Marketing research involves conducting research to support marketing activities, and the statistical interpretation of data into information. This information is then used by managers to plan marketing activities, gauge the nature of a firm’s marketing environment and attain information from suppliers. Marketing researchers use statistical methods such as quantitative research, qualitative research, hypothesis tests, Chi-squared tests, linear regression, correlations, frequency distributions, poisson distributions, binomial distributions, etc. to interpret their findings and convert data into information. The marketing research process spans a number of stages[12] including the definition of a problem, development of a research plan, collecting and interpretation of data and disseminating information formally in form of a report. The task of marketing research is to provide management with relevant, accurate, reliable, valid, and current information.
A distinction should be made between marketing research and market research. Market research pertains to research in a given market. As an example, a firm may conduct research in a target market, after selecting a suitable market segment. In contrast, marketing research relates to all research conducted within marketing. Thus, market research is a subset of marketing research.
[edit] Marketing environment
The term marketing environment relates to all of the factors (whether internal, external, direct or indirect) that affect a firm’s marketing decision-making or planning and is subject of the marketing research. A firm’s marketing environment consists of two main areas, which are:
- Macro environment
- On the macro environment a firm holds only little control. It consists of a variety of external factors that manifest on a large (or macro) scale. These are typically economic, social, political or technological phenomena. A common method of assessing a firm’s macro-environment is via a PESTLE (Political, Economic, Social, Technological, Legal, Ecological) analysis. Within a PESTLE analysis, a firm would analyze national political issues, culture and climate, key macroeconomic conditions, health and indicators (such as economic growth, inflation, unemployment, etc.), social trends/attitudes, and the nature of technology’s impact on its society and the business processes within the society.
- Micro environment
- A firm holds a greater amount (though not necessarily total) control of the micro environment. It comprises factors pertinent to the firm itself, or stakeholders closely connected with the firm or company. A firm’s micro environment typically spans:
- Customers/consumers
- Employees
- Suppliers
- The Media
- By contrast to the macro environment, an organization holds a greater degree of control over these factors.
[edit] Market segmentation
Market segmentation pertains to the division of a market of consumers into persons with similar needs and wants.[13] As an example, if using Kellogg’s cereals in this instance, Frosties are marketed to children. Crunchy Nut Cornflakes are marketed to adults. Both goods aforementioned denote two products which are marketed to two distinct groups of persons, both with like needs, traits, and wants.
The purpose for market segmentation is conducted for two main issues. First, a segmentation allows a better allocation of a firm’s finite resources. A firm only possesses a certain amount of resources. Accordingly, it must make choices (and appreciate the related costs) in servicing specific groups of consumers. Furthermore the diversified tastes of the contemporary Western consumers can be served better. With more diversity in the tastes of modern consumers, firms are taking noting the benefit of servicing a multiplicity of new markets.
Market segmentation can be defined in terms of the STP acronym, meaning Segment, Target and Position.
- Segment
- Segmentation involves the initial splitting up of consumers into persons of like needs/wants/tastes. Four commonly used criteria are used for segmentation, which include:
- Geographical (e.g. country, region, city, town, etc.)
- Psychographic (i.e. personality traits or character traits which influence consumer behaviour)
- Demographic (e.g. age, gender, socio-economic class, etc.)
- Behavioural (e.g. brand loyalty, usage rate, etc.)
- Target
- Once a segment has been identified, a firm must ascertain whether the segment is beneficial for them to service. The DAMP acronym, meaning Discernible, Accessible, Measurable and Profitable, are used as criteria to gauge the viability of a target market. DAMP is explained in further detail below:
- Discernable – How a segment can be differentiated from other segments.
- Accessible – How a segment can be accessed via Marketing Communications produced by a firm.
- Measurable – Can the segment be quantified and its size determined?
- Profitable – Can a sufficient return on investment be attained from a segment’s servicing?
- The next step in the targeting process is the level of differentiation involved in a segment serving. Three modes of differentiation exist, which are commonly applied by firms. These are:
- Undifferentiated – Where a company produces a like product for all of a market segment.
- Differentiated – In which a firm produced slight modifications of a product within a segment.
- Niche – In which an organisation forges a product to satisfy a specialised target market.
- Position
- Positioning concerns how to position a product in the minds of consumers. A firm often performs this by producing a perceptual map, which denotes products produced in its industry according to how consumers perceive their price and quality. From a product’s placing on the map, a firm would tailor its marketing communications to suit meld with the product’s perception among consumers.
[edit] Marketing information system
A marketing information system (MKIS) is an information system that is commonly used by marketing management to analyse and view information pertaining to marketing activities. As the label suggests, an MKIS is a computer-based information system therefore used to input, store, process and output marketing information.[14] An MKIS spans four subset components, which are detailed below:
- Marketing intelligence system
- This sub-system stores information gathered from a firm’s marketing intelligence activities. Marketing intelligence consists of actions a firm would undertake within its own market or industry, geared towards information existing within its markets. This can be obtained via communication with suppliers, consumers or other bodies within a market.
- Internal processes system
- The internal processes system catalogues all internal marketing processes within a firm.
- Marketing research system
- This section of the overall system contains data from a firm’s marketing research activities.
- Analytical system
- The analytical system is the only sub-system which does not store data or information. It’s function is to analyse and process data from the other three systems, into reliable, timely and relevant information for the perusal and use of marketing management.
[edit] Types of marketing research
Marketing research, as a sub-set aspect of marketing activities, can be divided into the following parts:
- Primary research[15] (also known as field research), which involves the conduction and compilation of research for the purpose is was intended.
- Secondary research[16] (also referred to as desk research), is initially conducted for one purpose, but often used to support another purpose or end goal.
By these definitions, an example of primary research would be market research conducted into health foods, which is used solely to ascertain the needs/wants of the target market for health foods. Secondary research, again according to the above definition, would be research pertaining to health foods, but used by a firm wishing to develop an unrelated product.
Primary research is often expensive to prepare, collect and interpret from data to information. Nonetheless, while secondary research is relatively inexpensive, it often can become outdated and outmoded, given it is used for a purpose other than for which is was intended. Primary research can also be broken down into quantitative research and qualitative research, which as the labels suggest, pertain to numerical and non-numerical research methods, techniques. The appropriateness of each mode of research depends on whether data can be quantified (quantitative research), or whether subjective, non-numeric or abstract concepts are required to be studied (qualitative research).
There also exists additional modes of marketing research, which are:
- Exploratory research, pertaining to research that investigates an assumption.
- Descriptive research, which as the label suggests, describes “what is”.
- Predictive research, meaning research conducted to predict a future occurrence.
- Conclusive research, for the purpose of deriving a conclusion via a research process.
