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Prof. Ronak Shah
Market Research
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Prof. Ronak Shah
Market Research is the process of Systematic Design, Collection,
Analysis and Reporting ofData & Findings, that are relevant to Specific
Marketing situation being faced by the Company
Market Research Encompasses all the spheres of Marketing, i.e. Right from
theIdea of a New ProducttoAfter Sales Service
Companies normally budget Marketing Research at 1 to 2% of Company
Sales.
Introduction to Market Research
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The Research Process Provides a Scientific Platform, Contrary to the
Traditional Intuitive Approach of Decision Making by Managers, Which
used to put Large Amount ofOrganizational Resources at Risk.
Companies generally avail service of either of the following types of
Marketing Research Firms:
Syndicate-Services Research Firms: These firms gather consumer & Trade
Information, which they sell for a fee. Eg. ACNeilsen-ORG, NCAER etc..
Custom Marketing Research Firms: They Cater to the specific Research
Needs of Individual Companies
Introduction to Market Research
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You are planning to open-up a Fast Food joint in Pune....
- Why will you conduct a Market Survey ?
- What would be the Source of your Data ?
- Whom will you ask these Questions ? How will you choose Sample ?
- How will you collect the Information ?
(Personally asking questions OR Sending
Mails etc...??)
- Which Tools will you use to Analyze
these Data ?
An Exercise
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Market Research Process
Define the Problem &
Research Objective
Develop theResearch Plan
Collect theInformation
Analyze theInformation
Prepare & Present theResearch Report
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Answers to Following Questions will help you in Defining the Problem:
What is to be Researched (The Content, The Scope)
Why is it to be Researched (The Decisions that are to be Made)
The Problem should not be defined either too Broadly or Narrowly
The End product of these Step should be a clear Definition of the Problem
Problem Definition for Our Restaurant Exercise:What is the Market Potential for a Fast-Food Joint with South Indian Dishes
as their specialty, in Pune
Step 1 Define Research Problem
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This Includes the Decision On:
- Data Source: Primary Source, Secondary Source
- Research Approaches: Focus Group, Survey, Behavioral Data, Experimental
- Research Instrument: Questionnaires, Mechanical Devices
- Sampling Plan: Sampling Unit (Who is to be Surveyed), Sample Size (How Many
People to be Surveyed), Sampling Procedure (How should Respondent be Chosen
: Probability Sampling OR Non Probability Sampling)
- Contact Methods: Mail Questionnaire, Telephone Interview, Personal Interview,
Online Interview
Step 2 Develop the Research Plan
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Research Plan for Our Restaurant Exercise
- Data Source: Primary, Secondary or Both
- Research Approaches: Survey
- Research Instrument: Questionnaires
- Sampling Plan: Sampling Unit (18-35 Age Group), Sample Size (200 People),
Sampling Procedure (Random Sampling, Stratified Random Sampling (Age Group) ,
Cluster/area Samples (Region/City wise) )
- Contact Methods: Personal Interview
Step 2 Develop the Research Plan
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This is Most Expensive & Error prone Phase of Market Research
Because:
Some Respondents will not be at Home....
Some Respondents will Refuse to Cooperate...
Some others will give Biased or Dishonest Answers...
Getting the Right Respondents is always Critical
Step 3 Collect The Information
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Use Statistical tools & Decision Models to Analyze the collected Data.....
(You would have studied Multivariate Analysis, Chi-Square, Annova....Etc
This would be covered in detail if your choose MR as your Elective in
Semester III OR IV)
The Data Becomes INFORMATION when Arranged & Analyzed
Meaningfully......
Step 4 & 5 Analyze & Present the Findings
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Demand Forecasting
Forecasting Current Market Demand
Forecasting Future Market Demand
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Sales Forecasts are Used By....
- Finance Dept. to Raise the Needed Cash for Investments & Operations
- Manufacturing Dept. to Establish Capacity & Output Levels
- Purchasing Dept. to Place Orders to Suppliers
- HR Dept. to Hire the Needed Workforce...etc
Marketing Dept. is Responsible for Preparing the Sales Forecast
Importance of Demand Forecasting
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Potential Market
It is the Set of Consumers who profess a Sufficient Level of Interest in your
Product Offering and Have Enough Income to purchase your Product Offering
Available Market
It is the Set of Consumers who have Interest, Income & Access to your
Product Offering.
For certain Product, Company or Government might have restricted the
Sales to only Certain Group of Consumers
Ex:Selling of Tobacco Products to Under 18 Age group is banned
Measures of Market Demand
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Target Market
It is the Part of Qualified Available Market the Company Decides to Pursue.
Ex: Company might decide to concentrate its Marketing & Distribution efforts
In the North only.
Penetrated Market
It is the Set of Consumers who are Buyingthe Companys Product
Measures of Market Demand
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Forecast of Current Market Demand is Useful while Venturing in to
A New Market
Two Popular Approaches Are:Total Market Potential, Industry Sales &
Market Share Information
Total Market Potential
It is the Maximum amount of Sales that might be available to all the firms in
an Industry during a Given Period, under a given level ofEnvironmental
Condition.
Total Market Potential = No. of Potential Buyers X
Average Quantity Purchased by a Buyer X
The Avg. Price of Product
(WhereXindicates Multiplication)
Forecasting Current Market Demand
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Essilor is World Leader in Spectacle Lenses. It is venturing in to Indian
Market & planning to Targeting Indian youth (Age 18-35), since they have
been the major consumers across the world for Essilor Contact Lenses.
It is evaluating the Market Potential of Pune, for the Contact Lenses.
One Pair of its Contact Lenses cost around Rs. 2000.
Further, following Secondary data have been obtained From PMCs
Consensus Dept. & Other Market Experts for such Products
Total Population of Pune: 6 Mill.
Age Group wise Break-up: Under 18: 20%, 18-35: 50%, Above 36: 30%
Potential Buyers in Each Age group: 60%
Avg. No. of Contact Lenses purchased by
Each Person per Year: 0.6
What is the Total Market Potential ???
An Exercise
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Industry Sales & Market Shares
Company needs to Identify its Competitors and estimate their Sales. The
Company can then Compare and Evaluate its Performance vis-a-vis the
Competition.
The Industry Trade Associations normally compile and publish Data on
Industry Sales and their Category wise Break-ups.
Ex: Spectacle Lenses Market has Categories Like: Spectacle Glasses, Fiber
Glasses, Contact Lenses...etc
Syndicate Reports are also available in this regards, like, ACNeilson-ORG-
MARG Retail Index, National Readership Survey...etc
Forecasting Current Market Demand
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Estimation for Products which have fairly consistent Sales, or which areFrequently Used Products, is relatively easy compared to estimation for
Products whose Sales keep Fluctuating.
Demand Estimation Process is generally carried out by Research Agencies,
Which observes Environmental Factors such as the effect of Government
Regulations, Population Trends..etc.
Forecasting Future Market Demand
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Forecasting Future Market Demand
Four Fundamental Approaches for Future Demand Forecast
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Sales Force Survey
- The Sales Team is Involved in Estimating Future Demand Pattern, usingtheir Sales Experience
- Advantage - it is Easy to conduct & it is Inexpensive
- Disadvantage - It brings the Personal Factors/Experiences of a Sales
Person
- Company can Provide Incentives to its Sales person for providing Proper
Projections to overcome above Challenges
Sales Person normally understands the Importance of Accurate Projections
since their Sales Targets are being determined on the basis of these
Projections
Forecasting Future Market Demand
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Customers Survey
- Understanding Consumer Behavior Patterns are the most Critical part ofDemand Estimation
- Conduct Consumer Research Survey to understand the Consumers
Demand Patterns
- Advantage It is Very Accurate since we can Read Minds of Consumers
- DisadvantageVery expensive & Complex
Expert Opinion
- These Experts may be Dealers, Suppliers, Consultants, Economist...etc
- Forecast made are generally based on Intuition rather than Scientific
Methodology
Forecasting Future Market Demand
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Past Sales Analysis
Companies also use Past Sales Information for Projecting Future SalesPatterns
Methods like Time Series Analysis & Regression Analysis are used to
forecast Future Demands based on Analysis of Past Sales
Lets Look at Time Series Analysis.......... (Next Slide)
Test Marketing- Sales of the Product is directly Tested in the Market, for Few Days
- It is used where Effective Estimation or Forecasting is not Possible
Forecasting Future Market Demand
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Time Series Projections: Exponential Smoothing
Include all past observations
Weight recent observations much more heavily than very old
observations:
weight
today
Decreasing weight givento older observations
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Forecasting Future Market Demand
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P f R k Sh h
Lets Stop....
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