Market-orientated businesses (uses of market research information to a business)
Before discussing the market research, it is better to discuss some basic concepts related to business. There are two types of businesses i.e. product-oriented business and market-oriented business.
Product Oriented Business
In a product-oriented business, the producer produces the product first and then tries to find out the market for it. Although this method is not common nowadays. These products are mainly related to the basic needs of life. We can have an example of agricultural products as most of the products are sold because of their quality, price, and utility. The retailers are not interested in any big brand name and consumers are interested to fulfill their needs.
Market Oriented Business
The businesses that have national and international markets to sell their products don’t go to sell directly. First, they conduct market research to know what their consumers need and then they design their products according to the needs of consumers. They meet the needs of consumers and earn a profit. These are called market-oriented businesses. It is also important to note that all market-oriented businesses must have a marketing budget that is used in various marketing activities.
The marketing budget is basically a financial plan for marketing a product for a specific time period. It could be for the whole year as well. It shows that how much finances are available to use for a product so that the marketing department manages its marketing activities according to the budget.
Market Research, Primary research and Secondary research (benefits and limitations of each)
Market Research and its Importance
Market research is basically the process of gathering and analyzing the data. The results are interpreted and findings are presented to the top management. On the basis of these results and findings, the management takes the decision about any particular situation like launching a new product, etc.
Market research is important to find out the opinion of the consumers. What consumers need and what they want from a specific product. When any business organization wants to introduce any new product in the market, market research is conducted to know the consumer insight. If results are not showing positive signs to launch the product, the organization may cancel the project. Launching products even after negative results of market research is a big risk that may end up with a huge financial loss.
There are two types of information that can be collected as the result of research.
The information that answers the questions related to the quantity is known as quantitative information. It deals with questions like “What percentage of university graduates is unemployed in this city?” or “How many people are taking benefits from social security in this city?” etc.
The information that answers the questions related to the opinion or perception of someone is known as qualitative research. It deals with questions like “What changes would you like to bring in our education system?” or “According to your opinion, what are the reasons behind inflation in the current scenario?” etc.
Both types of information i.e. quantitative information and qualitative information are collected through two types of research. These two types of research are primary research and secondary research.
Methods of Primary Research, e.g. Questionnaire, Online Survey, Interviews, Focus Groups
Primary research or field research is done through the collection of original or first-hand data. The direct contact of the respondent is required in primary research.
This research is carried out to use the data for a specific purpose. For example, to know the opinion of consumers towards a specific product, etc. It is the primary research that is also used for test marketing of a product.
Questionnaires are used to form the basis of any primary research. Sometimes questionnaires are used to collect data from the public directly like by meeting them on the streets.
Online surveys are carried out through websites. Questionnaires are made and then put on the websites from where the respondents can fill online. Sometimes, the links of online forms are also sent to the respondents through emails.
Advantages of Questionnaire
• A collection of detailed information regarding any product or service is possible through a questionnaire.
• The opinion of the respondent can also be obtained.
• Questionnaires can be put on different websites as well. That is a cheaper way to collect data. Questionnaires can be distributed through email as well.
Disadvantages of Questionnaire
• If the questionnaires are not designed very well, the information collected will not be accurate that may lead the higher management in the wrong direction.
• Designing the questionnaire is a time taking process.
• Analysis of the collected information is also a time taking process.
When interviews are conducted, the interviewer (the person who asks the questions) asks some questions to the interviewee (the person to whom questions are asked). The interviewer asks these questions to judge the interviewee’s personality and to get insight from his/her mind. Most of the time the questions are already prepared to be asked.
Advantages of Interviews
• In an interview, it is possible for an interviewer to explain the questions if the interviewee is not understanding.
• Detailed information and perception of interviewees can be gathered regarding any product, service, or anything else.
Disadvantages of Interviews
• It is observed that sometimes the interviewer influences to get answers in a certain way. Though most of the time, it is done unintentionally.
• It is a time-consuming process so that it is considered an expensive process.
A small group of respondents selected to get some information related to any specific product or service through guided discussion.
Advantages of Focus Group
• Consumer perception of any product or service can be studied in detail.
Disadvantages of Focus Group
• It is possible that some people could be influenced by other people in the panel.
• It is time consuming and expensive exercise.
Observations can be done in different ways. Some of these ways are discussed below:
Fitting meters on televisions of different people to know which channel was watched more and which channel was watched less.
How people behave in the supermarkets, which products they buy more.
The audit also shows which products are sold more than other products.
Advantages of Observation
• It is a cheaper way to collect data as compare to other ways.
Disadvantages of Observation
• It only provides you the basic information. It doesn’t describe to you the reasons behind consumer decisions regarding any product or service.
The need for Sampling
It is not possible for any researcher to conduct research by getting data from the whole population. It is because sampling is done to collect data from a target population.
There are two common types of sampling discussed below:
In random sampling, there is an equal chance for everyone to be selected as a respondent who lies in the category of the target population of that research.
In quota sampling, the samples are taken from a specific population like if research is being conducted on physically disabled people, the samples will be taken from physically disabled people only and not from the outside of that category.
Methods of Secondary Research, e.g. Online, Accessing Government Sources, paying for Commercial Market Research Reports
Secondary research or desk research is done by using the information already collected and made available for use by other people. There are two types of sources i.e. internal and external sources.
There is a cheap way to get information from our own company’s different departments like about customer’s choice, we can ask the customer care department. Regarding finance, we can get some information from the finance department and about the sale of different products, we can get information from the sales department.
Besides these internal sources, there are some external sources as well. Some of these sources are discussed below in detail.
Government Statistics is a great source of information that is considered reliable. Different publications from government departments provide information regarding different fields e.g. industrial development and growth, economic growth, literacy rate, etc.
There are various newspapers that publish different articles related to the economic situation of their country that may include industrial growth and development, business activities, agricultural development, etc. Newspaper reports and articles are based on facts and figures so that these are considered reliable sources of information.
Market Research Agencies
There are some market research agencies that offer their services to conduct research. Sometimes they conduct research according to the demand of clients and sometimes conduct to check market trends on their own and then sell the report regarding current trends. Although, both ways are expensive but are very commonly used in the market.
There are various websites available that offer access to the research reports especially related to academic research conducted by the students on different market trends in the current scenario. Most of the time these websites are not very expensive. These are also an authentic source of information.
Factors Influencing the Accuracy of Market Research Data
All the research activities are basically based upon the accuracy of data but there are some factors that play an important role in maintaining the accuracy of data. Some of them are discussed below:
The questionnaires should be phrased carefully to get honest responses from the respondent.
Selection of Samples
If the selected sample used in the research is truly representing the population then there is more chance that the results will be accurate. Quota sampling is a more accurate way to collect data.
The sample size plays an important role to bring accuracy to the data. If there is a large sample size, the chance for accuracy in data will increase.
If the questions are well phrased and clear to understand, it will be a great step towards collecting accurate data.
Sometimes, when articles published in newspapers regarding any topic like economic growth or industrial development, the writer becomes bias towards government policies. This bias behavior may be in favor of the policies or may go against the government policies but in both cases, the accuracy of data collected is affected.
Time of Information
In secondary research, it is important to choose the articles for the study that are newly published as to when time passes, the information becomes old and outdated. There is a high chance that Outdated information will affect your collected data for research purposes in our ever-changing scenario. From newly published articles, there are very few chances for data to be affected. In the same way in primary research, first-hand data is used so that there is also very little chance for data to be affected by the time of information collected.