A marketing research includes several main stages: determining a problem and setting a research goal, conducting a preliminary research and formulating hypotheses, developing a research design (plan, scheme), analyzing secondary data and collecting primary information, interpreting data and presenting research results.
Consider these steps.
1. Problem definition and goal setting
At the first stage of marketing research, it is necessary to determine the problem of the company - the customer of marketing research. This is a very important step, because a well-defined problem is a half-resolved problem. A correctly identified company problem allows the researcher to focus his efforts on exactly the information that is necessary to solve the problem. A clear statement of the question that marketing research should answer, increases the speed and accuracy of the research process.
It is important not to confuse the symptoms of the problem with the problem itself. Symptoms are alarms that inform management that they have a problem. For example, a company is faced with the fact that its advertising does not produce the expected results. The reason may be an incorrectly defined target group, an error in the choice of communication channels, in assessing the competitive situation.
The consultant analyst must analyze the situation of the client in order to outline the problem. He must identify the main question that the management of the company must answer, making a successful choice of his decisions.
The logical starting point in identifying the problem is to evaluate the company's marketing mix and the target market. It is necessary to determine the current decisions on the marketing complex and their adequacy to the current environment of the company's marketing activities.
Perhaps the effectiveness of advertising has declined because a new aggressive competitor has entered the market. Then the problems of advertising fade into the background, and the main attention should be paid to the problem of the effectiveness of the marketing complex of the company.
Having defined the problem of the company, it is necessary to formulate the purpose of marketing research. Marketing research should help in solving a company’s problem by answering a key, or main, question of resolving a problem situation.
The purpose of the study is formulated so that its results provide answers to the key question of the problem situation. In our example, the company management should answer the question: “What should we do in the current competitive situation?”
Accordingly, the purpose of marketing research is to analyze the effectiveness of the marketing complex of the company and develop recommendations for its development. The purpose of marketing research determines the scope and scope of the proposed work and, accordingly, determines the cost of research.
2. Conducting a preliminary study and the formulation of hypotheses
A preliminary study is necessary to determine the cause of the identified company problems. It is conducted by discussing the problem with informed sources within the company and beyond, as well as by using other available sources of information.
So, for example, a preliminary study of the problem of the effectiveness of the marketing complex can begin with a discussion of the problems of the sales service, service, and managers for working with the company's customers.
Along with conversations with employees in the company, a preliminary study may include an assessment of the formal data of the company. This may be an analysis of sales and profits of the company itself, as well as competing products.
The most commonly used sources of internal information are sales data, financial statements, and marketing cost analysis. Analysis of sales data allows you to get a general picture of the company's performance and find the thread leading to the solution of the problem.
Sales analysis is prepared on the basis of company accounts or a computer database system. Comparison of actual and expected sales by territories, products, consumers, sales staff is supposed. An analysis of transactions by the sales method (personal contact, phone, Internet), sales volumes, types of consumers can be carried out. Sales analysis is the least expensive and most important source of marketing information available to a company.
Financial reporting data (profit and loss statement, balance sheet, etc.) can be a means of identifying financial issues that affect marketing. Using indices, the researcher can compare the results of the current and previous years in comparison with the industry level. This analysis may indicate possible problems, however, specific causes of variation in the indicators are identified in a more detailed study.
The third main source of internal information is the analysis of marketing costs. These are the costs of sales, advertising, delivery and storage. They are needed to assess the profitability of specific customers, territories and product lines. Most often, companies study the allocation of their costs by products, consumers, territories. Marketers then measure the profitability of specific consumers and areas based on the sales generated and the cost of generating those sales.
As a result of a preliminary study, hypotheses can be formulated - a preliminary explanation of events or situations. So, for example, after studying the situation of the company, a hypothesis may be put forward - “the low level of sales of the company's products is due primarily to the lack of integration of elements of the marketing mix”.
Not all marketing research tests specific hypotheses. However, a carefully designed study can benefit from hypothesis development to the start of information collection and processing.
3. Development of a research plan
To implement the goal of marketing research, finding a solution to a marketing problem or testing a hypothesis, a research model (or scheme, plan) is developed.
When developing a research project, marketers provide a follow-up study of exactly what they intended to study. This plan includes a secondary information analysis program, a scheme for collecting and processing primary information, interpretation and presentation of research data.
4. Data collection: secondary and primary information
The collection of secondary information on the subject of research, as a rule, precedes the collection of primary information. According to the criteria of availability, cost, speed of obtaining secondary information has advantages over primary. However, incompleteness, incomplete adequacy to the tasks of analysis, untimely data are a lack of secondary information.
For example, census data contain demographic characteristics of residents, but do not contain information about their brand preferences.
The collection of primary information is usually more expensive and longer in time, however, as a result, more valuable and detailed information can be obtained. The choice between secondary and primary information is related to the cost and effectiveness of these options. In fact, many marketing research projects combine secondary and primary information to provide a complete answer to marketing questions.
Primary Information Collection Decisions
To collect the primary information, a sampling plan is being developed - a system of decisions about the unit, size and sampling procedure. First you need to decide what to study. Suppose you want to conduct a consumer survey. Marketers usually draw conclusions about large groups of objects (consumers, companies) by studying small samples, or samples, from the total population of these objects. The whole group of objects (people in this case) that researchers want to study is called a population. For example, for a political campaign, the population is made up of all voters. To study the yogurt market - all consumers of yogurt.
Since it is impossible to interview all consumers, only a part of all consumers, or a sample reflecting the properties of the entire group, is selected. This sample is called sampling. The sample is a part of the studied group of objects (consumers), selected for marketing research and representing the entire group. The sample should reflect the target market, i.e., present its characteristics, or be representative.
The sampling plan answers three questions:
Firstly, this is a sampling unit, i.e. who needs to be interviewed. The researcher must determine what information is needed and who most likely has it. So, for example, if you need to study the behavior of consumers of cell phones, the question is: who to interview - students, businessmen, schoolchildren, doctors, sellers, or all of them?
The second question about the sample plan is how many people should be interviewed, or the sample size. Large samples give more reliable results than small ones. However, for reliable results, it is not necessary to interview most people in a population. A well-formed sample of less than one percent of the population can often give good reliability.
The third question is the sampling plan: how the sample should be formed, or sampling procedure (sampling procedure). The sample can be random, probabilistic (probability sample), or nonrandom, improbable (nonprobability sample).
Random sampling gives each member of the population, or population, a known and equal chance of being selected, and sampling error can be measured. However, if random sampling is too expensive or takes too long, non-random sampling may be used. Although the random sampling error cannot be measured. The sampling method depends on the needs of the study. Often methods are combined.
After drawing up a sampling plan, a decision is made on the research tools. The main tools are a questionnaire and electronic-mechanical means.
The questionnaire is a traditional means of collecting primary information: in person, by phone or via the Internet. It is necessary to decide what questions to ask, in what order to arrange them. Closed questions (with choices) provide answers that are easily tabulated and interpreted. Open-ended questions (with a free answer form) are more useful in preliminary, exploratory research.
The first question on the sheet should arouse the interest of the respondent, and the last may be the most difficult. Electromechanical tools - scanners, web page counters read information automatically.
The collected information should be prepared for subsequent analysis - a search for errors and their elimination is carried out. For example, questionnaires with missing answers are either recognized as invalid and are not used in the future, or are finalized with respondents upon repeated contact, if possible.
5. Analysis, interpretation of data and presentation of research results
After eliminating the errors in data collection, respondents' answers are categorized and encoded, i.e., a rating number is assigned to each answer option. The data are presented in matrix form, are tabulated - tabulated, which makes possible the statistical processing of results.
Statistical analysis allows you to describe the state of answers (find average values and deviations of answers from average values), check the validity of hypotheses, find relationships between analysis variables, make predictions.
Interpretation of the results of statistical analysis helps to answer the main questions of the study. Based on the results of the analysis, the researcher generates conclusions and makes recommendations, draws up a report and presents it to the customer.
The customer often wants to make sure that the studies are carried out properly, and may also want to get additional explanations of the report materials. The customer may be biased towards the results and see in the study what he wants or is ready to see, and not see what he does not want or is not ready to accept.
Therefore, the report and presentation must be performed perfectly and at the same time be understood by the customer, who may not be as deeply versed in statistics as the researcher himself.
If the customer does not know statistical terminology, it is necessary to present the results in a generally accepted language. The research customer manager and researcher should work together to interpret the results and share responsibility for the research process and the decisions arising from it.
In order to get exactly the necessary information, the research manager must:
- to formulate the company's problem in the preparation of the study and create conditions for the collection of objective information within the company,
- review the problem statement by the researcher and review it with the researcher until agreement is reached on what information should be received and how long it needs to be done,
- view the progress of the study and intermediate results, as well as insist on a clear interpretation of the results of the study.
3 levels of marketing research
Without marketing research of the company, we are not able to effectively sell our products / services, so it is necessary to conduct tests at three levels:
- Analysis of the environment and company conditions.
- Analysis of market elements.
- Analysis of the results of the company.
Marketing analysis of the environment
For the first marketing analysis, you should determine the conditions of the company and for this you need to ask yourself questions:
- What is the absorption capacity of the promoted product and what is its target market.
- What are the trends in this market and what external factors influence them.
- What is the market share.
- Who are our main competitors, what are their strengths and weaknesses.
- Who mainly buys our goods / services (age, income, classes).
- Where are the main potential buyers of our products / services.
- How much and how often they buy a promoted product.
- To what extent can we satisfy the needs of our best customers.
Marketing analysis of market elements
For the second marketing analysis by market elements, the following questions should be answered:
- Is the quality of our products / services satisfying customer needs.
- Do you sell at the right price.
- How much is the reasonable cost of distribution of goods.
- Coy will need a budget for an advertising company in promoting the product.
- How and by what I can be more attractive in comparison with competitors. Application of innovation:
- possible implementation of innovative solutions in product properties,
- for which clients innovation can be an attractive and decisive factor of choice.
Marketing Analysis of Results
Research for the 3rd analysis of the results of marketing activities of the company includes:
- Results (effects), sales (sales) in different sections - time, assortment, place, categories of recipients are supported, including the reasons for any changes in turnover.
- Change in the company's market share.
- The image (image) of your product and business as a whole in the eyes of consumers (against the background of the image of the largest competitors).
For a small business and for a large corporation, conducting an ideal marketing analysis will require equal efforts, financial and time costs. The problem is that such costs for small businesses are most often not rational. But any complex can always be decomposed into simple.
Marketing research is scaled from a small town (for example, a village) to a global scale. If the customers are mostly people from the city, the study should not take much time. The larger the territorial scope of the company, the more time you should spend and invest in conducting marketing analysis.
About the current market situation - about products, customers and competitors, we can get from the local press, from literature on the topic of industry. An excellent source of information is the Internet. You can also subscribe to trade magazines, where you can find information on the latest products and new trends.
We also need to spend our time to participate in fairs and exhibitions, where we receive new information on the development of industry and various options for the application of new technologies.
Important Market Analysis Steps
Where to start market analysis? Do you analyze the consumer, industrial or b2b market - it doesn’t matter. Each time compiling a market review, the marketing manager must sequentially complete the 8 following stages of market research:
|Market Analysis Stages||Description of the market research phase|
|Stage 1||Define the goals and main objectives of the market analysis|
|Stage 2||Make a consistent plan for marketing analysis of the market|
|Stage 3||Определить возможные сроки и максимальный бюджет на анализ рынка|
|Этап 4||Определить методы анализа рынка и источники получения информации по рынку|
|Этап 5||Провести необходимые маркетинговые исследования рынка товаров или услуг|
|Этап 6||Подготовить наглядный анализ всей собранной информацией с выводами|
|Этап 7||Составить сводный отчет по анализу рынка|
|Stage 8||If necessary, prepare a presentation on the conducted marketing analysis of the market|
Fig. 1 Stages of marketing analysis and market research
What market analysis do you need?
There are many types of marketing analysis and market research. Before starting the analysis, determine the objectives of studying the target market. What exactly do you want to know?
|Subject of analysis||Goal description|
|Market structure||Analysis of capacity and market conditions, assessment of market trends|
|Company product||Analysis of market development and market share of the company's goods in the segment|
|Target segment||Analysis of the attractiveness of market segments in order to select a target market|
|Consumer||Analysis of market demand and analysis of key market needs, a detailed study of the behavior, requirements of the target audience for the product|
|Prices||Analysis of competitors' price positioning, the current industry price structure|
|Swob niches||Analysis of market segments in order to search for free market niches and new sources of sales|
|Competitors||Conducting a competitive market analysis in order to analyze the competitive advantages of the product and identify weaknesses of the company|
A clear answer to this question will help you avoid processing unnecessary and unnecessary information. Having a precisely formulated goal, you can correctly draw up a market analysis plan, choose the most effective method of marketing market research, use the right tools for market analysis, thereby reducing the cost of finding and processing information.
Perhaps you need a detailed strategic analysis of market conditions and market dynamics, or a comprehensive competitive market analysis, or maybe you need an overview of consumer behavior in the market to understand free market niches.
How to determine what type of marketing research is needed for you? Very simple! Take a blank piece of paper and write down in a column all the questions that you want to get an answer to. Now, next to each question, write how this information will help you to improve the competitiveness of the product and increase the profitability of the company.
Fig.2 Definition of tasks of market analysis
Draw up a market analysis plan
So, the list of questions for market analysis is ready. Now it is important to correctly draw up a market analysis plan, which is a certain sequence of questions grouped among themselves by topic.
The enlarged stages of the marketing analysis of the market are as follows:
- Analysis of market size, dynamics and potential
- Market research, market segmentation and identification of key segments
- Competitive Market Analysis
- Price Analysis and General Economic Market Analysis
- Analysis of the structure of distribution or distribution of goods in the market
- Analysis of advertising methods, methods of promotion and support of goods in the market
- Analysis of demand, key needs and characteristics of customer behavior in the market
- Identification of major market and consumer trends
Fig.3 Market analysis plan
The above list of questions is a universal plan for analyzing any sales market. A detailed market analysis is not necessary often. It is quite fundamental and will provide the necessary information for 2-3 years of work.
Brief Market Analysis Plan
Sometimes situations arise when it is necessary to prepare a short section for any segment, to assess the degree of market development and the general state of the market. In this case, there is no need to conduct a comprehensive comprehensive marketing research of the market, but it is enough to get answers to the following questions:
|Stage 1||Determine the market capacity (or market size), market growth dynamics and sales potential.|
|Stage 2||Identify the main players in the market and conduct a brief competitive analysis for each player (assortment, prices, communication, points of sale, product quality). Determine the competitive advantages of the players and the main message to the consumer of the market, describe the image characteristics of the players.|
|Stage 3||Conduct market analysis and highlight the main product segments. Assess their size, growth dynamics and potential.|
|Stage 4||To analyze the places and methods of selling goods on the market.|
|Stage 5||Conduct a comparative analysis of methods for promoting goods on the market.|
|Stage 6||Estimate the level of prices in the market, break down all market players by price segments and estimate the price structure (cost, margin, advertising costs, profit).|
|Stage 7||Assess customer satisfaction with market products. Identify key factors affecting the first and repeated purchase of goods. List free market niches.|
|Stage 8||Assess market development trends 3-5 years in advance|
A brief marketing analysis of the target market is often used to assess the attractiveness of individual market segments, to prepare a business plan.
Primary and secondary research of commodity markets
There are 2 types of market information that you can collect: primary and secondary data. Primary data is the initial information about the market, collected directly by the company during direct market research. Secondary data already exists in the market and is collected by someone, and is also often processed and analyzed.
Fig. 4 Primary and secondary marketing research
Any analysis of the market must begin with the study of existing secondary information about it. Perhaps research companies, government statistics agencies have already gathered information to answer questions from your analysis plan. If so, then you will significantly save time and budget for research.
So do not be lazy and spend an hour of your time searching for secondary market information on the Internet.
Quantitative and qualitative research methods
There are 2 ways to collect market information: a quantitative and qualitative method of market research.
Fig. 5 Features of quantitative and qualitative market research
Quantitative market research methods in marketing provide structured and statistically processed market information. Using quantitative methods, you can get accurate numbers based on which to make a sales forecast or estimate the market size.
The result of qualitative methods of market analysis are hypotheses, ideas, individual opinions that are not unstructured and can not be statistically evaluated, but can only be analyzed subjectively.
5 types of market research
There are 5 methods of market research in marketing: surveys, focus groups, in-depth interviews, field studies or experiments, observations. The choice of research method depends on the budget and time resources. Briefly about each.
Fig. 6 Types of market research
|Types of Market Research||Description of research methods|
|Surveys||They mean a survey of the target market according to a strictly specified questionnaire. The size can be both large and small. In the survey, the sample is important: the larger it is, the more correct and representative result you will get. This is a quantitative method, used when it is necessary to get an exact figure for a specific question.|
|Focus groups||A discussion or a round table at which a discussion of a given topic by a target group of consumers takes place. There is a moderator who manages the discussion on a given list of issues. A qualitative method, effective for understanding the causes of behavior, researching the hidden motives of the consumer, helps to formulate hypotheses.|
|In-depth interviews (personal interviews)||Conversation with one representative of the target audience on a specific list of open questions. They help to understand the issue in detail and form hypotheses. Qualitative research method.|
|Observation||Observation of a representative of the target audience in a familiar environment for him (for example: video shooting in the store). Qualitative research method.|
|Experiments and field trials||A quantitative way of market research. Helps test certain hypotheses and alternatives in practice.|
The most affordable and easy market research
It is rare when a company can afford to allocate a good budget for conducting complex marketing research of the industry market, starting with searching for hypotheses in focus groups, interviews and ending with a large-scale survey with obtaining statistically valid data.
Often, on the contrary, the marketing manager has to use his own strengths to obtain market information that will help in developing the company's marketing strategy. Some tips on where and how to look for marketing information about the market:
|Market Information Source||Comments|
|Personal interviews||Speak in person with the target market audience, conduct 5-10 interviews. Include in your interviews users of different brands, consumers and non-consumers of the market. Interview those who make the decision and influence the purchase and those who use the purchased goods. You will spend less than a week on such a survey and get a lot of useful information.|
|Forums and social networks||Use the possibilities of the Internet: the ability to ask consumers on forums, on social networks, via e-mail, contact via Skype - all this reduces research costs|
|Internet resources||Examine available information on the Internet on topics of interest, including information about related markets.|
|Company employees||Interview the company employees about the issues that interest you, find out their opinion, talk separately with representatives of the sales department. If you conduct market research as an independent party, conduct an interview with company executives.|
|Personal observation||Observe the behavior of customers at points of sale themselves: how he makes a choice, how he chooses.|
|Personal experience||Try to become a buyer of your product yourself and describe your impressions.|
6 Essential Market Analysis Tips
Be realistic and include in the market analysis only those indicators that you are able to receive and process. Remember: there is no need to analyze for the sake of the analysis process. Only those conclusions that may be useful in shaping the strategy are important.
Be sure to conduct marketing research that can be organized even with a small marketing budget. Only the sample size depends on the budget size. But to understand the culture of demand in the market, the needs of the target market, even a few in-depth interviews with consumers are enough.
Make it a rule: after analyzing each block of information, draw conclusions. Even when they are obvious.
When you do not have enough data, resort to expert judgment and expectations, making notes and notes about it.
Use sales managers for information. You will be surprised how much they can know about competitors and market conditions.
Make a short plan of market analysis. The analysis plan should not be too detailed, since it only serves as a systematizer of the process. But it is necessary that in the process of analyzing the market, product or service you do not spend time on useless information analysis.
Determining the target market for marketing research
It is necessary to make the right choice for a specific group of customers who are the target market for the company. This will allow you to segment the market and get the right audience of the market segment. What unites all the customers who form such a segment? They have great similarities in the first place, the needs and preferences of a particular product or service. Recipients belonging to the same “market segment” tend to have very similar needs, tastes and preferences. They are looking for services with similar characteristics and properties.
Particularly important is the concept of a market niche, which narrowly defines the groups that give preference to certain advantages. The advantage of highlighting a niche is that, as a rule, it has few competitors in its segment, which allows the company to become a leader in its market.
To highlight a market segment, you need to find answers to the following questions:
- Does this segment have a gap (needs that do not yet satisfy customers).
- What part of the population is satisfied with the products / services offered by competitors, and how many consumers are looking for something else.
- If the company is able to offer something that customers themselves still need, but do not find.
- What demand is expected for the form to create an opportunity for a profitable business.
- Will the company be able to effectively represent and promote its products to potential customers.
It should be remembered that any market can be divided into smaller markets in the same niche. And they can be divided into smaller markets, then into mini-markets, etc. This search in marketing analysis allows you to find mini-markets from which the company is most successful in making its start (entry point to the niche market) where there are no competitors yet, but there is sufficient customer demand to start a business. And the following larger market segments provide an opportunity to build a successful business development strategy, mastering an increasing market share - step by step. It is for this that marketing analysis is needed for every small business.
How to determine a market entry point
You can find out the correct entry point into the market and the correct consistent chain of company development by the following criteria:
- Concentration analysis for the company in the place where it will have the greatest competitive advantage.
- Choose a market area that the company knows very well.
- Choose the market segment that meets the long-term plans for the development of the company.
- Consistently concentrate on market segments, the sizes of which correspond to the potential of the company.
- Severely competitive market segments should be avoided.
- Identify and carefully examine all barriers to entry.
- Make sure that the activities of the company in a certain market segment will fully satisfy the demand.
- Leave some interesting segments in reserve.
Briefly about the competition
To compete successfully, you should close the following questions:
- The ability to sell and promote your product.
- Provide decent quality finished product.
- The ability to adapt to changing market conditions.
- The ability to find the main differences compared to its competitors.
Market segments are not stable and may change from time to time. Therefore, it is important to continuously monitor market events that interest the company at a certain stage of development, from the point of entry into the market to the monopolization or complete absorption of its market. The rule of marketing research says that until you own 100% of the market share, you still have room to develop.