Market Segmentation

Market segmentation is the process of dividing a market of potential customers into groups,
or segments, based on different characteristics. The segments created are composed of
consumers who will respond similarly to marketing strategies and who share traits such as
similar interests, needs, or locations. Market segmentation is the research that determines
how your organization divides its customers or cohort into smaller groups based on
characteristics such as, age, income, personality traits or behavior. These segments can later
be used to optimize products and advertising to different customers.

Importance of Market Segmentation

Market segmentation makes it easier for marketers to personalize their marketing campaigns.
By arranging their company’s target market into segmented groups, rather than targeting each
potential customer individually, marketers can be more efficient with their time, money, and
other resources than if they were targeting consumers on an individual level. Grouping
similar consumers together allows marketers to target specific audiences in a cost effective
manner.

Market segmentation also reduces the risk of an unsuccessful or ineffective marketing

campaign. When marketers divide a market based on key characteristics and personalize their
strategies based on that information, there is a much higher chance of success than if they
were to create a generic campaign and try to implement it across all segments. Marketers can
also us segmentation to prioritize their target audiences. If segmentation shows that some
consumers would be more likely to buy a product than others, marketers can better allocate
their attention and resources.

TYPES OR BASIS OF MARKET SEGMENTATION

GEOGRAPHIC SEGMENTATION

While typically a subset of demographics, geographic segmentation is typically the easiest.

Geographic segmentation creates different target customer groups based on geographical
boundaries. Because potential customers have needs, preferences, and interests that differ
according to their geographies, understanding the climates and geographic regions of
customer groups can help determine where to sell and advertise, as well as where to expand
your business.

DEMOGRAPHIC SEGMENTATION

Demographic segmentation sorts a market by demographic elements such as age, education,

income, family size, race, gender, occupation, nationality, and more. Demographic
segmentation is one of the simplest and most commonly used forms of segmentation because
the products and services we buy, how we use those products, and how much we are willing
to spend on them is most often based on demographic factors.

FIRMOGRAPHIC SEGMENTATION

Firmographic segmentation is similar to demographic segmentation. The difference is that

demographics look at individuals while firmographics look at organizations. Firmographic
segmentation would take into consideration things like company size, number of employees
and would illustrate how addressing a small business would differ from addressing an
enterprise corporation.

BEHAVIORAL SEGMENTATION

Behavioral segmentation divides markets by behaviors and decision-making patterns such as

purchase, consumption, lifestyle, and usage. For instance, younger buyers may tend to
purchase body wash, while older consumer groups may lean towards soap bars. Segmenting
markets based off purchase behaviors enables marketers to develop a more targeted approach.

PSYCHOGRAPHIC SEGMENTATION

Psychographic segmentation takes into account the psychological aspects of consumer

behavior by dividing markets according to lifestyle, personality traits, values, opinions, and
interests of consumers. Large markets like the fitness market use psychographic segmentation
when they sort their customers into categories of people who care about healthy living and
exercise.

Ensuring Effective Segments

A good segmentation analysis should pass the following tests:

Measurable: Measurable means that your segmentation variables are directly related to
purchasing a product. You should be able to calculate or estimate how much you segment
will spend on your product.

Accessible: Understanding your customers and being able to reach them are two different
things. Your segment’s characteristics and behavior should help you identify the best way to
meet them.

Substantial: The market segment must have the ability to purchase. For example, if you are a
high-end retailer, your store visitors may want to purchase your goods but realistically can’t
afford them. Make sure, an identified segment is not just interested in you, but can be
expected to purchase form you.

Actionable: The market segment must produce the differential response when exposed to the
market offering. This means that each of your segments must be different and unique from
each other.

BENEFITS FROM MARKET SEGMENTATION

Market segmentation offers the following potential benefits to a business:

 Better matching of customer needs:
 Customer needs differ. Creating separate products for each segment makes sense
 Enhanced profits for business:
 Customers have different disposable incomes and vary in how sensitive they are to
price. By segmenting markets, businesses can raise average prices and subsequently
enhance profits
  Better opportunities for growth:
 Market segmentation can build sales. For example, customers can be encouraged to
“trade-up” after being sold an introductory, lower-priced product
 Retain more customers:
 By marketing products that appeal to customers at different stages of their life (“life-
cycle”), a business can retain customers who might otherwise switch to competing
products and brands.
 Target marketing communications:
 Businesses need to deliver their marketing message to a relevant customer audience.
By segmenting markets, the target customer can be reached more often and at lower
cost
 Gain share of the market segment:
 Through careful segmentation and targeting, businesses can often achieve competitive
production and marketing costs and become the preferred choice of customers and
distributors

MARKET TARGETING
Market targeting is a process of selecting the target market from the entire market. Target
market consists of group/groups of buyers to whom the company wants to satisfy or for
whom product is manufactured, price is set, promotion efforts are made, and distribution
network is prepared. Market is segmented using certain bases, like income, place, education,
age, and life cycle, and so on. Out of them, a few segments are selected to serve them. Thus,
evaluating and selecting some market segments can be said as market targeting.
A company cannot concentrate on all the segments of the market. The company can satisfy
only limited segments. The segments the company wants to serve are called the target market,
and the process of selecting the target market is referred as market targeting. Market
segmentation results into dividing total market into various segments or parts. Such segments
may be on the basis of consumer characteristics or product characteristics or both. Once the
market is divided into various segments, the company has to evaluate various segments and
decide how many and which ones to target. It is simply an act or process of selecting a target
market.
IMPORTANCE OF TARGETING IN MARKETING
Targeting in marketing is important because it’s a part of a holistic marketing strategy. It
impacts advertising, as well as customer experience, branding, and business operations.
When your company focuses on target market segmentation, you can do the following:
Speak directly to a defined audience. Marketing messages resonate more deeply with
audiences when readers can relate directly to the information. Brands that have a large, varied
market of customers often struggle with creating marketing campaigns that speak directly to
their audience. Because their viewers are very different, few slogans or stories can resonate
with each person on a personal level. Through target marketing, you can alleviate this
problem and focus on crafting messages for one specific audience.
Attract and convert high-quality leads. When you speak directly to the people you want to
target, you are more likely to attract the right people. Your marketing will more effectively
reach the people most likely to want to do business with you. When you connect with the
right people, you are then more likely to get high-quality, qualified leads that will turn into
paying customers.
Differentiate your brand from competitors. When you stop trying to speak to every
customer in your market and start focusing on a smaller segment of that audience, you also
start to stand out from competitors in your industry. When customers can clearly identify
with your brand and your unique selling propositions, they will choose you over a competitor
that isn’t specifically speaking to or targeting them. You can use your positioning in
marketing to make your brand more well-known and unique.
Build deeper customer loyalty. The ability to stand out from competitors by reaching your
customers on a more personal, human level also creates longer-lasting relationships. When
customers identify with your brand and feel like you are an advocate for their specific
perspectives and needs, they will likely be more loyal to your brand and continue to do
business with you over a longer period of time.
Improve products and services. Knowing your customers more intimately also helps you
look at your products and services in a new way. When you have a deep understanding of
your target audience, you can put yourself in their shoes and see how you can improve your
offerings. You can see what features you can add to better serve your customers.
Stay focused. Finally, the benefit of using targeting in marketing is that it also serves to help
your brand and team. Target marketing allows you to get more specific about your marketing
strategies, initiatives, and direction of your brand. It helps you clarify your vision and get
everyone in the organization on the same page. You have more direction when it comes to
shaping upcoming plans for both marketing and the business as a whole. A focused approach
helps you fully optimize your resources, time, and budget.

Market Targeting Strategies

In todays’ business environment every business needs market targeting strategies. Targeting
the right market is very important. Here we will discuss four types of market targeting
strategies with examples.
Undifferentiated Market Targeting
Undifferentiated market targeting strategy ignores market segmentation and goes after the
whole market. This strategy considers buyers as homogeneous group. Undifferentiated
marketing is also known as mass marketing. In this strategy, companies do not produce
different products for different market segments. This type of marketing strategy relies on
mass distribution and mass advertising. Companies aim to create superior image of the
product in the minds of consumers. Company use this strategy to appeal a wider audience
based on common customer needs and wants other than differentiated and concentrated
strategies. It has a narrow product line which leads to low advertising cost. Lack of segment
marketing reduces the costs of marketing research. Example
Henry Ford adopted undifferentiated marketing strategy for T Ford Model. This model was
available in only black color in 1930s. Another example of undifferentiated strategy is
Hershey Company, few years back they have only one chocolate candy bar for all.
Differentiated Market Targeting
In Differentiated market targeting strategy, a company opt to target multiple market segments
and design different and effective marketing mix for each market segment. A Differentiated
market targeting approach is likely to create more sales than the undifferentiated marketing.
But due to distinct marketing mix, the promotion cost also increases. The increasing sales
must be weighed with increasing costs. Number of different companies adopted differentiated
marketing strategies. For example, the segmentation of Unilever generates more sales by
achieving higher market share through various detergent brands which they could not with
just one brand. Example
McDonalds, have developed unique menus for local consumers in many countries of the
world. In India McDonald create a unique menu for local consumers i.e. the McCurry Pan
which a vegetarian dish. The Indian version of Big Mac is called the Maharaja Mac “the
Social Burger” make with grilled chicken, tomatoes and onions. Both products are according
to the Indian religious sensitivities as beef is not consumed.
Concentrated Market Targeting
In concentrated / niche market targeting strategy, resources are focused and target specific
market segments. Concentrated marketing strategies are effective for those small companies
having limited resources. Due to focused strategy they can perform better compare to large
businesses. Due to better knowledge of specific segment’s needs, company can achieve a
higher market position. If company choose the right segment at the right time, it can achieve
lucrative rate of return on investment. Examples
Pizza Hut successfully developed database of 9 million pizza lovers’ customers. By using this
database, Pizza Hut developed target market campaigns to reach its consumers.
Micromarketing Market Targeting
Micromarketing strategy involves developing products, services and marketing programs best
match with individuals and locations. Small business owners can use micromarketing strategy
to target customers at personal level. Micromarketing includes local marketing and
individuals marketing. Examples
A good market targeting examples is Citibank, it offers different services on branch level
based on neighborhood demographics. Walmart and Sears Store customizes its inventory and
promotion to meet the requirements of specific clients.
Individual marketing examples include hotel industry, clothing, furniture and bicycle
industry. This strategy is based on the preferences on individual’s customers.
Whether a company, business owner or marketer, you should evaluate and target the market
very carefully and effectively. Market targeting strategies are designed to promote a brand or
resonate a message to target audience. Marketers have to evaluate market segments and select
target market according to their overall business objectives and plans.
MARKET POSITIONING
An effort to influence consumer perception of a brand or product relative to the perception of
competing brands or products. Its objective is to occupy a clear, unique, and advantageous
position in the consumer's mind. What is market position? In marketing and business
strategy, market position refers to the consumer’s perception of a brand or product in relation
to competing brands or products. Market positioning refers to the process of establishing the
image or identity of a brand or product so that consumers perceive it in a certain way.
For example, a car maker may position itself as a luxury status symbol. Whereas a battery
maker may position its batteries as the most reliable and long-lasting. And a fast-food
restaurant chain may position itself as a provider of cheap and quick standardized meals. A
coffee company may position itself as a source of premium upscale coffee beverages. Then a
retailer might position itself as a place to buy household necessities at low prices. And a
computer company may position itself as offering hip, innovative, and use-friendly
technology products.
Positioning of a Brand
The positioning of a brand or product is a strategic process that involves marketing the brand
or product in a certain way to create and establish an image or identity within the minds of
the consumers in the target market. Market positioning of a brand or product must be
maintained over the life of the brand or product. Doing this requires ongoing marketing
initiatives intended to reinforce the target market’s perceptions of the product or brand.
Repositioning
Repositioning a brand or product means altering its place in the minds of the consumer, or
essentially changing the brand’s or product’s image or identity. When you are repositioning,
or trying to change the consumers’ perception of a brand or product after it has already been
solidified, may confuse or alienate consumers in the target market.
For example, if a premium luxury car maker suddenly slashed the prices of its vehicles and
began selling them at the same prices as cheaper brand-name vehicles, consumers would no
longer perceive the vehicles made by the luxury car maker as prestigious status symbols,
even though the car features may remain unchanged.
Cost Leadership and Differentiation
There are two broad categories of market position: cost leadership and differentiation. Cost
leadership and differentiation market positioning strategies are applicable to any business and
any industry. A business can choose to position itself using a cost leader strategy or a
differentiation business strategy.
Cost Leader Strategy
A company using a cost leader strategy attempts to position itself in the minds of the
consumers as a company that provides products the consumers want at a price that is lower
than competing products available in the marketplace. Consumers expect basic products with
no bells and whistles from a company using a cost leader strategy. Instead, consumers just
expect the products to meet their needs and nothing more or less.
Differentiation Business Strategy
A company using a differentiation business strategy attempts to position itself in the minds of
the consumers as a company that provides unique products that consumers will pay more for
because they cannot find comparable products or product features anywhere else in the
marketplace. Consumers expect more from a differentiated product and therefore are willing
to pay a premium for a differentiated product. This is true as long as the unique features of
the product add some value to the product that makes it more valuable to the consumer,
whether a functional feature or an aspect of image or prestige that enhances the perception of
the product.
APPROACHES TO POSITIONING STRATEGIES
There are seven approaches to positioning strategies:
1) Using Product characteristics or Customer Benefits as a positioning strategy
This strategy basically focuses upon the characteristics of the product or customer benefits.
For example if I say Imported items it basically tell or illustrate a variety of product
characteristics such as durability, economy or reliability etc. Lets take an example of
motorbikes some are emphasizing on fuel economy, some on power, looks and others stress
on their durability. Hero Cycles Ltd. positions first, emphasizing durability and style for its
cycle. In the case of toothpaste market, most toothpaste insists on ‘freshness’ and ‘cavity
fighter’ as the product characteristics.
2) Pricing as a positioning strategy
If we look at this Price – quality approach it is important and is largely used in product
positioning. Example, Just suppose you have to go and buy a pair of jeans, as soon as you
enter in the shop you will find different price rage jeans in the showroom say price ranging
from 350 rupees to 2000 rupees. As soon as look at the jeans of 350 Rupees you say that it is
not good in quality.
Why? Basically because of perception, as most of us perceive that if a product is expensive
will be a quality product whereas product that is cheap is lower in quality.
3) Positioning strategy based on Use or Application
Let’s understand this with the help of an example like Nescafe Coffee for many years
positioned itself as a winter product and advertised mainly in winter but the introduction of
cold coffee has developed a positioning strategy for the summer months also.
Basically this type of positioning-by-use represents a second or third position for the brand,
such type of positioning is done deliberately to expand the brand’s market. If you are
introducing new uses of the product that will automatically expand the brand’s market.
4) Positioning strategy based on Product Process
Another positioning approach is to associate the product with its users or a class of users.
Makes of casual clothing like jeans have introduced ‘designer labels’ to develop a fashion
image. In this case the expectation is that the model or personality will influence the
product’s image by reflecting the characteristics and image of the model or personality
communicated as a product user.
Lets not forget that Johnson and Johnson repositioned its shampoo from one used for babies
to one used by people who wash their hair frequently and therefore need a mild people who
wash their hair frequently and therefore need a mild shampoo. This repositioning resulted in a
market share.
5) Positioning strategy based on Product Class
In some product class we have to make sure critical positioning decisions For example, freeze
dried coffee needed to positions itself with respect to regular and instant coffee and similarly
in case of dried milk makers came out with instant breakfast positioned as a breakfast
substitute and virtually identical product positioned as a dietary meal substitute.
6) Positioning strategy based on Cultural Symbols
In today’s world many advertisers are using deeply entrenched cultural symbols to
differentiate their brands from that of competitors. The essential task is to identify something
that is very meaningful to people that other competitors are not using and associate this brand
with that symbol.
Air India uses maharaja as its logo, by this they are trying to show that we welcome guest and
give them royal treatment with lot of respect and it also highlights Indian tradition. Using and
popularizing trademarks generally follow this type of positioning.
7) Positioning strategy based on Competitors
In this type of positioning strategies, an implicit or explicit frame of reference is one or more
competitors. In some cases, reference competitor(s) can be the dominant aspect of the
positioning strategies of the firm, the firm either uses the same of similar positioning
strategies as used by the competitors or the advertiser uses a new strategy taking the
competitors’ strategy as the base.

Marketing Mix
Definition: The marketing mix refers to the set of actions, or tactics, that a company uses to
promote its brand or product in the market. The 4Ps make up a typical marketing mix - Price,
Product, Promotion and Place. However, nowadays, the marketing mix increasingly includes
several other Ps like Packaging, Positioning, People and even Politics as vital mix elements.
The four Ps classification for developing an effective marketing strategy was first introduced
in 1960 by marketing professor and author E. Jerome McCarthy. The 4Ps were designed at
a time where businesses were more likely to sell products, rather than services and the role of
customer service in helping brand development wasn't so well known. Over time, Booms and
Pitner added three extended ‘service mix P’s': Participants, Physical evidence and Processes,
and later Participants was renamed People. Today, it's recommended that the full 7Ps of the
marketing mix are considered when reviewing competitive strategies. Cost, Consumer
wants and needs, Communication and Convenience (4Cs) are sometimes considered part
of the marketing mix.

Product: refers to the item actually being sold. The product must deliver a minimum level of
performance; otherwise even the best work on the other elements of the marketing mix won't
do any good.
Price: refers to the value that is put for a product. It depends on costs of production, segment
targeted, ability of the market to pay, supply - demand and a host of other direct and indirect
factors. There can be several types of pricing strategies, each tied in with an overall business
plan. Pricing can also be used a demarcation, to differentiate and enhance the image of a
product.
Place: refers to the point of sale. In every industry, catching the eye of the consumer and
making it easy for her to buy it is the main aim of a good distribution or 'place' strategy.
Retailers pay a premium for the right location. In fact, the mantra of a successful retail
business is 'location, location, location'.

Promotion: this refers to all the activities undertaken to make the product or service known
to the user and trade. This can include advertising, word of mouth, press reports, incentives,
commissions and awards to the trade. It can also include consumer schemes, direct
marketing, contests and prizes.
The services marketing mix is also called the 7Ps and includes the addition of Process,
People & Physical Evidence.

Process represents the method or flow of providing service to the clients and often
incorporates monitoring service performance for customer satisfaction. People refer to
employees who represent a company as they interact with clients or customers. Physical
evidence relates to an area or space where company representatives and customers interact.
Considerations include furniture, signage, and layout.

Determining Marketing Mix

The process of determining the marketing-mix (or marketing decision-making) consists of the
following steps:
1. Identification:
First of all, the marketing department must identify the target customers to whom the sales
are to be made.
2. Analysis:
Once the target market is identified, the next step is to discover and understand the needs and
desires of the customers. Marketing research is used in locating and analysing the target
market. It is necessary to know the number, location, buying power and motives of
customers. In addition, the nature of competition, dealers’ behaviour and government
regulations must be analysed.
3. Design:
On the basis of the knowledge obtained through identification and analysis, an appropriate
mix of product, price, promotion and channel is designed. Design involves not only the
determination of each component but the proper integration of individual variables so that
they reinforce one another.
4. Testing:
It is desirable to make a test run of the marketing-mix designed by the marketing department.
The designed mix may be used in a small group of customers. The reaction of customers will
indicate the adjustments required in the mix.
5. Adoption:
After the necessary modifications, the marketing-mix is adopted and put into use. The
adopted mix should be evaluated from time-to-time and it must be adapted to changes in the
environment of business.
Factors affecting Marketing Mix
Market related factors-
 Distribution system
 Consumer behaviour
 Government policies
 Nature of competition
Product related factors-
 Product planning
 Branding
 Marketing research
 Sales promotion
 Channel of distribution
 Advertising and Personal Selling
Importance of Marketing Mix
Marketing Mix is one of the most important marketing strategies used by companies. It lets
companies decide on their formula for the four parameters-Product, Price, Place and
Promotion. A marketer can use these four to adjust the product offering. All the elements of
the marketing mix influence each other. They make up the business plan for a company and
handled right, can give it great success. There are several benefits of the marketing mix that
makes it important to businesses;
 Helps understand what your product or service can offer to your customers
 Helps plan a successful product offering
 Helps with planning, developing and executing effective marketing strategies
 Helps businesses make use of their strengths and avoid unnecessary costs
 Helps be proactive in the face of risks
 Help determine whether your product or service is suitable for your customers
 Helps identify and understand the requirements of customers
 Helps learn when and how to promote your product or service to your customers

Marketing Environment
Marketing Environment is the combination of external and internal factors and forces which
affect the company’s ability to establish a relationship and serve its customers. The
Marketing Environment includes the internal factors (employees, customers, shareholders,
retailers & distributors, etc.) and the external factors (political, legal, social, technological,
economic) that surround the business and influence its marketing operations.
The marketing environment of a business consists of an internal and an external environment.
The internal environment is company-specific and includes owners, workers, machines,
materials etc. The external environment is further divided into two components: micro &
macro. The micro or the task environment is also specific to the business but external. It
consists of factors engaged in producing, distributing, and promoting the offering. The macro
or the broad environment includes larger societal forces which affect society as a whole. The
broad environment is made up of six components: demographic, economic, physical,
technological, political-legal, and social-cultural environment.

The marketing environment is made up of the internal and external environment of the
business. While the internal environment can be controlled, the business has very less or no
control over the external environment.

Internal Environment

The internal environment of the business includes all the forces and factors inside the
organisation which affect its marketing operations. These components can be grouped under
the Five Ms of the business, which are:
Men
Money
Machinery
Materials
Markets
The internal environment is under the control of the marketer and can be changed with the
changing external environment. Nevertheless, the internal marketing environment is as
important for the business as the external marketing environment. This environment includes
the sales department, marketing department, the manufacturing unit, the human resource
department, etc.
External Environment
The external environment constitutes factors and forces which are external to the business
and on which the marketer has little or no control. The external environment is of two types:

Micro Environment
The micro-component of the external environment is also known as the task environment. It
comprises of external forces and factors that are directly related to the business. These
include suppliers, market intermediaries, customers, partners, competitors and the public

Suppliers include all the parties which provide resources needed by the organisation.
Market intermediaries include parties involved in distributing the product or service of the
organisation.
Partners are all the separate entities like advertising agencies, market research organisations,
banking and insurance companies, transportation companies, brokers, etc. which conduct
business with the organisation.
Customers comprise of the target group of the organisation.
Competitors are the players in the same market who targets similar customers as that of the
organisation.
Public is made up of any other group that has an actual or potential interest or affects the
company’s ability to serve its customers.

Macro Environment
The macro component of the marketing environment is also known as the broad environment.
It constitutes the external factors and forces which affect the industry as a whole but don’t
have a direct effect on the business. The macro-environment can be divided into 6 parts.

Demographic Environment
The demographic environment is made up of the people who constitute the market. It is
characterised as the factual investigation and segregation of the population according to their
size, density, location, age, gender, race, and occupation.

Economic Environment
The economic environment constitutes factors which influence customers’ purchasing power
and spending patterns. These factors include the GDP, GNP, interest rates, inflation, income
distribution, government funding and subsidies, and other major economic variables.

Physical Environment
The physical environment includes the natural environment in which the business operates.
This includes the climatic conditions, environmental change, accessibility to water and raw
materials, natural disasters, pollution etc.

Technological Environment
The technological environment constitutes innovation, research and development in
technology, technological alternatives and innovation inducements also technological barriers
to smooth operation. Technology is one of the biggest sources of threats and opportunities for
the organisation and it is very dynamic.

Political-Legal Environment
The political & legal environment includes laws and government’s policies prevailing in the
country. It also includes other pressure groups and agencies which influence or limit the
working of the industry and/or the business in the society.

Social-Cultural Environment
The social-cultural aspect of the macro-environment is made up of the lifestyle, values,
culture, prejudice and beliefs of the people. This differs in different regions.

Importance of Marketing Environment

1 Essential for planning
An understanding of the external and internal environment is essential for planning for the
future. A marketer needs to be fully aware of the current scenario, dynamism, and future
predictions of the marketing environment if he wants his plans to succeed.

2 Understanding Customers
Thorough knowledge of the marketing environment helps marketers acknowledge and predict
what the customer actually wants. In-depth analysis of the marketing environment reduces
(and even removes) the noise between the marketer and customers and helps the marketer to
understand consumer behaviour better.

3 Tapping Trends
Breaking into new markets and capitalizing on new trends requires a lot of insight about the
marketing environment. The marketer needs to research about every aspect of the
environment to create a fool proof plan.
4 Threats and Opportunities
Sound knowledge of the market environment often gives a first-mover advantage to the
marketer as he makes sure that his business is safe from future threats and taps the future
opportunities.
5 Understanding the Competitors
Every niche has different players fighting for the same spot. A better understanding of the
marketing environment allows the marketer to understand more about the competitions and
about what advantages do the competitors have over his business and vice versa.

MARKETING INFORMATION SYSTEM

According to Philip Kotler “A marketing information system is a continuing and interacting
system of people, equipment’s, and procedures to gather, sort, analyze, evaluate, and
distribute the pertinent, timely, and accurate information for use by marketing decision-
makers to improve their marketing planning, implementation, and control.” The Marketing
Information System refers to the systematic collection, analysis, interpretation, storage and
dissemination of the market information, from both the internal and external sources, to the
marketers on a regular, continuous basis. The marketing information system distributes the
relevant information to the marketers who can make the efficient decisions related to the
marketing operations viz. pricing, packaging, new product development, distribution, media,
promotion, etc. Every marketing operation works in unison with the conditions prevailing
both inside and outside the organization, and, therefore, there are several sources ( viz.
Internal, Marketing Intelligence, Marketing Research) through which the relevant
information about the market can be obtained.
The major components of Marketing Information System are as under:
Internal Records: The Company can collect information through its internal records
comprising of sales data, customer database, product database, financial data, operations data,
etc.
Marketing Intelligence System: The marketing intelligence system provides the data about
the happenings in the market, i.e. data related to the marketing environment which is external
to the organization. It includes the information about the changing market trends,
competitor’s pricing strategy, change in the customer’s tastes and preferences, new products
launched in the market, promotion strategy of the competitor, etc.
Marketing Research: The Marketing Research is the systematic collection, organization,
analysis and interpretation of the primary or the secondary data to find out the solutions to the
marketing problems. Several Companies conduct marketing research to analyze the
marketing environment comprising of changes in the customer’s tastes and preferences,
competitor’s strategies, the scope of new product launch, etc. by applying several statistical
tools.
Marketing Decision Support System: It includes several software programs that can be
used by the marketers to analyze the data, collected so far, to take better marketing decisions.
With the use of computers, the marking managers can save the huge data in a tabular form
and can apply statistical programs to analyze the data and make the decisions in line with the
findings.

Components of Marketing Information System

Characteristics of Marketing Information System

1. MIS is an ongoing process. It operates continuously.

2. MIS acts as a data bank and facilitates prompt decision-making by manager.

3. MIS operates in a rational and systematic manner and provides required information.

4. MIS is future-oriented. It anticipates and prevents problems as well as it solves marketing

problems. It is both a preventive as well as curative process in marketing.

5. The gathered data is processed with the help of operations research techniques. Modem
mathematical and statistical tools are available for problem-solving in the field of marketing.

6. MIS is a computer-based method of data collection, processing, and storage.

7. Management gets a steady flow of information on a regular basis — the right information,
for the right people, at the right time and cost.

8. Marketing Information System stands between the marketing environment and marketing
decision-makers. Marketing data flows from the environment to the marketing information
system. Marketing data is processed by the system and converted into marketing information
flow, which goes to the marketers for decision-making.
Importance of Marketing Information System

1. Anticipation of Consumer Demand:

In a dynamic economy, consumer tastes, fashions and liking are constantly changing.
Without precise information on the nature, character and size of consumer demand, marketers
will be simply groping in the dark. Decisions based upon hunches, guess-work, intuition or
tradition cannot give desirable results in the modern economy. They must be supported by
facts and figures.

2. Complexity of Marketing:

Modern marketing process has become much more complex and elaborate. Ever-expanding
markets and multinational marketing activities require adequate market intelligence service
and organised information system.

3. Significance of Economic Indicators:

In a wider and complex economy, fluctuations in demand, supply and prices are tremendous.
Marketer must have latest information on the changing trends of supply, demand, and prices.
Intelligent forecasting of the future is based on economic indices, such as national income,
population, price, money flow, growth-rate, etc. For this purpose, he relies on the market
reports and other market intelligence services.

4. Significance of Competition:

Modern markets are competitive. A marketer cannot make decisions in a competitive

vacuum. Modern business is a many-sided game in which rivals and opponents continuously
try to formulate strategies to gain advantage over one another. A marketer cannot survive
under keen competition without up-to-date market information, particularly regarding the
nature, character, and size of competition to be met.

5. Development of Science and Technology:

Modern marketer must be innovative. ‘Innovate or perish’ is the slogan in the existing
marketing environment. Marketer must have latest information regarding technological
developments. New products, new markets, new processes, new techniques are based on facts
and figures.

6. Consumerism:

In an ever-widening market, we do have a communication gap between consumers, users, and

marketers. This gap is responsible for unrealistic marketing plans and programmes. Up-to-
date Marketing Information System alone can establish proper two-way flow of information
and understanding between producers and consumers in a wider market.

7. Marketing Planning:
Our plans and programmes are based upon information supplied by economic research
(economic forecasts) and marketing research (marketing forecasts), which provide the
requisite information about the future economic and marketing conditions. For instance, sales
forecast is the base of production plan, marketing plan, financial plan, and budgets.
Marketing information alone can inter-relate and co-ordinate the product and user/consumer
demand so that both supply and demand can travel on the same wavelength.

8. Information Explosion:

We live in the midst of information explosion. Computer is the most immediate force behind
the information explosion. The speed with which the computer can absorb, process, and
reproduce large quantities of information is simply staggering. As multinational companies’
troop in and competition turns fierce, the winner will be the one who satisfies customer needs
most comprehensively through well-organised Marketing Information System.

Marketing Information System – Functions

The Marketing Information System performs six functions, viz.:

1. Assembling of marketing data.

2. Processing, i.e., editing, tabulating and summarizing the data.

3. Analyzing the data, i.e., filling out percentage, ratios, test of significance, etc.

4. Storage and retrieval, i.e., filing and indexing.

5. Evaluating regarding accuracy and reliability of data.

6. Dissemination or distribution of relevant and wanted information to decision makers.

All the above six functions can be brought down to three main stages, viz.:

1. Collection of market information.

2. Interpretation of information.

3. Dissemination of information.

Essentials of MIS

(i) Accessibility- This refers to the ease and speed with which the particular information
could be obtained. Faster and easier access will have more value as compared to difficult
access.

(ii) Comprehensiveness- More complete the information in itself, more valuable it becomes.
This attribute does not refer to the value of information but refers only to its usefulness.

(iii) Accuracy- The information, if free from any error, will have more value than otherwise.
(iv) Timeliness- It takes certain time to generate the information and the value of the
information depends very much on how it is made available to the user manager.

(v) Authenticity- If the information is being generated from a formal information system it is
authentic and could be measurable.

(vi) Free from Bias- The information, if free from any bias towards the pre-conceived
conclusion, will have more value than otherwise.

BENEFITS OF MIS
There are several advantages of Marketing information systems which are as under:
1) Organized Data collection – Lots of data can be collected from the market. But the main
word here is “Organized”. Organizing data is very important else the data is
meaningless. Thus MIS helps you to organize your database thereby improving productivity.
2) A broad perspective – With a proper MIS in place, the complete organization can be
tracked which can be used to analyse independent processes. This helps in establishing a
broader perspective which helps us know which steps can be taken to facilitate improvement.
3) Storage of Important Data – Several times in pharmaceuticals, when one drug is being
produced they may need data of another drug which was produced years back. Similarly in
Media, photographs are stored in archives. This storage of important data plays a crucial role
in execution and thus proves again that MIS is not important only for information but also for
execution.
4) Avoidance of Crisis – The best way to analyse a stock (share market) is to see its
past performance. Top websites like moneycontrol.com thrive on MIS. Similarly MIS helps
you keep tracks of margins and profits. With an amazing information system established, you
can know where your organization is moving and probably avert a crisis long before it has
taken place. Ignoring hints received from MIS reports is foolhardy.
5) Co-ordination – Consumer durables and FMCG companies have huge number of
processes which needs to be co-ordinated. These companies depend completely on MIS for
the proper running of the organization. There are dedicated people for marketing information
systems in such organizations. This is mainly because of the speed required to access
information and implement it.
7) Analysis and Planning – MIS is critical for planning. You cannot do planning without
information. For planning, the first thing which is needed is the organizations capabilities,
then the business environment and finally competitor analysis. In a proper MIS, all these are
present by default and are continuously updated. Thus MIS is very important for planning
and analysis.
8) Control – Just like MIS can help in a crisis, in normal times it provides control as you
have information of the various processes going on and what is happening across the
company. Thus it provides you with a sense of control.
Limitations – Maintenance, complexity and setting up a MIS are one of the major hindrances
to Marketing information systems. Limitations do exist with an MIS, such as the expense to
create and implement an MIS, training time for employees, lack of flexibility and capturing
wrong or incomplete information can become cumbersome and appropriate filters need to be
established.
MARKETING RESEARCH
Definitions
“The systematic gathering, recording and analysis of data about problems relating to the
marketing of goods and services” —The American Marketing Association.
“The systematic objective and exhaustive research for and study of the facts relevant to any
problem in the field of marketing.” —Richard Crisp
“Marketing research is the careful and objective study of product design, markets, and such
transfer activities as physical distribution and warehousing, advertising and sales
management.” —Clark and Clark
“Marketing research is the inclusive term which embraces all research activities carried on
for the management of marketing work, the gathering, recording and analysing of all facts
about problems relating to the transfer and sale of goods and services from producer to
consumer.” —Harry Hapner
From the above definitions, it is clear that marketing research is concerned with tackling the
problems emerging from the beginning to the final stage of marketing process.

Marketing Research Vs. Market Research:

Marketing research is a comprehensive term including market research. Marketing research is
concerned with all the major functions of marketing. Market research is primarily concerned
with knowing the capacity of the market to absorb a particular product. Marketing research is
not only concerned with the jurisdiction of the market but also covers nature of the market,
product analysis, sales analysis, time, place and media of advertising, personal selling and
marketing intermediaries and their relationships etc. Market research is a narrow concept
whereas marketing research is a broad one and its scope is much wider. It includes nature of
the market, product analysis, sales analysis, time, place and media of advertising, personal
selling, pricing, sales organisation, packaging, brand names, etc.

Objectives of marketing research:

1. To understand the economic factors affecting the sales volume and their opportunities.
2. To understand the competitive position of rival products.
3. To evaluate the reactions of consumers and customers.
4. To study the price trends.
5. To evaluate the system of distribution.
6. To understand the advantages and limitation of the products.
7. To find new methods of packaging, by comparing other similar packages.
8. To analyze the market size.
9. To know the estimation of demand.
10. To evaluate the profitability of different markets.
11. To study the customer’s acceptance of products.
12. To assess the volume of future sales.
13. To study the nature of the market, its location and its potentialities.
14. To find solutions to problems relating to marketing of goods and services.
15. To evaluate policies and plans in the right course of action.
16. To know the development of science and technology.
17. To know the complexity of marketing.
18. To measure the effectiveness of advertising.
19. To estimate the potential market for a new product.
20. To assess the strength and weakness of the competitors.

Constituents of marketing research

Marketing research includes almost each and every activity of marketing management. It has
a wide and comprehensive scope. The major constituents of marketing research are as under:
1. Research on Products:
Products involve goods and services. This branch of marketing research covers all the issues
related to firm’s products.
It studies and solves the product-related problems, such as:
i. Study of products’ qualities and performance
ii. Study of physical and psychological characteristics of product
iii. Determining uses of the existing products
iv. Comparative study of competitive products
v. Detecting consumers’ problems related to the products
vi. Determining need for developing new products
vii. Assessing success of a new product in market, including market testing
viii. Product life cycle and consumer adoption study
ix. Study of branding, packaging, labelling, after-sales services, and remarking
2. Research on Market:
This area of marketing research deals with market/consumers. It studies characteristics and
compositions of the target markets. It covers both current as well as potential markets.
This branch includes:
i. Defining and selecting target market
ii. Studying needs and wants of target market
iii. Study of size and location of current market
iv. Assessing the current market trends and projecting the future trend
v. Analysis of territorial sales opportunities and potential
vi. Setting sales territories and sales quotas
vii. Market share analysis
viii. Studies on relative profitability of different markets
ix. Estimating demand of a new product
3. Research on Sales Methods and Policies:
This area of marketing research, particularly, concerns with study and analysis of the sales-
related activities.
Various aspects covered under this head may be listed as below:
i. Study and analysis of sales records
ii. Analysis of sales territories in terms of products, size of orders, times, terms and
conditions and methods
iii. Study on activities and effectiveness of salesmen
iv. Evaluating existing selling methods
v. Sales force management including size, compensation, training, control, etc.
vi. Study on effect of various promotional tools such as advertising, personal selling, sales
promotion, and publicity tools on sales
vii. Study on organisation structure of sales department
4. Research on Advertising:
Advertising is one of the powerful methods of market promotion. Major part of promotional
budget is devoted to advertising activities. Therefore, it is imperative to conduct research on
various aspects related to advertising.
Under this area, at least following aspects are covered:
i. Comparative study of various elements of promotion
ii. Study on advertising objectives, media and media selection, advertising message, theme,
copy, and advertising agency
iii. Social aspects of advertising – negative and positive effects of advertising on society at
large
iv. Advertising role in different stages of product life cycle
v. Government restrictions on advertising
vi. Study on costs and contribution of advertising or evaluating advertising effectiveness
vii. Study of competitors’ advertising practices and strategy
5. Research on Pricing:
Price is an important element of marketing mix. In developing and underdeveloped countries,
price plays a vital role. Suitable pricing policies and methods can contribute positively in
attainment of marketing goals. It is clear that price has remained a major determinant of
buying decision.
This branch covers:
i. Study on pricing objectives
ii. Study on effectiveness of pricing policies and strategies
iii. Study of various methods for setting price
iv. Quality v/s value analysis
v. New product and pricing policies
vi. Study on effect of discount, allowance, and seasonal variables
vii. Pricing strategies on different stages of product life cycle
6. Research on Distribution:
In today’s marketing, distribution has unique role to determine success of product. A
marketer can contribute to total consumer satisfaction by designing appropriate distribution
network. Physical distribution and distribution channel are two important components of such
research.
This area includes:
1. Assessing role of distribution decisions in achieving marketing goals
2. Comparative study of between direct and indirect distribution
3. Physical distribution and ancillary services
4. Study on various types of channels of distribution
5. Study on relevant factors affecting channel decision/selection
6. Comparing company’s distribution strategies with competitors
7. Relevance of online marketing
8. Legal issues related to distributions
7. Research on Business Environment and Corporate Responsibility:
This area is not concerned with solving any marketing problem directly. In order to collect
and analyze data related to broad business environment, such research is conducted. The
study on the area helps manager formulate strategies for the current and the future market as
well. It also helps assess strengths and weaknesses of marketing department in relation to
business environment. In today’s dynamic business environment, the study on various
economic, social, and cultural variables is extremely important. Similarly, it is necessary to
analyze corporate responsibility.
Main aspects covered under the head include:
i. Business analysis including demand, national income, per capita income, trade and
industry, economic growth rate, fiscal monetary policies, and export-import policy.
ii. Short-term and long-term business forecasting.
iii. Technological aspects.
iv. Availability and quality of productive resources.
v. Impacts of legal provisions and Acts.
vi. Study on consumerism and the consumer rights.
vii. Social and cultural values affecting business policy.
viii. Pollution and ecological imbalance, and social responsibility of business.

Scope of Marketing Research:

Clark and Clark define marketing research as “The careful and objective study of product
design, markets and such transfer activities as physical distribution, warehousing advertising
and sales management. Thus the scope of marketing research lies in its variety of
applications.”
1. Diagnosing the current situation or problem based on detailed information.
2. Clearly identifying competitive strengths and weaknesses.
3. Constantly analyzing what is happening in the market place.
4. Planning to watch company’s strengths with market opportunities by outlining objectives
for product and market development and devising strategies and tactics to achieve them.
5. Watching out continuously for threats to the achievement of those plans.
6. Monitoring the progress of strategy implementation.
7. Research creativity, at its best, marketing research develops innovative ways to solve
problems. The main objective of marketing research is to enable manufacturers to make
goods acceptable and saleable and to see that they reach the market more easily, quickly,
cheaply and profitably without sacrificing consumer interest.

Scope of Market Research:

Market research covers the following items of study:
1. Size of the present and potential market.
2. Consumer needs wants, habits and behaviour.
3. Dealer wants and preferences.
4. Analysis of the market size according to age, sex, income, profession, standard of living
etc.
5. Geographic location of customers.
6. Analysis of market demand.
7. Knowledge of competitors and their products.
8. Knowing the profitability of different markets.
9. Study the market changes and market conditions.
10. Analysis of various channels of distribution.

Advantages of marketing research:

Marketing research has several advantages. They are:
1. Marketing research is used to measure market potential, characteristics and share of
markets for a company.
2. Companies can use marketing research to evaluate new product opportunities and product
acceptance and to test existing products relative to the competitor’s products.
3. It helps to make better advertising decisions.
4. It helps to evaluate the effectiveness of marking activities and draws attention to a potential
problem.
5. It helps the manufacturer to adjust his productions according to the conditions of demand.
6. It helps marketing of goods in efficient and economical way by eliminating all types of
wastage.
7. It helps a dealer to find out the best way of approaching potential buyers.
8. It helps to find out defects in the products and take corrective steps to improve the product.
9. It guides a dealer in planning, advertising and promotion effort.
10. It helps to assess the effectiveness of advertising programmes.
11. It helps in evaluating the relative efficiency of different advertising media.
12. It facilitates to evaluate the selling methods.
13. It helps to minimize the risks of uncertainties.
14. It helps in exploring new markets for its products.
15. It guides a firm in making sales forecasts for products.
16. It helps to explore new uses of existing products.
17. It is quite helpful for a firm to launch a new product.
18. It helps the firm in knowing general conditions prevailing in the market.
19. It helps in determining pricing policies and pricing strategy of competitors.
20. It reveals the causes of consumer resistance, etc.

Types of marketing research:

There are different types of marketing research depending on the objectives that the research
is designed to achieve and the sources of data which are to be used. Marketing research may
also be either qualitative or quantitative depending on the form of data generated and the
degree of mathematical accuracy level to which it is subjected. The most widely used
category of marketing research is based on the functional objective of investigation.
Marketing research can be defined as:
1. Exploratory
2. Descriptive
3. Casual, and
4. Predictive.
1. Exploratory Research:
Exploratory research gives valuable insight, generates ideas and hypotheses rather than
measuring or testing them. “Exploratory research is concerned with identifying the real
nature of research problems and perhaps of formulating relevant hypotheses for various
tests”. Crimp stated that the researcher undertakes exploratory research in order to generate
an adequate basis for designing research and it includes searching for data that are already
available both within the company and from external sources, consulting experts, conducting
observational studies, getting feedback from market place and surveys.
A marketing researcher uses this type of research when very little is known about the
problem being examined. The major benefit is that it is less expensive and less time-
consuming. For example, if a researcher is interested in finding out “Which features or
factors are vital in a purchase decision? “What will be the best mode of communication to
reach the consumers? For all these purposes, exploratory research gives an insight into the
problem.
2. Descriptive Research:
Descriptive research is concerned with measuring and estimating the frequencies with which
things occur or the degree of correlation or association between various variables. It has been
seen that market research reports are often descriptive and they measure market size, market
structure, and the behaviour and attitudes of consumers in the marketplace. In general as the
data obtained by descriptive research is put to various statistical analysis, it is very necessary
to make a list of the variables to be investigated and how these variables will be measured.
3. Causal Research:
Causal research is basically concerned with establishing cause and effect relationship and an
attempt to explain why things happen. For example, to what extent the price elasticity of
demand or the degree to which advertising campaigns have affected the sales may be
explained by causal research.
However, there are two important aspects of causal research:
(i) Necessary condition and
(ii) Sufficient condition which should be kept in mind.
An event may be considered as the cause of another event, if its occurrence is the necessary
and sufficient condition for the latter event to take place. A necessary condition means that
the caused events cannot occur in the absence of the causative event. A sufficient condition
means the causative event is all that is needed to bring about the caused event.
4. Predictive Research:
The main purpose of predictive research is to arrive at a forecast or prediction or some
measurement of interest to the researcher. The ultimate target may be the future sales level of
the firm. Other goals of predictive research may involve industry sales level, projection or
growth or defining of firm’s product line and the use of a test market to predict the likely
success of a new product.

STEPS IN MARKETING RESEARCH PROCESS

Marketing research exercise may take many forms but systematic enquiry is a feature
common to all such forms. Being a systematic enquiry, it requires a careful planning of the
orderly investigation process. Though it is not necessary that all research processes would
invariably follow a given sequence, yet marketing research often follows a generalised
pattern which can be broken down and studied as sequential stages. The various stages or
steps in the marketing research process are discussed below:
1. Identification and Defining the Problem:
The market research process begins with the identification “of a problem faced by the
company. The clear-cut statement of problem may not be possible at the very outset of
research process because often only the symptoms of the problems are apparent at that stage.
Then, after some explanatory research, clear definition of the problem is of crucial
importance in marketing research because such research is a costly process involving time,
energy and money.
Clear definition of the problem helps the researcher in all subsequent research efforts
including setting of proper research objectives, the determination of the techniques to be
used, and the extent of information to be collected.
It may be noted that the methods of explanatory research popularly in use are—survey of
secondary data, experience survey, or pilot studies, i.e., studies of a small initial sample. All
this is also known as ‘preliminary investigation’.
2. Statement of Research Objectives:
After identifying and defining the problem with or without explanatory research, the
researcher must take a formal statement of research objectives. Such objectives may be stated
in qualitative or quantitative terms and expressed as research questions, statement or
hypothesis. For example, the research objective, “To find out the extent to which sales
promotion schemes affected the sales volume” is a research objective expressed as a
statement.
On the other hand, a hypothesis is a statement that can be refuted or supported by empirical
finding. The same research objective could be stated as, “To test the proposition that sales are
positively affected by the sales promotion schemes undertaken this winter.”
Example of another hypothesis may be: “The new packaging pattern has resulted in increase
in sales and profits.” Once the objectives or the hypotheses are developed, the researcher is
ready to choose the research design.
3. Planning the Research Design or Designing the Research Study:
After defining the research problem and deciding the objectives, the research design must be
developed. A research design is a master plan specifying the procedure for collecting and
analysing the needed information. It represents a framework for the research plan of action.
The objectives of the study are included in the research design to ensure that data collected
are relevant to the objectives. At this stage, the researcher should also determine the type of
sources of information needed, the data collection method (e.g., survey or interview), the
sampling, methodology, and the timing and possible costs of research.
4. Planning the Sample:
Sampling involves procedures that use a small number of items or parts of the ‘population’
(total items) to make conclusion regarding the ‘population’. Important questions in this
regard are— who is to be sampled as a rightly representative lot? Which is the target
‘population’? What should be the sample size—how large or how small? How to select the
various units to make up the sample?
5. Data Collection:
The collection of data relates to the gathering of facts to be used in solving the problem.
Hence, methods of market research are essentially methods of data collection. Data can be
secondary, i.e., collected from concerned reports, magazines and other periodicals, especially
written articles, government publications, company publications, books, etc.
Data can be primary, i.e., collected from the original base through empirical research by
means of various tools.
There can be broadly two types of sources
(i) Internal sources—existing within the firm itself, such as accounting data, salesmen’s
reports, etc.
(ii) External sources—outside the firm.
6. Data Processing and Analysis:
Once data have been collected, these have to be converted into a format that will suggest
answers to the initially identified and defined problem. Data processing begins with the
editing of data and its coding. Editing involves inspecting the data-collection forms for
omission, legibility, and consistency in classification. Before tabulation, responses need to be
classified into meaningful categories.
The appropriate analytical techniques chosen would depend upon informational requirements
of the problem, characteristics of the research designs and the nature of the data gathered.
The statistical analysis may range from simple immediate analysis to very complex
multivariate analysis.
7. Formulating Conclusion, Preparing and Presenting the Report:
The final stage in the marketing research process is that of interpreting the information and
drawing conclusion for use in managerial decision. The research report should clearly and
effectively communicate the research findings and need not include complicated statement
about the technical aspect of the study and research methods.
An 11 steps marketing research process used in general is as under:
1. Establishing the need for marketing research
This could seem basic but is in fact fundamental to conducting marketing research. Research
takes time and money. Marketing research is not needed when information is readily
available (this could be through secondary data), when there is not enough time to conduct a
proper research study and answers are needed immediately, when you can afford the research
or when the costs outweigh the value. It could also simply be that the answer is obvious.
2. Defining the problem
According to the authors, this is by far the most important step. If the problem is incorrectly
defined, all is wasted effort. Marketing research should only be conducted to answer a
problem. There are also needs to be alternatives. If there are no alternatives, no decision is
necessary.
3. Establishing research objectives
Objectives tell a researcher exactly what he or she should be looking for and what he or she
must do to obtain the information necessary to allow the manager to choose between the
decision and the alternatives.
4. Determining research design
 Exploratory research: informal search to learn more about the research problem, learn
terms and definitions or identify opportunities
 Descriptive research: most basic; used to describe the marketing phenomena
 Causal research: uncover factors that cause on event
5. Identifying information types and sources
 Primary: information collected specifically for the problem at hand
 Secondary: information already collected
6. Determining methods of accessing data
This can be done through observing consumers, surveys, online etc.
7. Designing data collection forms
Designing the form in which data will be collected. It can be a questionnaire or an
observation form.
8. Determining sample plan and size
Sample plan: describes how each sample element is to be drawn from the total population
Sample size: how many elements of the population should be used to make up the sample
9. Collecting data
Non-sampling errors in data are likely to occur and researchers need to know the sources of
these errors to implement controls to minimize them.
10. Analyzing data
Data analysis involves entering data into computer files, inspecting data for errors, and
running tabulations and various statistical tests.
11. Preparing and presenting the final report
It is important that it is not overstated as it is the report that properly communicates the
results to the client.
The language of the final report should be clear and properly paragraphed. Generally,
a report may be in the following form:
1. Title of research.
2. The name of the organisation.
3. The objectives of the research.
4. The methodology used.
5. Organisation and the planning of the report.
6. A table of contents, along with charts and diagrams followed in the report.
7. The main report.
8. Conclusions drawn and recommendations suggested.
9. Appendices.
Follow up study:
Follow up will ensure the implementation of recommendations made by the marketing
researchers. Otherwise, the report may be left unopened.
Methods of Data collection:
There are two sources of data for investigation:
1. Internal sources, and
2. External sources.
The internal sources mean and include a company’s profit and loss account, balance sheet,
sales figures, sales reports, inventory records, registers, documents etc. A proper analysis of
these records will reveal the degree of efficiency of the business. The collection of
information from internal sources is inexpensive. When information cannot be collected from
the internal sources, or when available information is irrelevant and insufficient, then one will
have to depend upon the external resources-facts collected from outside the company.
Other sources of information are:
(1) Primary data, and
(2) Secondary data.
1. Primary Data:
Primary data are those which are collected for the first time and they are original in character.
These are collected by the researcher himself to study a particular problem.
2. Secondary Data:
The secondary data are those which are already collected by someone for some purpose and
are available for the present study. For instance, the data collected during census operations
are primary data to the department of census and the same data, if used by a research worker
for some study, are secondary data.
Methods of Gathering Primary Data:
The following are the methods adopted to obtain primary data:
1. Experimental method
2. Observation method
3. Survey method
1. Experimental Method:
“This method of gathering primary data involves the establishment of a scale model or a
controlled experiment which stimulates the real market situation as much as possible. The
theory is that the small-scale experiment will furnish valuable information in designing a
large-scale marketing programme.” Under this experimental approach, the producer carries
out a small-scale experiment, tries to get valuable information, which can be of great help in
designing large-scale marketing programme.
This is a method intended to evaluate the effect of a proposed course of action. It seeks to
find the buyer-reaction and can successfully apply it in several cases. For instance, a soap
manufacturer gives different colours to the soaps-white in Kerala, green in Tamil Nadu and
pink in Karnataka; except for the colour all the other factors are the same. Now the marketing
manager records the sales over a period of time and decides the colour of the soap, promotion
campaigns, fixing right price, products, packages, design etc.
Merits:
1. This method is more realistic and gives best results.
2. This approach is more effective and profitable.
3. Relative efficiency can be measured.
4. It gives room to improve future research techniques.
Demerits:
1. This method is expensive.
2. It takes a long time to get the results.
3. Careful planning is needed.
4. The test markets selected for the experiments must posses the same characteristics, which
is difficult.
2. Observation Method:
In Observation method, the data are collected by observing some action of the respondent. No
questions are asked in data collection. No interview is made. The actions or behaviour of the
customers are watched personally or mechanically. Buyers may be observed personally by
the observer while making purchases. The observer or researcher poses as a customer, and
observes the marketing situations. A buyer is unaware that he is being observed and acts in
his usual way. The observer, posing as a customer, knows the ability of salesmen and the
brand that is being pushed through and also the motivating factors of the purchasers.
Merits:
1. It is more accurate.
2. Interviewer’s bias is reduced.
3. Inaccuracies in answering questions are eliminated.
4. Actual market behaviour is recorded.
5. It is possible to get additional data.
Demerits:
1. The method is expensive.
2. The field observer’s bias may creep in.
3. It consumes more time.
4. It tells “what happened,” but fails to tell “why it happened.”
5. This method is less flexible.
3. Survey Method:
A survey consists of gathering data by interviewing a limited number of people (a sample)
selected from a larger group. A survey has the advantage of getting to the original source of
information. In this method, the researcher obtains information from the respondents by
interviewing them. This is the most common method of getting primary data. This method is
more effective than the experimental and observation approach.
In the factual survey, respondents are asked to report actual facts, as exemplified by questions
such as: What brand of cigar do you smoke? How many persons live in your house? Opinion
survey is designed to gather expressions of personal opinions, to record evaluations of
different things or to report thinking on particular matters.
For instance: How do you feel about this new cordless electric shaver? In the interpretative
survey the respondent acts as an interpreter as well as a reporter. Interpretative data are
gathered by using such questions as: Why do you use brand ‘A’ of the product in your house?
What feature of the new pack of this product appeals to you most?
The survey can also be conducted in two ways: sampling survey and census survey. Under
census survey, the marketer conducts surveys covering the entire market. The data are
collected from each and every person in the market. But under sampling survey, only a part
of the whole group will be studied. We may study a sample drawn from the large group and if
the sample is adequately representative of the group, we should be able to arrive at valid
conclusions. As such, sampling survey is widely accepted.
Data collection under the survey method is of three types:
(A) Personal interview,
(B) Mail questionnaire, and
(C) Telephone interview.
(A) Personal Interview Method:
Under this method, the enumerator makes personal contacts with the informant and obtains
more information than under any other method. The researcher can clarify the questions, if
they are not understood by the informant. This is of two types:
(i) Direct Personal Observation:
Under this method, the data are collected by the investigator personally. The investigator
must be a keen observer, tactful and courteous in behaviour. He asks or cross-examines the
informant and collects necessary information, which is original in character.
This method is adopted in the following cases:
1. Where greater accuracy is needed.
2. Where the field of enquiry is not large.
3. Where confidential data are to be collected.
4. Where the field is a complex one.
5. Where intensive study is needed.
6. Where sufficient time is available.
Merits:
1. Original (first hand information) data are collected.
2. True and reliable data can be had.
3. Response will be more encouraging, because of personal approach.
4. A high degree of accuracy can be aimed.
5. The investigator can extract current information.
6. Misinterpretations, if any, on the part of the informant can be avoided.
7. Uniformity and homogeneity can be maintained.
Demerits:
1. It is unsuitable where the area is large.
2. It is expensive and time-consuming.
3. The chances of bias are more.
4. An untrained investigator will not bring good result.
5. One has to collect information according to the convenience of the informant.
(ii) Indirect Oral Interview:
When the informant is reluctant to supply information, the method of indirect oral
investigation can be followed. Under this method the investigator approaches witnesses or
third parties, who are in touch with the informant. The enumerator interviews the people, who
are directly or indirectly connected with the problem under study.
For instance, we are asked to collect information relating to the gambling or drinking habits
of people. In such cases, the informants will be reluctant to supply information relating to
their own socially, evil habits. On such occasions, we may approach the dealer of liquor
shops, friends, neighbours etc., to get the needed information.
Generally this method is employed by different enquiry committees and commissions. The
police department generally adopts this method to get clues of thefts, riots, murders etc. The
police interrogate third parties who possess knowledge about the happenings under study.
Suitability:
This system is more suitable, where the area to be studied is large. It is adopted when direct
information cannot be obtained. This system is generally adopted by governments.
Merits:
1. It is simple and convenient.
2. It saves time, money and labour.
3. It can be followed in the investigation of a large area.
4. The information is unbiased.
5. Adequate information can be had.
6. As the information is collected from different parties, a true account can be expected and
all aspects of the problem can be ascertained.
Demerits:
1. Absence of direct contact is there; the information cannot be fully relied upon.
2. Interview with an improper man will spoil the results.
3. In order to get the real position, a sufficient number of persons are to be interviewed.
4. The careless attitude of the informant will affect the degree of accuracy.
5. Informants may colour the information according to their interests.
The researcher prepares a list of questions in the form of a questionnaire and either hand over
the questionnaire to the informant, who fills the questionnaire or asks questions from the
questionnaire and notes down the replies himself.
(B) The Mail Questionnaire Method:
In this method, a questionnaire consisting of a list of questions pertaining to the survey is
prepared. There are blank spaces for answers. This questionnaire is sent to the respondents,
who are expected to write the answers in the blank spaces. A covering letter is also sent along
with the questionnaire, requesting the respondents to extend their full co-operation by giving
the correct replies and returning the questionnaire duly filled in time.
To get quick and better response, the return postage expense is borne by the investigator, by
sending a self-addressed and stamped envelope. This method is adopted by research workers,
private individuals, non-official agencies and State and Central Governments.
Merits:
1. Of all the methods, the mailed questionnaire method is the most economical.
2. It can be widely used, when the area of investigation is large.
3. It saves money, labour and time.
4. Error in the investigation is small because information is obtained directly from
respondents.
5. It eliminates the danger of the bias by the interviewer.
Demerits:
1. In this method, there is no direct contact between the investigator and the respondent.
Therefore we cannot be sure about the accuracy and reliability of the data.
2. This method is suitable only for literate people. In many countries, there are illiterates who
cannot understand and reply the questionnaire.
3. Generally there is long delay in receiving questionnaires duly filled in.
4. People may not give the correct answer and this leads to false conclusion.
5. The questionnaire is inelastic. Asking supplementary question is not possible.
6. Sometimes the informant may not be willing to give written answers, apart from causing
delay.
Framing a Questionnaire:
The questionnaire is the medium of communication between the investigator and the
respondent. The success of an investigation depends on the framing of the questionnaire. As
such, utmost care and caution are essential for designing or drafting the questionnaire. In
addition, it requires skill, wisdom, efficiency and experience.
There are no hard and fast rules to be followed but the following general points may be
borne in mind:
1. The Questionnaire should be brief.
2. The questions should be simple to understand.
3. The questions should be arranged logically.
4. There must be choice (simple alternative, multiple choice etc.)
5. Ask only what we want to know.
6. All questions should be numbered serially.
7. Proper words should be used in the questionnaire.
8. Necessary instructions should be given to the informant.
9. The questions should be capable of an objective answer.
10. A questionnaire should look attractive.
11. Avoid ambiguous questions.
12. The accuracy of the questionnaire must be judged.
(C) Telephone Survey:
This type of survey is conducted over the telephone and resembles personal interview. Where
the respondents are scattered in distant areas and where the telephone communication is
advanced, the researcher can contact the informant to obtain information.
Merits:
1. The cost is less.
2. It is quick in getting data.
3. This is most simple in collecting data.
4. It is flexible.
5. It gives accurate answer.
6. It saves time and travel of the researcher.
Demerits:
1. Persons who have no phone connection are omitted.
2. Personal bias may creep in.
3. Lower income group respondents are not covered.
4. The interview will be of short duration.
Sampling:
Only a part of the whole group population will be studied in the case of sample enquiry.
According to Croxton and Cowdon, “It may be too expensive or too time-consuming to
attempt either a complete or a nearly complete coverage in a statistical study. Further to
arrive at valid conclusions, it may not be necessary to enumerate all or nearly all of a
population.
We may study a sample drawn from the large population and, if that sample is adequately
representative of the population, we should be able to arrive at valid conclusions.” The results
obtained from sample study can be applied to the whole universe or population. We can study
the characteristics of the population or universe from the sampling. A study of a sample will
give a correct idea of the universe or population.
A truck load of product is accepted or rejected on the evidence gained from testing only a few
items. A physician makes inferences about a patient’s blood through the examination of a
single drop. Samples are devices for learning about large masses by observing a few
individuals.
Merits:
1. It saves time because fewer items are studied.
2. It reduces cost also.
3. Where the population is infinite, only sampling method is possible.
4. Degree of accuracy is higher than that in census method.
5. It is more scientific.
Methods of Sampling:
There are many methods of sampling. The choice of method will be determined on the
purpose of sampling.
The various methods can be grouped under two heads:
1. Random Sampling method (Probability samples).
(a) Simple or unrestricted random sampling.
(b) Restricted random sampling
(i) Stratified sampling
(ii) Systematic sampling
(iii) Cluster sampling
2. Non-random sampling method (Non-probability samples).
(a) Judgement or purposive sampling
(b) Quota sampling
(c) Convenience sampling
Probability samples result from a process of random selection, whereby each member of a
universe has a known chance of being selected for the sample. Non-probability samples result
from a process in which judgement of bias enters into the selection of members of a universe
included in the sample.
1. Random Sampling Method (Probability Samples):
A random sample is one where each item in the universe has an equal chance of known
opportunity of being selected. “Every member of the parent population has equal chances of
being included.”
(a) Simple Random Sampling:
This is a technique in which sample is so drawn that each and every unit in the population has
an equal and independent chance of being included in the sample. Several methods have been
adopted for random selection of the sample.
(i) Lottery Method:
This is the most popular and simplest method. In this method, all the items of the universe are
numbered on separate slips of paper of the same size, shape and colour. They are folded and
mixed up in a drum or container. A blindfold selection is made. The required number of slips
are selected for the desired sample size. The selection of items thus depends on chance.
(ii) Table or Random Number:
As the lottery method cannot be used, when the population is infinite, the alternative is that of
using the table of random numbers.
Merits:
1. It is a scientific method.
2. Personal bias is absent.
3. Samples are more representative.
4. Sampling error can be measured.
5. This method is economical
Demerits:
1. This method requires a complete list of the population.
2. If the size of the sample is small, then it will not be a representative of the population.
(b) Restricted Random Sampling:
(i) Stratified Sampling:
When the population is heterogeneous or of different segments or strata with respect to the
variable or characteristic under study, then it is stratified. First the population is divided into a
number of sub-groups or strata. Each stratum is homogeneous. A sample is drawn from each
stratum at random.
There are two types of stratified random sampling. They are proportional and non-
proportional. In the proportional sampling, equal and proportionate representation is given to
sub-groups or strata. If the number of items is large in the population, the same will have a
higher size and vice versa.
In disproportionate or non-proportionate sample, equal representation is given to all sub-
strata, regardless of their existence in the population.
Merits:
1. It is more representative.
2. It ensures greater accuracy.
3. It is easy to administer as the universe is sub-divided.
4. Greater geographical concentration reduces the time and cost.
5. When the original population is badly skewed, this method is an appropriate one.
6. For non-homogeneous population, it may yield more reliable results.
Demerits:
1. To divide the population into homogeneous strata, it requires more money, time and
statistical experience which is a difficult one.
2. If proper stratification is not done, the sample will have an effect of bias. If different strata
of population overlap, such sample will not be representative one.
(ii) Systematic Sampling:
It is also known as quasi-random sampling. A systematic sample is selected at random
sampling. When a complete list of the population is available, this method is used. We
arrange the items in numerical, alphabetical, geographical or any other order. If we want to
select a sample of 15 students from 150 students, under this method Kth item is picked up
from the sample frame and k is the sample interval.
k = N/n
k = Sampling interval
N = Size of universe
n = Sample size
In the above example k = 150/15 = 10.10 is the sampling interval. Every 10th student will be
taken as sample i.e., 10th, 20th, 30th and so on (OR) 1st, 11th, 21st and so on. (OR) 6th, 16th,
26th and so on.
Merits:
1. This is simple and convenient.
2. The time and work are much reduced.
3. If we take care, the result will be satisfactory one.
4. It can also be used in infinite population.
Demerits:
1. It may not represent the whole population.
2. There is the element of personal bias of the investigators.
(iii) Cluster sampling (multistage sampling):
It is also called as sampling stages. It refers to a sampling procedure, which is carried out in
several stages. The whole population is divided into sampling units, and these units are again
divided into sub-units. This process will continue till we reach the last number. For instance,
we want to take 5,000 students from Madhya Pradesh. We must take universities at the first
stage, then the number of colleges at the second stage, selection of students from the colleges
at the third stage etc.
Merits:
1. It introduces flexibility in the sampling method.
2. It is helpful in large-scale survey where the preparation of list is difficult, time-consuming
or expensive.
3. It is valuable in under-developed countries, where no detailed and accurate framework is
available.
Demerit:
It is less accurate than other methods.
2. Non-random Sampling Method (Non-Probability Samples):
(a) Judgement sampling (purposive or deliberate sampling):
The investigator has the power to select or reject any item in an investigation. The choice of
sample items depends on the judgement of the investigator. He has the vital role to play in
collecting the information. For example, if a sample of 5 students is to be selected from a
B.Com. Class of 50 students for analyzing the habit of picture seeing, the investigator would
select 5 students, who according to his opinion are the representative of the class.
Merits:
1. It is a simple method.
2. It is used to obtain a more representative sample.
3. It is very helpful to make public policies, decisions etc. The executives and public officials
use this method for their urgent problem
Demerit:
1. Due to individual bias the sample may not be representative one.
2. It is difficult to get correct sampling decisions.
3. The estimates are not accurate.
4. Its results cannot be compared with other sampling studies.
(b) Quota Sampling:
This sampling is similar to stratified sampling. It is used in U.S.A. for investigating public
opinion and consumer research. To collect data, the universe is divided into quota according
to some characteristics. Each enumerator is then told to interview a certain number of persons
who are his quota. The selection of sample items depends on personal judgement.
It is stratified-cum-purposive sampling and thus has the advantages of both the methods.
There is saving of time and money. If there are trained investigators, the sampling will give
quite reliable results. Personal prejudice and individual bias are there. It is not based on
random sampling, and so sampling error cannot be estimated.
(c) Convenience or Chunk Sampling:
Chunk is a convenient slice of a population which is commonly referred to as a sample. It is
obtained by selecting convenient population units.
Merits and Demerits:
1. It is suitable when the universe is not clearly defined.
2. Sample unit is not clear.
3. Complete source list is not available.
A sample obtained from automobile registration, telephone directories etc., is a convenience
sample. The results of this sampling cannot be representative. They are unsatisfactory. They
are biased. But they are used for pilot studies.
Qualities of a good sample:
A sample selected should have the following essentials:
1. It must be true representative.
2. It must have homogeneity.
3. It must be random.
4. It must be adequate.
5. It must be proportional.
6. Items of the sample must be selected independently.
7. Selection of sample must be based on “the law of statistical regularity” and “the law of
inertia of large numbers.”
Sources of secondary data:
1. Internal accounts, records and reports of the company.
2. Libraries.
3. National and international publications.
4. Publication of research institutions.
5. Publications of commercial and financial institutions.
6. Reports of various committees and commissions.
7. Journals, newspapers, etc.
Precautions in the Use of Secondary data:
We must take extra care when using secondary data. The degree of reliability of secondary
source is to be assessed from the source, the compiler and his capacity to produce correct
statistics. The users for the most part, tend to accept a series, particularly one issued by a
government agency as its face value without enquiring its reliability. Prof. Bowley says,
“Secondary data should not be accepted at their face value.”
Therefore, before using the secondary data, the, investigators should consider the
following factors:
(a) Suitability of data
(b) Adequacy of data
(c) Reliability of data
The investigators should be careful in using secondary data and should consider the
following points:
1. Were the data collected for a similar object?
2. Are they free from errors?
3. Were they collected by efficient and experienced agency?
4. What was the type of enquiry adopted?
5. What was the definition of the units?
6. What was the degree of accuracy aimed?
7. Was there any bias in the collection of data?
8. Were the data collected through a good method?
9. Were they collected in boom or depression or normal period?
10. Were the data properly edited and analysed?
Without knowing the meaning and limitations, we cannot accept the secondary data. Bowley
points out. “It is never safe to take published statistics at their face value without knowing
their meaning and limitations, and it is always necessary to criticize arguments that can be
based on them.”
Organisation of Marketing Research:
Generally producers want to market all the products produced. They would not like to hold
the stock idly, which means blocked or dead capital amount. Whenever a fall in the sales is
smelt, the businessman tries to find out the reasons through marketing research.
There are two ways in getting the job done:
(a) By the company’s own personnel and
(b) By an outside agency.
It is always better to have a separate marketing research department, within the organisation
and at the same time it is advantageous that the researchers are well-versed in company
procedures and know the information available. There are many institutions, having highly
qualified specialists in the marketing research field-outside agency. They offer their expert
services for hire.
There are no clear cut solutions to the problem of budget to be fixed. It is difficult to assess
the expenditure of the research and the value of the result of a research project. Costs will be
more as the precision increases. Nature of the research work and the size of the firm will
decide the amount to be spent for the marketing research.
Limitations of Marketing Research:
1. Marketing research needs the services of qualified and trained persons. Such persons are
rarely found.
2. It is highly expensive and time-consuming.
3. If the researcher is biased to the problem, the results will be unsatisfactory and misleading.
4. Marketing research studies the behaviour of customers; so it is quite impossible to achieve
mathematical accuracy.
5. It is not an end itself. It presents the correct information for decision making. Unless the
information is used by a qualified manager, the study will be of no use.
6. By the time the results are ready, the circumstances might have changed; and then the
whole study will be valueless.
7. It deals with human behaviour and as such cannot be examined in a controlled
environment. There are various and uncontrollable factors which influence marketing forces.
This gives for wrong conclusions. Hence this leads to marketing research as not being an
exact science.
8. The complicated problems may not be comprehensively studied and their impact properly
analysed by the researcher on account of insufficient fund, time and technique. This leads to
erroneous, which disappoint the management.
9. The validity of marketing research is also limited by the limitation of tools and techniques
involved.
10. Its use and effectiveness largely depends upon the ability of executives to get the most
value of it.

Contribution of Marketing Research:

1. Marketing research, as a guide will shape the products suitable to the demand.
2. Prices can be adjusted in accordance with the demand.
3. It helps to stimulate the sales through sales promotions.
4. It will not only increase sales, but also cut down the unnecessary expenses.
5. It will guide to achieve consumer satisfaction and sales profitability.
Marking Research in India:
The marketing research is unpopular with Indian manufacturers because of the
following reasons:
1. Demand exceeds supply; in such a condition the sales are guaranteed and the market is
favourable.
2. Firms earn profits without a marketing research.
3. The management thinks that the amount to be spent on marketing research can be used
profitably for expansion and improvements of the products.
4. Available sources of information are adequate.
5. The management concentrates their interest on production and raw materials.
But marketing research in India will certainly in the long run, increase the profits, eliminate
the wastes, fetch consumer satisfaction, guide progress etc.