the purposes of market research · by the end of this chapter, you should be able to: š explain...

11
By the end of this chapter , you should be able to: explain why and how organizations carry out market research analyse the primary market research methods comment on the secondary market research methods discuss the ethical considerations of market research distinguish between qualitative and quantitative research explain th e va rio us sampling methods int erpret res ult s from given data. Mar ke t r esearch is the process or co ll ecting, analys in g, and r epo rt ing data rel ated to a part icular market, in cludi ng d ata on consu mp tion of goods an d serv ices and on competitors' behav iour. Importa nt ly, businesses use market research infor mation to make decisions. The purposes of market research To id ent ify con su m er needs and wa nts as we ll as aim to u nde rstand con sumers' sat is f act ion leve ls and patte rn s in purch ase beh av iou r. For example, a beverage company may wan t to fi nd out t he type of custo m ers bu ying their so das and the sa les trends ove r a give n period . To assist a business in pre di ct ing wh at is likely to h app en in f utu re. Fo r examp le, an upcom ing recession may signal fi rms to be prepa red for decreases in overa ll spend i ng patterns because of a possib le decli ne in cons umer income levels. To red uce th e risk of produ ct fa il ure (especia ll y of new prod ucts) by effe ctively ca rr ying o ut m a rk et resea rch that establish es the li kes and dislik es of cons u me rs. To m easure t he effecti ve n ess of a marketing strategy. Th is can be done by assessing or eva l uat ing how a firm imp leme nts the activities requ ired by its marke tin g mix in specific ma rk et segm ents . To p ro v id e cu r re nt or th e la t est info rmation rega r ding a ct ivity in th e mar ket. Fo r exa mple, most l arge techn ol og ical com panies h ave hu ge resea rch and deve l opment budgets so th at they keep up to date in offering fir st-mover advantages . Market research methods Marke t r esearch can broadly be carr ied out in two ways : primary and seco nd ary research.

Upload: others

Post on 16-Aug-2020

0 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

By the end of this chapter, you should be able to: • explain why and how organizations carry out market research

• analyse the primary market research methods

• comment on the secondary market research methods

• discuss the ethical considerations of market research

• distinguish between qualitative and quantitative research

• explain the va rious sampling methods

• interpret results from given data.

Ma rket research is th e process o r collecting, ana lysing, and reporting da ta related to a particu lar market, including data on con sumption o f goods and services and on competitors' behaviour. Importa ntly, b usinesses use market research info rmation to make decisions.

The purposes of market research • To identify con su mer needs and wa n ts as well as a im to unde rsta n d

consumers' satisfact ion levels and patte rns in purch ase be haviou r. For example, a beverage company may wan t to fi nd out the type of customers buying their sodas and the sa les trends over a given period .

• To assist a business in predicting w hat is likely to happen in futu re. For example, an upcoming recession may signal fi rms to be prepa red for decreases in overall spending patterns because of a possible decline in consumer income levels.

• To reduce the risk of prod uct fa il ure (especia ll y of new prod ucts) by effectively ca rrying out m a rket research tha t esta blishes the li kes a nd dislikes of consumers.

• To measure the effectiven ess of a marketing strategy. Th is can be done by assessing or evaluating how a firm implements the activities requ ired by its marketing mix in specific ma rket segm ents .

• To provide current o r the la test informa tion regarding activity in the market. For exa mple, most large techn ological com panies have huge research and development budgets so that th ey keep up to date in offerin g first-mover advantages.

Market research methods Market research can broadly be carried o ut in two ways: p rimary a nd secondary research.

Page 2: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

282

MARKETING

Primar~ market research Th is is also known as fi eld research and involves the collection of first­hand information from the market. Most organizations will conduct th is resea rch to find ou r specific buying patterns of consumers and attempt to anticipate an y changes in th eir spending behaviour over a given period of time. Firms ma y decide to carry out this research themselves or seek the help of a market research agency. A key ad van rage o f primary research is that the orga niza tion that collects the data wi ll be the first to access it, which gives it an advantage over its rivals. For example, a hotel may discover th rough primary resea rch that a particu lar airline is prone to fl ight ca ncellations. It can use this information to attract customers who may be waiting for many hours and possibl y da ys for their connecting flights. However, fi e ld research is expensive because the research process takes time and requires specia lized researchers.

Secondar~ market research This is the collection o f second-hand in fo rmation fro m the market. Also kn own as desk research , it in vo lves a nalysing da ta tha t already exists in some form. Orga nizations sh ou ld fi rst carry ou t secondary research to get an overall background picture and th en conduct prima ry resea rch as a gap-filling m easure. Desk resea rch is a quicker and cheape r method tha n field resea rch a nd most o [ the informat io n involved is read ily available. However, th e information col lected may be out of date and h ave been collected fo r purposes o ther than th e specific needs of th e resea rching organization. In some cases the source of data may not be reliable.

Primary market research methods and techniques Surve~s These are questionn ai res sent out to a pa rticular ta rget a ud ience to enable the research e r to gath er usefu l information. The questionn ai re may conta in different types of question, fo r example those needing "yes" or "no" a nswers, m ultiple choice, or open-ended quesrions. A consumer survey may focus on getting specific in fo rmation from consumers by seeking their opinion on a particula r prod uct o r issue. Su rveys can be implem ented in a numbe r of different ways.

Som e of the most common ways to admin ister surveys include:

• by mail - an example would be an alumni survey distributed via direct mail by the developmen t offi ce in a school seeking the opinions from past students about an issue

• by telephone - an example would be a resea rcher calling consumers to elicit th e ir opinion on using a certain prod uct o r service

• online - for example, workshop leaders may use on line surveys as an eva luation tool to seek participants' opinions of the workshop.

Key terms

Market research

the process of collecting,

analysing, and report ing data related to a particular market

Primary research

the collection of first-hand

information from the market

Secondary research

the collection of second-hand

information from the market

Page 3: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

4.4 MARKET RESEA RCH

Advantages Disadvantages

• They enable researchers to collecL a large amount of data in a relatively short period of time.

• Surveys that are poorly constructed a nd administered can undermine otherwise well­intended research.

• If designed well, surveys can be administered and completed easily by the respon dents.

• Surveys can be used Lo collect info rmation on a wide range of aspects including altitudes, preferences, and opinions.

• The answers provid ed by respondents on a survey may not be an accurate re fl ection of how Lhey truly [eel, w ith some results also being biased.

• As large samples are usually used, surveys can prove LO be costly and use up a lot of time in their construction and administration. While random sampli ng is genera ll y used to select participants, response rates can bias the results o f a survey.

Interviews An interview is a conversaLion during wh ich the inte rviewer asks the interviewee quest ions in o rder to gain information. Interviews ca n be conducted o ne on one, [ace to face or by telephone.

Advantages

• They ca n provide deta iled information about the perceptions an d opin ions o f consumers through in-depth questi oning.

• They usua ll y achieve a h igh response rate because of the one-o n -o ne attention provided . Precise wording ca n be ta ilored to the respondent a nd the precise mean ing of question s clarifi ed during the interview process.

Focus groups

Disadvantages

• The whole process ca n be very time-consuming as it involves setting up th e inte rview, carrying it out, analysing responses, gath ering feedback, and reporting.

• Some interviewers may be biased, therefore influenci ng interviewees' responses.

Focus groups consist o[ a small number of people brought together to discuss a specific producL or idea . The group com prises individua ls who are representative of the custom e rs of the business or of a specific segment of customers. In Lhe discussion, participants respond to

questions prepa red by ma rket researchers. ParticipanLs freely share their opin ions, ideas, and reactions. They may also be asked to try a new producL. Usually, all their responses are viewed and studied to help researche rs predict th e reac tion of the larger markeL population.

How does the language used

in questionnaires influence

consumers and businesses'

conclusions when doing market research?

283

Page 4: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

284

MARKETING

Advantages

• As focus groups consist of a small group of individuals, using them is a cheap and easy way of gathering ma rket research.

• They can be used to measure the reaction of customers to a firm's new product or to the firm's strategies.

• They help identify key product requiremen ts as well as other needs not addressed by the business and its competitors.

• They provide insights on tbe current position of the firm's competitors in the mind ol' the customer.

Observation

Disadvantages

• The business may seek information about the entire market o r segment and it could be that the opinions of a small number of individua ls do not reflect it.

• There is t he possibility that some members of the group may not express their honest and personal opinions on the discussion topic. They may be hesitant LO express their own views, especially when their opinions oppose those of another participant.

• Focus g roups a re more costly to carry out than surveys as each participant usually has to be compensated in cash or in kind.

Obse rvation is a fundamental and basic method of getting information by ca refully watch ing and trying to understand certain things or people's behaviour. Some observations are scientific in nature; however, not a ll follow this trend. Observation can be u sed by supe rmarkets to check how quickly consumers notice their displays o r how long they may spend queuing as they wail to pay. It can also be used by a government's traffic department to observe the flow of traffic in certain areas and help provide recommendations for improvement.

Advantages

• It is a direct method of collecting data or information w hen studying actual human be haviour, as the researcher can see exactly how people behave in a given situation.

• A large number or indi viduals can be surveyed in a short space o r time.

• Observation is usually a cost-effective way of gathering data.

Disadvantages

• Complete answers to any problem or issue cannot be obta ined by observation alone, so market researchers need to combine this with other methods such as issu ing questiona na ires.

• Observation cannot be used to study attitudes or opinions of individuals because this usually requires a verbal response from the participant.

Secondary market research methods or techniques Academic journals These are publications of scholarly articles written by experts. The articles should be well referenced to provide the exact source of the information given. The experts will usually include professors, graduate students, or others w ith first-hand experience in a particular subject. Academic journals are written for the sole purpose of providing and distributing knowledge a nd not as a money-making opportunity.

Page 5: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

4.4 MARKET RESEARCH

Advantages Disadvantages

• Academic journals undergo a peer-review p rocess wh ere they are checked by academ ics and other experts. This increases the reliability of the information.

• Since they contai n information of very specific academic interest, they may not be th e best source for general-in terest topics.

• The peer-review process ca n be time­consuming, wh ich may also affect the provision of the latest or current event in forma tion.

• Most academic journals include reports, reviews of curre nt research, and topic-specific information. They a re therefore good sources w hen a firm is in need of o riginal research on a topic.

• They take less time to publish than books.

Media articles These incl ude newspa pe rs a nd magazi nes.

A n ewspaper is a printed publication containing news, fea ture articles, advertisemen ts, and correspondence. Once viewed as the dominant means of communica ting world even ts, newspapers have declined in readership since the rise of television and the Internet.

Advantages

• Communicating via a newspape r is cheaper than communicating via television.

• Most serious newspape r articles have been well researched, written with re liable sources, and edited for accuracy, w hich is not the case for some Internet resources.

• They are w idely available and can be found in many retail stores.

Government publications

Disadvantages

• It is difficu lt to communicate events in real-time. As the process o f producing content, prin ting, and distributing the finished paper is time-consuming, articles that were written may be out of date by the time they are delivered to th e customer.

• Newspapers can be biased, depending on the type of o rganization that owns them .

• The process of producing n ewspapers could be con side red a waste of paper and energy resources.

These are articles produced by the government on a w ide variety of topics. They could provide businesses with useful information on the population census in a country, statistics on socia l trends, o r even surveys on co nsumer expenditure patterns.

Market analyses These include comme rcia l publica tio ns o r market inte lligen ce repo rts that gathe r data abo u t particular m a rkets. The highly deta il ed reports are u sually ca rried out by specia list m arket research agen ts. They ca n be sourced a t various loca l business libraries, b ut they a re q uite costl y. Organizatio n s that provide such repo rts include Dun, Mintel and Verdict.

285

Page 6: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

286

MARKETING

ETHICS Marketing research has experienced a resurgence with the

widespread use of the Internet and the popularity of social

networking. It is easier than ever before for companies to connect

directly with customers and collect individual information.

The way a company conducts its market research these days

can have serious ethical repercussions, impacting the lives of

consumers in ways that have yet to be fully understood. Further,

companies can be faced with a public backlash if its market

research practices are perceived as unethical.

Deceptive practices

The ease with which a company can access and gather data

about its customers can lead to deceptive practices and

dishonesty in the company's research methods. The type of

ethical problems could range from not telling customers that

information is being collected when they visit a website to

misrepresenting research numbers by changing database

numbers. Any action that uses lies and deception to find out or

establish information about consumers falls under this category.

Invasion of privacy

One of the most serious ethical considerations involved in

market research is invasion of privacy. Companies have an

unprecedented ability to collect, store and match information

relating to customers that can infringe on a customer's right

to privacy. In many instances, the customer does not know

or understand the extent of the company's infiltration into his

[or her) life. The company uses this information to reach the

customer with targeted advertising, but the process of targeting

can have a chill ing effect on personal freedom.

Breaches of confidentiality

Another significant ethical consideration involved in market

research involves breaches of confidentiality. Companies

regularly share information about customers with partners

and affiliates, requiring the customer to opt-out of the sharing

if he [ or she) doesn't want to be involved. Some companies

sell information they have gathered on customers to outside

companies. Ethically, any unauthorized disclosure of customer

information is problematic.

Objectivity

Marketing and advertising have a significant impact on public

perceptions. Market researchers have an ethical obligation to

conduct research objectively, so data is available that allows for

the development of the varying issues noted. Researchers who

allow their own opinions to bias their work tend to contribute to

the continuation of stereotypes in advertising. For example, a

market researcher with a one-dimensional view of minorities

could do a fair amount of harm if allowed to shape an advertising

campaign based on biased data collection.

Source: http://smallbusiness.chron.com/ethical-considerations­marketing-research-43621.html

Exam-style questions

1. Describe two forms of marketing research. [4marks]

2. Discuss how and why ethics and globalisation

impact upon marketing research. (10 marks)

The differences between qualitative and quantitative research Primary resea rch o r secondary resea rch can be e ithe r qualita ti ve o r quantitative in na tu re.

Table 4.4.l shows the diffe rences between qualita ti ve and q ua ntita tive

research.

Table 4.4.1. Differences between qualitative and quantitative research

Qualitative research Quantitative research

This involves the collection of data about opinions, This involves the collection of numerical data or data that

attitudes or beliefs. can be measured.

Information is open to a high degree of interpretation. Information is open to less interpretation.

It is subjective. It is objective.

Key research questions wou ld include "Why?" Key research questions would include "How many?"

The researcher is part of the process. The researcher is separate.

It provides multiple realities, i.e. t he focus is complex It provides one reality, i.e. the focus is concise

and broad. and narrow.

Page 7: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

4 .4 MARKET RESEARCH

Generally, qualitati ve research is coll ecting, ana lysing, and inte rpreting data by observing what people do and say. Whereas quantitative resea rch refe rs to co unts and measures of things, qua li tative research refers to the meanings, defini tions, cha racteristics, and description s of things. Common me thods used in collecting qualitative data include the use of focus groups and in-depth interviews. Surveys a nd gove rnment publica tions a re m e thods usua ll y used to collect quantitative data. Quantitative research may seek answe rs to the question: How many customers bought the compan y's spo rts shoes in the month of May 20 13? Qualita tive resea rch may seek a nswers to the question: Why do custom ers li ke the company's sports shoes?

Sampling methods In reality th e re is simply not enough tim e, ene rgy, money, labour, o r equipment to carry out a survey of th e w hole population. The population comprises a ll pote ntial consumers in a market. However, in an e ffort to gather adequate primary research and still ha ve a clear idea of consumers' views, taking a sample of the popula tion is required. A sa mple is a small group of people selected to represen t the population or ta rget m a rket unde r resea rch. For example, a sm a ll group of con sumers cou ld be se lected o ut of a la rge number o f potential buyers of a product. Sampling is simply the process or selecting the app ropriate sa mple.

Below are a number of commonly used sampling m ethods and the advantages and disadva ntages of each.

Quota sampling This involves segm e nting a g ive n popula t io n into a numbe r of gro ups tha t share ce rta in cha racte ri sti cs (mutua ll y exclusive sub-groups) such as age o r gende r. Targe ts are th en set fo r the number of pe ople who must be inte rvie w ed in each segment. Fo r exam ple, in a sch oo l o f 500 students offering th e 1B diplo ma progra mme, a resea rche r may target 15 males a nd 20 fe ma les to inte rvi ew rega rdin g their percepti on o r the p rogra mme.

Advantages

• This is a quick a nd cost­effective sampling method, especia ll y whe re rhe proportions of the d iffere nt groups in th e population are known.

• Findings obtained a re us ually more re liable th an those o f ra ndom sa m pling.

Disadvantages

• Resul ts obta ined a re no t a lways sta tisticall y representati ve of the popula tion as rand om sa mpling (see below ) is not done; this a lso leads to sta tistical errors.

• The inte rvie we r may be biased in the selection of inte rviewees a nd choose those who will coope rate most in the process.

287

Page 8: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

288

MARKETING

Random sampling In this case every member in the population bas an equal chance of being selected as pa rt of th e sa mple . Th e sample of respondents is selected ra ndoml y. With technology, a list of random numbers can be generated from a target populatio n by the use o f a com puter. An example of se lecting a random sample ma y be choosing any 50 people fro m a te lephone directory containing the names of 1,000 peo

Advantages

• Ra ndom sampling reduces bias as everyone has an eq ual chance of being chosen.

• It is a re latively easy way of obtaining a sample.

Stratified sampling

Disadvantages

• The sa mple chosen may be too small and/or it may not consist of the target popu la tion: a la rge r, more representative sa mple may have to be selected .

In this method the target population is made up o[ many d ifferent groups who a re subdivided into segments or strata that sh a re similar characteristics. Members are then chosen from each stratum to fo rm a represe n ta tive sa m ple. For example, a secondary school may be deciding to introd uce a n ew school uniform. It may divide the school population based on the d ifferent forms, from Form l ro Form 5. A random sample is then ch osen from each of these forms, ensuring that the same proportio ns of the sample in each ca tegory is ma intained. As in th e above example, for a samp le size o f 50 people whose names appear in a telephone directory, 10 students from each form ( LO x 5) would be randomly selected to make up the req u ired sample.

Advantages

The sa m ple selected is m o re represemalive o f a particula r target population.

Cluster sampling

Disadvantages

IL is not easy to select re levant strata from a population of very similar cha racteristics.

This is an appropriate method to use w hen the population is geographically dispersed. This w ill involve selecting a group from each region (cluster) and then taking a random sample from the clusters. Fo r example, a multinatio nal w ish.ing LO set up a plant in a certain town may carry o ut resea rch on just a few geographical a reas around the location and the opinjons o f the clusters selected will be assumed to represent the whole population.

Advantage Disadvantage

• lL is a quick and cheap • Results obta ined m ay not be method of ca rrying out representa tive of the w hole resea rch from widely population and may be biased,

geographica ll y dispersed especially if the cluste r sample is

popu lations. obta ined from areas where people share similar characteristics.

CHANGE Technological innovation has transformed the way market research is done.

Social media has expanded the landscape is transforming it in exciting new ways. Social media allows unfiltered feedback abut requires new researching skills.

With new technology, researchers can be much more targeted in what they measure and who they target. Using the most recent social media and online survey products, businesses are able to collect data about all sorts of things. They can do it faster, better and cheaper than ever.

What do you think are some of the major drawbacks inherent in conducting market research using the recent changes in technology? How do you think these drawbacks can be addressed?

Page 9: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

4.4 MARKET RESE ARC H

Snowballing This is a process of sampling that involves s urveying the first group o r individual w ho then suggests othe r groups or individua ls who co uld participate, a nd so on. Members of the initial group use their con tacts to refer to o ther people tha t they know, hence the snowba ll effect. It may be used w hen conducting qui te sensitive research, fo r example a su rvey done on the use of ARVs amon g HIV-positive individua ls. It is a lso used when researching ex pensive soph istica ted products w he re the ra nge of po tentia l custom ers is limited.

Advantage

• It is a cost-e ffective meth od of obta ining info rmation through refe rrals.

Convenience sampling

Disadvantage

• There is potentia l fo r getti ng a biased sample, since friends sharing sim ilar li fes tyles may refer each other and be part o f th e same sample.

This is a sa mpling techn ique whe re groups are selected based on the ir easy access a nd proximity to the researche r. For example, a teach er doing resea rch on the school ca nteen co uld conduct a study by being physica lly present and directly ime rviewing studen ts purch asing ite ms from the can teen at break time o r lu n chtime . Anothe r example wou ld be when co nducting research in a hospita l, w hen the researche r may use th e first ten names in the patient list to select a sample .

Advantage

• It is a fast, easy and cheap m ethod of sampling beca use the research groups are readily ava ilable.

Disadvantage

• The sam ple may be biased a nd n ot be representative of the entire population .

Results from data collection BusiJ1esses are mterested in the range of resul ts they get from carrying out research. It is therefore of p rune importance that they ensure th at their data collection methods are appropria te and o ffer a high degree of accuracy. Whether using either quantitative o r qualita tive data, o r a combmalion of bo th, it is essential to maintain integrity m the research process. Selecting the appropriate data collection instruments and providing clear iJ1structions for their correct use reduces th e likelihood of sa mpling e rrors occurring.

Ben efits o f properly collected data include :

• the ability of research to answer accurately the research questions posed

• the abili ty to repeat a nd valida te a particular study w here n eeded

• increased a ccuracy of findings resulting in effi cient use of resou rces

• good opportuni ties for o ther resea rchers to pursu e areas needing fu rther investigatio n.

Exam tip

In determining the best

sampling method to use, it

is important to analyse the

strengths and weaknesses

of each method. A key

consideration is the level of

bias in the sample and how

cost-effective the method is.

This could also be influenced

by factors such as financial

resources, business size, and

rationale of the research.

Key terms

Quantitative research

the collection, analysis and

interpretation of numerical data

or data that can be measured

Qualitative research

the collection, analysis, and

interpretation of data about

consumer opinions, attitudes,

or beliefs

Sample

a group of people selected to

represent the population or

target market under research

Sampling

the process of selecting an

appropriate sample

289

Page 10: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

290

MARKETING

The h eart o f resea rch is gathering re liable inform atio n abo ut a n issue o r inte rvention a nd analysin g it to dete rmine the significance o f th e sample results. Collecting and ana lysing q uanti ta tive da ta ca n he lp highligh t connections (correla tions) among va riables and also address o the r

To what extent is market

research information reliable? fa ctors the resea rcher may not have conside red. Coll ecting and analysing qualitative data can provide insight into the varying participant experiences, including what may need to be imp roved or changed . On gaining the req uired knowledge from the resea rch informa tion p rovided, a research er should continu e eva luating the w hole process in an effort to obtain even be tte r results in the nex t research ro und.

Marketing research - A case study of Safaricom Safaricom is the leading telecommunications company operating in Kenya. It provides a host of products and services for telephony, GPRS, 3G, EDGE and data and fax.

It has been faced with a number of problems with

time, one of which is the entry of many other telecommunication companies into the market over

the years. The companies include, Telkom Orange, Yu and Zain. So far t he main rival is Zain. The problem caused by the entry of other companies is that they bring about unwanted competition [ decrease in market

share). This problem can be solved by conducting marketing research.

The first step in the marketing research process is

identify ing and defining your problem. Defining the problem would mean expanding on it and explaining why it should be seen as a problem. In this case Safaricom has identified a number of competitors as the threat of losing customers and reducing the market share, which will lead to lower profit margins and growth at the end of the year is contrary to what they want.

Step two is to develop your approach, generally speaking the approach should be developed almost exclusively around a defined set of objectives. Clearer

objectives developed in step one will lend them to a better approach development. Developing your approach should consist of an honest assessment of your team's market research skills, establishing a budget, understanding your environment and its influencing factors and formulating hypotheses.

Safaricom has to find an approach to counterthe problem they are facing, which is competition. A chosen team at Safaricom came up with a number of possible solutions and chose one that was effective. The first solution would be to introduce lower call rates for subscribers and introduce a competition which only

Safaricom subscribers can participate. The second solut ion Safari com can have a charity event were the money they make goes to a special cause for example food aid, tree planting etc this would affect the market

socially. And the final solution would be Supremacy to control the telephony industry by outmatching other operators to be the first to launch Apple's iPhone 3G. To do all this they have to carry out extensive research to

help in a decision.

Safari com decided to be the first to launch the Apple's iPhone 3G increasing the competitor advantage. The third step would be to market research to enable

the firm to make an appropriate decision on all the elements of the marketing mix as well as reduce the

risk of investing in an unprofitable marketing venture.

Since Safaricom is a long establ ished firm and has a network running across Kenya they decided to

launch the product in a limited geographical area where demand is observed. The price was high as it was a unique product to capture non price sensitive consumers who see new products as a novelty and as the product would grow older the price is reduced t o

capture the more price sensitive consumer. It will be launched in Westland's Nairobi next to two shopping malls and excessive advertisements will be done to

ensure consumers receive information about the new

and excit ing product.

Step four is called data collection or survey fielding. Generally data analysis is concerned with editing, coding and presenting collected raw materials into a form suitable for solving the research problem and making decisions. The data collected from the test marketing research would include diagrams, sales, etc this would enable us to evaluate it and make the decision on whether to launch the product officially in

the whole of Kenya.

Page 11: The purposes of market research · By the end of this chapter, you should be able to: š explain why and how organizations carry out market research š analyse the primary market

Step five is the analysis of the collected information. Data presentations methods chosen should allow for easy interpretation of the research findings by the analyst. Use of charts and diagrams make this possible as they can plot the data to show trends

and relationships between variables. Test marketing provides first hand information about the market and

also revenues are collected during collection of data.

For example the analyst can use a graph that shows the trend of the sales to help in making decisions.

Step six involves the market research report. The report must provide the readers [sponsor) with the information they require in a format they are able to

understand and appreciate. Vocabulary, presentations, analysis methods used should match the readers levels and demands. Also the report should contain

4.4 MARKET RESEARCH

threats of launching the product. In this case Safaricom launched the iphone 3G as their research in this

area was positive, however this was a test on a small group that may not effectively represent the whole market behaviors.

Adapted from http://www.123he1pme.com/marketing•

research--view.asp ?id=l 66 2? 5

Exam-style questions 1. Outline two challenges that companies such

as Safaricom may face when carrying out

market research. [4 marks]

2. Evaluate Safari co m's strategies to overcome

competition. [8 marks]

Student workpoint 4.8 ______________ ___..~ Be an inquirer Carry out an investigation on any organization of your choice that carries out market research . In the process, consider the following:

1. What are the primary and secondary research methods it uses?

2. Does it use qualitative or quantitative research, or both?

3. Comment on the sampling m ethod or methods it uses.

Revision checklist ✓ Market research aids in business decision making by collecting,

analysing and reporting data related to a particu lar market.

✓ Primary research (field research) and secondary research (desk resea rch) are the two ways in which market research can be carried out.

✓ Primary research methods include surveys, interviews, focus groups and observations.

✓ Secondary research me thods include academic journals, media articles, government publication s and market analyses.

✓ Quantitative research concerns the collection, analysis and interpretation of numerical data as compared to qualitative research that collects, analyses and interprets data about consumer opinions, attitudes or beliefs.

✓ In conducting market resea rch it is important that the data collection methods busin esses use are appropriate and offer a high degree of accuracy w hile maintaining integrity in the research process.

291