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The primary purpose of marketing research is to gather information which will allow your company or organisation to make better, more informed decisions. Many textbooks have been published on marketing research but most are very quantitative and are also too detailed for students taking a one-semester course, they do not focus on important qualitative issues such as depth interviews and focus groups - Baines and Chansarkar redress this imbalance. Written as an introduction to marketing research for students taking a one-semester module Introducing Market Research includes chapters on business to business marketing research and Internet marketing research. The authors adopt a practical focus and include numerous practical examples as well as coursework assignments.
After reading this chapter, you will be able to:
Understand what marketing research is.
Appreciate the role marketing research plays in the marketing process.
Know the major players in the market research industry in the UK.
Choose who should conduct the marketing research.
Understand and recognize the importance of ethics and the code of conduct for undertaking marketing research.
This chapter begins with a definition of what marketing research is and then looks at the three research designs commonly used in the marketing research process. A brief description of the marketing research industry follows, giving the top marketing research agencies in the UK and the percentage turnover by the market research method. It then discusses who should do the marketing research and the importance of the code of conduct as recommended by the Market Research Society.
What is Marketing Research?
The primary purpose of marketing research is to gather information which will allow your company or organization to make better, more informed decisions. Marketing research is closely linked to the marketing concept as it implies a customer focus, that the customer is central to the activities of the company, and the opinions of the customer are a highly valued and usefulaid in decision making. Researching customer needs through marketing research enables the company to fulfil the requirements of the marketing concept.
The terms marketing research and market research are interchangeable in their scope and coverage of information. This is explicitly brought out by the definitions of the American Marketing Association (AMA) and the UK's Market Research Society (MRS).
According to the American Marketing Association, marketing research is defined as:
the function which links consumer, customer, and public to the market through information-information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues; designs the method for collecting information; manages and implements the data collection process: analyses the results; and communicates the findings and their implications. (Marketing News, 1985)
The Market Research Society (in the UK) defines market research as:
the collection and analysis of data from a sample of individuals or organisations relating to their characteristics, behaviour, attitudes, opinions or possessions. It includes all forms of marketing and social research such as consumer and industrial surveys, psychological investigations, observational and panel studies. (MRS, 1994)
However, marketing research and market research are not interchangeable terms. Market research is sometimes described as consumer/business research whereas marketing research looks into marketing strategy problems and as such is considered to subsume market research. This text covers market research particularly and touches upon aspects of marketing research.
Marketing research covers all aspects of the marketing of goods and services. There are various ways of classifying these aspects into categories according to the activity involved such as product research, price research, pricing research, sales research, customer research, and promotion research (Chisnall, 1992). Product research deals with the design, development, and testing of new products, the viability of existing products and estimating the demand in relation to consumers' future preferences in relation to style, product performance, and competition. Sales research involves a detailed examination of a company's selling activities. This is usually carried out using sales outlets or marketing zones and is analysed over a specified time period to enable direct comparisons over time and also with published data. Customer research usually deals with buyer behaviour-researching the social, economic and psychological influences affecting purchase decisions taken under different situations at the consumer, trade or industrial level. Such research covers the consumers' attitudes and opinions, and impact of different marketing practices that a company may adopt in the market. Pricing research deals with decisions all businesses have to make about the cost to the buyer of their goods and services. It is one of the critical factors affecting business success. It requires a creative and analytical approach to judge the sensitivity of price changes, effectiveness of relative positioning, and to estimate demand in a competitive market. Finally, promotional research is concerned with testing and evaluating the effectiveness of the various methods used in developing and promoting a company's product or services. Marketing research provides decision makers with information that allows the reduction of uncertainty surrounding business decisions.
Designing Marketing Research
There are three major categories of research designs: exploratory, descriptive and causal. Each relate to the role they play in the marketing research process. They specify the procedure for collecting and analysing the data necessary to help to identify a problem, such that it maximizes the difference between the cost of obtaining the information and the expected value of information associated with each level of accuracy.
Exploratory designs involve discovering the general nature of a problem and variables that relate to it. It enables the formulation of relevant hypotheses. These designs generally tend to be of a qualitative nature and use primary techniques such as focus groups, in-depth interviews and observational studies. It also uses secondary data, non-probability (subjective) samples, case analysis and subjective evaluation of the resultant data. Descriptive designs, on the other hand, focus on the accurate description of the variables under consideration and are quantitative in nature. They commonly use questionnaires and surveys and are employed for consumer profile and product usage studies, price and attitude surveys, sales analyses, and media research.
Causal designs try to establish the nature of relationship (or association) between two or more variables under investigation, for example study of price elasticity of demand and measuring advertising effectiveness in terms of sales or attitude changes. There is a need for caution in using such designs, as the direction of the causal link is quite important. For example, in the case of advertising effectiveness it is assumed that advertising causes sales to increase rather than vice versa. Further, the links, though strong, may be spurious (not logical/meaningful) in nature, for example sales being linked to the marital status of the salesforce. However, one can always find some explanation or a logical link between two measurements. Causal designs allow use of control variables or groups to facilitate meaningful comparisons between the outcomes. Watney-Mann Ltd, a brewer, in a study to measure advertising effectiveness of its 'best bitter' which was advertised used the 'mild beer' as a control (a similar product but not advertised). Mild beer (the control-used as one of the independent variables in the regression analysis) was allowed to generally account for the market conditions. It thus eliminated other factors affecting the sales and enabled measurement of the true effect of advertising. Experimentation is widely used in these designs.
The UK Marketing Research Industry
The marketing research industry in the UK is one of the most advanced in the world. It went through a lean period in the early 1990s with continual increases in annual turnover in the later years. In many cases companies turn to the marketing research budget when they are forced to make cost savings. This is not unusual, as marketing expenditure, which does not always show a clear and measurable return, is often the first to be cut when growth begins to slow.
Table 1.1 outlines the top marketing research agencies in the UK according to the Annual Report of the British Market Research Association (BMRA, 2000).
The BMRA, the trade body that represents UK market research companies, was formed in 1998 with the merger of the Association of Market Survey Organizations (AMSO) and the Association of British Market Research Companies (ABMRC). The BMRA experienced a substantial increase in membership during the 1990s, and in 1999, the market research sector was worth at least £1 billion (BMRA, 2000). The membership now includes approximately 80% of the total marketing research industry in the UK. Between them, these companies carried out approximately 9.5 million marketing research interviews in 1999. According to the AMSO, the majority of marketing research interviews in the UK are personal interviews (47.4%) and telephone interviews (40.3%). Although Web/Internet interviews accounted for only 1%, these are increasing at a very fast rate (BMRA, 2000).
The Market Research Society is the professional society for organizational and individual membership in the UK. The society was established in 1947 and is the largest body of its kind in the world today. There are a number of other professional associations and societies in the world of marketing research in the UK. The Industrial Market Research Association (IMRA), founded in 1982, and the Association of Qualitative Research Practitioners (AQRP), with an individual membership of over 500, are examples.
The marketing research industry uses different methods-observation, group discussions, personal interviews and surveys-for primary data collection. Table 1.2 shows the percentage of the total turnover generated during 1999 by BMRA members by type of method.
Who Conducts the Marketing Research?
Who should do the marketing research depends on size of the organization and the type of products it handles. Most of the large companies have some kind of marketing department and employ outside market research agencies to conduct research and support on their behalf. Small companies generally either are not involved or resort to ad hoc research. Companies with their own departments may consist of perhaps either (1) a small section of, say, two or three executive staff, plus administrative support or (2) a large department which can function as an in-house research department. The large department may have its own fieldforce, telephone and computer facilities and employ its own specialist staff, market researchers, psychologists and statisticians. The function of the executives of such a department would be to evaluate and circulate relevant information (for example, financial and trade press). In addition, they would act as the management's liaison with the sub-contracted research agency. Depending upon their ability and experience they may carry out some functions themselves, (for example, writing the questionnaire and/or the report), while leaving the sampling, fieldwork, coding and data analysis to the agency. They would have responsibility for selecting the agency and controlling the quality of their work, including keeping time schedules. They have to agree the research methodology and budget between the relevant persons in the marketing and market research departments. As such, the work of a large 'in-house' research department is similar to that employed in an external agency.
Which Agency to Select?
Two main advantages of using an agency are that it is relatively cheap compared with carrying out the research in-house and the data is collected independently. The fixed cost of recruiting, training and maintaining a large panel of interviewers and specialist staff is prohibitive unless the organization has a constant stream of research projects. The agency spreads these costs over many clients/projects throughout the year. There is fierce competition between agencies, which helps to keep their charges down to the variable costs of each survey plus a contribution towards fixed costs and profits. The agency will often specialize in a particular technique and become very efficient at performing it. They are also not involved in the emotional or political sense and can be more objective than the client's own staff in the research design and reporting. It is often preferable that the client remains anonymous to retain the objectivity of the study and increase the response rate to the investigation.
The main disadvantages of using an agency are that it cannot achieve the depth of knowledge of the client's problems nor of the product or market, unless it continuously researches the same area. With less day-to-day control there is an increased possibility of poor-quality research being carried out as well as rival organizations learning of the client's plans and research findings. The latter disadvantage is perhaps more apparent than real, since a client's staff may leave and join a rival. In many syndicated surveys (for example, retail audits and omnibus surveys) several rival organizations buy the same data from the agency, so that a cost-effective survey can be carried out. For this data to be useful, it needs to be viewed long term as the surveys indicate both short-term tactical performance and long-term trends.
In order to commission market research, the client can obtain a list of agencies (see The Market Research Society Yearbook in the UK) and might receive recommendations from other research buyers, i.e., trade associations, advertising agencies, colleagues, friends, and academic institutions. These are sought to draw up a short-list. Agencies that are then short-listed are asked make a 'presentation' of their services. Usually visits are made to their premises to check the quality of their staff and facilities, perhaps some interviewers are accompanied for several days to assess their quality and training, and previous reports may be read and permission sought to interview, or obtain references from, some of their other clients.
Each agency would be evaluated on its ability to carry out work of acceptable quality at an acceptable price within the stipulated time period. This could depend upon the following evaluations: (1) their staff-specialist technical ability, creativity, experience, length of service-stability, education and training, numbers employed and participation in MRS activities, conferences and published papers; and (2) their facilities, e.g., data processing, in-house editing and coding, group discussion rooms and printing and quality control procedures.
Excerpted from Introducing Marketing Research by Paul Baines Bal Chansarkar Excerpted by permission.
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Foreword by Robert M Worcester
Foreword by David Smith
About the Authors
About the Contributors
Part 1 Research Design and Methods
Introduction to Marketing Research
Marketing Research: Design and Process
Desk Research and Secondary Data Collection
Qualitative Research: Data Collection and Analysis
Survey and Questionnaire Design
Part 2 Statistical Considerations
Basic Statistics and Data Analysis
An Introduction to Sampling
Hypothesis Testing and Tests of Association
Hypothesis Testing and Tests of Difference
Part 3 Contexts in Marketing Research
International Marketing Research
Internet Marketing Research
Business to Business Marketd and Marketing Research
Appendix 1: Selected Sources of Secondary Information
Appendix 2: Statistical Tables