MODULE 2

Market research & Information System.

Marketing research is an important tool for formulating marketing strategies and programmes.Research
work is not only confined in single dimension rather it stretch its branches in different channels like,

• Lifestyle changes
• Consumption pattern
• Brand loyalty
• Forecasting
• Competitive advantage. Etc

In order to make the research effective it is important that it should be linked with business strategy and
should respond to emerging scenarios in the market place.

MIS- It means
Set of procedures and practices employed in analyzing and assessing marketing information, gathered
continuously from sources inside and outside of a firm. Timely marketing information provides basis for
decisions such as product development or improvement, pricing, packaging, distribution, media selection,
and promotion. See also market information system.

(The marketing information systems and its subsystems)

MIS is the…Processes associated with collecting, analyzing, and reporting marketing research
information.
Research Process :
The marketing process goes through 7 steps. They are,

1. Problem Definition. Problem definition involves discussion with the decision makers, interviews
with industry experts, analysis of secondary data, and, perhaps, some qualitative research, such as
focus groups. Once the problem has been precisely defined, the research can be designed and
conducted properly.

2. Development of an Approach to the Problem. This includes formulating an objective or

theoretical framework, analytical models, research questions, hypotheses, and identifying
characteristics or factors that can influence the research design

3. Working on a research design. More formally, formulating the research design involves the
following steps
1. Secondary data analysis
2. Qualitative research
3. Methods of collecting quantitative data (survey, observation, and experimentation)
4. Definition of the information needed
5. Measurement and scaling procedures
6. Questionnaire design
7. Sampling process and sample size
8. Plan of data analysis
4. Sources of data Collection.
• Primary data(types-Census, Sample)
• Secondary data(lacks in accuracy,efficiency,availability,etc)(sources-internal database)

5. Planning and deciding on data collection techniques & tools

Tools of data collection are,
• Questionnaire
• Measurement of attitude
• Interview
• Association Test

Data can be collected by,

• Observation
• Experimentation
• Focus groups

6. Analyzing data. Raw data is of no use so appropriate analytical tools must be used to interpret
this data. Arithmetic & statistical analysis must be used where-ever necessary. Today
MDSS(MARKETING DECISION SUPPORT SYSTEM) helps make better decision.
7. Making a report and presenting it to decision makers. The entire project should be
documented in a written report which addresses the specific research questions identified, describes
the approach, the research design, data collection, and data analysis procedures adopted, and
 present the results and the major findings. The findings should be presented in a comprehensible
format so that they can be readily used in the decision making process. In addition, an oral
presentation should be made to management using tables, figures, and graphs to enhance clarity and
impact

Research methods
The goal of the research process is to produce new knowledge, which takes three main forms (although, as
previously discussed, the boundaries between them may be fuzzy):

• Exploratory research, which structures and identifies new problems

• Constructive research, which develops solutions to a problem
• Empirical research, which tests the feasibility of a solution using empirical evidence

Research can also fall into two distinct types:

• Primary research
• Secondary research

In social sciences and later in other disciplines, the following two research methods can be applied,
depending on the properties of the subject matter and on the objective of the research:

• Qualitative research
• Quantitative research

The Internet & World Wide Web based Information Collection & Processing:

Internet, network of networks, connects several computers and resources around the
world using the language called/IP (Transmission Control Protocol/Internet Protocol)
The Internet carries a vast array of information resources and services, most notably the inter-linked
hypertext documents of the World Wide Web (WWW) and the infrastructure to support electronic mail.
The internet &WWW acts as a source of secondary information. The internet is a worldwide
telecommunications network that allows computers and the people who use them to access data, pictures,
sound and files across the world without being restricted by the computer.
Global sites such as Yahoo,Google,Rediff.Com,Indiainfoline,Indiatimes,etc are some of the popular
websites providing information on industry and economy.
One or the other way internet is helping the world in accessing any type of information, as we all know
that secondary information have certain pros & cons but we need to cope up with this type of gathering
information, we need to collect the data’s then evaluate it then process the necessary things. As we all
know in today’s world,
“INTERNET IS A NECESSARY EVIL”
Database:
Database involves recording data in the computer, organizing it for effective use, updating & maintaining
it, and retrieving the information for decision making.
Generally this data is on customers, territories, & brands.
Database marketing is the creation of a large computerized file of customers & potential customers,
profiles &purchase patterns. Database marketing assists in,
• Identification of most & least profitable customers.
• Identification of attractive market segments & target efforts
• Evaluation of sales territories
• Identification of new market opportunities
• Modification of market programmes.

Data Warehouses:
Data Warehousing is an IT architecture aimed at storing and organizing information in a meaningful
manner, thereby helping them in taking operational and strategic decisions.
Successful Data Warehousing involves the following,
• Providing information to both operational & strategic decision maker.
• It often supports analysis of trends over a period of time & comparison of current & historical data.

Data Mining:
Data mining is the process of extracting patterns from data. As more data are gathered, with the amount of
data doubling every three years, data mining is becoming an increasingly important tool to transform these
data into information. It is commonly used in a wide range of profiling practices, such as marketing,
surveillance, fraud detection and scientific discover. Data mining commonly involves four classes of task:

• Classification - Arranges the data into predefined groups. For example an email program might
attempt to classify an email as legitimate or spam. Common algorithms include Decision Tree
Learning, Nearest neighbor, naive Bayesian classification and Neural network.
• Clustering - Is like classification but the groups are not predefined, so the algorithm will try to
group similar items together.
• Regression - Attempts to find a function which models the data with the least error.
• Association rule learning - Searches for relationships between variables. For example a
supermarket might gather data on customer purchasing habits. Using association rule learning, the
supermarket can determine which products are frequently bought together and use this information
for marketing purposes. This is sometimes referred to as "market basket analysis".

Spatial Datamining- Spatial data mining follows along the same functions in data mining, with the
end objective to find patterns in geography.

Pattern mining- "Pattern mining" is a data mining technique that involves finding existing patterns in
data.

Subject based Data Mining- Subject-based data mining" is a data mining technique involving the
search for associations between individuals in data

Global market research:

Global Market Research provides quantitative research and proprietary software tools to
institutional investors in the Fixed Income, Forex and Equity asset classes
.Market Probe is a global market research firm with offices in nine countries, providing full-service
strategic guidance and business solutions to major international companies. We specialize in customer
satisfaction, employee and brand stakeholder marketing research, with in-house facilities for field services
by Web and phone.
GLOBAL MARKET RESEARCH has the industry expertise and local resource to help clients understand
and develop their market, providing added-value market research and consultancy services throughout the
world.

Competitive Intelligence:

Component of Intelligence System,

• Customer Intelligence
• Competitor Intelligence
Competitor Intelligence gives information on strengths & weaknesses of each competitor in the territory,
the strategy & tactics used by them, and how the customer procures competitor brands.
Key points of this definition:

1. Competitive intelligence is an ethical and legal business practice, as opposed to industrial

espionage which is illegal.
2. The focus is on the external business environment.
3. There is a process involved in gathering information, converting it into intelligence and then
utilizing this in business decision making. CI professionals emphasize that if the intelligence
gathered is not usable (or actionable) then it is not intelligence.

Consumer Behavior:
It is the study of when, why, how, what & where people do or do not buy products. It blends elements from
Psychology, Sociology, Anthropology, Social & Economics.
Features—
 Involves both individual (Psychological) processes & Group processes.

 Reflected from awareness right through past purchase evaluation indicating,

A. Communication relating consumption behavior

B. Basically social in nature. Buyer behavior includes both individual consumer &
business

Importance of studying CB buyer.

 Helps marketers place their products better & develop effective marketing strategies.

 Help firms to strengthen the long term Customer Relationship.

 Helps to gain knowledge about consumes belief, specific needs, preferences about
products & brands.

 Determine the durability of an utility aspect of good.

 Helps firm to determine pricing policy of products.

 Determining quality style, colour.packaging, form of product.

Factors influencing consumer behavior:

A. Cultural factor

(Set of values, rules, beliefs behavior & concepts that is common & binds the
members of society)

B. Social Factor

(An individual’s family, friends are next important social group, former social groups
like, ex-rotary club, etc.)

C. Personal Factors

(AgeSexLifestyle stageOccupationEconomic conditionPersonality)

D. Psychological factors

(Motivation, Perception, Beliefs & Attitude, Learning)

Buying motive:
 1. Product motive(motive which prompt people to buy a given product)

2. Patronage Motive(The influences that explain why they buy from a particular firm or
shop)

a. Emotional Patronage Motive

b. Rational patronage motive(Latest selection)

Buying Decision:
• Initiator

• Influencer

• Decider

• Buyer

• User

• Maintainer

• Disposer

Three stages in extensive problem solving buying behavior,

Buyer develops a belief about the productAttitudes are shaped around that beliefthe buyer makes
a well planned decision
Buying Behavior:
Extensive problem solvingRoutinized Buying BehaviorVariety Seeking Behavior
Stages in Consumer Buying..
Identify the problem/Need RecognitionGather information about the products & BRANDSevaluate
the alternatives & select the best possible alternativePurchasing Decision/BuyingPost Purchase
Evaluation.
Steps in buying..
1. Problem recognition

2. Need recognition

3. Product specification

4. Searching potential buyers

5. Value analysis

6. Vendor analysis
 7. Order routine specification

8. Multiple specification

9. Performance Review

Tools to study Buyer Behavior.

Surveys  Projective Technique  Focus Group Decision

Organizational Buying Behavior:

Determinants of organizational buying behavior-

A. Organizational Buying

B. Psychological Factor

Organizational Buying-

Decision Making Process  Formal organization establishes the need for purchased products & services
 Identify, Evaluate & choose among alternative brand & suppliers.
Participants in Organizational Buying

I. Invitators

II. Influences

III. Users

IV. Deciders

V. Approvers

VI. Buyers

VII. Gate keepers

Market segmentation

Market Segmentation is the process of dividing a heterogeneous market into homogeneous sub units.

Successful segmentation requires the following

• homogeneity within the segment

• heterogeneity between segments
• segments are measurable and substantial
 • segments are differentiable
• segments are accessible and actionable
• target segment is large enough to be profitable

Segmentation is commonly used by organizations to improve their customer retention programs and help
ensure that they are:

• Focused on retaining their most profitable customers

• Employing those tactics most likely to retain these customers

Stages of Segmentation-

• Survey Stage(focus group discussion & developing questionnaire)

• Analysis Stage(analyze using factor analysis)
• Profiling Stage(each cluster is profiled in terms of
demographics,psycographics,attitude,behaviour,etc)

Attractiveness of a Market Segment

Size of the segment (number of customers and/or number of units),Growth rate of the segment,
Competition in the segment, Brand loyalty of existing customers in the segment, Attainable market share
given promotional budget and competitors' expenditures, Required market share to break even, Sales
potential for the firm in the segment, Expected profit margins in the segment

Bases for Segmenting-

1.Customer Based Segmentation

2.Product Related Segmentation

3.Competition Related Segmentation

Variables used for Segmentation-

• Geographic variables(region of the world or country, East, West, South, North, Central, coastal,
hilly, etc.county size: Metropolitan Cities, small cities, towns, Density Urban, Semi-urban, Rural,
climate Hot, Cold, Humid, Rainy).
• Demographic variables(age, gender Male and Female, family size, family life cycle: young
children, empty nest, education Primary, High School, Secondary, College,
Universities,income,occupation,socioeconomic status,religion,nationality/race (ethnic marketing)&
language).
 Psychographic variables (personality, lifestyle, value, attitude).
 Behavioral variables (benefit sought, product, loyalty, product, readiness stage, buying,
profitability, income status).
 Technological segmentation variables(motivations, usage patterns, attitudes about technology,
fundamental values, lifestyle perspective, standard of living, profit is there in business from the existing
clients).
Targeting:
After segmenting the market now the organization has to choose the marketing strategies, the strategies
are,
• Standardization(same product to different market segments, same pricing, communication &
distribution strategies Ex-soft drinks)
• Differentiation(just opposite of above one Ex-airline ticket)
• Focus(combination of above two,Ex-automobiles having features)

Target Market Strategies

There are several different target-market strategies that may be followed. Targeting strategies usually can
be categorized as one of the following:

• Single-segment strategy - also known as a concentrated strategy. One market segment (not the
entire market) is served with one marketing mix. A single-segment approach often is the strategy of
choice for smaller companies with limited resources.
• Selective specialization- this is a multiple-segment strategy, also known as a differentiated
strategy. Different marketing mixes are offered to different segments. The product itself may or
may not be different - in many cases only the promotional message or distribution channels vary.
• Product specialization- the firm specializes in a particular product and tailors it to different market
segments.
• Market specialization- the firm specializes in serving a particular market segment and offers that
segment an array of different products.
• Full market coverage - the firm attempts to serve the entire market. This coverage can be achieved
by means of either a mass market strategy in which a single undifferentiated marketing mix is
offered to the entire market, or by a differentiated strategy in which a separate marketing mix is
offered to each segment.

Positioning:

Positioning involves ascertaining how a product is perceived in the minds of consumers. The organization
needs to position their product in the minds of the customer as customer has diversified thoughts regarding
a product. They differ in terms of,
{Product,Service,Channel,Price,People,Image}
Ex-Whenever we think of a Health Drink-HORLICKS comes into our mind. i.e,that drink is perceived
as a good health drink that means that product is positioned in the mind of ours whenever we think of
health drink it comes into mind.
A product in order to be different from others needs to be
• Superior(superior to other existing ones)
• Communicable(clear & distinctive)
• Pre-emptive
• Affordable
• Profitable to Company.
Market Demand Forecasting:
The better a company can assess future demand, the better it can plan its resources. Demand forecasting is
the activity of estimating the quantity of a product or service that consumers will purchase.

Methods;-No demand forecasting method is 100% accurate. Combined forecasts improve accuracy
and reduce the likelihood of large errors. Methods that rely on qualitative assessment-
Forecasting demand based on expert opinion. Some of the types in this method are,

• Unaided judgment, Prediction market, Delphi technique, Game theory, Judgmental bootstrapping,
Simulated interaction, Intentions and expectations surveys, Conjoint analysis

Methods that rely on quantitative data

• Discrete Event Simulation,Extrapolation,Quantitative analogies, Rule-based forecasting, Neural

networks, Data mining, Causal models, Segmentation.

Key Terms:

• Market
• Potential Market
• Target Market
• Market Penetration
• Market Potential
• Market Forecast
• Market Demand

Forecasting Tools:

Two kinds of tools are used to estimate market demand. One the qualitative & the other quantitative.
Tool.
Quantitative Tool
The quantitative techniques are further categorized as,
1. Tools for short term forecasting
2. Tools for long term forecasting
1.Short Term Forecasting—
• Exponential Smoothing Method.
It is a type of moving average that represents a weight sum of all past numbers in the time series with the
heaviest weight placed on the most recent information. Exponential smoothing is a technique that can be
applied to time series data, either to produce smoothed data for presentation, or to make forecasts.
Exponential smoothing is commonly applied to financial market and economic data

The raw data sequence is often represented by {xt}, and the output of the exponential smoothing algorithm
is commonly written as {st} which may be regarded as our best estimate of what the next value of x will be.
When the sequence of observations begins at time t = 0, the simplest form of exponential smoothing is
given by the formulas

2.Moving Average Method—

Moving average, also called rolling average, rolling mean or running average, is a type of finite
impulse response filter used to analyze a set of data points by creating a series of averages of different
subsets of the full data set.
A simple moving average (SMA) is the unweighted mean of the previous n data points. For example, a
10-day simple moving average of closing price is the mean of the previous 10 days' closing prices. If those
prices are then the formula is

When calculating successive values, a new value comes into the sum and an old value drops out, meaning
a full summation each time is unnecessary,

In technical analysis there are various popular values for n, like 10 days, 40 days, or 200 days. The period
selected depends on the kind of movement one is concentrating on, such as short, intermediate, or long
term. In any case moving average levels are interpreted as support in a rising market, or resistance in a
falling market.

Exponential Smoothing Method:

This is a very popular scheme to produce a smoothed Time Series. Whereas in Single Moving Averages
the past observations are weighted equally, Exponential Smoothing assigns exponentially decreasing
weights as the observation get older. In other words, recent observations are given relatively more weight
in forecasting than the older observations. In the case of moving averages, the weights assigned to the
observations are the same and are equal to 1/N. In exponential smoothing, however, there are one or more
smoothing parameters to be determined (or estimated) and these choices determine the weights assigned to
the observations.

Long-term forecasting Tools:

Time Series Analysis.

Time series analysis comprises methods for analysing time series data in order to extract meaningful
statistics and other characteristics of the data. Time series forecasting is the use of a model to forecast
future events based on known past events: to predict data points before they are measured. An example of
time series forecasting in econometrics is predicting the opening price of a stock based on its past
performance.
Methods for time series analyses may be divided into two classes: frequency-domain methods and time-
domain methods. The former include spectral analysis and recently wavelet analysis; the latter include
auto-correlation and cross-correlation analysis.

Time series data have a natural temporal ordering. This make time series analysis distinct from other
common data analysis problems, in which there is no natural ordering of the observations (e.g. explaining
people's wages by reference to their education level, where the individuals' data could be entered in any
order).

(Time series: random data plus trend, with best-fit line and different smoothing)

Econometrics

Econometrics is concerned with the tasks of developing and applying quantitative or statistical methods to
the study and elucidation of economic principles. Econometrics combines economic theory with statistics
to analyze and test economic relationships. Theoretical econometrics considers questions about the
statistical properties of estimators and tests, while applied econometrics is concerned with the application
of econometric methods to assess economic theories. Although the first known use of the term
"econometrics" was by Paweł Ciompa in 1910, Ragnar Frisch is given credit for coining the term in the
sense that it is used today.

Although many econometric methods represent applications of standard statistical models, there are some
special features of economic data that distinguish econometrics from other branches of statistics. Economic
data are generally observational, rather than being derived from controlled experiments. Because the
individual units in an economy interact with each other, the observed data tend to reflect complex
economic equilibrium conditions rather than simple behavioral relationships based on preferences or
technology. Consequently, the field of econometrics has developed methods for identification and
estimation of simultaneous equation models. These methods allow researchers to make causal inferences in
the absence of controlled experiments. Early work in econometrics focused on time-series data, but now
econometrics also fully covers cross-sectional and panel data.
example

A simple example of a relationship in econometrics from the field of labor economics is:

Economic theory says that the natural logarithm of a person's wage is a linear function of (among other
things) the number of years of education that person has acquired. The parameter β1 measures the increase
in the natural log of the wage attributable to one more year of education. The term ε is a random variable
representing all other factors that may have direct influence on wage. The econometric goal is to estimate
the parameters, β0 and β1 under specific assumptions about the random variable ε. For example, if ε is
uncorrelated with years of education, then the equation can be estimated with ordinary least squares. One
of the fundamental statistical methods used by econometricians is regression analysis.

Qualitative tools:

1. Buying Intention Survey:

2. Composite of Sales Force Opinion
3. Delphi Technique
The Delphi method is a systematic, interactive for The objective of the method was to combine expert
opinions on likelihood and expected development time, of the particular technology, in a single
indicator. Casting method which relies on a panel of experts. The experts answer questionnaires in two
or more rounds. After each round, a facilitator provides an anonymous summary of the experts’
forecasts from the previous round as well as the reasons they provided for their judgments. Thus,
experts are encouraged to revise their earlier answers in light of the replies of other members of their
panel. It is believed that during this process the range of the answers will decrease and the group will
converge towards the "correct" answer. Finally, the process is stopped after a pre-defined stop criterion
(e.g. number of rounds, achievement of consensus, stability of results) and the mean or median scores
of the final rounds determine the results.[ The objective of the method was to combine expert opinions
on likelihood and expected development time, of the particular technology, in a single indicator.