Application of Marketing Research ‘CLASSIFICATION OF MARKETING RESEARCH The application of marketing research stretches from the identification of consumer wants and needs to the evaluation of consumer satisfaction. It ‘includes research in respect of consumers, product, services, sales, distribution channels, advertising, pricing, export marketing and physical distribution. It also covers sales forecasting for company’s products while discussing planning of marketing operations. A clear view of the application of marketing research may be obtained by the following classification of marketing research activity. Traditional ‘Contemporary Emerging Applications Applications Applications * Product/Service * Competitive Advantage + Database Marketing * Price * Brand Equity * E-commerce * Promotion * Customer Satisfaction * Relationship Marketing * Distribution * Total Quality Management Figure 16.1 Classification of marketing research ‘Consumer Research Consumer research seeks answers to a variety of questions in respect of consumer characteristics and behaviour. The aim of this research is to develop am understanding about consumers, both current and potential, and the level of satisfaction expected and derived by them from company’s products, Broadly, the areas of consumer research include the following: * Determining the demographic characteristics of both existing and potential consumers.Application of Marketing Research 271 * — Identifying the consumer needs and product expectation levels. * — Identifying the factors influencing purchase decisions. * Ascertaining the levels of consumer satisfaction. Market Research Market research answers questions in respect of different markets. The purpose of this research is to gather facts about markets and the forces operating therein, lika‘competitors and government, so as to enhance the competitive strength of the company in the market place. The areas of market research broadly include : * Determining the size of both current and potential market. * Assessing the market trends. + Ascertaining the strengths and weaknesses of competitors’ marketing strategies. * Determining the impact of current and contemplated legislative actions of the state on the marketing effort of the company. * Demand and sales forecasting. Product Research Product research addresses itself to the questions associated with the products of the company and competitors. The purpose of this research is to find out the product image which will be compatible with the self- image of consumers and to ascertain whether the former really fits into the latter or not. Product research, thus becomes an important vehicle for implementing the marketing concept. The areas of product research include: * Evaluating performance of company’s products in terms of sales, profits, and market segments. * Determining modifications in the existing products. * Determining consumer acceptance of new products. + Undertaking comparative studies of the competitive products. * Evaluating new competitive products. * Determining current or new uses of existing products. * Market-testing of new products. * — Testing package and label designs. * Appraising diversification and simplification plans.272 Marketing Research Services Research These are many services which are offered both to individuals/ households to industries and institutional buyers. The buying practices, buying behaviour etc., of organisational buyers in the industrial marketing are equally applicable to marketing of industrial services. The broad areas of research in services include: + Selecting service attributes tailored to the needs of selected target markets that are equal to or superior to competitive offerings. * Tailoring location and timing of service availability to consumer needs and preferences. * Developing an effective communication mix to inform prospective customers about the service and persuade them in order to promote the use of that service. * Setting prices in line with competitive strategy, which the customer can afford and, which will leave a profit margin to the supplier of the service. Sales Research Sales research attempts to answer questions relating to the sales of company’s products. The purpose is to find out the sales potential and appraise sales performance of company’s products. The broad areas of sales research incjude: + Determining and appraising sales methods. * — Establishing and revising sales territories. * Measuring sales performance in terms of volume and profits. * Analysing the operations and appraising the performance of sales personnel. + Determining sales quotas and other standards of performance for different market segments and sales personnel. * Determining the mode of compensating sales personnel. Distribution Channel Research In distribution channel research, researchers address themselves to the questions relating to channels and intermediaries engaged by the company to transfer ownership of products to consumers. The purpose of this research is to identify the appropriate distribution channels and intermediaries and to ascertain whether they help the company inApplication of Marketing Research 273 meeting the consumer needs or not. The broad areas of channel research include: + Identifying the existing and potential distribution channels and appraising their relative’ strengths and weaknesses in the context of consumer needs. + Identifying the appropriate intermediaries for products and determining their number and type. * Measuring and evaluating the performance of the channels and different intermediaries. * Determining the needs of the dealers and the factors governing their behaviour. Advertising Research Advertising is one of the important consumer marketing areas in which marketing researchers are involved these days. The purpose of this research is to make the company’s product and other allied messages worthy of effective reception at the consumer-end so that consumers are induced to act in the manner desired by the company. The areas of advertising research broadly include: * Determining the advertising messages and appeals in the light of consumer research findings. + Comparing the probable effectiveness of the alternative advertisement copies. * Selecting the advertising media. + Evaluating the advertising effectiveness. Pricing Research In pricing research, answers are sought to questions relating to the ability of consumers to pay. The purpose of this research is to find out the price expectations of consumers and their responses and reactions to them. The areas of research broadly include : * Determining the price expectations of consumers in the different market segments. * Comparing the price strategics of the competitors. * Testing the alternative price strategies. * Evaluating the consumer reactions and responses to the company prices.274 Marketing Research Physical Distribution Research In physical distribution research, researchers address themselves to problems connected with the holding, handling and transportation of finished products. The purpose of this research is to explore the possibilities of cost reduction in any of these areas and enhancing the time and place utilities of products. The areas of research include: * Determining the optimum inventory levels. * Determining the design and location of distribution centres. * Considering the economics of the different modes of materials handling and transportation and determining their suitability. Global Marketing (Export-Import) Research Special cultural and other environmental factors, political and legal constraints to market entry and other unfamiliar influences require market survey enquiries be thoroughly designed. The multi phase approach in export research involves: * — Initial screening of countries or areas which appear to offer potentially attractive opportunities for market development. * — Identifying specific sectors or segments of markets. + Evaluating market opportunities against corporate resources and objectives. Financial Research Marketing research techniques can be used for making better decisions in the field of financial services/schemes marketed by a bank, finance house, leasing and hire purchase organisations. Financial research includes investor research and client research covering: + Supply side in the form of mobilisation of funds using financial schemes, + — Study of distribution network through agents and branches in different locations. * Estimation of demand side in the form of investor profiles and their investing patterns. * Identification of their needs and designing a package for them.Application of Marketing Research 275 Post-transaction Research It involves research into all those problems that are not covered above but otherwise concern marketing of company’s products. It also encompasses receiving feedback from the market about consumer satisfaction. It may include, inter-alia: * Studying and anticipating legislative and administrative actions of State affecting marketing of company’s products for example, price and product regulations. * ascertaining consumer opinion and determining the level of consumer satisfaction. SERVICES RESEARCH Critical Role of Services In a highly developed economy like that of the UK, and USA radical changes have taken place in the structure of its industrial and commercial base; older industries which typified the industrial revolution have largely been supplemented by newer industries based, for example, on electronics, computer technology or sophisticated technical and advisory services. The advanced economies of the western world now have the high proportion of their employment in the tertiary sector. The service economy is virtually a hallmark of economic development. The increasing dependence of modern economics on the efficiency of the service industries — which increasingly absorb a greater proportion of national spending power — should be a matter of direct interest to marketing specialists, including market researchers. Services increasingly support products, as with cars, industrial plant, office machinery, etc. They can add value to products — the concept of the augmented or extended product can be profitably developed on the provision of pre and post servicing. The health education and welfare services add immeasurably to the well-being of the population and also to the productivity of its economic efforts. In the mixed economy of modern industrialised communities, there is an interdependence between economic and social activities as well as between industrial free enterprise firms and government-controlled services serving companies and people. The public utility undertakings — now being privatised-concerned with the supply for gas, electricity and water are large users of many products and services and in some cases, virtually the major markets for276 Marketing Research some of their suppliers. The financial services market has expanded dynamically over the past decade or so. Most of the larger financial houses, such as the commercial banks, building societies and insurance companies, now have marketing departments. Some have market research specialists on their staff. The service sector is also likely to be the thrust area of high growth in our country in the years to come, due mainly to the following factors: (i) Industrial development. (ii) Growing middle class with disposable incomes. (iii) Growing specialisation of individuals. (iv) The influence of western culture and urbanisation. (v) High employment potential of the service sector as against the automated manufacturing sector. (vi) Governmental encouragement. Variety of Services In India services have encompassed a variety of fields such as: @ Banking, insurance, leasing, housing finance. (ii) Hospitals, hotels, airlines, travel and tourism. (iii) Goods and container transportation, courier services, warehousing, etc. (iv) Education, advertising, engineering, consultancy, etc. (v) Information technology, computer software, other high-tech services. New and additional services are constantly being introduced and are becoming popular with both households and institutions. In contemporary society people consider it more appropriate and economical to buy services from professional than to create them at home or within the organisation. Classification of Services We divide ‘good’ into two broad categories, viz. ‘Consumer goods’ and ‘Industrial goods’, based on who uses them. One may consider all these as being tangible goods with a physical existence, and separate the services as intangible goods forming the third category. However, all services could also be classified as ‘consumer services’ and ‘industrial services’, again based on who uses them, as shown below.Application of Marketing Research 277 Services Consumer Services Industrial Services Hotels, Motels and Travel Transport, Warehousing, & Tourism, Personal care, Advertising and Promotion, Entertainment, Passenger transport, Engineering and Consultancy, Insurance, Financial Services, etc. Computer software, Insurance, Financial services, ete. As is clear, there are many services which are offered both to individuals / households to industries and institutional buyers. The buying practices, buying behavior etc., of organisational buyers in the ‘Industrial Marketing’ are equally applicable to the marketing of industrial services. ‘Characteristics of Service Industries 1. dntangible Services are intangibles, abstract and cannot be packed, displayed at retail counters or exhibited. 2. No Middlemen Typically, producers of services sell direct to consumers and maintain direct contacts with them. Since no physical products are involved, there is nothing to move through distribution channels. There are, therefore, no middlemen or agents except when customers are widespread and agents are required to provide contacts. For example, airline agents, insurance agents etc. 3. No Inventory There is simultaneous production and consumption of services. There is no storage or inventory of services and there is no separation of consumption from production as is the case in manufacturing activity (service units hold stocks only of supporting items, e.g., a printer holding stock of ink and paper). 4. Operations Department The direct contact with customer highlights the importance of the operations department which is typically the central and largest part of any service business and dominates line management. Effective operations management is, therefore, critical to the success of any service industry. 5. Demand Fluctuation Some service industries are subject to fluctuations in demand during different hours of the day or over seasons, ¢.g., restaurants. 6. Capital Required While most professional services can be started almost without capital some others like transport, hotels, hospitals, etc., might be highly capital intensive.278 Marketing Research 7. Specific Use In some cases premises could be highly specific in use, ¢.g., hospitals. 8. Perishability Service products are highly perishable, e.g., an airline seat perishes the moment a flight takes off. An unoccupied hotel room, bus seat, theatre seat, hospital bed, all have the same perishability. 9. Professionals \f the suppliers have some unique or special service to offer, the demand for such services is often inelastic, and the supply of such services is also inelastic. Such suppliers consider themselves to be professionals and compete on quality of service rather than on price, for example, engineers, architects, medical doctors all more or less follow commonly accepted norms of charging fees and do not compete on the basis of price. 10. Some May Compete on Quality and Price As in the case of road transport in India, competition might be on quality as well as on price. ll. Inseparable’ Most professional services based on individuals’ skills cannot be separated from the supplier and/or cannot be mass- produced. Hence they are able to cater to very limited markets. 12. Heterogeneity Most services, even of the same supplier, cannot be uniform, though, for the purpose of marketing, some standardisation is possible and normally implemented. This is not to say that all the characteristics mentioned above apply to all types of services. Here our effort has been to pick up some of the important features common to a number of services. While working out the marketing strategies for each service, its exact characteristics and other situational factors will have to be considered along with the customers’ expectations. Role of Marketing in the Service Industry It is incorrect to say that if in a service industry customer-service is good and operations are efficient there is no need for the marketing function. In fact marketing has as many inputs to make and as much ofa role to play in service industries as in any other industry producing either consumer goods or industrial goods. In fact, in marketing intangible services it can be more difficult to differentiate the company’s ‘offer’ than is the case with tangible goods. The following are examples of some such marketing functions. (i) To select service attributes tailored to the needs of selected target markets that are equal to or superior to competitive offerings.Application of Marketing Research 279 (ii) To tailor location and timing of service availability to consumer needs and preferences. Gi) To develop an effective communication mix to inform prospective customers about the service and persuade them in order to promote the use of that service. (iv) To set prices, (a) in line with competitive strategy, (b) which the customer can afford and, (c) which will leave a profit margin to the supplier of the service. In practice, if some of the service industries or some companies within the industry have not inculcated the marketing concept they should do so and become customer-oriented in order to survive the competition. If the whole industry fails to satisfy the customer requirements, another new industry may take its place sooner or later to render that service to the customer. Banking services in India Till recently all the banks, both Indian and foreign, operating in India within the prevailing regulations, were not marketing oriented. Canvassing deposits or offering specialised customer service was neither aggressive nor extensive nor innovative. . However, during last few years, with Units (UTI), NSCs, Company Debentures, PSU Bonds etc., emerging as more attractive instruments for investment than bank deposits or offering specialised customer service was neither aggressive nor extensive nor innovative. However, the rates for deposits and advances are standardised by the Reserve bank. A bank can, therefore, do more business only by (i) improving the efficiency and quality of its service, (1i) offering attractive and innovative schemes for deposits and advances, (iii) using whatever little discretion that is available for concessions on subsidiary services and, (iv) dynamic personal selling, i.e., going out and persuading the depositor, and even the appropriate borrower. Some foreign banks such as Citibank, Hongkong bank and some nationalised banks like the State Bank of India, Bank of India, Canara Bank, etc., have already taken some steps in the direction of a consumer-oriented philosophy. Other banks are preparing to follow suit. The effort is to offer different, more attractive and more ‘suitable financial schemes, quicker service, efficient communication with and persuasion of the depositor, borrower etc. Emphasis on personal selling The promotional task involved in marketing ‘services’ is usually persuasive in nature, though the ‘informing’ and ‘reminding’ functions are also necessary. The reasons. are:280 Marketing Research (i) Most competing service business have __ relatively undifferentiated products to offer. (ii), They typically offer their products direct to their customers. (iii) Selling ‘service’ is like selling a ‘promise’ and ‘credibility’. Hence persuasion is important. As we know, ‘persuasion’ and ‘conviction’ are better achieved by the personal selling method than by the mass selling method of promotion, which is more suitable for creating awareness, imparting information and reminding. The competition in service industries is also increasing. The service industry in general, therefore, needs relatively more emphasis on personal selling. Many service industries, such as banks, hospitals, hotels etc., which have a large ‘operations department’, but no specialised sales staff, have realised that their marketing mix contains 5 Ps, the Sth ‘p” being their own employees, whose attitudes can make the organisation effective or render it ineffective. In India there is vast scope for the growth of service industries of all types and marketing has an important role to play in this growth, With the government, by and large, recolonising the importance of the service sector as a whole, young marketing professionals can look forward to ever- increasing opportunities to use their skills in promoting a wide variety of services. EXPORT RESEARCH The type of information needed to market successfully overseas is similar to that required for home market operations. But because of special cultural and other environmental factors, political and legal constraints to market entry and other unfamiliar influences, market survey enquiries must be thoroughly designed. . Multi-phase Approach A systematic and sequential approach to export market research is shown in figure 16.2. The first phase involves desk research and forms an initidl screening of countries or areas which appear to offer potentially attractive opportunities for market development. Checks will be made on environmental factors, economic data such as market size, trends and possible future developments, per capita income, GNP, etc. From this preliminary screening, some general guides should be forthcoming as to suitable markets for cultivation.Application of Marketing Research 281 Initial screening process (desk research} Identification of market ‘groups’ or ‘clusters’ l Systematic marketing research in areas identified in phase 2 Identification of special segments of national markets l Market opportunities in specific segments related to corporate resources and objectives Figure 16.2. Multi-phase research for international markets The second phase will concentrate on researching those groups or clusters which have been identified earlier. Further studies will enable specific sectors or segments of markets to be identified; this research will be extended in succeeding phases until, finally, the data covering market opportunities will be carefully evaluated against corporate resources and objectives. Scope of Export Marketing Research Investigations This is illustrated in figure 16.3 below from which will be noted the comprehensive nature of the data necessary to make well-informed decisions about export business operations. Nothing should be taken for granted in overseas markets unfamiliarity may indeed breed contempt but the results will be hazardous and even fatal for companies. Cultural norms may have profound influence on the acceptability of certain kinds of products, packaging or methods of distribution. Flavouring, consistency, colouring and labelling all affect product success. The guiding principle of a large German diversified group is: ‘as much standardization as necessary, as much differentiation as possible’.