Marketing research is the intelligence service of a business enterprise. American Marketing Association defined marketing research as “the gathering, recording and analyzing of all data about problems relating to the transfer and sale of goods and services from producer to consumer.”
Objectives of Marketing Research
- To know the demographics and psychographics of customers:- Marketing research tries to reveal the number of persons who buy, why they buy, when they buy, the frequency of their buying, and the sources of their buying. It also includes the social status and the regional location of the customers.
- To find out the impact of promotional efforts.
- To know customer response to a new product.
- To prove ‘what went wrong’.
Nature of Marketing Research
Marketing research is systematic and objective collection of data, its analysis and evaluation, and decision making in respect of specific aspects of a marketing problem.
Marketing Research and Market Research:- The nature of marketing research cannot be properly understood without knowing the meaning of market research. Market research is the gathering, recording and analyzing of market data to identify the present and potential customers and their motives and buying habits. It is the discovery of the capacity of the market to absorb the products of a firm. It is a part of the marketing research. It is worthwhile to quote Richard D.Crips to identify clearly the scope of Marketing research and market research. “Marketing research is the systematic, objective and exhaustive search for the study of the facts relevant to any problem in the field of marketing. Market research is restricted to the study of actual and potential buyers, their location, their actual and potential value of purchases and their motives and habits.”
Market research may be conducted for the following reasons:
- To identify the present and potential customers and their needs.
- To forecast the demand of a product.
- To determine customers preferences with regard to packaging, design, size, price and other features of a product.
- To locate the demand for products with regard to time and place, such as festival demand.
- To explore new markets for existing products.
Scope of Marketing Research
Marketing research covers different aspects of marketing of goods, services and ideas. There are many areas of marketing management where marketing research has special branches.
- Product Research:- Product research is associated with the conversion of customer needs into tangible product offer. This includes development and testing of new products, improving the existing products, and a tab on the changing customer preferences, habits, tastes, etc. Packaging design, branding, and labeling decisions are also included here.
- Customer Research:- This research type includes investigation into the customer buying behavior — the economic, social, cultural, personal and psychological influences.
- Sales Research:- Sales research involves decisions concerning selection of store location, channels, territories, sales force motivation and compensation, etc. The purpose is to reach the target customer more effectively, efficiently and timely. .
- Promotion Research:– Promotion research encompasses all efforts by the marketers to communicate the company’s offer. This includes advertising, publicity, public relations, sales promotion, etc.
Significance of Marketing Research
Marketing is one of the most important areas of any business enterprise. Making of right type of decision in this area determines the success of the enterprise. Correct and sound marketing decision can be made only if right type of information is available to the management. The required information can be made available by conducting marketing research. The significance of marketing research has increased because of severe competition in the market, frequent technological changes, and the emergence of buyer’s market. Marketing research is of great value to management.
Advantage of Marketing Research
A business enterprise can derive the following benefits by conducting marketing research.
- Forecasting. Marketing research facilities forecasting of demand for the products of the firm. This will help in adjusting the production schedules accordingly.
- Assessing Product Acceptance. Marketing research helps in knowing the probability of acceptance of the products in its present form. Such type of research may lead to alternations in design, color and other features of the product to make it more acceptable by the consumers.
- Rightful Promotion. Marketing research reduces wasteful expenditure on production and advertisement. It tells in advance the products and services which are required by the customers.
- Understanding New Markets. Marketing research helps in discovering new markets and in understanding the behavior of various types of customers.
- Suitability of Channels. Marketing research can be used to study the effectiveness of existing channels of distribution, advertising, sales promotion activities and other marketing activities.
- Overall Business Direction. Marketing research provides invaluable information which not only affects the working of the Marketing Department, but has an important impact on the functioning of other departments of the enterprise, particularly production and purchase departments.
- Assessment of Middlemen. Marketing research helps in knowing the reaction of the middlemen in regard to the company’s marketing policies. This may lead to the discovery of the new lines of production which can be taken up along with the existing products.
Limitations of Marketing Research
Marketing research may suffer from the following limitations:
- Huge Expenditure. Marketing research involves huge expenditure of money, efforts and time on the collection and analysis of data. Small firms cannot afford marketing research.
- Bias in Collecting Data. The effectiveness of marketing research depends largely on the types of data or information collected. The subjectivity of the investigators may have adverse effect on the effectiveness of the marketing research.
- Unpredictable Human Behaviors. Marketing research is mainly a study of the behavior of human beings. The individuals may not always give adequate and accurate data. Thus, the results of the marketing research are not cent percent accurate.
- Requires Intelligent Handling. Marketing research is not an end in itself. It is a means to decision —making. It requires competent and experienced executives or managers to use the results of marketing research.
- Supplementary, Not Substitute. Marketing research is not a substitute for executive judgment. It only provides relevant information with the help of which executives can take decisions regarding product, pricing, promotion, place, packaging, etc.
- Requires Competent Researcher. Marketing research may lead the executive to wrong results because of carelessness of the research staff. If the investigators are not competent to collect right type of data and analyze it accurately, there will be no utility of marketing research.
- No time Gap Allowed Between Research and its Implementation. There is generally a time lag between marketing research and the implementation of its findings. During this period, business conditions might change making the market research a futile exercise.