Introduction to Enterprise

Market Research

Why is it necessary?

  • Feature of product liked by the customers
  • Customer preferences
  • Price to be charged
  • Place to sell the product
  • Type of customer
  • Type of promotion
  • Competition

Types of Information – 

  • Quantitative information refers to the information given relating to the quantity of something. Eg. “How many shirts were sold in November?”
  • Qualitative information refers to the situations where opinion or judgment is necessary. Eg. What do customers like about a product?

Types of Research – 

  • Primary Research also known as field research is the collection and collation of original data through direct contact with the potential or existing customers.
  • This research will usually be planned and carried out by the people who want to use the data.
  • It is first-hand information.
  • Secondary Research, also known as desk research, is the use of information that already has been collected and is available for the use of others.
  • The information can be from external or internal sources 

Types of Primary Research – 

  1. Questionnaire/ Surveys
  2. Interviews
  3. Sampling
  4. Consumer Panels/ focus groups
  5. Observation
  6. Test Marketing
  1. Questionnaire – 
  • They form the basis of most primary research.
  • This can be done either through telephone, post or by face to face contact.

Advantages and Disadvantages – 

Advantages – 

  • Direct consumer opinion about the product or service can be obtained.  
  • Detailed qualitative information can be derived about the product or service.

Disadvantages – 

  • Analyzing the answers to the questions is time consuming as well creating the very questionnaire. 
  • If the questions are not clear and not well thought, then it can mislead to wrong answers.

The process of creating the questionnaire – 

  1. Writing the question 

• Decide on number of questions- not more than 12.

• Keep questions short and clear.

• Choice of age group.

 • Avoid open ended questions.

• Be careful not to lead the interviewee into an answer you think is correct. 

• Be logical- put your questions in order.

  1. Carrying out the questionnaire 

• Consider how many people you are going to ask?

• What time of the day will you conduct the interview? 

• Where are you going to carry the interview?

  1. Interviews – 

In an interview, the interviewer (person asking questions) will have prepared questions for the interviewee (person answering questions), this can be done through telephone, individual face to face or group interviews.

Advantages and Disadvantages – 

Advantages – 

  • The interviewee likes and dislikes about the product can be gathered in detail. 
  • Interviewer can explain the questions interviewee cannot understand

Disadvantages – 

  • Interviews are very time consuming and quite expensive.
  • The interviewer could lead the interviewee into answering in a certain way, resulting in inaccurate results due to interviewer bias.
  1. Consumer Panel –

This is where a group of people agree to provide information about a product or general spending patterns over a period of time. Panels also test new products and then discuss what they think of them, explain what they like and what they dislike about them.

Advantages and Disadvantages

Advantages – 

  • Consumer panels can provide detailed information about consumer’s opinions, in order to facilitate product creation through them, and adapt them to tastes liked by the people.

Disadvantages – 

  • They can be expensive and time consuming.
  • They can be biased if some people are influenced by a person or a different group in the consumer panel and hence lead to misleading results

Observations can be taken in many different ways, such as – 

• They can take it in the form of: –

  1. Recording- E.g. Meters can be fitted to monitor which television channels are being watched. 
  2. Audits- E.g. Counting of stock in the shops to see which products have sold well.
  1. Test Marketing – 

Introducing a new product to a small part of the market in order to test if the product will be accepted by the customers or not. It’s expensive and takes time. It could also give ideas to competitors.

Advantages and Disadvantages

Advantages – 

• It is not a very expensive way of gathering information for research

Disadvantages – 

  • Information does not provide the business with reasons for consumer decisions 
  • It only provides with figures.
  1. Sampling – 

A Sample has to be selected to do market research as it would be too expensive and impractical to include all the population.

Two types of Sampling are- Random Sampling and Quota Sampling

Random and Quota Sampling – 

• When people are selected at random as a source of information for market research it is known as Random Sample. 

• When people are selected on the basis of certain characteristics like age, gender or income as a source of information for market research it is known as Quota Sample.

Advantages – 

• Easy to set up and carry out. 

• Consumer’s instant reaction of the product can be known.

Disadvantages – 

• Potential customers need not shop in those particular supermarkets where the experiment is done. 

• Customers might not give their real feelings about the product so as not to cause offense.

Secondary Research can be from internal and external sources – 

Internal Sources – The information which is readily and cheaply available from the firm’s own records is known as Internal Sources, such as – 

• Finance department 

• Customer service department 

• Sales department- sales records, customer details, sale reports, price data 

• Opinion from the distribution and public relation personnel

External Sources – Information received from outside the company. Since this information has been taken for some other purpose it will not cater to the needs of the research. But it can be used for gathering of information for the research.

• Newspaper

• Internet 

• Specialist Journal 

• Research report 

• Media report 

• Market research agencies’ report

Accuracy of Market Research varies from within how it is conducted and the method used, it depends carefully on the sample drawn up and also the way in which the questionnaires were prepared to get honest responses, and also depends on the size of the sample.

Data can be presented in many different ways, including pie charts, bar graphs, Venn-diagrams and such, using a variety would be time consuming but may also help you wherein comes the opportunity cost and your skillfulness as an entrepreneur.