Market Research

Prof. Ronak Shah

Introduction to Market Research

Market Research is the process of Systematic Design, Collection, Analysis and Reporting of Data & Findings, that are relevant to Specific Marketing situation being faced by the Company Market Research Encompasses all the spheres of Marketing, i.e. Right from the Idea of a New Product to After Sales Service

Companies normally budget Marketing Research at 1 to 2% of Company

Sales.

Prof. Ronak Shah

Introduction to Market Research

The Research Process Provides a Scientific Platform, Contrary to the Traditional Intuitive Approach of Decision Making by Managers, Which used to put Large Amount of Organizational Resources at Risk.

Companies generally avail service of either of the following types of Marketing Research Firms: Syndicate-Services Research Firms: These firms gather consumer & Trade Information, which they sell for a fee. Eg. ACNeilsen-ORG, NCAER etc..

Custom Marketing Research Firms: They Cater to the specific Research

Needs of Individual Companies

Prof. Ronak Shah

An Exercise
You are planning to open-up a Fast Food joint in Pune.... - Why will you conduct a Market Survey ? - What would be the Source of your Data ? - Whom will you ask these Questions ? How will you choose Sample ? - How will you collect the Information ?
(Personally asking questions OR Sending Mails etc...??)

- Which Tools will you use to Analyze these Data ?

Prof. Ronak Shah

Market Research Process

Define the Problem & Research Objective

Develop the Research Plan

Collect the Information

Analyze the Information

Prepare & Present the Research Report

Prof. Ronak Shah

Step 1 Define Research Problem

Answers to Following Questions will help you in Defining the Problem: What is to be Researched (The Content, The Scope) Why is it to be Researched (The Decisions that are to be Made) The Problem should not be defined either too Broadly or Narrowly The End product of these Step should be a clear Definition of the Problem Problem Definition for Our Restaurant Exercise: What is the Market Potential for a Fast-Food Joint with South Indian Dishes as their specialty, in Pune

Prof. Ronak Shah

Step 2 Develop the Research Plan

This Includes the Decision On: - Data Source: Primary Source, Secondary Source - Research Approaches: Focus Group, Survey, Behavioral Data, Experimental - Research Instrument: Questionnaires, Mechanical Devices - Sampling Plan: Sampling Unit (Who is to be Surveyed), Sample Size (How Many
People to be Surveyed), Sampling Procedure (How should Respondent be Chosen
: Probability Sampling OR Non Probability Sampling)

- Contact Methods: Mail Questionnaire, Telephone Interview, Personal Interview,

Online Interview

Prof. Ronak Shah

Step 2 Develop the Research Plan

Research Plan for Our Restaurant Exercise

- Data Source: Primary, Secondary or Both - Research Approaches: Survey - Research Instrument: Questionnaires - Sampling Plan: Sampling Unit (18-35 Age Group), Sample Size (200 People), Sampling Procedure (Random Sampling, Stratified Random Sampling (Age Group) ,
Cluster/area Samples (Region/City wise) )

- Contact Methods: Personal Interview

Prof. Ronak Shah

Step 3 Collect The Information

This is Most Expensive & Error prone Phase of Market Research Because:

Some Respondents will not be at Home.... Some Respondents will Refuse to Cooperate... Some others will give Biased or Dishonest Answers...

Getting the Right Respondents is always Critical

Prof. Ronak Shah

Step 4 & 5 Analyze & Present the Findings

Use Statistical tools & Decision Models to Analyze the collected Data..... (You would have studied Multivariate Analysis, Chi-Square, Annova....Etc This would be covered in detail if your choose MR as your Elective in Semester III OR IV)

The Data Becomes INFORMATION when Arranged & Analyzed Meaningfully......

Prof. Ronak Shah

Demand Forecasting
Forecasting Current Market Demand Forecasting Future Market Demand

Prof. Ronak Shah

Importance of Demand Forecasting

Sales Forecasts are Used By....
- Finance Dept. to Raise the Needed Cash for Investments & Operations - Manufacturing Dept. to Establish Capacity & Output Levels - Purchasing Dept. to Place Orders to Suppliers - HR Dept. to Hire the Needed Workforce...etc Marketing Dept. is Responsible for Preparing the Sales Forecast

Prof. Ronak Shah

Measures of Market Demand

Potential Market It is the Set of Consumers who profess a Sufficient Level of Interest in your Product Offering and Have Enough Income to purchase your Product Offering Available Market It is the Set of Consumers who have Interest, Income & Access to your Product Offering. For certain Product, Company or Government might have restricted the

Sales to only Certain Group of Consumers

Ex: Selling of Tobacco Products to Under 18 Age group is banned

Prof. Ronak Shah

Measures of Market Demand

Target Market It is the Part of Qualified Available Market the Company Decides to Pursue. Ex: Company might decide to concentrate its Marketing & Distribution efforts In the North only. Penetrated Market It is the Set of Consumers who are Buying the Companys Product

Prof. Ronak Shah

Forecasting Current Market Demand

Forecast of Current Market Demand is Useful while Venturing in to A New Market Two Popular Approaches Are: Total Market Potential, Industry Sales &

Market Share Information

Total Market Potential It is the Maximum amount of Sales that might be available to all the firms in an Industry during a Given Period, under a given level of Environmental Condition. Total Market Potential = No. of Potential Buyers X Average Quantity Purchased by a Buyer X The Avg. Price of Product
(Where X indicates Multiplication)
Prof. Ronak Shah

An Exercise
Essilor is World Leader in Spectacle Lenses. It is venturing in to Indian Market & planning to Targeting Indian youth (Age 18-35), since they have been the major consumers across the world for Essilor Contact Lenses.

It is evaluating the Market Potential of Pune, for the Contact Lenses.

One Pair of its Contact Lenses cost around Rs. 2000. Further, following Secondary data have been obtained From PMCs Consensus Dept. & Other Market Experts for such Products Total Population of Pune: 6 Mill. Age Group wise Break-up: Under 18: 20%, 18-35: 50%, Above 36: 30% Potential Buyers in Each Age group: 60%

Avg. No. of Contact Lenses purchased by

Each Person per Year: 0.6

What is the Total Market Potential ???

Prof. Ronak Shah

Forecasting Current Market Demand

Industry Sales & Market Shares Company needs to Identify its Competitors and estimate their Sales. The Company can then Compare and Evaluate its Performance vis-a-vis the Competition. The Industry Trade Associations normally compile and publish Data on Industry Sales and their Category wise Break-ups. Ex: Spectacle Lenses Market has Categories Like: Spectacle Glasses, Fiber Glasses, Contact Lenses...etc Syndicate Reports are also available in this regards, like, ACNeilson-ORGMARG Retail Index, National Readership Survey...etc
Prof. Ronak Shah

Forecasting Future Market Demand

Estimation for Products which have fairly consistent Sales, or which are Frequently Used Products, is relatively easy compared to estimation for Products whose Sales keep Fluctuating.

Demand Estimation Process is generally carried out by Research Agencies, Which observes Environmental Factors such as the effect of Government Regulations, Population Trends..etc.

Prof. Ronak Shah

Forecasting Future Market Demand

Four Fundamental Approaches for Future Demand Forecast

Prof. Ronak Shah

Forecasting Future Market Demand

Sales Force Survey - The Sales Team is Involved in Estimating Future Demand Pattern, using their Sales Experience - Advantage - it is Easy to conduct & it is Inexpensive - Disadvantage - It brings the Personal Factors/Experiences of a Sales Person - Company can Provide Incentives to its Sales person for providing Proper Projections to overcome above Challenges

Sales Person normally understands the Importance of Accurate Projections since their Sales Targets are being determined on the basis of these Projections
Prof. Ronak Shah

Forecasting Future Market Demand

Customers Survey - Understanding Consumer Behavior Patterns are the most Critical part of Demand Estimation - Conduct Consumer Research Survey to understand the Consumers Demand Patterns - Advantage It is Very Accurate since we can Read Minds of Consumers - Disadvantage Very expensive & Complex

Expert Opinion - These Experts may be Dealers, Suppliers, Consultants, Economist...etc - Forecast made are generally based on Intuition rather than Scientific Methodology
Prof. Ronak Shah

Forecasting Future Market Demand

Past Sales Analysis Companies also use Past Sales Information for Projecting Future Sales Patterns Methods like Time Series Analysis & Regression Analysis are used to forecast Future Demands based on Analysis of Past Sales

Lets Look at Time Series Analysis.......... (Next Slide)

Test Marketing

- Sales of the Product is directly Tested in the Market, for Few Days
- It is used where Effective Estimation or Forecasting is not Possible

Prof. Ronak Shah

Forecasting Future Market Demand

Time Series Projections: Exponential Smoothing
Include all past observations Weight recent observations much more heavily than very old

observations:

weight

0 1
Decreasing weight given to older observations

(1 ) (1 ) 2 (1 ) 3
today

Prof. Ronak Shah

Lets Stop....

Prof. Ronak Shah