LESSON 3
Effective Market Research
Market research is most likely to be useful when:
- The information is available at an appropriate cost
- The information is accurate
- Data is understandable
Cost of Market Research:
How much should a firm spend on market research?
This depends on:
- Urgency for information
- Required quality of information needed
- Nature of decision (e.g. degree of risk)
Value of Market Research:
Research does not guarantee success but can help to reduce the risk.
Not all decisions use formal researching methods. Some decisions are based on intuition or hunch.
Evaluating Market Research:
How much will it cost?
What is the risk if we do not do research?
How reliable will the findings be?
How long will it take?
What alternatives are there?
Typical Problems of Market Research:
- Bias e.g. due to poor interviewers and questionnaires or because it is looking for a particular result (e.g. entrepreneurs want to be convinced that their idea works)
- Sample too small and unrepresentative
- Results take too long to arrive and so are out of date
Value of Intuition:
It may be appropriate/necessary to follow intuition if:
- There is no information available
- Market conditions are rapidly changing
- The firm wants a creative/novel solution
Consumer Buying Behaviour: the acts of individuals involved in buying goods and services. By studying this behavior marketers can develop appropriate marketing strategies.
Consumer Behaviour: The 7 O’s
Market research will try to find out more about consumers and the marketplace including:
- Occupants: Who is in the market already?
- Objects: What are consumers buying?
- Objectives: Why is the market buying these goods and services?
- Organization: Who is involved in the buying process?
- Operations: How does the market buy?
- Occasions: When does it buy?
- Outlets: Where does it buy?
Six Buyer Readiness Stages:
- Awareness e.g. of name, of product
- Knowledge e.g. of product features
- Liking i.e. think about the product favourably
- Preference i.e. actively prefer it to alternatives
- Conviction i.e. consumers are sure they want it
- Purchase i.e. consumers buy it
Promotional actions will vary according to the stage consumers are at.
Influences on Consumer Buying Behaviour:
- Personal influences such as individual needs, perceptions, attitudes and experiences; age; stage in the personal life cycle; economic circumstances.
- Interpersonal determinants such as cultural, social and family influences.
Stages in Consumer Decision Making:
- Recognition of problem or opportunity (decide you need/want something)
- Search process (look for alternatives)
- Evaluation of alternatives (weigh up the alternatives)
- Decision to purchase
- Act of purchase (buy the goods/service)
- Post-purchase evaluation (was it value for money? Was it worth it?)
- Feedback
Buyer’s Purchase Decision:
Based on:
- Choice of product
- Choice of brand
- Choice of outlet
- Decision when to buy
- Decision about how much to buy
Categories Of Consumers As They Buy the Product Over Time:
Innovators: willing to try new ideas; willing to take risks in this market; this group may buy the product first
Early Adopters: opinion formers in this market; they buy after innovators.
Early Majority: adopt new products before the average person; need to think about a product before buying it.
Late Majority: only adopt after many others have already; skeptical buyers.
Laggards: very late to adopt new products/services; only accept it has proved itself for some time in the market; the last group to buy.
Outside Influences On The Customer Buying Decision:
Marketing Mix:
- Price
- Product
- Place
- Promotion
External Environment:
- Political/legal
- Economic
- Social/cultural
- Technological
