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Marketing Research Basics

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					This document sets forth a step by step guide for a company’s market research plan. It
includes descriptions for the basic requirement of collecting information to conduct
market research, such as how to design a survey questionnaire and how to perform
competitor profiling. This document includes a template and tools to evaluate a
company’s market research results. This form should be used by companies or product
managers seeking a plan and guide to perform market research.
 Marketing Research Basics



Marketing
Research




 Basics
                                         Marketing Research Basics


Table of Contents
Why Do Market Research? ............................................................................................................. 1
To Hire or Not to Hire?.................................................................................................................... 1
Collecting Information .................................................................................................................... 2
Competition .................................................................................................................................... 2
Environmental Factors .................................................................................................................... 2
Secondary Sources .......................................................................................................................... 2
Developing the Structure for Your Survey Questions ..................................................................... 2
Designing Your Survey Questionnaire ............................................................................................ 3
   Setting the Criteria....................................................................................................................... 3
   Figure out what the ‘Must Have’ Information is ......................................................................... 4
Techniques for Planning your Marketing Research ........................................................................ 5
Kinds of Market Research ............................................................................................................... 7
   Buy Reports.................................................................................................................................. 7
   Run Surveys ................................................................................................................................. 7
   Competitor Analysis..................................................................................................................... 7
Competitor Profiling ....................................................................................................................... 8
   Developing Detailed Profiles on Each of Your Major Competitors ............................................. 8
Media Scanning ............................................................................................................................. 10
Evaluating the Results of Your Survey .......................................................................................... 10
Summary ....................................................................................................................................... 11
Marketing Research Basics

Why Do Market Research?
Starting your business without finding out if there is a market for the product or service you want
to offer and learning about the likes and dislikes of your customers is like opening a store with
no stock. Market research must be an ongoing process. It is an important part of sustaining your
business and helping it grow. Before you invest your time and funds into developing a new
product or service, you must find out more about what the consumers want, and more precisely
what they need. You must learn about their likes and dislikes as well as their needs and their
desires. Exactly what are their expectations are as far as product or service delivery goes? What
do they want to see happen, when do they want to see it happen, and how do they want it to
happen?

First you need to understand the difference between exploratory research and conclusive
research. Exploratory research will give you insight into and an understanding of an issue or
circumstance. It should describe tentative solutions, but with caution. Conclusive research gives
you insight that can be generalized to the entire population.

Many businesses fail because they don’t bother to do market research. They
don’t invest the time and research efforts to find out if there is even a market for
the goods or services that they want to offer. Or better still, they try to peddle
their wares in a market that is not suited for what they want to sell. It’s kind of
like trying to sell shampoo to people who are bald. What kind of profits do you
expect to claim from those proceeds? If you have a head full of hair, you will
wind up being your best customer! Investing time and funds into market research will save you
money and grief in the long run.

To Hire or Not to Hire?
Many small business owners can’t afford to hire a company to do their market research for them,
which means they will have to do it for themselves. This manual is designed to show you how
you can do your own market research. It includes tips for designing your own market research
surveys and questionnaires.

                   Carrying out your own market research is not hard at all. However, it is time
                   consuming. You probably already have conducted informal assessments of
                   the market, and of your competitors. Every time you interact with a
                   potential customer, chat with a supplier or sales representative, you are
                   conducting market research. You are learning about new trends, you are
                   learning about what consumers want, and you are finding out which vendors
are the most successful with supplying those demands. If you aren’t finding these things out,
you should be. A more formalized approach needs to be taken to ensure a continued success of




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your business. Basically, there are two kinds of data sources, and the three areas of research that
are the most important for any successful business. They are:

                        Data Sources                   Areas of Research

                    1. Primary                        1. Customer
                    2. Secondary                      2. Competition
                                                      3. Environment

Collecting Information
You need to collect information from and about your customers; and then fine tune your
marketing efforts based on the information that was collected. Don’t just collect it, use it!
Continually evaluate routine decisions about how you plan to maintain and improve your
customer services. This will help to guide you as you attempt to develop new products and/or
service lines. Another way to collect information is to involve yourself in community and other
kinds of events that will help you to increase your business network.

Competition
Use the information collected during your market research to find out what has and what has not
worked in the market. Come up with plans that will improve your method of delivery so that
you are able to further shift your share of the market.

Environmental Factors
When researching the environmental factors, investigate the economic, social, political forces
that shape businesses. Learn about the various trends that will directly impact your business; as
well as those that will have an indirect affect. Be it decline in interest rates that was previously
predicted, or another business that has just closed, you need to stay informed and take a look at
the ripple effect that it may have on your business. The effect can be a positive one or a negative
one, regardless of which it is, you need to know.

Secondary Sources
Marketing research data that has already been gathered by another source such as telephone
books, government publications, trade journals, and surveys conducted by other companies is
your secondary data source. You can use these records to find out just what consumers want.
You can find out what your competitors have done, and you can get a better understanding of
what the environment is like.

Developing the Structure for Your Survey Questions
The majority of your market research is going to be consumer based. You’ll want to start with a
survey focused on whether or not the consumer would be interested in such a product and/or


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services. It could be as simple as asking everyone you come into contact with, or it can be in the
form of a questionnaire that is mailed out to members of your target population. If the response
is favorable, you can proceed on to telephone interviews with randomly selected members of that
same target population. If those responses are favorable, you would then proceed with a more
in-depth market research survey, and interview selected respondents.

As you progress through your research, it needs to become more specific. The first phase of
your research may involve simple questions of interest. If the responses are to the affirmative,
you will need to know more than whether or not the consumer is interested. Your questions
would then need to be more detailed, asking more specific information for example, if the
product or service were to be made available, with what frequency would the consumer avail
themselves to it, and how much are they willing to pay for such a product or service? The more
detailed and specific the information is, the more useful it will be when you are making your
decisions.

Designing Your Survey Questionnaire
Setting the Criteria
Before you begin, you must clearly define the process in your own mind. A
good questionnaire should get people interested right away. How the
questionnaire looks is of particular importance to persuading people to fill it
out. The questionnaire should be neat. It should be printed on quality paper;
otherwise it can give the impression that the survey is not important, and does
not deserve their time and effort.

A long questionnaire is more likely to be tossed, instead of being completed and returned. It
should not take more than 15 minutes to fill the questionnaire out. If it takes longer than 15
minutes, people will get bored and lose interest. There are three main rules to developing your
questions:

   1. Do they understand the questions you are asking?
   2. Are they able to answer the questions?
   3. Are they willing to truthfully answer the questions?
If your answer to any one of these three questions is ‘no’, you should either re-frame the
question, or choose a different group to interview. Remember that the information you collect
will only be as good as the kinds of questions that you ask.
The questionnaire should start with a short introduction that tells who is doing the survey, why it
is being done, and what you are asking from them in by way of time and effort. Always give
them the assurance that their answers are anonymous.



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When wording your questions, make sure that the language you use is simple and free of jargon.
Keep your questions short and try to avoid having a lot of questions in one sentence. Keep your
questions specific. Avoid leading questions, and make sure the questions are unambiguous. The
vocabulary that you use must be decipherable to the people who will be filling out the
questionnaire.
Questions should be neutral. They should not be designed to have responders answer in any one
particular way. For example: “What are your views on the proposed …?” Instead of “Do you
agree that …?” The second question implies that you agree with the concept, and you want them
to agree as well. There are two kinds of basic questions that you can ask; they are closed
questions, and open questions.

C l o s e d Q u es t i o n s                        E xa m p l e
People choose one or more answers from a range of Did you contact the supplier:
options. They are much easier to analyze by giving
                                                      by phone            by letter
the number and percentage of people’s answers.
                                                      by email            in person
O p e n Q u e st i o n s                            E xa m p l e
People say or write their own answers. Leave What problem or question did you have when you
enough space for them to write in their answers. last contacted the supplier?
These responses will be harder to analyze, but may
give more insightful information.
R a t i n g Sc a l e s                              E xa m p l e
Generally used because they give the responders an Which phrase best describes what you think of
equal number of positive and negative options to that supplier’s customer services?
choose.
                                                      Good                     Very Good
You can also use a numerical rating, but you must       Bad                     Very Bad
indicate which number is high, or very good. You
may get more neutral answers with this approach.        Neither good nor bad


Your questions should be in logical order, and start with simple introductory questions. You can
group questions together under headings, and give easy explanations or examples of how they
need to be completed. Questions should be routed, leaving an option for responders to not
respond and move to the next question.

Figure out what the ‘Must Have’ Information is
Because space is limited, you will want to give careful consideration to the questions you will be
asking. Ask yourself the following:




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    1. Is this question really necessary? The question needs to directly relate to the survey
       objectives. They must be confined to what you need to know and not to what it would
       be nice to learn.
    2. Are people willing/able to give an honest answer? Is the question relevant? Will they
       have a view point? Is the question too personal?
    3. Will the question give me the information that I need? What answer will you get, and
       what will the answer tell you? You may need to split some of your questions up so
       you’re not asking for too much at the same time.
Make sure that the information you are asking centers on what you need to know so that you can
make informed decisions. Many are offended by questions that ask about their income, or other
personal information. If you offend or confuse them, they will be less likely to respond candidly
to your questions. Some responders will not like lengthy questions, or a lot of pages, so try very
hard to keep your survey to one page. You do want to give them a chance to give more detailed
answers when they want to, so make sure you leave them with that opportunity. At times, those
comments that are written are the most helpful.

Before doing the ‘live run’, it is wise to test your
questionnaire on a few people, preferably from a range of
backgrounds. You want to make sure the content flows
properly, and that the questions are not easily misinterpreted.
It will also help to determine if the survey itself is too long or
too complex. Problems that surface in the pilot can be
rectified before using it on a larger scale.

Techniques for Planning your Marketing
Research
In practice, you can make a distinction about different
methods for planning and organizing your research. It will
depend on your goals and on the tasks at hand. When
planning and organizing, consider the turnover or sales
potential of your service or product by using potential
methods. Your objective is to divide your possibilities into
present and expected potentials.

Obviously your data on sales potentials and the information
you have collected on your competitors needs to be considered. On the other hand, you can
estimate a theoretical sales potential using auxiliary criteria. In this case a close correlation
between the chosen criteria and the turnover of your product is necessary.




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In order to make further distinctions you can bring in additional product-specific criteria that
determine the sales quality. The market share of a product within a certain territory is often taken
into consideration as well. Your goal is to make the most use of the territory’s potential.




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Kinds of Market Research
Buy Reports
These are target profiles that are used by developers, investors, and lenders for making decisions
to buy, hold, or sell. The data is often incorporated into appraisals and reports on financial
viability. It contains the most recent sales data, and allows you to identify the sectors that are
driving growth. It lists the leading brands and companies, and offers a strategic analysis of the
key factors that influence the market like new product development, or matters with distribution
or pricing. They may also forecast potential changes in the market. The data includes historic
and forecasted market sizes as well as company and brand shares. These reports are ideal for
executives who want to understand the key drivers in the market, and who want to stay abreast of
marketing developments for the upcoming year. It allows them to see the market in its global
context with international market comparisons.

Run Surveys
We use surveys to collect data about populations as a whole. We use them to learn about what
numbers and proportions of people think 'X' or agree with 'Y'. These surveys collect and evaluate
information from a large number of people. They are not suitable for obtaining a specific
understanding of the underlying principle behind people's opinions and attitudes. Qualitative
approaches like interviews and workshops should be used to accomplish this.

Competitor Analysis
This is a very important part of your corporate strategy. It is an assessment of the strengths and
weaknesses of current and potential competitors; and it analyzes both their offensive and
defensive strategic context. You can use this to identify opportunities and threats because the
process merges all of the relevant sources for analyzing competitors into one structure. It
supports the effective and efficient formation, implementation, monitoring, and adjustment of
strategies.

Although competitor analysis should be conducted routinely, most firms do not conduct them in
a sufficient amount. When companies don’t conduct routine competitor analysis, it puts them at
risk for competitive blind spots.

A useful method to learn more about your competitors is to develop a model. The information
can be displayed with the competitors on the top row, and the key success factors down the side.
The matrix should include the following information:

     A definition of the targeted industry that includes both the nature and scope.
     A listing of all competitors.


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     An outline of who the potential customers are and the benefits they expect to receive.
     An outline of the key factors that will make the venture successful.
         Add weight to each key factor so you can rank them accordingly, the sum of which
          must total one.
     Rate each competitor on each of the key success factors.
     Multiply each cell in the matrix by the factor weight.
     Include total columns for a weighted assessment of the total strength of each
       competitor in relation to each other.

Competitor Profiling
A comprehensive understanding of your competitors is a valid source for a competitive
advantage. The basis for establishing your competitive advantage is to give superb customer
value in your chosen market. Customer value relates to rival offerings, and makes competitor
knowledge an essential element of your corporate strategy. Profiling smoothes the progress of
your strategic objective in three ways, all of which are essential:

   1. It reveals strategic weaknesses in your rivals that you can exploit.
   2. The proactive posture of competitor profiling makes it possible for you to anticipate the
      strategic response of your rivals to your planned strategies, the strategies of other
      competing firms; and to the changes in the environment.
   3. This applied knowledge gives you strategic agility. Offensive stratagem can be applied
      faster so that you are able to exploit opportunities and capitalize on strengths.
      Defensive stratagem can be engaged more skillfully to make it possible for you to dispel
      the threat of your rivals’ ability to exploit your own weaknesses.
The companies that systematically administer competitor profiling practices have an important
advantage. The practice is rapidly becoming one of the core competences for successfully
competing in the market. A good way to look at this is to think about staying one step ahead of
your competitors at all times, just as you would do when playing any kind of strategic game. By
staying one step ahead, your chances for success are much greater than if you do not.

Developing Detailed Profiles on Each of Your Major Competitors
The profiles should be intended to give you an in-depth description of each competitor’s
background, finances, facilities, markets, marketing strategies, products, and personnel, and
should include:




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B a c kg r o u n d                              F i n a n ci a l s
 History                                        P-E Ratios
   Key personalities                              Cash flow
   Dates/Events/Trends                            Dividend policy
 Location of Office/Plants                        Financial ratios
 Online Presence                                  Liquidity
 Ownership                                        Profitability
   Corporate governance                         Profit Growth Profile
   Organizational climate & structure             Method of growth (organic/acquisitive)
P r o du c t s                                  M a r k et i n g
 Brands                                         Promotional Mix
   Brand awareness                                Ad agency use
   Brand loyalty                                  Advertising themes
   Strength of brand portfolio                       On-line promotional approach
 New Products Developed                              Pricing allowances/discounts
   R & D strengths                                Promotional budgets
   Success rate                                   Sales force success rates
 Patients and Licenses                          Segments Served
 Products Offered:                                Consumer base
   Extent and depth of product line               Consumer loyalty
   Extent/depth of product portfolio balance      Growth rate
 Quality Control Compliance                       Market shares
F a ci l i t i es                               P er s o n n el
 Location                                       Number of Employees
   Product mix by plant                           Employee skill sets
   Shipping logistics                             Key employees
 Plant Capacity                                 Strength of Management
   Age of plant                                   Compensation & benefits
   Capacity utilization rate                         Employee morale & retention rates
   Capital investment                                Management style
   Plant efficiency
Corporate Strategies                            M a r k et i n g S t r at e gi es
 Acquisitions & Divestitures                    Corporate strategy
 Growth Plans                                   General Strategy



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Marketing Research Basics

 Mission Statement                                 Tactics and Actions
 Objectives

Media Scanning
Scanning competitor’s ads will tell you a lot about what they think about marketing and what
they think about their target market. A change in competitor advertising messages tells much
about their new product offerings, new branding strategies, and/or new production processes.

A competitor’s media strategy will help you gain knowledge of their budget allocations, their
segmentation and targeting strategy, and their selectivity and focus. You can also use that
information to help you develop your own media plan. Also, it can help to ensure that there is no
overlap between your plan and theirs.

Evaluating the Results of Your Survey
If you arranged your survey properly, analyzing the data will be pretty clear-cut. Think of your
analysis in three separate, but important stages:

   1. Prepare the data for analysis
        a. Log the data in.
        b. Check it for accuracy.
        c. Enter the findings into the computer.
   2. Describe the basic features of the data in the study
        a. Broken down by age, gender, etc.
        b. Describe what the data shows by giving simple summaries about the data along
           with some graphics.
   3. Test your conclusions
        a. What is the data telling you?
        b. Look at similar data in the survey.
        c. Select the most relevant and important and organize them into summary graphs
           and tables.
        d. Does it confirm or contradict these findings?
        e. If you plan to further extrapolate your answers, how does the data measure up to a
           wider population?




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When writing any analysis of your findings, it is easy to get caught up in providing too much
detail. It is usual to put your wide-ranging, detailed analysis in appendices. It also is usual to save
the most significant analysis summaries for the body of the report itself.

A business that is dedicated to repetitive improvement, and that makes adjustments, additions, or
complete changes to their service delivery systems to ensure that customer satisfaction is
preserved, if not improved, is a business that will thrive. Continual improvement is not to be
confused with impulsiveness. Your goal is not to constantly change, but rather to be prepared
and adaptable to changing expectations; and flexible enough to transform service delivery if and
when it may become necessary. Consider the following when evaluating the circumstances:

   1. Is there truly a need?
   2. Are there any possibilities for alienating any consumer group(s)?
   3. Will the actions improve my market share?
   4. Do I have all of the necessary resources to carry it through?
   5. What do I need to do to monitor the progress?

Summary
The information furnished in this guide is a representative sampling of the processes involved
with the basics of marketing research. We hope that you will find it useful and wish you the best
of success.




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DOCUMENT INFO
Description: This document sets forth a step by step guide for a company’s market research plan. It includes descriptions for the basic requirement of collecting information to conduct market research, such as how to design a survey questionnaire and how to perform competitor profiling. This document includes a template and tools to evaluate a company’s market research results. This form should be used by companies or product managers seeking a plan and guide to perform market research.
This document is also part of a package Top Marketing and Branding Tools 9 Documents Included