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Introduction to Business

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Introduction to Business ­MGT 211
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LESSON 25
MARKET RESEARCH PROCESS
This chapter introduces the steps involved in the market research process. It also provides you
with a brief preview of each of the steps necessary to conduct a market research effort. As you
can see in figure 1, the market research process has 4 basic steps. These steps include:
Defining the research problem
Establishing the research design
Collecting and analyzing data
Formulate findings
Meta-process model for Market research
Before these four steps are discussed it is important to make a few comments about these
steps. First although the list does strongly imply an orderly step-by-step process, it is rare that
a research project follows these steps in the exact order that they are presented
in the figure. Market research is more of an interactive process whereby a researcher, by
discovering something in a given step, may move backward in the process and begin again at
another step [Market research 2006] Finding some new information while collecting data, may
cause the researcher to establish different research objectives
In the following the different market research steps are described.
Defining the research problem
The step defining the research problem exists of 2 main steps: (1) formulating the problem and
(2) establishing research objectives.
Defining the problem is the single most important step in the market research process. A clear
statement of the problem is a key to a good research. A firm may spend hundreds or
thousands of dollars doing market research, but if it has not correctly identified the problem,
those dollars are wasted. In our case it is obvious that the problem here is setting up a
business. But even if this is clear, you still need to know what exactly you need to know to
make the new business a success and what specific related to the product is difficult to find
out. Problems that may be encountered are: it is unknown what potential markets there are,
what customer groups are interested in your products, who the competitors are? After
formulating your problem, you need to formulate your research questions. What questions
need to be answered and which possible sub-questions do you have.
With the problem or opportunity defined, the next step is to set objectives for your market
research operations. Research objectives, related to and determined by the problem
formulation, are set so that when achieved they provide the necessary information
to solve the problem. A good way of setting research objectives is to ask,
"What information is needed in order to solve the problem?" Your objective might be to explore
the nature of a problem so you may further define it, or perhaps it is to determine how many
people will buy your product packaged in a certain way and offered at a certain price. Your
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Introduction to Business ­MGT 211
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objective might even be to test possible cause and effect relationships. For example, if you
lower your price, how much will it increase your sales volume?
And what impact will it have on your profit?
Clear objectives can lead to clear results. An example of this is a situation at Camaro/Firebird.
Auto manufacturers are sometimes criticized for creating expensive vehicles with unwanted
features and technologies that do not meet the needs of the target market. To avoid this trap
engineering team of this company turned to market research to evaluate how changes in
performance and fuel economy would affect sales volume and customer satisfaction. It turned
out that customers were willing to pay more for greater performance if the car also offered
simultaneous increases in fuel economy. [Burns 2001]
The problem description, the research question, sub questions and the research objectives are
part of an overall document problem description.
After describing and formulating the problem and the objectives, the next step is to prepare a
detailed and realistic time frame to complete all steps of the market research process. If your
business operates in cycles, establish target dates that will allow the best accessibility to your
market. For example, a holiday greeting card business may want to conduct research before
or around the holiday season buying period, when their customers are most likely to be
thinking about their purchases. [Market research 2006]
Selecting and establishing research design
The step selecting and establishing research design consists of 3 main steps: (1) select the
research design, (2) identify information types and sources and (3) determine and design
research instrument.
Select the research design
As stated earlier, every research project and every business is different. Still, there are enough
commonalities among research projects to categorize them by research methods and
procedures used to collect and analyze data. There are three types of research design:
1. Exploratory research is defined as collecting information in an unstructured and
informal way. For example if the owners of a new restaurant often eat out at
competitor's restaurants in order to gather information about menu selections, prices
and service quality.
2. Descriptive research refers to a set of methods and procedures that describe
marketing variables. Descriptive studies portray these variables by answering who,
what, why and how questions. These types of research studies may describe such
things as consumers' attitudes, intentions, and behaviours, or the number of
competitors and their strategies.
3. Causal research design is conducted by controlling various factors to determine
which factor is causing the problem. It allows you to isolate causes and effects. By
changing one factor, say price you can monitor its effects on a key consequence such
as sales. Although causal research can give you a high level of understanding of the
variable you are studying, the designs often require experiments that are complex and
expensive. Identify information types and sources
There are two types of information available to a market researcher: primary data and
secondary data. Primary data is original information gathered for a specific purpose.
Secondary data refers to information that already exists somewhere and has been collected
for some other purpose. Both types of research have a number of activities and methods of
conducting associated with them. Secondary research is usually faster and less expensive to
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Introduction to Business ­MGT 211
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obtain than primary research. Gathering secondary research may be as simple as making a
trip to a local library or business information center or browsing the Internet. There is already a
lot of statistics about different businesses that can be used for this research.
Determining and design research instrument
After determining which type(s) of information are needed, the methods of accessing data
must be determined. There are several different methods of collecting data. These methods
include telephone surveys, mail surveys, personal interviews or group surveys.
The actual design of the research instrument, the data collection form that is used to ask and
record the information is critical to the success of the project. There are two basic methods to
collect information: by asking questions or by observing. The most common research
instrument is the questionnaire. There are two types of forms: structured and unstructured.
Structured questionnaires list close-end questions. These include multiple choice questions
which offer respondents the ability to answer "yes" or "no" or choose from a list of several
answer choices. Close-end questions also include scales refer to questions that ask
respondents to rank their answers at a particular point on a scale. Unstructured questionnaires
have open-ended questions. Respondents can answer in their own words.
Collecting and analyzing data
Data collection is usually done by trained interviewers who are employed by field data
collection companies to collect primary data. A choice has to be made between collecting the
data yourself or hiring an external office who are specialized in interviews. Data analysis is
needed to give the raw data any meaning. The first step in analyzing the data is cleaning the
data. This is the process of checking the raw data to verify that the data has been correctly
entered into the files from the data collection form. After that the data have to be coded. This is
the process of assigning all response categories a numerical value.
For example males = 1, females = 2. After that the data can be tabulated, which refers to the
actual counting of the number of observations that fall in to each possible response category.
Formulate findings
After analyzing the data you can make your findings based on this data. Once the findings
about the target market, competition and environment are finished, present it in an organized
manner to the decision makers of the business. In this case report the findings in the market
analysis section of your business plan. In summary, the resulting data was created to help
guide your business decisions, so it needs to be readily accessible to the decision makers.
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Table of Contents:
  1. INTRODUCTION:CONCEPT OF BUSINESS, KINDS OF INDSTRY, TYPES OF TRADE
  2. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:THE ECONOMIC ENVIRONMENT
  3. BUSINESS ORGANIZATION:Sole Proprietorship, Joint Stock Company, Combination
  4. SOLE PROPRIETORSHIP AND ITS CHARACTERISTICS:ADVANTAGES OF SOLE PROPRIETORSHIP
  5. PARTNERSHIP AND ITS CHARACTERISTICS:ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
  6. PARTNERSHIP (Continued):KINDS OF PARTNERS, PARTNERSHIP AT WILL
  7. PARTNERSHIP (Continued):PARTNESHIP AGREEMENT, CONCLUSION, DUTIES OF PARTNERS
  8. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:ETHICS IN THE WORKPLACE, SOCIAL RESPONSIBILITY
  9. JOINT STOCK COMPANY:PRIVATE COMPANY, PROMOTION STAGE, INCORPORATION STAGE
  10. LEGAL DOCUMENTS ISSUED BY A COMPANY:MEMORANDUM OF ASSOCIATION, CONTENTS OF ARTICLES
  11. WINDING UP OF COMPANY:VOLUNTARY WIDNIGN UP, KINDS OF SHARE CAPITAL
  12. COOPERATIVE SOCIETY:ADVANTAGES OF COOPERATIVE SOCIETY
  13. WHO ARE MANAGERS?:THE MANAGEMENT PROCESS, BASIC MANAGEMENT SKILLS
  14. HUMAN RESOURCE MANAGEMENT:Human Resource Planning
  15. STAFFING:STAFFING THE ORGANIZATION
  16. STAFF TRAINING & DEVELOPMENT:Typical Topics of Employee Training, Training Methods
  17. BUSINESS MANAGERíS RESPONSIBILITY PROFILE:Accountability, Specific responsibilities
  18. COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR
  19. COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE
  20. STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE
  21. MANAGERIAL STYLES AND LEADERSHIP:Changing Patterns of Leadership
  22. MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction
  23. THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation
  24. MARKET RESEARCH:Market information, Market Segmentation, Market Trends
  25. MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data
  26. MARKETING RESEARCH:Data Warehousing and Data Mining
  27. LEARNING EXPERIENCES OF STUDENTS EARNING LOWER LEVEL CREDIT:Discussion Topics, Market Segmentation
  28. UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process
  29. THE DISTRIBUTION MIX:Intermediaries and Distribution Channels, Distribution of Business Products
  30. PHYSICAL DISTRIBUTION:Transportation Operations, Distribution as a Marketing Strategy
  31. PROMOTION:Information and Exchange Values, Promotional Strategies
  32. ADVERTISING PROMOTION:Advertising Strategies, Advertising Media
  33. PERSONAL SELLING:Personal Selling Situations, The Personal Selling Process
  34. SALES PROMOTIONS:Publicity and Public Relations, Promotional Practices in Small Business
  35. THE PRODUCTIVITY:Responding to the Productivity Challenge, Domestic Productivity
  36. THE PLANNING PROCESS:Strengths, Weaknesses, Threats
  37. TOTAL QUALITY MANAGEMENT:Planning for Quality, Controlling for Quality
  38. TOTAL QUALITY MANAGEMENT (continued):Tools for Total Quality Management
  39. TOTAL QUALITY MANAGEMENT (continued):Process Re-engineering, Emphasizing Quality of Work Life
  40. BUSINESS IN DIGITAL AGE:Types of Information Systems, Telecommunications and Networks
  41. NON-VERBAL COMMUNICATION MODES:Body Movement, Facial Expressions
  42. BUSINESS ORGANIZATIONS:Organization as a System
  43. ACCOUNTING:Accounting Information System, Financial versus Managerial Accounting
  44. TOOLS OF THE ACCOUNTING TRADE:Double-Entry Accounting, Assets
  45. FINANCIAL MANAGEMENT:The Role of the Financial Manager, Short-Term (Operating) Expenditures