Market Research, 27 March 2007

Market Research

To understand the difference between primary and secondary market research and to understand how primary and secondary market research may be used by a business to help inform its marketing decisions

• Primary Research
• Secondary Research
• Sampling Methods
• Purpose

Primary Research

• Questionnaries
• Focus Grooups
• Postal Survey
• Telephone Surveys
• Customer Interviews
• Test Markets
• Technology-Internet feedback
• –First hand information
  –Expensive to collect, analyse and evaluate
  –Can be highly focussed and relevant
  –Care needs to be taken with the approach and methodology to ensure accuracy
  –Types of question – Closed – limited information gained; Open – useful information but difficult to analyse
• Quantitative and Qualitative Information:
• Quantitative – based on numbers – 56% of eighteen year olds drink alcohol at least four times a week.
  Doesn’t tell you why, when, how.
• Qualitative – more detail – tells you why, when and how!

Secondary Research

• Internal Sources:
  -Company Accounts
  -Internal Reports and Analysis
  -Stock Analysis
  -Retail data - till data, etc.
• External Sources:
  -Government Statistics
  -EU - Euro Stat
  -Household Expenditure Survey
  -Magazine surveys
  -Other firms’ research
  -Research documents – publications, journals, etc.
  -Web sites: commercial & non-commercial

Sampling Methods

• Random Samples – equal chance of anyone being picked
  –May select those not in the target group – indiscriminate
  –Sample sizes may need to be large to be representative
  –Can be very expensive
• Stratified or Segment Random Sampling
  –Samples on the basis of a representative strata or segment
  –Still random but more focussed
  –May give more relevant information
  –May be more cost effective
• Quota Sampling
  –Again – by segment
  –Not randomly selected
  –Specific number on each segment are interviewed etc
  –May not be fully representative
  –Cheaper method
• Cluster Sampling
  –Primarily based on geographical areas or ‘clusters’ that can be seen as being representative of the whole population
• Multi-Stage Sampling
  –Sample selected from multi stage sub-groups
• Snowball Sampling
  –Samples developed from contacts of existing customers – ‘word of mouth’ type approach!

Purpose

• Size of market
• Market Trends
• Forecasting
• Planning
• Evaluation of Strategies/Promotion
• Assessing Marketing Mix
• Identifying market segments
• Identifying consumer needs
• Identifying Competition
• Identifying Opportunities/gaps in the market
• Reduce Risk

Advantages of Market Research

• Helps focus attention on objectives
• Aids forecasting, planning and strategic development
• May help to reduce risk of new product development
• Communicates image, vision, etc.
• Globalisation makes market information valuable

Disadvantages of Market Research

• Information only as good as the methodology used
• Can be inaccurate or unreliable
• Results may not be what the business wants to hear!
• May stifle initiative and ‘gut feeling’
• Always a problem that we may never know enough to be sure!
  
  
  
  
  

Market Analysis, 20 march 2007

Market Analysis




Market Position

• Market Niche – small part of an existing market
• Market Leader – maintain dominant position in the market?
• Market Follower – Follow the lead of the market leader – pricing, product development etc
• Market Challenger – Seek to adopt strategies to challenge market leader’s position

Market Objectives

• National Growth
• International Growth
• Ethical Objectives
• Market Share
• Consumer Focus
• Product Focus
• Image
• Social Responsibility
• Revenue Maximisation
• Shareholder Value
• Overcome Competitors
• Will involve/determine some or all of the following:
  –Market Penetration
  –New Product Development
  –Branding
  –Diversification
  –SWOT Analysis

Market Segments

• Age
• Religion
• Gender
• Income Level
• Lifestyle
• Ethnic Grouping
• Geographical region
• Family Circumstances
• Behaviouristics
• Social Class: Institute of Practitioners in Advertising (IPA) Grouping
  –A – Higher managerial, professional and administrative
  –B – Middle management, professional and administrative
  –C1 – Supervisory, clerical and junior management
  –C2 – Skilled Manual Workers
  –D – Semi and unskilled manual workers
  –E – Pensioners, casual workers, unemployed

Which Segment?

• Mass Markets: high volume, low margin goods – confectionary, cars, clothing, food stuffs
• Multiple Segments: appealing to wider range of groups – e.g. 4x4 vehicles – town, country, gender, lifestyle, social class?
• Single Segment: often a specialised product, e.g. machinery, exclusive goods

Market Structure

• Highly Competitive?
• Imperfect Competition?
• Oligopoly?
• Duopoly?
• Monopoly?
• Nature of the market structure determines marketing strategy:
  –Pricing strategy
  –Branding?
  –Product Differentiation?
  –Market Penetration?
  –Direct Selling?
  
  

Quantitative and Qualitative Factors in Decision Making, 13 March 2007

Quantitative Factors

• Provide a numerical basis for decision making – reduces decisions to looking at a monetary value placed on different choices, e.g.
  –Forecasted sales figures for the next 3 years
  –The cost of a series of redundancies against the longer term financial benefits to the firm of this process
• But: such data provides only part of the story
• Other factors need to be taken into account, particularly the effects of decisions on stakeholder groups and their response to such decisions, e.g.
  –The takeover of Manchester United by Malcolm Glazer might make financial sense but the reaction of the supporters might make the move unworkable

Decision Trees: The Process

Decision Trees: The Process

Qualitative Factors

• Qualitative factors look to take account of these other issues that may influence the outcome of a decision
• Can be wide ranging and especially need to consider the impact on human resources and their response to decisions

SWOT

• A decisions (for example, investment in a new production plant) could be considered not only in financial terms but also to apply other techniques of decision making to look at wider issues:
• A SWOT analysis might be part of this:
  –Strengths
  –Weaknesses
  –Opportunities
  –Threats

PEST

• Might also need to factor in other external issues that might influence the decision making process which can be summarised as:
  –Political
  –Economic
  –Social
  –Technological
• Political could be in its widest sense, e.g. the internal politics of a firm as well as the national and international political effect
• The decision to site a series of wind turbines in a coastal area might be justified on financial grounds but:
• –Does government policy support such planning developments?
• –What is the reaction of the local community?
• –Are there social impacts – e.g. noise pollution, damage to eco-systems, etc?
• Such factors may make the difference between success and failure

Human Resources Management

• Impact on a firm’s human resources is essential to consider, in particular the effects on:
  –Motivation
  –Morale
  –Recruitment and Retention
  –May be difficulty to assess and measure
  –May need to distinguish between short term effects and long term

Decision Making

• Eventual decision may rest on the balance between the perceived effects of quantitative and qualitative.
• If the long term effect on the workforce for example was to reduce productivity or increase absence because of the impact on motivation and morale, the fact that a decision makes financial sense may be shelved!
• Qualitative by its nature, therefore, is very subjective.
  

Business Organisation, 27 February 2007

Business Functions

• Human Resources
• Sales and Marketing
• Research and Development
• Production/Operations
• Customer Service
• Finance and Accounts
• Administration and IT

Human Resources

• Recruitment and retention
  –Job descriptions
  –Person Specifications
• Dismissal
• Redundancy
• Motivation
• Professional development and training
• Health and safety and conditions at work
• Liaison with trade unions

Sales and Marketing

• Market research
• Promotion strategies
• Pricing strategies
• Sales strategies
• The sales team
• Product – advice on new product development, product improvement, extension strategies, target markets

Research and Development

• New product development
• Product improvements
• Competitive advantage
• Value added
• Product testing
• Efficiency gains
• Cost savings

Production/Operations

• Acquiring resources
• Planning output – labour, capital, land
• Monitoring costs
• Projections on future output
• Production methods
• Efficiency

Customer Service

• Monitoring distribution
• After-sales service
• Handling consumer enquiries
• Offering advice to consumers
• Dealing with customer complaints
• Publicity and public relations

Finance and Accounts

• Cash flow
  –Monitoring income/revenue
  –Monitoring expenditure
• Preparing accounts
• Raising finance
• Links with all other functional areas

Administration and IT

• Managing estates – cleaning, health and safety, maintenance, security
• Reception
• Clerical work – reporting, recording, record keeping, communication
• Overview of quality control
• Use of IT systems

Organisation Charts

Hierarchical Structure

Pyramidal Structure

Centralised/ Entrepreneurial

Matrix Structure

• Changes to business structures
• Linked to new thinking on leadership and management
• Less hierarchical
• Emphasis on communication and collaboration between sections