Market Research vs Marketing Research

Market Research
Researching the immediate competitive environment of the marketplace, including customers, competitors, suppliers, distributors and retailers Marketing Research all the above plus: Includes

- companies and their strategies for products and markets

- the wider environment within which the firm operates (e.g. political, social, etc)

Market(ing) Research

The systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the organisation

Non-ad. research agencies Ad. agencies

Other

4% 5% 4%

Spending on Market Research

Retailers and wholesalers

9% 44% 13%
Manufacturing Companies

Public sector

21%

Service companies

The Ten Most Common Market Research Activities

Activity Percentage of companies doing activity*
Directly relevant to NPD

Determination of market characteristics

Measurement of market potential Market share analysis Sales analysis Studies of business trends Short range forecasting Competitive product studies Long range forecasting Pricing studies Testing existing products 92 91 89 87 87 83 80

97
97 97

Top 10 market research activities

Market Measurement New Product development/concept testing Ad or brand awareness monitoring/tracking Customer Satisfaction (inc Mystery Shopping) Usage and Attitude Studies Media Research & evaluation Advertising developing and pre-testing Social Surveys for central/local government Brand/corporate reputation Omnibus Studies 18% 14% 13% 10% 7% 6% 5% 4% 4% 3%

Market Research Budgets

1 - 2% of company sales = total budget

of this:
50% - 80% in-house
85% of Fortune 500 companies have internal departments

20% - 50% externally

1. Syndicated - service research firms 2. Custom research firms

3. Specialty research firms

External Market Research Firms

Types
1. Syndicated - service research firms

Description
Data gathered periodically from customers and distribution channels and then sold to clients (e.g. A.C. Nielson) Hired to carry out specific research projects for clients. The firm conducts the survey and the results are the property of one client only (e.g. Research International) Firms providing a specialised service to other market research firms, e.g. a firm selling field interviewing services (e.g. Continental Research)

2. Custom market research firms

3. Specialty line research firms

Why Conduct Market Research in New Product Development?

- The product must appeal to the customer (however widely defined)

- Timely market research can help you mould the product to the consumers need/wants - Market research tend to point out successes and failures before products are launched for real - As a result, it can save you money and time

Types of Market Research

By Source By Methodology By Objectives

- Primary - Secondary

- Qualitative - Quantitative

- Exploratory - Descriptive

- Causal
(or experimental)

Types of Market Research: By Source

Primary Secondary

Collection of data specifically for the problem or project in hand Based on data previously collected for purposes other than the research in hand (e.g. published articles, government stats, etc)

Types of Market Research: By Methodology

Qualitative
Type of Question Sample Size Information per respondent Probing Small High

Quantitative
Simple Large Low(ish)

Questioners skill
Analysts skill Type of analysis

High
High Subjective, Interpretative

Low(ish)
High Objective, Statistical High Choices Frequency Demographics

Ability to replicate Areas probed

Low Attitudes Feelings Motivations

Types of Market Research: By Objective

Exploratory Preliminary data needed to develop an idea further. Eg outline concepts, gather insights, formulate hypotheses Describe an element of an ideas precisely. Eg who is the target market, how large is it, how will it develop Test a cause and effect relationship, e.g. price elasticity. Done through experiment

Descriptive

Causal

The Market Research Process

1. Defining the problem and objectives 2. Developing the research plan 3. Collecting the information 4. Analysing the information 5. Presenting the findings

Steps
Distinguish between the research type needed e.g. - exploratory - descriptive - causal Decide on - budget - data sources - research approaches - research instruments - sampling plan - contact methods Information is collected according to the plan (N.B. it is often done by external firms) Statistical Overall conclusions manipulation of to be presented the data collected rather than (e.g. regression) overwhelming or subjective statistical analysis of focus methodologies groups

Comments
If a problem is vaguely defined, the results can have little bearing on the key issues The plan needs to be decided upfront but flexible enough to incorporate changes/ iterations This phase is the most costly and the most liable to error Significant difference in type of analysis according to whether market research is quantitative or qualitative Can take various forms: - oral presentation - written conclusions supported by analysis - data tables

Potential Problems with Market Research

1.
2. 3.

When and how not to do it

Problems with research buyers vs suppliers Frequent technical pitfalls

4.

Problems with traditional market research

When and How Not to Conduct Market Research

Occasion Lack of resources Comments/Example If quantitative research is needed, it is not worth doing unless a statistically significant sample can be used Where psychographic data (for example) is used which wont help the company form firm actions When research is used only as a rubber stamp of a preconceived idea When research results come too late to influence the decision If a product is in the decline phase (e.g. records) theres little point in researching new product varieties Market research cannot be helpful unless it is probing a particular issue The expected value of the information should outweigh the cost of gathering the data

Research results not actionable Closed mindset Late timing re: process Poor timing re: marketplace Vague objectives Cost outweighs benefit

Cost/Benefit of Market Research: Rule of Thumb matrix C = Cost

B = Benefit

B>C (?) Large Market Size C>B Small

(e.g. replacement screw for spectacles) (e.g. new brand of frozen fish)

B>C
(e.g. High Definition T.V.)

B>C (?)
(e.g. computer aided metal stamping machines)

Low

High

Expected Profit Margin

Problems With Research Buyers vs Suppliers

Buyer Narrow concept of research Research used tokenistically Unrealistic view of timeframe Suppliers Variable quality of market researchers

Market researchers not sufficiently demanding

Technical problems

Frequent Technical Pitfalls

1. 2. 3. Poor definition of problem Designing the questionnaire Sample size small

4.

Data collection inadequate

Issues to consider in questionnaire design

Sensitivity of question Bias in formulation Cultural issues Repetition Respondent motivation Questioner training Pre-testing Comprehensiveness Realism Ease of completion

Problems with Traditional Market Research

1. Market research has allowed prominent product failures, and wrong predictions 2. Markets are increasingly becoming microsegmented (e.g. sports shoes aimed at affluent fashion conscious women specifically for aerobics), so mass market research becomes correspondingly irrelevant 3. It is helpful for improvements, but less so for radical innovations 4. For more accurate targeting it may be advantageous to work with leading customers within the target group

Coca Cola Failure: Chronology

May 1985

Old Coke withdrawn New Coke introduced

July

Old Coke reintroduced as Coke Classic

Coca Cola Failure: Background and Research

- Early 80s, share losses to Pepsi
- New Product research carried out $4m cost

200,000 taste tests

60% of consumers preferred it in blind tests - BUT research was narrowly defined

considered taste not emotions

dropping Old Coke not mentioned

U.S. Reaction to Old Cokes Return

Political Senator David Prior of Arkansas on the Senate Floor:
A very meaningful moment in the history of America, this shows that some national institutions cannot be changed Economic Coca Colas share price rose to its highest level in 12 years

New Market Research

Traditional Market Research

Reliance on lead customers

interactive development
increasingly popular (3M, HP, Sony, Raychem) Better for true innovations