Chapter 15.docx

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University of Calgary
Management Information Systems
MGIS 317
Ronald Schlenker

Chapter 15: market research The need for market research This is the process of collecting, recording and analyzing data about the customer, competitors and the market To reduce the risks associated with new product launches By investigating potential demand for a new product or service the business should be able to assess with some degree of accuracy the likely chances of a new product achieving satisfactory sales. No research can guarantee success, however. Market research is still a key point in new product development (NPD) and most firms would check market conditions before planning a new product. To predict future demand changes A travel firm may wish to investigate social and other changes to see how these might affect the demand for holidays in the future. For instance, the growth in the number of single-person households may suggest that there could be a rising demand for “singles”-type holidays To explain patterns in sales of existing products and market trends Market research is not just undertaken for new or planned products, it needs to be conducted for existing products too. Sales at the fashion retailer Gap had by the end of 2009 fallen in 28 of the last 31 months. Unless Gap managers are prepared to find out why this happened, then they will not be able to take any remedial action to “stop the rot” To assess the most favoured design, flavours, styles, promotions and packages for a product Consumer tests of different versions of a product or of the proposed adverts to promote it will enable a business to focus on the aspects of design and performance that consumers rate most highly. These can then be incorporated into the final product. Market research can therefore be used to discover information about: - Market size and consumer tastes and trends - The product and its perceived strengths and weaknesses - The promotion used and its effectiveness - Competitors and their claimed unique selling propositions - Distribution methods most preferred by consumers - Consumers´ preferences for packaging of the product The market research process Management problem identification If a business doesn’t have a clear idea of the purpose of this research or the problem that needed investigating, then the money would be wasted. Here are some examples of problems that might be investigated by market research: - What size is the potential market for the business? - Why are our sales falling? - How can we break into the market in another country? - How can we most effectively meet the challenge of new competitors? - What customer groups buy our product and which groups tend not to buy them? Research objectives They must be set in such a way that, when they have been achieved, they provide all the information needed to solve the problem. Here are some examples of research objectives in the form of a question: - how many people are likely to buy our products in country X - if the price of good Y is reduced, how much will these increase sale volume - if we advertise this product on television, what will be the likely impact on sales volume and market share? - Which new product idea, A or B, will generate more sales - What would be the impact of new packaging on sales of our product? - Why are consumer complaints about our products increasing? Sources of data – primary and secondary research Primary research is a collection of first-hand data that is directly related to a firm´s needs Secondary research is a collection of data from second-hand sources Sources of secondary data Government publications In most countries, sources such as the following from the UK could be referred to: - Population census - Social tends - Economic trends - annual abstract of statistics - family expenditure survey businesses like a furniture would use this type of information Local libraries and local government offices If research needed to be about a small area then local, not national, data would be necessary: - local population census returns with details of total numbers and age and occupation distributions - numbers of households in the area - the proportions of the local population from different ethnic and cultural groups Trade organizations They produce regular reports on the state of the markets their members operate in. for example: - Society of Motor Manufacturers and Traders. - Furniture Retailers Association - Engineering Employers Federation Market intelligence reports They are very expensive, but they are usually available at local business libraries. Examples are: - Mintel reports - Key note reports - Euromonitor If the owner of a hotel planned to expand by opening a hotel in the capital city, one of these reports on the hotel and catering market would provide lots of details. Newspaper reports and specialist publications “marketing” The grocer” “Motor trader” “the financial times” Internal company record If the business has been trading for a long time, then large quantity of secondary data will already be available for further analysis from: - Customer sales - Guarantee claims - Daily, weekly and monthly sales trends - Feedback from customers on product, service, delivery and quality The internet Internet has transformed secondary data collection – but the worldwide web only has access to data that have already been gathered from sources listed above Methods of primary research Primary research can itself be divided into quantitative and qualitative research. Qualitative research is a research into the in-depth motivations behind consumer buying behavior
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