Question

4. What is Market Research? (10 Marks) 1. What are different steps involved in a Market Research? 2. Explain with a diagram 3. Why Market Research is not feasible to conduct for small-size business?

min 1000 words

Answer 1

4) Market research refers to the process of analyzing the viability of a product or service in the market through direct customer research. It enables the company to identify the target market and consequently gain the customers’ feedback about the product or service. This research is conducted either in-house, by company itself or a third party with the help of focus groups, product testing, surveys and others. Product samples are provided to the test subjects. It is an essential tool for the company to understand the needs and preferences of the target customers and accordingly, develop such products that they will use that would help in gaining a competitive advantage in the market. The primary purpose of a market research is to look at the market associated with it and identify how the customers will perceive a particular product or service. This includes collecting information about the target market for product differentiation and segmentation. These are again used for developing effective advertising strategies or identifying features of the product that are priority to the customers. Thus, businesses can use market research for determining the feasibility of a new product or services, developing new potential markets, keeping track of latest market trends, testing the demand for a product or service, improving promotional campaigns and innovating the business.

1) The various steps involved in the market research process are problem definition, problem approach, research design formulation, data collection, data analysis and report representation.

2) The steps can be represented in the diagram below:

Problem Definition Presentation Problem Approach Data Analysis Forming Research Design Data Collection

· Problem Definition- This is the first step of the market research process where the problem is defined by taking into account background information, the purpose of the study, required information and its use in the decision-making process. In this stage, the discussion takes place with different experts, decision-makers, interviewing industry professionals, analyzing data and collecting information through focus groups and others. Companies can undertake three types of research in this stage, namely, exploratory, descriptive and causal research. Exploratory research helps in defining the problem in a better way after conducting in-depth interviews and discussions. Descriptive research helps in evaluating the business environment through surveys and personal interviews. Causal research is used for identifying cause and effect relationships by estimation and hypothesis testing.

· Problem Approach- This step involves developing an approach to the problem. Thus, it includes forming an objective or theoretical framework, various analytical models, research questions, hypotheses and other characteristics that can affect the research design. Discussions with various industry experts, case studies, simulation, data analysis and pragmatic considerations are taken place in the second stage.

· Forming Research Design- This stage involves developing a blueprint of how the research will be conducted. Thus, it consists of procedures for obtaining information, the purpose of the research study for testing the relevant hypotheses, identifying answers to the research questions and gathering valuable information for decision-making. Furthermore, qualitative research, questionnaire designing and sampling plan are also undertaken in this stage.

· Data Collection – This involves gathering relevant data from the market to get a detailed insight into the trends and factors that can affect the marketing strategies of the company. Data is collected from either primary or secondary sources. Primary data collection involves conducting personal interviews, telephonic interviews, emails, observations, surveys, focus groups, questionnaire and others, while secondary sources involve case study analysis, journals, websites, newspapers, published articles and others.

· Data Analysis – This stage involves organizing, reviewing, verifying and interpreting the collected data. The main objective of data analysis is inspecting and transforming the data into valuable information, suggesting conclusions and consequently, supporting the decision-making process. It is essential to communicate the results of the analysis to the concerned parties, avoiding bias during data interpretation and provide emphasis on the data regardless of the hypothesis results.

· Report Presentation- This step involves providing effective conclusions based on the information gathered during the research to meet the required objectives. The report should be presented in a written format consisting of the specific research questions, approach description, research design, data collection methods, data analysis procedures and presenting the results and findings. Thus, the presentation must include final conclusions meeting the research objectives, various graphical and table representation of important facts, recommendations for applying the research and any limitations faced during the entire process.

3) Small-sized companies have limited resources in terms of both finance and workforce. Besides, they operate in a relatively smaller market with very few customers buying their products or services. Thus, conducting a market research study might be more costly for these companies than the benefits achieved from them because of their limited resources. Furthermore, since they operate in a small market, information is already available. Thus, conducting expensive market research for discovering already available information would be a wastage of resources. It would not only waste the time and funds of the company, but it can force it to acquire loans for conducting such research. Besides, the lack of abundant resources might result in the project being unsuccessful and incomplete, which would further increase the loss and expenses for the company. In addition, it can also lead to a threat to the competitive advantage by preparing everyone to see the research.

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