of the most expensive methods of marketing research.
At this stage, the researcher has to adopt the methods to collect the information, he may
 find it difficult to gather the correct information because of the respondent’s biasedness,
unwillingness to give answers or not at home.
4. Analyze the Information: Once the information is collected the next step is to organize it in
such a way that some analysis can be obtained. The researchers apply several statistical
techniques to perform the analysis, such as they compute averages and measures of
dispersion. Also, some advanced decision models are used to analyze the data.
5. Present the Findings: Finally, all the findings and the research are shown to the top
management level viz. Managing director, CEO, or board of directors to make the
marketing decisions in line with the research.
6. Make the Decision: This is the last step of the marketing research, once the findings are
presented to the top level management it is up to them either to rely on the findings and
take decisions or discard the findings as unsuitable.
Thus, marketing research is done to gather all the relevant information about the market
and design the marketing strategies accordingly.

Marketing Information System

Definition: The Marketing Information System refers to the systematic collection, analysis,
interpretation, storage and dissemination of the market information, from both the internal
and external sources, to the marketers on a regular, continuous basis.

The marketing information system distributes the relevant information to the marketers
who can make the efficient decisions related to the marketing operations viz. Pricing,
packaging, new product development, distribution, media, promotion, etc.

Every marketing operation works in unison with the conditions prevailing both inside and
outside the organization, and, therefore, there are several sources ( viz. Internal, Marketing
Intelligence, Marketing Research) through which the relevant information about the market
can be obtained.
1. Internal Records: The Company can collect information through its internal records
comprising of sales data, customer database, product database, financial data, operations
data, etc. The detailed explanation of the internal sources of data is given below:

• The information can be collected from the documents such as invoices, transmit copies,
billing documents prepared by the firms once they receive the order for the goods and
services from the customers, dealers or the sales representatives.
• The current sales data should be maintained on a regular basis that serves as an aide to a
the Marketing Information System. The reports on current sales and the inventory levels
help the management to decide on its objectives, and the marketers can make use of this
information to design their future sales strategy.
• The Companies maintain several databases such as*Customer Database- wherein the
complete information about the customer’s name, address, phone number, the frequency
of purchase, financial position, etc. is saved.
*Product Database- wherein the complete information about the product’s price, features,
variants, is stored.

*Salesperson database, wherein the complete information about the salesperson, his
name, address, phone number, sales target, etc. is saved.
• The companies store their data in the data warehouse from where the data can be
retrieved anytime the need arises. Once the data is stored, the statistical experts mine it by
applying several computer software and techniques to convert it into meaningful
information that gives facts and figures.

2. Marketing Intelligence System: The marketing intelligence system provides the data about
the happenings in the market, i.e. data related to the marketing environment which is
external to the organization. It includes the information about the changing market trends,
competitor’s pricing strategy, change in the customer’s tastes and preferences, new
products launched in the market, promotion strategy of the competitor, etc.
In order to have an efficient marketing Information System, the companies should work
aggressively to improve the marketing intelligence system by taking the following steps:

• Providing the proper training and motivating the sales force to keep a check on the market
trends, i.e. the change in the tastes and preferences of customers and give suggestions on
the improvements, if any.
• Motivating the channel partners viz. Dealer, distributors, retailers who are in the actual
market to provide the relevant and necessary information about the customers and the
competitors.
• The companies can also improve their marketing intelligence system by getting more and
more information about the competitors. This can be done either by purchasing the
competitor’s product, attending the trade shows, reading the competitor’s published
articles in magazines, journals, financial reports.
• The companies can have an efficient marketing information system by involving the loyal
customers in the customer advisory panel who can share their experiences and give advice
to the new potential customers.
• The companies can make use of the government data to improve its marketing Information
system. The data can be related to the population trends, demographic characteristics,
agricultural production, etc. that help an organization to plan its marketing operations
accordingly.
• Also, the companies can purchase the information about the marketing environment from
the research companies who carry out the researches on all the players in the market.
• The Marketing Intelligence system can be further improved by asking the customers
directly about their experience with the product or service via feedback forms that can be
filled online.

3. Marketing Research: The Marketing Research is the systematic collection, organization,

analysis and interpretation of the primary or the secondary data to find out the solutions to
the marketing problems.Several Companies conduct marketing research to analyze the
marketing environment comprising of changes in the customer’s tastes and preferences,
competitor’s strategies, the scope of new product launch, etc. by applying several statistical
tools. In order to conduct the market research, the data is to be collected that can be either
primary data (the first-hand data) or the secondary data (second-hand data, available in
books, magazines, research reports, journals, etc.)
The secondary data are publicly available, but the primary data is to be collected by the
researcher through certain methods such as questionnaires, personal interviews, surveys,
seminars, etc.

A marketing research contributes a lot in the marketing information system as it provides

the factual data that has been tested several times by the researchers.

4. Marketing Decision Support System: It includes several software programs that can
be used by the marketers to analyze the data, collected so far, to take better marketing
decisions.With the use of computers, the marking managers can save the huge data in a
tabular form and can apply statistical programs to analyze the data and make the decisions
in line with the findings.
Thus, the marketers need to keep a check on the marketing environment, i.e. both the
internal (within the organization) and the external (outside the organization, so that
marketing policies, procedures, strategies can be designed accordingly.

Importance Of Marketing Information System

Marketing information system has become an essential part of the marketing decision
making process. Importance of marketing information system can be described as follows:

1. Closing Information Gap

Expansion of the geographical market coverage from local-to national-to international scale
has made marketing information system vital for day to day operation of an organization.
This expansion of the market coverage has widened the information gap between the
organization and its market.
The information need of an organization that operates at the local market level is less than
that of an organization that operates the national market level. The information need of
exporters who operate at the international level is very high, because they operate very far
from their market. Marketing information system provides information on the local, the
national and the international markets.

2.Want Creation And Delivery

Today, marketing goals have changed from understanding and satisfying buyer's needs to
want creation and delivery. It has posed a greater challenge for organization to more
accurately understand the consumer's desires located in the subconscious part of the mind.
Marketing has reached a new height where organizations strive to create, mold and modify
new desires and want among the consumers. This requires the organization to undertake
intensive consumer research activities targeted at probing deeply into the mind of
consumers. The mind-probing exercise is conducted to understand the hidden and
ungratified desires of consumer groups and stimulating these desires to take the shape of
wants for products.
In the highly competitive world, success of an organization depends on creating wants and
delivering products that specially satisfy the created wants. This new challenge has
increased the role of marketing information system for an organization.

3. Non-price Competition

Organizations, to-day believe that price competition leads to price cuts, which usually
results in a loss not only to individual organizations but to the industry as a whole.
Organizations prefer to compete over non-price factors, such as product differentiation,
image, service and promotion.
Implementation of non-price competition requires a variety of information on consumers'
awareness and attitude towards the organization's and competitors' products, product
positions in the market, the services offered by competitors, effectiveness of promotional
tools etc. Such vital information is provided to the decision makers by the marketing
information system.
4.Environmental Monitoring And Scanning

Organizations need to constantly monitor the movements in the environmental forces,

particularly the economic, competitive, technological and political environment of the
market. Changes in any of the environmental forces bring challenges and new
opportunities to the organization.
Environmental scanning process collects vital information on the development taking place
in the environment and prepares the organization to face the threats and capitalize on the
new opportunities. Environmental monitoring and scanning are integral parts of the
marketing information system.

5. Marketing Planning

Marketing planning involves a detailed planning of the marketing activities in relation to the
needs of the target markets. In a competitive market, the success of and organization
depends on adequate and accurate marketing planning. Planning requires variety of
information on the market including demand estimates and sales forecasts, which are
supplied by the marketing information system.

6.Evaluation And Control

Regular evaluation and control of the marketing program are important activities of the
marketing management process. the organization needs to know to what extent its
program has been successful, to what level it has met the desired targets, in what forms
modifications and corrections are necessary and so on. Such information is provided by the
marketing information system through regular market monitoring and occasional market
research activities.
Consumer Behavior: Introduction, Applications in Marketing

Consumer behavior covers a broad variety of consumers based on diversity in age, sex,
culture, taste, preference, educational level, income level, etc. Consumer behavior can be
defined as “the decision process and physical activity engaged in evaluating, acquiring,
using or disposing of goods and services.”

The study of Consumer Behavior helps in understanding how individuals make decisions to
spend their available resources like time, money, and effort while purchasing goods and
services.

Principles of consumer behavior

Analyzing Market Opportunity

Consumer behavior helps in identifying the unfulfilled needs and wants of consumers. This
requires scanning the trends and conditions operating in the market area, customer’s
lifestyles, income levels and growing influences.
 Selecting Target Market

The scanning and evaluating of market opportunities helps in identifying different target
markets. Identifying these groups, learning how to make buying decisions enables the
marketer to design products or services as per the requirements.

Marketing-Mix Decisions

Once the unfulfilled needs and wants are identified, the marketer has to determine the
precise mix of four P’s, i.e., Product, Price, Place, and Promotion.

Product

A marketer needs to design products or services that would satisfy the unsatisfied needs or
wants of consumers.

Price

The second important component of marketing mix is price. Marketers must decide what
price to be charged for a product or service, to stay competitive in a tough market.

Place

The next decision is related to the distribution channel, i.e., where and how to offer the
products and services at the final stage.

Promotion

Promotion deals with building a relationship with the consumers through the channels of
marketing communication. Some of the popular promotion techniques include advertising,
personal selling, sales promotion, publicity, and direct marketing and selling.

NATURE OF CONSUMER BEHAVIOUR

Consumer behavior is multidimensional in nature and it is influenced by the following

subjects:

• Psychology is a discipline that deals with the study of mind and behavior. Psychology plays
a vital role in understanding how consumers behave while making a purchase.
• Sociology is the study of groups. When individuals form groups, their actions are
sometimes relatively different from the actions of those individuals when they are
operating individually.

• Social Psychology is a combination of sociology and psychology. It explains how an

individual operates in a group. Opinions of peers, reference groups, their families and
opinion leaders influence individuals in their behavior.

• Cultural Anthropology is the study of human beings in society. It explores the development
of central beliefs, values and customs that individuals inherit from their parents, which
influence their purchasing patterns.

• Economics is concerned with consumer behavior, the behavior that people seek to acquire
goods and services that will satisfy their needs and wants.

Changing face of consumer behavior under the scenario of Globalization

Consumers have more purchasing choices than ever before thanks to the globalization
movement. The Internet has opened new opportunities for browsing from the comfort of
home, and there are products available from all over the world. Globalization has changed
consumer buying behavior in ways that could never have been anticipated.

Globalization Defined

Globalization is the economic trend that began in the latter part of the 20th century. It is
free trade allowed, to increase the competition around the world. The benefits of
globalization have been an increase in product variety for consumers, lower prices and
improved quality of products.

Globalization Drawbacks

While the globalization trend has benefited consumers in many ways, but it is not without
drawbacks. Competition generally tends to create better-quality products, but that is not
always the case. Also, foreign-made goods may not be subject to the same standards as
American-made goods. And while the growth of product availability has given American
buyers many more choices, the loss of jobs due to globalization has made stretching the
consumer dollar very difficult for many.
 Consumer behavior effected by Technological Changes

Consumer behaviour as we all know is influenced by varied factors. But in recent years, the
market has seen a tremendous shift in the consumer behaviour. It has become more
complex and the reason for the same can be attributed to technological advancement.

1. Stay Connected

The majority of consumers today are well informed and active online. For this reason,
companies need to adopt the latest technologies so as to engage their active and informed
consumers on the platform they are available such as Instagram or twitter.

2. Fulfill Consumer Expectations

With the modern technological revolution of smart phones and eCommerce, consumers
can go for the product they want at any given time. Today’s consumers have set higher
standards of expectations and not acceptance, pertaining to customer service.

The modern consumer is fully aware of his or her purchasing power and will exercise it
whenever they are dissatisfied with a product or service. For instance, if a consumer wants
a specific product at a specific time and you fail to deliver it, he might opt to visit other
online suppliers who are ready to meet his or her need.

3. Opt for Newer and Latest communication Channels

The modern social media platforms with live chat options makes it mandatory for a
company to answer the consumer queries immediately as not doing so would severely
affect the brand image of the company as millions of other consumers also have easy
access to the same . Winning over consumers is not easy; it requires having strategies in
place along with adoption of the latest technologies.

New Retailing Environment

Today, social media has defeated traditional shopping habits by sparking an active online
recommendation culture. Now, consumers easily research products on blogs or ecommerce
reviews. They frequently tap into their online network of trusted advisors for firsthand
insights on brands they want to try.

Latest research has shown that new technology is increasing the pressure on retailers to
enhance levels of customer service as they compete for tech-savvy customers. The study
shows that social media, text message responses and online instant messaging are rapidly
replacing telephone services for consumers looking to reach customer service teams, and
businesses increasingly have to ensure that their staff has the knowledge and skills to
manage such platforms effectively.
 Consumer Behavior in electronic markets: opportunities, issues and challenges

With the evolution of online communication through internet, customers now see online
advertisements of various brands. It is fast catching up with the buying behavior of
consumers and is a major source of publicity for niche segments and also for established
brands. This is the new way of digital revolution and businesses worldwide have realized
their worth.

Online Customer Behavior Process

Stage 1 (PRE PURCHASING STAGE)

The most useful characteristic of internet is that it supports the pre-purchase stage as it
helps customers compare different options.

Stage 2 (PURCHASING STAGE)

During the purchasing stage, product assortment, sale services and information quality
seem to be the most important point to help consumers decide what product they should
select, or what seller they should buy from.

Stage 3 (POST PURCHASE STAGE)

Post-purchase behavior will become more important after their online purchase.
Consumers sometimes have a difficulty or concern about the product, or they might want
to change or return the product that they have bought. Thus, return and exchange services
become more important at this stage.

Factors of Online Customer Behavior

The first elements to identify are factors that motivate customers to buy products or
services online. They are divided into two categories − external factors and internal factors.

• The External Factors are the ones beyond the control of the customers. They can divide
into five sectors namely demographic, socio-economic, technology and public policy;
culture; sub- culture; reference groups; and marketing.
• Internal Factors are the personal traits or behaviors which include attitudes, learning,
perception, motivation, self image.
• The Functional Motives is related to the consumer needs and include things like time,
convenience of shopping online, price, the environment of shopping place, selection of
products etc.
• The Non-Functional Motives related to the culture or social values like the brand of the
store or product.
Issues in Consumer Behavior

Consumerism has been identified as the root cause of the emerging issues in consumer
behavior. Consumerism is used in context of advancement of consumer oriented
tendencies, marked by availability of a variety of manufactured consumer goods and active
advertising of the products in various media.

To offer products and services that are in demand, today’s marketers need to identify the
factors that influence buying behavior. Some of these factors are mentioned below −

1. Quality

Consumers are now interested in items that deliver a variety of features along with quality.
Today consumers look for products that are long lasting and reliable. This feature has
increased the time invested by the manufacturers in choosing the quality of components to
be used in making these products.

2. Added Advantage
Today consumers want to experience something new and are inclined to shop from the
place where they get added advantages. For instance a store offering special discount.
According to ConsumerAffairs.com, 35% of consumers state that they are more likely to
shop at a store where special promotions or discounts are available.

3. Marketing Apps

Today cell phones create another venue for consumers to do a variety of things. Cell
phones today are not only used to make phone calls or send messages but to perform a
variety of other functions, such as shop and surf the Internet.