4 Conducting Marketing Research and Forecasting Demand

Marketing Research DefinedSystematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing a company.

Marketing research is the systematic gathering, recording and analyzing of data about problems relating to the marketing of products and services .(American marketing association)

Classification of MRResearch on consumerResearch on marketResearch on productResearch on competitionResearch on priceResearch on advertisingResearch on sales Research on distribution

The Marketing Research ProcessDefine the problemDevelop the research planCollect informationAnalyze informationPresent findingsMake decision

Step 1

Define the problem

State research objectives

OBJECTIVESExploratory (aims to collect preliminary information that will help to define the problem and suggest hypotheses )

Descriptive (is to describe the marketing problem ,situations or markets) such as the market potential for a product and attitudes of consumers who buy the product

Causal (is done to establish the cause and effect relationships.)

Step 2Data sourcesResearch approachResearch instrumentsSampling plan

DATA Sources two 1 Primary data 2 Secondary data

Research ApproachesObservation (this technique observing what a customer is buying and doing in the store.)Survey (the researcher carries out opinion polls involving customer ,sales persons, dealers etc.)Experimentation (this is a technique that involves experimenting with new product ideas , advertising ,sales promotion and even pricing and distribution strategies with the target customer group)

Research InstrumentsQuestionnaires

Questionnaire Dos and DontsMake questions simpleMake questions specificAvoid difficult wordsAvoid unclear words

Avoid negativesUse response bandsUse similarly select categories

CLOSED- END QUESTIONS

Question TypesDichotomousIn arranging this trip, did you contact Air India? Yes No

Question TypesMultiple ChoiceWith whom are you traveling on this trip? No one Spouse Spouse and children Children only Business associates/friends/relatives An organized tour group

Question TypesLikert ScaleIndicate your level of agreement with the following statement: Small airlines generally give better service than large ones. Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree

Question TypesImportance ScaleAirline food service is _____ to me. Extremely important Very important Somewhat important Not very important Not at all important

Question TypesRating ScaleAir Indias food service is _____. Excellent Very good Good Fair Poor

Question TypesIntention to Buy ScaleHow likely are you to purchase tickets of Air India if in-flight Internet access were available? Definitely buy Probably buy Not sure Probably not buy Definitely not buy

OPEN-END QUESTIONS

Question TypesCompletely UnstructuredWhat is your opinion of Air India?

Question TypesWord AssociationWhat is the first word that comes to your mind when you hear the following?Airline ________________________Air India _____________________

Question TypesSentence CompletionWhen I choose an airline, the most important consideration in my decision is ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.

Question TypesStory CompletionI flew Air India a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings. Now complete the story. ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Question TypesPicture (Empty Balloons)

Sampling Plan

Sampling unit: Who is to be surveyed?Sample size: How many people should be surveyed?Sampling procedure: How should the respondents be chosen?

METHOD of SamplesPROBABILITY/ RANDOM(THE SAMPLE UNITS ARE SELECTED AT RANDOM THE TERM RANDOM SHOULD NOT BE UNDERSTOOD AS HAPHAZARD.)

NON PROBABILITY(Non-probability sampling method units are selected in a non random manner )

Probability sampling- type

1- simple random 2- systematic 3- area

Simple random sampling- is a sample where in any item of the population is as likely to be selected as any other item

Systematic sampling- involves selecting every unit from the population after the beginning unit is selected at random. ( Population=500 and my sample= 50 THE SAMPLING INTERVAL WILL BE FIXED AS 500/50=10 )

AREA SAMPLING- the sample units in several stages at each stages a series of intermediary geographical blocks are selected on random basis.

Contact MethodsMail questionnaireTelephone interviewPersonal interviewOnline interview

Characteristics of Good Marketing Research Scientific method Research creativity Multiple methods Interdependence Value and cost of information Ethical marketing

Major Marketing Research Agencies in India1. ORG-MARG Operations Research Group Marketing and Research Group2.IMRB Indian Market Research Bureau3.AC Nielsen India 4.TN Sofres MODE Taylor Nelson Sofres MODE(Marketing Operations Design and Enquiry Service MODE )

SCOPEScope of Marketing Research

Marketing Information System ( MkIS)Decision Support SystemMarket Research Projects

DEMAND & FORECASTING

Definitions of forecasting*Sales forecast is an estimate of sales in dollars (in rupees) for a specified future period. (American marketing association)

*Sales forecast is an estimate of future sales or sales calculation (R.C. Agarwal)

Objective of sales forecastingShort run objective Long run objective

Short run objectiveTo determine an suitable price policy for a given period.To start sales quote targets for different market segments.

Long run objectivesTo facilitate budgeting and budgetary control.To estimate future profits of the business enterprise.Estimating cash inflow from sales

Major Concepts in Demand MeasurementMarket DemandMarket ForecastMarket potentialCompany DemandCompany ForecastCompany potential

Market demand- for the product is the total volume that would be bought by a target group of customer in a target area.

Market forecast that part of the market demand that will appear with the level of marketing effort the industry will position in during the period of the forecast.

market potential is the highest limit approached by market demand as industry marketing expenditures approach time without end for a given marketing environment.

Company demand is the companys estimated share of market demand at alternative levels of company marketing effort in a given time period . (share will depend on how its product, service, price, communication, etc.)

Company forecast- means the sales forecast of the company. it refers to that share of the company demand, which the company expects to capture with the selected marketing effort.

Company potential- an individual firm can achieve at the maximum in a given market

Methods of Sales Forecasting1. Opinion of Executives2. Sales Force Composite MethodCustomers Expectations (or survey of buyers intentions)Expert Opinions MethodsHistorical Method

Opinion Method- sales forecast is done in discussion with person who are directly concerned with the problem .

Composite Method- Each individual views of the respective salesmen about the sales of his own area

Customers Expectations (or survey of buyers intentions)- Actual users of the companys product are contacted and are asked to submit the estimated quantities of the product they expect to purchase during a given period of time

Expert Opinions Methods- the sales organization collects opinions from the outside specialists engaged in the sales field, Such as Wholesalers, retailers, agencies, etc.

Historical Method- Past data information and reports etc. AS to demand, sales production etc. are analyzed and thereby sales forecast is done

Limitations 1-The executive opinion method gives results based on opinions and not facts. These forecasts are not readily amenable to breakdown into product-wise, month-wise or territory-wise forecasts. 2*In sales force composite method, salesmen do not use difficult techniques of forecasting. They are also not experts in forecasting. They can be over-optimistic or too negative about future sales. 3* Non availability of Data as to Past history of the product.

OTHERChange in FashionChange in priceMiscellaneous Government involvement Technological Developments Changes in the pattern of consumer behaviors

AdvantagesIn the field of production In the field of Distribution In the field of Advertising and Sales promotion.

Mobile for the Masses

QuestionsQ1 sales forecasting is an estimate of --------------------------- Q2 sales forecasting for a -------------------------period is more perfect. Q3 There are ---------method of marketing research. (3/4/2/5)

Q4 Prepare a brief questionnaire with 15 questions to collect data on customer satisfaction for PIZZA Hut

Q5 If you are a Sales Manager for Nokia in India, what methods will you use for forecasting your sales for the next 3 years? Justify your answer

Q6-Sales Forecasting Involves:------ A Market Research B Marketing Planning C Budget Forecasting D Estimating Future Sales.

Marketing MetricsExternalAwarenessMarket shareRelative priceNumber of complaintsCustomer satisfactionDistributionTotal number of customersInternalAwareness of goalsActive supportResource adequacyDesire to learnWillingness to changeFreedom to failAutonomyRelative employee satisfaction

Sample CustomerPerformance Scorecard MeasuresPercent of new customers to average numberPercent of lost customers to average numberPercent of customers in various levels of satisfactionPercent of customers who would repurchasePercent of target market members with brand recall

Tools to Measure Marketing Plan PerformanceSales analysisMarket share analysisExpense-to-sales analysisFinancial analysis

Sales AnalysisSales-variance analysisMicro-sales analysis

Market Share Analysis

Overall market shareServed market shareRelative market share

Marketing-Profitability AnalysisStep 1: Identifying functional expensesStep 2: Assigning functional expenses to marketing entitiesStep 3: Preparing a profit-and-loss statementfor each marketing entity

Distinguishing Types of CostsDirectTraceable commonNontraceable common

The Measures of Market DemandPotential marketAvailable marketTarget marketPenetrated market

Estimating Current DemandTotal market potentialArea market potentialMarket buildup methodMultiple-factor index methodBrand development index

Estimating Future DemandSurvey of buyers intentionsComposite of sales force opinionsExpert opinionPast-sales analysisMarket-test method

Purchase Probability ScaleDo you intend to buy an automobile within the next 6 months?0.00 No0.20 Slight possibility0.40 Fair possibility0.60 Good possibility0.80 High possibility1.00 Certain