MODULE-3

Market segmentation and market targeting - introduction to segmentation - targeting and

product positioning. Marketing research - need and scope - marketing research process
– research objectives, developing research plan, collecting information, analysis, and
findings.

What is market segmentation?

Market segmentation is the process of dividing a market of potential customers into
groups, or segments, based on different characteristics. The segments created are
composed of consumers who will respond similarly to marketing strategies and who
share traits such as similar interests, needs, or locations.

Why is market segmentation important for marketers?

 Market segmentation makes it easier for marketers to personalize their marketing

campaigns.

 By arranging their company’s target market into segmented groups, rather than
targeting each potential customer individually, marketers can be more efficient
with their time, money, and other resources than if they were targeting

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consumers on an individual level. Grouping similar consumers together allows
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marketers to target specific audiences in a cost effective manner.
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 Market segmentation also reduces the risk of an unsuccessful or ineffective
marketing campaign. When marketers divide a market based on key
characteristics and personalize their strategies based on that information, there is
a much higher chance of success than if they were to create a generic campaign
and try to implement it across all segments.

 Marketers can also us segmentation to prioritize their target audiences. If

segmentation shows that some consumers would be more likely to buy a product
than others, marketers can better allocate their attention and resources.

INTRODUCTION TO MARKET SEGMENTATION

According to Philip Kotler, “Market segmentation is the sub-dividing of market into

homogeneous sub-sections of customers, where any sub-section may conceivably be
selected as a market target to be reached with a distinct marketing mix.”

According to Stanton, “Market segmentation consists of taking the total heterogeneous

market for a product and dividing it into several sub-markets or segments, each of which
tends to be homogeneous in all significant aspects.”

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Market segmentation is just the first step in a three-phase marketing strategy. After
segmenting the market into homogeneous clusters, the marketer must select one or
more segments to target. So the second step is target marketing, which is the process
of evaluating each market segment’s attractiveness and selecting one or more
segments to enter.

To accomplish this, the marketer must decide on a specific marketing mix-that is, a
specific product, price, channel and promotional appeal for each distinct segment. The
third step is market positioning, which involves arranging for a product to occupy a
clear, distinctive and desirable place relative to competitive products, in the minds of
target consumers.

The concept of market segmentation emerged as an extension of the marketing concept

in the latter part of 1950’s. It is based on the simple observation that all the existing and
potential consumers are not alike: there are significant differences in their needs, wants,
tastes, background, income, education and experience etc. and these characteristics
change over time with lifestyle changes.

Had they been alike, it would have eliminated the need to have different variations of
the same basic product and one promotional campaign is all that would have been
needed. For instance, there would have been only one type of soap, one detergent, one
scooter, one computer, one car and so on.

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A market is composed of individuals and they are rarely homogeneous in benefits

wanted, purchase rates, price and promotion elasticity.

Their response rates of products and services and promotion programmes differ. Since
consumers have dissimilar needs and wants in a market, it is called a heterogeneous
market and most markets are heterogeneous. Differences in product preferences, size

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and growth in demand, media habits and competitive structure of the market also affect
the differences and response rates.

A market segment is a portion of a larger market in which the individuals, groups or

organizations share one or more characteristics that cause them to have relatively

similar product’s needs; whereas market segmentation is the process of dividing the

total market into relatively distinct homogeneous sub-groups of consumers with similar

needs or characteristics that lead them to respond in similar ways to a particular

marketing programme.

Three-decision processes comprising market segmentation, target marketing and

positioning are closely related and have strong inter-dependence and essentially need

to be examined carefully and implemented to be successful in managing a given

product-market relationship. Peter Doyle cites international examples:

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“In England, Japanese companies have out-performed their British rivals across a range

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of industries. A major reason for this was that the Japanese were better at managing

the segmentation, targeting and positioning relationships. Thus, only 13% of the

Japanese firms versus 47% of the British were unclear about their target segment of
customers and their special needs.”

Market segmentation and the identification of target markets are an important element

of each marketing strategy. The importance of market segmentation results from the

fact that the buyers of a product or service are no homogeneous group. Actually, every
buyer has individual needs, preferences, resources and behaviours.

Since it is virtually impossible to cater for every customer’s individual characteristics, the

marketing people group customers into various market segments by variables they have
in common. These common characteristics allow developing a standardized marketing

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mix for all customers in this segment. They are the basis for determining any particular
marketing mix.

The interlinking of segmentation, targeting and positioning

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Criteria for Market segmentation:

The market segmentation to be worthwhile six criteria, as shown below, must be

satisfied:

1. Identity:

The marketing manager must have some means of identifying members of the

segment, that is, some basis for classifying an individual as being or not being a

member of the segment. There must be clear differences between segments. Members

of such segments can be readily identified by common characteristics which display

similar behavior.

2. Accessibility:

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It must be possible to reach the different segments in regard to both promotion and

distribution. In other words, organization must be able to focus its marketing efforts on

the chosen segment. Segments must be accessible in two senses. First, firms must be

able to make them aware of products or services. Secondly, they must get these
products to them through the distribution system at a reasonable cost.

3. Responsiveness:

A clearly defined segment must react to changes in any of the elements of the

marketing mix. For instance, if a particular segment is defined as being cost-conscious,

it should react negatively to price rises. If it does not, this is an indication that the
segment needs to be refined.

4. Size:

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The segment must be reasonably large enough to be a profitable target. It depends

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upon the number of people in it and their purchasing power. For example, makers of

luxury goods may appeal to small but wealthy target markets whereas makers of cheap

consumption goods may sell a large number of persons who are relatively poor. The

idea is that enough potential buyers must exist to cover the costs of production and
marketing required in that segment. This is often called as substantiality.

5. Nature of Demand:

It refers to the different quantities demanded by various segments. Segmentation is

required only if there are marked differentiation in terms of demand.

6. Measurability:

The purpose of segmentation is to measure the changing behaviour pattern of

consumers. For example, the segments of a market for a car are determined by a
number of considerations, such as economy, status, quality, safety, comforts etc.

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Bases for consumer Market segmentation

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Types of Market Segmentation

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Geographic Segmentation:

In geographic segmentation, the whole market is divided into different geographical

units. Generally, the market is divided into regions-northern, southern, western, eastern

and so on. Each region may consist of several states and districts. A national marketer

may treat the whole nation as his market and divide it on the basis of region or zone for
business operations.

For example, in the detergent market, Hindustan Level and Proctor and Gamble are all

national marketers in India. Moreover, a multinational company (MNC) may divide the

global market on the basis of continental characteristics. For example, Coca-Cola may

consider the entire Asia as its market but for further business operations, it may divide

Asia into South Asia, Middle-east, Far-east Asia etc. Perhaps, each country may also
be considered as a geographical segment.

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Demographic Segmentation:

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In demographic segmentation, the market is subdivided into different parts on the basis

of demographic variables-age, sex, family size, income, occupation, education, family

life cycle, religion, nationality etc. Demographic variables have long been the most

popular bases for distinguishing significant groupings in the market place. One reason is

that consumer wants or usage rates are often highly associated with demographic

variables; another is that demographic variables are easier to measure than most other
types of variables.

Psychographic Segmentation:

Consumers are subdivided into different groups on the basis of personality, life style

and values. These characteristic lead to psychographic segmentation. People exhibit

different life-style and they express them through the products they use. Some social

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segments are very orthodox and tradition bound at home. But the same people look
very modem and conspicuous when in the outside world.

Marketers of cosmetics, textiles, soft-drinks, fast-food providers etc. must understand

the lifestyle of the target market. Personality is another psychographic characteristic

which is used to segment the market. Particularly, automobile manufacturers-two

wheelers and passenger cars-must consider different personality traits in dividing the

market. Values are also used by marketers to segment a market. Values are beliefs
which determine people’s product choices and desires.

Behavioristic Segmentation:

In this method consumers are classified into market segments not the basis of their
knowledge, attitude and use of actual products or product attributes.

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Any of the following variables might be used for this purpose:

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(а) Purchase Occasion:
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Buyers may be differentiated on the basis of when they use a product or service. For

example, air travellers might fly for business or vacation. Therefore, one airline might
promote itself as a business flyer while another might target the tourists.

(b) Benefits Sought:

The major benefit sought in a product is used as the basis of classify consumers. High

quality, low price, good taste, speed, sex appeal are examples of benefits. For example,

some air travellers prefer economy class (low price), while others seek executive class
(status and comfort).

(c) User Status:

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Potential buyers may be classified as regular users, occasional users and non-users.

Marketers can develop new products or new uses of old products by targeting one or
another of these groups.

Socio Economic Characteristics:

Income, occupation, education, religion and social classes are the important socio-

economic data required for market segmentation. These are all components of socio-

economic characteristics of a target population. Income and occupation characteristics

are generally used in market segmentation for durable products such as automobiles,
household appliances, electronic items, personal computer etc.

Benefit Segmentation:

Buyers can be classified according to the benefits they seek. On a purchase of same

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product, different customers look for different benefit because of which they buy

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products from different companies which satisfy their specific needs. Let us take the
example of a car. The basic function of a car is transportation.

But people prefer different cars because they seek different benefits:

(а) Quality:

There are people for whom the quality is important: they buy Mercedes Benz, Skoda
Octavia.

(b) Service:
People buy things to avail some specific service: they buy Ambassador Bullet-proof car.

(c) Economy:

The price may be important deciding factor in case of any purchase: they buy Maruti
800.

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(d) Specialty:
People can be adventurous and sporty in purchase decisions: they by Ferari.

User Status:

The users of a product or service can be classified as heavy users, medium users and

light users- heavy buyers, medium buyers and light buyers. Marketers of soft drinks, hot

drinks etc. for example, may segment the market in terms of the above said criteria. A

firm, generally, is interested in the heavy buyers or users. Sometimes, a firm may select

light users as their target market with the intention of wooing and changing these
customers into heavy users.

Usage Rate:

Markets can be segmented into various classes depending on usage rate. Considering

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the cosmetics usage, the different categories of usage rate are as follows:

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(a) Light:
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These are the categories of the users who are very infrequent users. In case of

cosmetics an average housewife who is not very fashion conscious is a light user of
cosmetics.

(b) Medium:

The fashion-conscious teenagers are the medium users of cosmetics, that is, they use it
frequently.

(c) Heavy:

There are people for whom the cosmetics are the most important purchase and they are

heavy users of it. Celebrities in entertainment world, the models etc. need cosmetics on
a regular basis, as it is the most important part of their profession.

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Loyal Status:

Consumers have varying degrees of loyalty to specific brands, stores and other entities.
Buyers can be divided into four groups according to brand loyalty status.

(a) Hard-core-Loyals:

Consumers who buy one brand all the time. We find people who have been using

Colgate for years without caring which other brands are coming in and going out of the
market.

(b) Split or Soft Core Loyals:

Consumers who are loyals to two or three brands. Pepsodent after its launch found
some customers of Colgate switching between the two brands.

(c) Shifting Loyals:

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Consumers who shift from one brand to another. Customers can be found to keep on

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switching off from Colgate to close up and then to Pepsodent without any consistency.

(d) Switchers:

Consumers who show no loyalty to any brand. These are the people who will buy any
brand that is available in the market.

Attitude:

A market may be segmented by classifying people in it according to their enthusiasm for

a product. Five attitude groups can be found in a market.

(a) Enthusiastic:

These are people having tendency of impulsive purchase. They may not carry cash all
the time but suddenly decide to buy something. They definitely need credit cards.

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(b) Positive:
They are serious buy mobile people who need to buy suddenly at any time.

(c) Indifferent:

There are some people who are technology averse with systematic purchasing pattern.

They would prefer to purchase with cash after thinking over the need for purchase. They
do not prove to be potential users of credit cards.

(d) Negative:

People can be spendthrifts who fear of losing money or misusing it. They would never
go for a credit card.

(e) Hostile:

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People at times become very much irritated either by sales-people calling or meeting
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any time, giving false promise or by the service provided. For example, in case of credit

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cards, there are some hidden costs which are not clarified by the sales-person during
selling.

Benefits:

Benefits from segmentation are:

1. Segmentation helps in focusing strategies more sharply on target groups.

2. It helps the company to know demand pattern of each segment thus increased the
sale volume of the products.

3. It helps the marketer to understand the needs, behavior, habits, tastes and

expectation of consumers of different segments. Thus marketing opportunities

increases.

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4. It is possible to satisfy a variety of customers with a limited product range by using
different promotional activities.

5. Marketing can be more specialized when there is segmentation as the element of

marketing mix.

6. Segmentation helps in adopting different policies, programmes and strategies for

different markets based on rival’s policies, programmes and strategies.

MARKET TARGETING

MARKET TARGETING: INTRODUCTION, DEFINITION, PROCEDURE AND

METHODS

Market targeting is a process of selecting the target market from the entire market.
Target market consists of group/groups of buyers to whom the company wants to satisfy

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or for whom product is manufactured, price is set, promotion efforts are made, and

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distribution network is prepared.

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INTRODUCTION:

A company cannot concentrate on all the segments of the market. The company can
satisfy only limited segments. The segments the company wants to serve are called the
target market, and the process of selecting the target market is referred as market
targeting. Market segmentation results into dividing total market into various segments
or parts.

Such segments may be on the basis of consumer characteristics or product

characteristics or both. Once the market is divided into various segments, the company
has to evaluate various segments and decide how many and which ones to target. It is
simply an act or process of selecting a target market.

DEFINITIONS:

Market is segmented using certain bases, like income, place, education, age, and life
cycle, and so on. Out of them, a few segments are selected to serve them. Thus,
evaluating and selecting some market segments can be said as market targeting.

However, we can define the term as:

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1. We can define the term as: Market targeting is a process of selecting the target
market from the entire market. Target market consists of group/groups of buyers to
whom the company wants to satisfy or for whom product is manufactured, price is set,
promotion efforts are made, and distribution network is prepared.

2. It involves basically two actions – evaluation of segments and selection of the

appropriate market segments. In this relation, market targeting can be defined as:
Market targeting is an act of evaluating and selecting market segments.

3. Finally, we define market targeting as: Market targeting consists of dividing the total
market into segments, evaluating these segments, and selecting the appropriate
segments as the target market.

Procedure of Market Targeting:

Market targeting procedure consists of two steps:

1. Evaluating Market Segments:

Evaluation of market segments calls for measuring suitability of segments. The

segments are evaluated with certain relevant criteria to determine their feasibility.

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To determine overall attractiveness/suitability of the segment, two factors are
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used:

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i. Attractiveness of Segment:

In order to determine attractiveness of the segment, the company must think on

characteristics/conditions which reflect its attractiveness, such as size, profitability,
measurability, accessibility, actionable, potential for growth, scale of economy,
differentiability, etc. These characteristics help decide whether the segment is attractive.

ii. Objectives and Resources of Company:

The firm must consider whether the segment suit the marketing objectives. Similarly, the
firm must consider its resource capacity. The material, technological, and human
resources are taken into account. The segment must be within resource capacity of the
firm.

2. Selecting Market Segments:

When the evaluation of segments is over, the company has to decide in which market
segments to enter. That is, the company decides on which and how many segments to
enter. This task is related with selecting the target market. Target market consists of
various groups of buyers to whom company wants to sell the product; each tends to be

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similar in needs or characteristics. Philip Kotler describes five alternative patterns to
select the target market. Selection of a suitable option depends on situations prevailing
inside and outside the company.

Alternative Strategies (Methods) for Market Targeting:

Basically five alternative patterns/strategies are available.

Company may opt for any one of the following strategies for market targeting
based on the situations:

1. Single Segment Concentration:

It is the simplest case. The company selects only a single segment as target market and
offers a single product. Here, product is one; segment is one. For example, a company
may select only higher income segment to serve from various segments based on
income, such as poor, middleclass, elite class, etc. All the product items produced by
the company are meant for only a single segment.

Single segment offers some merits like:

(1) Company can gain strong knowledge of segment’s needs and can achieve a strong
market position in the segment.
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(2) Company can specialize its production, distribution, and promotion.

(3) Company, by capturing leadership in the segment, can earn higher return on its
investment.

It suffers from following demerits like:

(1) Competitor may invade the segment and can shake company’s position.

(2) Company has to pay high costs for change in fashion, habit, and attitude. Company
may not survive as risk cannot be diversified.

Mostly, company prefers to operate in more segments. Serving more segments

minimizes the degree of risk.

2. Selective Specialization:

In this option, the company selects a number of segments. A company selects several
segments and sells different products to each of the segments. Here, company selects
many segments to serve them with many products. All such segments are attractive and
appropriate with firm’s objectives and resources.

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There may be little or no synergy among the segments. Every segment is capable to
promise the profits. This multi-segment coverage strategy has the advantage of
diversifying the firm’s risk. Firm can earn money from other segments if one or two
segments seem unattractive. For example, a company may concentrate on all the
income groups to serve.

3. Product Specialization:

In this alternative, a company makes a specific product, which can be sold to several
segments. Here, product is one, but segments are many. Company offers different
models and varieties to meet needs of different segments. The major benefit is that the
company can build a strong reputation in the specific product area. But, the risk is that
product may be replaced by an entirely new technology. Many ready-made garment
companies prefer this strategy.

4. Market Specialization:

This strategy consists of serving many needs of a particular segment. Here, products
are many but the segment is one. The firm can gain a strong reputation by specializing
in serving the specific segment. Company provides all new products that the group can

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feasibly use. But, reduced size of market, reduced purchase capacity of the segment, or
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the entry of competitors with superior products range may affect the company’s position.
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5. Full Market Coverage:
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In this strategy, a company attempts to serve all the customer groups with all the
products they need. Here, all the needs of all the segments are served. Only very large
firm with overall capacity can undertake a full market coverage strategy.

Following costs are likely to be higher in differentiated marketing strategy:

i. Marketing research cost

ii. Administrative costs

iii. Manufacturing costs

iv. Inventory costs

v. Promotional costs

vi. Product modification costs

Here, costs and sales both increase. So, profitability is doubtful. However, it is less
risky. Loss in one segment can be offset against profitable segments. Most of
companies prefer this option. Thus, market targeting is an essential aspect of marketing

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programme. A manager needs a lot of experience, knowledge, and expertise to take
decision on target market. The alternative to be used depends upon a large number of
internal and external variables. Careful and objective analysis of these variables can
assist in selecting target market.

PRODUCT POSITIONING

What is Product Positioning?

Product positioning is a form of marketing that presents the benefits of your product to a

particular target audience. Through market research and focus groups, marketers can
determine which audience to target based on favorable responses to the product.

Research can also determine which product benefits are the most appealing to them.

Knowing this information helps streamline marketing efforts and create effective

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marketing messages that drive more leads and sales. It also helps differentiate the
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product or service from the competition in the marketplace.

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Product positioning is an important component of any marketing plan, but it doesn’t

have to be limited to one audience. For example, a product may have a main target

audience and also a secondary audience that is also interested in the product, but

perhaps in a different way. Each audience will find the product appealing for different
reasons, which is why it’s important to tailor marketing messages to focus on the
benefits each audience values most.

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Examples of Product Positioning

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Product positioning can involve a number of different elements. A product can be

positioned in a favorable way for a target audience through advertising, the channels

advertised through, the product packaging, and even the way the product is priced. For

example, market research may have revealed that the product is popular among

mothers. What do they like about the product? What should be highlighted about the

product to attract them? And where should the product be advertised to reach them?

With the answers to these questions, an effective marketing campaign can be created

to send benefit-driven messages to the target audience wherever they may be (such as

Facebook, where targeted ads can be purchased based on demographics and

interests).

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Product Positioning Strategies

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1. Competition Strategies
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2. Reducing Competition Strategies

3. Product benefits strategies

4. Product Attributes strategies

5. Product Categories
6. Usage Occasions Approach

7. Pricing Approach
8. Users Approach

The manufactures design and choose the Product Positioning Strategies according to

the manufactured products and the unique features of that product. Choosing the right
strategy for the product is crucial for the brand Success.

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 1. Competition Strategies

These Product Positioning Strategies requires a unique or a superior product attribute in

regard to a competing product. Positioning a Product against the Competitors product

requires a claim of superiority. A very good example to understand this concept is of

Avis Rental Cars. The superiority claim was, “We are number two. We try harder”

2. Reducing Competition Strategies

This concept of Product Positioning Strategies can help to differentiate a product in the
dominant market of an already well established brand.

3. Product Benefits Strategies

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In these Product Positioning Strategies the company focuses on defining and

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communicating the product benefit, unique features that the product offers to the

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targeted customers. In this strategy the companies emphasizes on the various product

benefits. The product features include durability, availability, economy or reliability can
be illustrated in this type of product positioning.

4. Product Attributes Strategies

Positioning a product based upon a specific attribute can also be compelling to the
targeted audience.

5. Product Categories

Positioning your product by differentiating it from other product based upon a category

is a very effective way to resonate the key message in the targeted audience. A
product can be positioned along two or more characteristics in the same time.

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6. Usage Occasions Approach

This concept is used when marketers positioned there product based upon the usage

situation of the product by the tarred audience. These types of Product Positioning

Strategies are done intentionally to expand the market for a particular brand. Introducing

new and different uses of the same product will automatically expand the horizons for
the product, increase the market share and will lead more sales.

7. Pricing Approach

Using the price and quality approach to position a product can ensure easy sales of a

product. In this concept the marketers play with human perception and the thinking of

associating quality with price. The customer often perceives that there is direct relation

in quality and price i.e. the higher the price the greater the quality of the product. The

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Marketers use this Price – quality approach to position the products and can easily

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charge higher margins of profits.

8. Users Approach

Another interesting form of product positioning strategies is to focus on the specific

characteristics of the users of the product. In this case the makers of a specific brand

use a personality or a model to effectively influencing the product image in the minds of
the consumer. This type of positioning resulted in an increased market share.

Top 10 Benefits of Product Positioning

1. To Make Entire Organization Market-oriented:

Product positioning is a part of the broader marketing philosophy. It concerns with

identifying superior aspects of product and matching them with consumers more

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effectively than competitions. This philosophy makes the entire organisation market
oriented.

2. To Cope with Market Changes:

Once the product is positioned successfully doesn’t mean the task of manager is over.

He has to constantly watch the market. As per new developments in the market place,

new competitive advantages should be identified, discovered or developed to suit the

changing expectations of the market. It makes the manager active, alert and dynamic.

3. To Meet Expectation of Buyers:

Generally, the advantages to be communicated are decided on the basis of

expectations of the target buyers. So, product positioning can help realize consumers’
expectations.
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4. To Promote Consumer Goodwill and Loyalty:

Systematic product positioning reinforces the company’s name, its product and brand. It
popularizes the brand. The company can create goodwill and can win customer loyalty.

5. To Design Promotional Strategy:

More meaningful promotional programme can be designed. Based on what advantages

are to be communicated, appropriate means are selected to promote the product.

6. To Win Attention and Interest of Consumers:

Product positioning signifies those advantages that are significant to consumers. When

such benefits are promoted through suitable means of advertising, it definitely catches
the interest and attention of consumers.

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7. To Attract Different Types of Consumers:

Consumers differ in terms of their expectations from the product. Some want durability;

some want unique features; some want novelty; some wants safety; some want low

price; and so on. A company, by promoting different types of competitive advantages,

can attract different types of buyers.

8. To Face Competition:

This is the fundamental use of product positioning. Company can respond strongly to
the competitors. It can improve its competitive strength.

9. To Introduce New Product Successfully:

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Product positioning can assist a company in introducing a new product in the market. It

can position new and superior advantages of the product and can penetrate the market
easily.

10. To Communicate New and Varied Feature Added Later on:

When a company changes qualities and/or features of the existing products, such

improvements can be positioned against products offered by the competitors. Product

positioning improves competitive strength of a company. Normally, consumers consider

product advantages before they buy it. So, product positioning proves superiority of

company’s offers over competitors. It may also help consumers in choosing the right
product.

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 MARKETING RESEARCH

INTRODUCTION

Marketing research is defined as, “The systematic, objective and exhaustive search for

the study of the facts relevant to any problem in the field of marketing.” Marketing

research may be described as a method of getting facts to be used by the executive in

formulating policies and plans. It can also be defined as the systematic gathering,

recording and analyzing of data about problems relating to marketing of goods and
services.

It is a systematic search for information. It involves data collection, analysis and

interpretation. Research cannot draw decisions, but it helps the marketers in the task of

decision making. A successful executive will never depend upon guess work. He looks
for more accurate information through research.

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The main idea of marketing research is to know more about the consumers, dealers,

and the products. As the business grows, the distance between the manufacturer and

consumers also widens. The management depends upon the marketing research as a

tool in solving the marketing problems. It helps in taking a fruitful and efficient decision
as to the flow of goods and services in the hands of the customers.

What is Market Research?

The market research is an important element of the process of marketing research.

Marketing research includes the complete analysis of the market. Information regarding

the nature, size, organization profitability of different markets, changes in markets and

various factors- economic, social and political-affecting those changes are studied

vigorously. The main purpose of market research is to know about the consumers and
the markets of its products or services.

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Scope of Marketing Research:

Clark defines marketing research as “The careful and objective study of product design,

markets and such transfer activities as physical distribution, warehousing advertising

and sales management. Thus the scope of marketing research lies in its variety of
applications.”

1. Diagnosing the current situation or problem based on detailed information.

2. Clearly identifying competitive strengths and weaknesses.

3. Constantly analyzing what is happening in the market place.

4. Planning to watch company’s strengths with market opportunities by outlining

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objectives for product and market development and devising strategies and tactics to

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achieve them.

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5. Watching out continuously for threats to the achievement of those plans.

6. Monitoring the progress of strategy implementation.

Scope of Market Research

Market research covers the following items of study:

1. Size of the present and potential market.

2. Consumer needs wants, habits and behaviour.

3. Dealer wants and preferences.

4. Analysis of the market size according to age, sex, income, profession, standard of
living etc.

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5. Geographic location of customers.

6. Analysis of market demand.

7. Knowledge of competitors and their products.

8. Knowing the profitability of different markets.

9. Study the market changes and market conditions.

10. Analysis of various channels of distribution.

Objectives of marketing research

1. To understand the economic factors affecting the sales volume and their
opportunities.

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2. To understand the competitive position of rival products.

3. To evaluate the reactions of consumers and customers.

4. To study the price trends.

5. To evaluate the system of distribution.

6. To understand the advantages and limitation of the products.

7. To find new methods of packaging, by comparing other similar packages.

8. To analyze the market size.

9. To know the estimation of demand.

10. To evaluate the profitability of different markets.

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 Need of Marketing Research
The following points explain the need for marketing research
1. Identifying problem and opportunities in the market:
It helps in identifying new market opportunities for existing and new products. It provides
information on market share, nature of competition, customer satisfaction levels, sales
performances and channel of distribution. This helps the firms is solving problems.

2. Formulating market strategies:

Today, markets are no more local. They have become global. Manufactures find it
difficult to contact customers and control distribution channels. Competition is equally
severe. The consumer needs are difficult to predict. Market segmentation is a
compli-cated task in such wide markets. The marketing intelligence provided through
marketing research not only helps in framing but also in implementing the market
strategies.
3. Determining consumer needs and wants:
Marketing has become customer-centric. However, large-scale production needs
intermediaries for mass distribution. Due to prevalence of multi channels of distribution,
there is an information gap. Marketing research helps in collecting information on

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consumers from structured distribution research and helps in making marketing
customer oriented.
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4. For effective communication mix: NOT
In an era of micro- rather than mass-marketing, communica-tion plays a vital role.
Marketing research uses promotional research to study media mix, adver-tising
effectiveness and integrated communication tools. Research on such aspects will help
in promoting effectively a company’s product in the market.

5. Improving selling activities:

Marketing research is used to analyze and evaluate performances of a company within
a market. It also studies effectiveness of a sales force. It helps in identify-ing sales
territories. Such information helps the companies in identifying areas of shortcoming in
sales. It also examines alternative methods for distribution of goods.

6. For sales forecasting:

The most challenging task for any production manager is to keep optimum levels of
inventory. However, production is undertaken in anticipation of demand. Therefore,
scientific forecast of sales is required. Marketing research helps in sales forecasting by
using market share method, sales force estimate method and jury method. This can
also help in fixing sales quotas and marketing plans.

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7. To revitalize brands:
Marketing research is used to study and find out the existing brand position. It finds out
the recall value of brands. It explores the possibilities of brand extension or prospects of
changing existing brand names. The main purpose of marketing is to create brand
loyalty. Marketing research helps in developing techniques to popularize and retain
brand loyalty.

8. To facilitate smooth introduction of new products:

Marketing research helps in testing the new products in one or two markets on a small
scale. This helps in finding out consumer response to new product and develop a
suitable marketing mix. It reveals the problems of the customers regarding new
products. Thus, it controls the risk involved in introducing a new product.

9. Determine export potentials:

The development in transport and communication has helped in globalization and
digitalization of world trade. This has helped in boosting the growth of international
markets. Marketing research helps in conducting market survey for export. It. collects

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information on marketing environ-ment prevailing in a country. By collecting data on
consumers from different countries, it indicates export potentials.

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10. Managerial decision-making: NOT
Marketing research plays a vital role in the decision-making processes by supplying
relevant, up-to-date and accurate data to the decision-makers. Managers need up-to-
date information to access customer needs and wants, market situation, technological
change and extent of competition.

THE MARKET RESEARCH PROCESS

The market research process consists of 6 distinct steps:

 Step 1 - Determine the research problem and objectives

 Step 2 - Cultivate the overall research plan

 Step 3 – Collect the data

 Step 4 – Analyze the data

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 Step 5 – Present or publish the findings

 Step 6 – Use the findings to make an informed decision

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DEVELOP THE RESEARCH PLAN

The second stage of marketing research is where we develop the most efficient plan for
gathering the needed information and what that will cost. Suppose American made a
prior estimate that launching in-flight Internet service would yield a long-term profit of
$50,000. If the manager believes that doing the marketing research will lead to an
improved pricing and promotional plan and a long-term profit of $90,000, he should be
willing to spend up to $40,000 on this research. If the research will cost more than
$40,000, it’s not worth doing.10 To design a research plan, we need to make decisions

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about the data sources, research approaches, research instruments, sampling plan, and
contact methods.

COLLECTING INFORMATION

Data collection for marketing research is a detailed process where a planned search for

all relevant data is made by a researcher. The success of marketing research is

contingent on the integrity and relevance of the data. And to a high degree, the quality

of the data depends on the methods of data collection used. The selection and use of

methods for conducting marketing research requires a great deal of experience and

expertise in order to correctly gage suitability.

These methods fall into two types of research categories, which are Qualitative

Research and Quantitative Research. Qualitative Research is generally used to develop

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an initial understanding of the problem. It is non statistical in nature and the answers are

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derived from the data itself. It is used in exploratory and descriptive research designs.

Qualitative data can be procured through a variety of forms like interview transcripts;

documents, diaries and notes made while observing. Quantitative Research on the

other hand, quantifies the data and generalizes the results from the sample to the

population.

There are two types of data:

1. Primary Data – Data that is collected first hand by the researcher. This data is
specifically collected for the purpose of the study and addresses the current
problem. This is original data that is collected by the researcher first hand.
2. Secondary Data – Data from other sources that has been already collected and
is readily available. This data is less expensive and more quickly attainable from

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 various published sources. Secondary data is extremely useful when primary
data cannot be obtained at all.

The challenge lies in the case of method selection for collecting primary data. The

method has to be relevant and appropriate. This will be the most important decision

prior to beginning market research.

To further explore Step 3, here a few effective methods of data collection:

1. Telephone Interviews

The biggest advantage of telephone interviews is that is saves cost and time. Today,

accessing people via telephone is so much easier because almost everyone has one.

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Another advantage is fewer interviewers are required in order to conduct telephone

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interviews than face-to-face interviews.

2. Online Surveys

Given the current myriad of technological developments, the use of online surveys has

rapidly increased. It may well be the least expensive way to reach the greatest amount

of people – all over the world. Once an online survey has been designed, it can be

stored easily, revised and reused as needed from time to time. The key is in the design

and layout of the survey so that respondents don’t overlook a survey in their crowded

inboxes. The response time is quick so online surveys have become the preferred

method of data collection for many consumer satisfaction surveys and product and

service feedback. It is easy to track respondents, non-respondents and results through

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the data collection process. Electronic reminders can be sent easily at a very low cost.

Respondents have the option to begin the survey, stop, save the responses at a later

more convenient time. Research shows that respondents tend to answer questions

more truthfully than when engaged through other methods.

3. Face to Face Interviews

Face to face interviews can also take place via Intercept Interviews as well. These

interviews can take place on the spot at shopping malls, street corners or even at the

threshold of people’s homes. It is understandable why these types of interviews must be

brief, to the point and free of from distasteful questions as there is a strong risk of the

potential respondent leaving. These face to face interactions can be time consuming so

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enlist a trusted company like Dattel Asia to provide the data needed with unprecedented

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levels of transparency. Dattel Asiais ASEAN’s leading data collection company that

utilizes tablets, digital tools and artificial machine learning systems for data collection. A

reliable face-to-face data collection service provider that has over 250 skilled Field Data

Associates and more than 310,000 unique and verified respondents in their data

repository.

ANALYZE THE INFORMATION

The next-to-last step in the process is to extract findings by tabulating the data and
developing summary measures. The researchers now compute averages and measures
of dispersion for the major variables and apply some advanced statistical techniques
and decision models in the hope of discovering additional findings. They may test
different hypotheses and theories, applying sensitivity analysis to test assumptions and
the strength of the conclusions.

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PRESENT THE FINDINGS

As the last step, the researcher presents findings relevant to the major marketing
decisions facing management. Researchers increasingly are being asked to play a
more proactive, consulting role in translating data and information into insights and
recommendations.38 They’re also considering ways to present research findings in as
understandable and compelling a fashion as possible. “Marketing Insight: Bringing
Marketing Research to Life with Personas” describes an approach that some
researchers are using to maximize the impact of their consumer research findings. The
main survey findings for the American Airlines case showed that: 1. Passengers’ chief
reason for using in-flight Internet service would be to stay connected and receive and
send e-mails. Some would also pass the time surfing the Web. This entertainment
capability would require expensive broadband Internet access, but passengers stated
they would be able to charge the cost and their companies would pay. 2. At $25, about
5 out of 10 first-class passengers would use Internet service during a flight; about 6

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would use it at $15. Thus, a fee of $15 would produce less revenue ($90 6 $15) than

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$25 ($125 5 $25). Assuming the same flight takes place 365 days a year, American

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could collect $45,625 ( $125 365) annually. Given an investment of $90,000, it would
take two years to break even. 3. Offering in-flight Internet service would strengthen the
public’s image of American Airlines as an innovative and progressive airline. American
would gain some new passengers and customer goodwill.

MAKE THE DECISION

The American Airlines managers who commissioned the research need to weigh the
evidence. If their confidence in the findings is low, they may decide against introducing
the in-flight Internet service. If they are predisposed to launching the service, the
findings support their inclination.

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