Market research is an effort to ascertain the worth or demand of the product in the market as well as the standing of the enterprise in the industry. It may be defined as the systematic and objective process of collecting, generating, analysing, and interpreting information and communicating the findings for use in making marketing decisions. It furnishes all the relevant information about the existing products in the market and helps the firm to identify and solve problems related to launching of new products. It helps the firm to identify and evaluate the marketing opportunities and exploit them for the firms profitability. Thus, market research is useful to a firm in a wide variety of activities,which include sales forecasting; measuring market share; identifying market trends; measuring brand images; developing consumers profiles; designing products and packaging; analysing demand; measuring price perceptions and ascertaining advertising effectiveness.
The Objectives of Market Research
- To link the consumer with the company through information.
- To investigate the real needs and requirements of customers.
- To search for and analyse information that can be used for arriving at the best alternative marketing decision.
- To suggest necessary changes in the goods and services in order to meet the market demands.
- To know in advance what kind of target markets exist in the economy where the company may launch its product.
- To know about the reactions of the people in the market about the existing or newly introduced products of the company.
- To identify opportunities and threats in the external environment of the company.
- To find out reasons for slowly losing market share, and identify ways and means for strengthening company's position in the market, within and outside the country.
Stages or Steps in market research process
- Identification and definition of the objectives :-
This is the first step in the process of marketing research. It is of crucial importance as it shows the direction of the research work. The research process begins by making a clear and concise statement of a problem or issues to be investigated. A clear definition of the problem helps the researcher in all subsequent research efforts including the setting up of proper research objectives,the determination of the techniques to be used,and the extent of information to be collected.
- Statement of research objectives :-
In the next step,the researcher makes a formal statement of the research objectives and states the reasons and aims for which the research is being undertaken. Such objectives may be stated in qualitative or quantitative terms and are expressed in the form of research questions,statement or hypothesis.
- Planning the research design :-
The next step is developing research design which is a master plan specifying the procedures for collecting and analysing the needed information. It represents a framework for the research plan of action.The objective of the study are included in the research design to ensure that data collected are relevant to the objectives. The researcher also determines the sources of information needed; the data collection method such as survey,interview,etc; the methodology, timing and possible costs of research.
- Planning the sample :-
Sampling involves procedures whereby a small number of items or parts of the 'targetted population' is taken to represent the whole population. It involves several important decisions relating to :- (i) defining the target population; (ii) selection of a sample which truly represents the population; (iii) the sample-size to be used for the purpose; and (iv) selection of various units to make up the sample.
- Data collection :-
It involves gathering of facts to be used in solving the problem. Data is primary, if it is collected from the original base through empirical research by means of various tools such as observation, experiment and survey methods. It may be collected from salesmen, customers and dealers. Data is secondary, if it is collected from concerned reports, magazines and other periodicals, especially written articles, government publications, books, etc. The data sources may be internal or external. Internal sources exist within the firm itself like accounting data, salesmen's reports, etc while, sources outside the firm are external sources.
- Data processing and analysis :-
The data collected is processed and analysed. It is thus converted into a meaningful format so as to suggest answers to the initially identified and defined problems. Data processing begins with the editing or inspection of data for checking consistency in its classification and coding. The analysis of data represents the application of logic to the understanding of the data collected. It may involve determination of consistent patterns and summarizing of appropriate details by using various analytical techniques. The aim of this step is to check whether empirical findings support or refute the statements or hypothesis made earlier.
- Formulating conclusions and preparing the report :-
The final stage is that of interpreting the information and drawing conclusion for use in making business decisions. The research report should clearly and effectively communicate the research findings. If needed,the researcher may bring out his appropriate recommendations or suggestions in the matter. The presentation of the report so prepared must be technically accurate and understandable.
Importance of market research
However, a research study will fail to serve its purpose, if the marketing manager does not offer full perspective of the research problem; or allows inadequate time; or uses research as a 'fire fighting' device; or does not really appreciate the value of research. Hence every company irrespective of its size must have a full proof market research strategy which continuously monitors the performance of its product. The strategy should also examine the competition for the product as well as the response of the customers on a regular basis. This research process is much easier for large scale businesses which generally have their own formal marketing networks, media campaigns and strong sales force. For example, (i) the Directorate of Marketing and Inspection (DMI) , Ministry of Agriculture undertakes commodity marketing surveys and in-depth studies of marketing system in respect of various agricultural commodities in the country. The Directorate publishes several reports and provides research grants to eminent scholars, institutions for undertaking probe oriented quality research in the field of agricultural marketing; (ii) Textiles Committee, Ministry of Textiles has a market research wing which conducts regular market surveys/studies on demand pattern for textiles as well as industry specific surveys/census for creation of data base on vital sectors of textile industry.
- It facilitates planned production by forecasting probable sales.
- It helps in identifying the reasons for consumer resistance to existing or new products.
- It reveals the nature of demand for the product i.e. whether the product is in demand through out the year or has a seasonal demand.
- It indicates the product utility as well as the effectiveness of existing channels of distribution.
- It may reveal certain new uses for the existing products.
- It provides information about potential or future markets.
- It helps in the discovery of new lines of production.