MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data

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Introduction to Business MGT 211

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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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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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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