Market Research for Starting New Business - Assignment Example

Market Research for Starting New Business 1. Introduction Every function in the area of marketing starts with the marketing research. Any marketing initiative without properly analysing the results of the research can cause damage to tangible and intangible resources of an organisation. On the other and, a thought-over and deliberate step relevant to the sum total of the marketing research would offer the leverage in profit making for short term and long run as well (Avasarikar & Chordiya, 2007). This report will look at different types of market research done on different parameters, elaborating the purpose of market research for different stakeholders like government, manufacturers and distributors. It further considers the primary and secondary research and research instruments. A discussion on the identified audiences and contact methods is made in the context of public relations, direct marketing and personal selling tools. Benefits of developing a company’s own marketing and sales plan through the mechanism of public relations as well as pros and cons of employing outside agents, brokers and representatives are mentioned. Focus on distribution channel has been made by analysing distribution medium from marketing perspective. Finally, recommendations are made on how to conduct sales of the new business or product through public relations capabilities. 1.1 Definition There is no unanimous definition of ‘Marketing Research’, as depending on the experiences and wisdom of researchers. For practical and conceptual clarity, some popular definitions include: It’s systematic problem analysis, model building and fact finding for improved decision making and control in marketing of goods and services – Philip Kotler. Marketing Research is a systematic gathering, recording and analysing the data about marketing problems to facilitate Decision making – Cundiff & Still. A marketing research involves research into sales aspect, product aspects, advertising aspects, motivation, export, service marketing and miscellaneous other activities of research. (Avasarikar & Chordiya, 2007). 2. Types of Research Research can be broadly segmented into two categories: (a) Basic Research (b) Applied Research The Basic Research could be either fundamental research, theoretical research or pure research. ‘It aims at expanding the frontiers of knowledge and does not directly involve pragmatic problems’ – Emory C Williams. It denotes striving to go beyond the limited knowledge in a particular area, without any instant practical application issues. Such type of research does not tackle problems having instant commercial implications. The Applied Research also named Decisional Research, starts with a particular problem unlike basic research. In addition, it specifies various solutions and results or outputs of each alternative (Avasarikar & Chordiya, 2007). 3. Purpose of market research Market research is very important from different perspectives of manufacturers, distributors and government. 3.1 For Government (i) From a government perspective, a market research helps to know the latest trends in (a) Money market and (b) Capital market. These trends support government initiatives in taking different measures in the context of strengthening a nation’s financial grounding and overall economy (Avasarikar & Chordiya, 2007). (ii) Market research helps a government in formulating effectively (a) Inventory Policy (b) Purchase Policy and (c) Fiscal and monetary policy. (iii) Market research provides enough data to government agencies to take decisions for governing relevant sectors of an economy of a country. (iv)Marketing research provides critical data for taking policy decisions to safeguard the stakes of leading producers in a country. It helps government in providing quantum of subsidies on certain products (Avasarikar & Chordiya, 2007). 3.2 For Manufacturers (i) Marketing research serves the purpose of manufacturers in evolving practical and dependable marketing strategies to increase their earnings. Effective implementation of marketing strategies in a marketplace provides competitive advantage to the manufacturing firm. (ii) Manufacturers can formulate strategies that help in attaining increased profits through output mix or product mix. (iii) Manufacturers get crucial information through marketing research on (a) Potential marketing opportunities and (b) Potential threats in a marketplace via intermittent corporate and business analysis of the information. They can test a product before introducing it in the market. It helps in taking decisions on the launching of a new product by making improvements in the product either on the agreed standards or on the basis of market research made before launching the product (Avasarikar & Chordiya, 2007). 3.3 For Distributors Marketing research helps distributors like wholesalers, retailers and agents at various stages of the distribution mechanism. (i) Marketing research not only helps but instructs and commands the distributors to develop grounded and rational distribution policies. It helps distributors in projecting their positive image at the marketplace. (ii) It provides knowledge of consumer tastes, trends, likings, disliking, choices and changes in them from time to time. (iii) Distributors can implement changes at various mediums of distribution. (iv) Distributors can take a judicious decision on taking outside agency help or adopt an internal channel or joining of both the processes of distribution. (v) Marketing research gets distributors familiarise with cost and extent of distribution. (vi) Retailers get knowledge of the movements of different brands of a product. Distributors take clues from the market research on deciding a preferred location of distribution and field of a unit for distribution (Avasarikar & Chordiya, 2007). 4. Primary & Secondary Research Research based on market types could be divided also into primary and secondary research. In primary research prepared questions are asked to the respondents. In secondary market research comes published content like newspapers, magazines and books. Secondary research is quick and cost-saving than primary research. For conducting primary research, the surveyor goes straight to the source of information that could be a customer or prospect. Information in primary research is well-structured, which helps in designing quantitative and qualitative responses (Gorman, 2003). Quantitative information deals with numbers and data that can be examined mathematically. For example saying that 30% survey participants found Mighty Vac highly valuable is quantitative information. Qualitative information is oral and less on analysis of numbers like saying that Mighty Vac assists in cleaning hard-to-reach places is qualitative information (Gorman, 2003). 5. Research Instruments Use of research instruments like questionnaires, psychological tools, mechanical devices, and qualitative measures for conducting primary research should be made. Not all instruments are used equally, as the result on new business can be better evaluated through maximum usage of structured questionnaire. It could be followed by laddering technique under psychological tools, eye camera as mechanical device, and using videos for mapping qualitative response of the respondents (Avasarikar & Chordiya 2007). 5.1 Questionnaire: First of all, using structured questionnaire through online medium is the most straightway and instant response from the relevant audience that visits a shop or website. 5.2 Psychological Tools Using all psychological tools would not be pertinent to the nature of new business as in-depth interviews, Rorschach tests, and Zoltman Metaphoric Elicitation Technique (ZMET) are not suitable being complex in nature and respondents may not be willing too. Only laddering techniques can elicit prospects’ response to the new business, which is an electronics item to be carried always for multiple utilities. Considering the nature of the business that a customer desires, laddering technique is easy to perform through all types of surveys. 5.3 Mechanical Devices Mechanical device like an eye-camera can be used as an instrument of marketing research to know the time taken by respondents in inspecting the business features. Suitability of other mechanical devices like audiometers, Galvanometers and Tachistoscope depends on the suitability of the market research to the new business. 5.4 Qualitative Measures including Attitude Research Attitudes and life styles randomly named psychographics are comparatively new topics for marketers, which may include hobbies, sports participation, random outdoor dining, vacation plan, favourite reading material, television programmes, future concerns, political inclinations, religion, personality features and even sexual orientation. For example, new trends in the gay market prompt financial and consumer packaged goods companies to find ways to cater to this market division (Gorman, 2003). In qualitative measures, we can make use of videos to know whether respondents’ reaction match with their answers to survey questions (Avasarikar & Chordiya, 2007). 6. Identification and Discussion of the Audiences To conduct the marketing research in the right direction for positive results, it is very important to discuss the survey audience, number of people to be surveyed and selection of the respondents. Being a primary method of research, researcher can expect and measure the actual market trend through sampling. The target audience should be people from 16 to 50 years of age-group doing shopping on the malls. The decided number of audiences should be contacted and requested to fill in answers to the survey questionnaire. The best alternative is to request the website visitors to take 1 minute and answer the survey questionnaire for helping in knowing the market trend (Avasarikar & Chordiya, 2007). Sample size through online questionnaire is not a big deal. It can be requested to website visitors for one month to attempt the questionnaire until the target number is reached. Direct sampling can be conducted on weekends when there is big rush of customers and particularly those coming out of shopping stores so that target audience could be easily contacted. Number of respondents directly sampled could be below the 1% target audience to be sufficient to represent audience response. Marketers can engage in the below-the line (BTL) activity for some weeks until they capture the number of people to answer the questions asked. For sampling procedure researchers can select the respondents through non-probability sampling methodology as the cost and time for probability sampling could be high and unaffordable (Avasarikar & Chordiya, 2007). 6.1 Identification and discussion on contact methods Contact methods include mail questionnaire, telephonic interviewing, personal interviewing, and online interviewing. 6.1.1 Questionnaire Mail questionnaire is the ideal method of contacting respondents who have least interest in the option of personal interviews or whose response could otherwise be discriminatory or could be misinterpreted by the interviewers. 6.1.2 Telephonic Interviewing It is also the best alternate choice to directly contact the respondents. But this practice is getting out of fashion because of answering machines. People don’t have faith in the genuineness of the method. 6.1.3 Personal Interviewing As per the type of product, it won’t be conducive to interview the respondents; it is costly too. 6.1.4 Online Interviewing As stated above, this is done by inviting visitors for taking the survey questionnaire online. Some sort of motivation is offered to the visitors to answer the questionnaire. The best idea is to put a banner on most often visited sites to answer the questions and get a chance to win the prize. Online advertisement of the upcoming product is getting popularity in comparison to traditional marketing research methods (Avasarikar & Chordiya, 2007). Marketers can themselves formulate survey questions in-house or take the help of a market research firm. Certain touchy questions elicit better responses from market research firms than company representatives if comments are adverse (Gorman, 2003). 7. Public Relations, Direct Marketing and Personal Selling Plan Nothing can be a better option than developing a company’s own marketing and sales plan based on its existing strength of public relations. It seems to be more relevant for two reasons. First, the business is new to the market. It has to be marketed first by its own network of sales people so that its importance can be explained to prospects better way by the company personnel. Second reason is that it is not wise to spend money on distribution expenses. It can raise the cost of the new business in the end making it less competitive (Patsula Media, 2001). 7.1 Pros of using Agents, Brokers and Representatives The number of distribution channels is astonishingly high. Representatives can sell any product or service. Some of the pros are given below of engaging them. They can be reached and available at short notice. Their valuable market analysis can help in forecasting sales and knowing market competitors. Their suggestions on product improvisations are worthy attempting considering their knowledge of the related market. They can brief on the market behaviour without charging on this service. They are more often in a better position to search multiple usages of the product. You need not pay them if they don’t get orders. They remain in touch with the customers by contacting them, so they better know customer behavior. They know their territories better than the manufacturer. Can handle after sale services, warranties, training and installation Speak your voice to market your products Their expertise of complimentary products adds power to the offers made by them than new business efforts alone New business can benefit from their recognition by the customers Cons of using Agents, Brokers, Representatives Manufacturers can be at a loss by taking distributors’ services, as it is not an easy job providing training according to new business needs. Their functions cannot be supervised. Need a lot of support of promotional material like brochures and samples Can be out of control after gaining success; you have to entertain them as partners in your business Customer loyalty can shift towards distributors in stead of the company Their inquiries have to be answered always first to get their attention and effort put on You have to pay them generous and timely commissions (Patsula Media, 2001). 8. Marketing Distribution Channel Analysis For distribution purpose the selection of right distributor should thoroughly be considered. Factors need to be considered such as Cost of Distribution Method vs. Services Provided. Value-added services of the distributor need to be analysed before taking a decision on the right distributor. Type and number of customers could be diverse to use the retailer’s services. The new business should consider selling by its own marketing efforts. As the market is not concentrated being a new business, for scattered market, marketing managers should use the services of a wholesaler and retailer. Depending on the complexity of the new product or business it would be better to sell directly or through the agent. Financial resources of the company also contribute to the selection of a distribution channel. An established business has sound financials to afford a broker. To keep control on sales activities also, services of a broker or agent should be taken. Instead of engaging a distributor who does all processes from packaging to delivery, new business should opt for a distributor whose market success rate is high. 9. Conclusion As manufacturing would not be on the large scale initially, intermediaries whether wholesalers, retailers or agents, are must for the company, also due to limited capability of spending on sales and promotion of the new product. The new business should opt for retailers as well in selected locations. Every market has some retailers who command respect for their services. The company should find out such retail outlets that are quite popular to attract masses. Supplying the new product directly to the retailer at selected cities and locations can be a better strategy. It does not mean not to engage the services of highly successful distributors. Area-wise distribution contracts should be given where direct marketing efforts are not effective, particularly print media (Patsula Media, 2001). 10. Recommendations Public relations capabilities of the marketing manager can help in direct marketing of the product. For that a personal selling plan can be made by touching the sales realisation points. Experience of the sales and marketing manager in handling advertising and promotion, their relationship with other marketing partners of the industry can help in personal selling plan. Selling personal should have personal sales capabilities, management expertise and sound knowledge of profit and loss considerations. Network of the sales people of the company can be used in the sales realisation of the new product. Existing data of the company can be used to the benefit of the company by introducing the product to the old customers of the company. This strategy implemented smartly can help retain the old customers as well. At the same time sales expansion to new areas should be made by recruiting new sales people for the old territories and sending experienced sales staff to new locations. The company should attempt covering big cities first, as scope of selling new concepts is greater there. Expansion can be accomplished after a time interval in smaller towns and cities through the company’s sales team (Patsula Media, 2001). Thus, a lot depends on the potential of sales and marketing managers in formulating and implementing a selling plan based on public relations, direct, and personalised marketing. Promotional literature at the banners and television advertisement should be such that appeal remains in the mind of viewers for its flashy lines for a long time. Marketing managers should have good contacts with the media. References Avasarikar, D.P. & Chordiya, Dr. S.B., 2007. Marketing research. National Government Publication. Training Manual No. 117.Washington, D. C. Available from: http://books.google.co.in/books?id=vpH_jzHN2noC&printsec=frontcover&source=gbs_v2_summary_r&cad=0#v=onepage&q=&f=false [Accessed 28 Nov. 2010]. Gorman, Tom., 2003. The complete idiot's guide to MBA basics: Ch 18: Who are your customers, anyway? Penguin. Available from: http://books.google.co.in/books?id=Q8MVitN4WhwC&pg=PA253&lpg=PA253&dq=definition+of+Market+research+types+of+Market+research+functions+or+purpose+of+Market+research+books&source=bl&ots=JpD47vd_jB&sig=c7-QSI24a6aislOlcWjIspRGO98&hl=en&ei=hSXzTJ_jM4GWvAOMyNj6DQ&sa=X&oi=book_result&ct=result&resnum=10&ved=0CFsQ6AEwCQ#v=onepage&q&f=false [Accessed 28 Nov. 2010]. Patsula Media, 2001. The Entrepreneur’s guidebook series. Patsula Media. Available from: http://www.smbtn.com/books/gb71.pdf [Accessed 28 Nov. 2010]. Read More