Although several studies have suggested that one of the fundamental reasons for the underutilisation of marketing research among businesses is their negative perceptions of the potential benefits offered by marketing research. Very often, the true value of marketing research is overlooked, relying on intuitive decision making, occasionally there are successes, but in essence uninformed decision making is risky and avoidable. Marketing research helps decision makers rely on systematic and objective investigating from intuitive information gathering. This paper has utilised discriminate analysis to confirm the value of marketing research for marketers, organisational performance and society.
Introduction
The importance of marketing research as an essential organisational activity is widely acknowledged in the perspective literature. For example, according to literature the use of marketing research can reduce the risk and uncertainty involved in decision making, and thereby increases the chances of successful decision making (Ogunmokun, 2005). Marketing research, as a major source of marketing information, plays an important role in improving marketing intelligence capability to enhance both strategic and tactical decision making. According to Samli (1996) without adequate market information, an organisation lacks a sufficient understanding of its strengths and weaknesses, what its opportunities and threats are, and more importantly, what its priorities should be.
Some authors have even emphasised the importance of marketing research as a means for implementing the marketing concept (Zikmund, 2004). Kinnear and Taylor (1991) also argued that marketing research helps in fulfilling the organisations activities and focuses on the needs of the marketplace. According to Crick et al. (1994), marketing research can also be seen as a major element of the “intelligence generation” component of market orientation, helps to focus an organisations efforts and marketers to actively seek and generate market pertinent information in order to satisfy the needs and wants of the consumer.
Simply, a business to consumers means providing benefits; successful companies are those that understand the value equation. If customer satisfaction is kept in mind than naturally, profitability will follow. Companies are constantly faced with key questions that need answering, answering these questions needs information. Marketing research’s function if used wisely and accurately is to supply information that helps provide these answers, it is marketing research’s role to supply accurate information that reduces the uncertainty in decision making (Zikmund & Babin 2010).
Before you create your product
Product research takes many forms and includes studies designed to evaluate and develop new products and to learn how to adapt existing product lines. Concept testing exposes potential customers to a new product idea to judge the acceptance and feasibility of the concept. According to the marketing concept philosophy the customer is at the heart of any business and addressing the consumer’s desires, beliefs, and attitudes is essential. To achieve the balanced best interests of all concerned the firm must create products and services with consumers’ needs in mind. According to Zikmund (2010) many marketing theorists and marketing managers believe that creation of value for consumers is the justification for a firm’s existence. Without marketing research a firm cannot completely understand if there is a need to create a product or service, “no business decision is uninformed,” (Walker Smith, 1991)
The Campbell Soup Company’s attempted introduction of canned soup in Italy failed to recognise the emphasis placed there on home cooking. An instant soup “that’s as good as home-cooked” just did not have the right appeal (Mayer, 1998). What marketing research does is bring rational structure within which information can be collected, analysed and communicated. Through marketing research a marketer can learn about basic differences such as the “Campbell Soup” dilemma and avoid customer rejection.
An Australian business that I work for, Kikki.k is a Swedish design stationary store. The founder of this company saw that there was a niche for stylish stationary supplies for the home office after trying to establish her own home office. It was realised that there was need for such products after 40 focus groups were held with 350 people. According to Zikmund (2010) product research reveals a products prototype’s strengths and weaknesses and determines whether a finished product performs better than competing brands or according to expectations. Kikki.k now has 43 stores worldwide and much of this success is due to extensive marketing research.
To your competitiveness
Once the desires and needs of consumers are known, then it is important to determine who else is selling similar products and how each competitor is perceived in the market place. Properly formulated, applied, and utilised, marketing research will contribute to effective awareness of a firm’s competition.
Nutella, for instance recognised the success its competition Skippy brand peanut butter had which currently markets peanut butter in a squeezable package a snack that takes peanut butter out of the sandwich and into kids’ hands for easy, on-the-go snacking. They had received numerous remarks from critics praising their new tube design. Nutella’s organisation identified the growing demand for squeezable food items as consumers react to quick, easy products and children to the independence of the product. By following this trend, Nutella aimed to be on the forefront of consumer buying and a must grab for children who will influence the products being purchased by the parents at the grocery store. “Interactivity is a key selling point with many kid-oriented products,” according to Sarah Delea, a spokeswoman for Kraft’s Lunchables line. Nutella was able to increase its profitability with this innovation.
To establish your target market
Marketing research is a major source of information for determining a target market’s demographics. Once the demographics are established, the psychographic and other behavioural characteristics can be determined. Marketing research further helps distinguish these characteristics from the overall market. Marketers are aware that a product is profitable when it is marketed to a target segment, a product cannot benefit everyone. Through research and following criterion a marketer can understand the characteristics of their target market allowing efficient communication with the market members and achieving customer loyalty. Indeed, both practitioners and scholars have emphasised that firms should spend not to acquire just any customer but rather the “right” kind of customer.
For customer satisfaction
Helgensen (2006) argues that with the aid of marketing research customer satisfaction is achievable and that the duality between customer satisfaction and profitability is self-evident. Peter Drucker claimed that “the aim of marketing is to know your customer so well that when you prospects are confronted with your product, it fits them so exactly that it sells itself.” In a market-oriented business it is crucial that the firm invests in market research to understand the changing needs, desires and trends of its customers, consequently increasing profitability. The customers are in general believed to be satisfied when offered products that meet their needs, desires and requests. Hence, the organisation is satisfied when exchanges result in profitability. A study done by Ogunmokun et al. concluded that organisations with a high performance saw marketing research as valuable.
Through the power of marketing research the needs and desires of customers can be fully understood to marketers thus achieving ‘customer satisfaction’. “New Coke” is the unofficial name of reformulation introduced in 1985 by the Coca-Cola Company to replace its original formula of its flagship soft drink Coke. The American public’s reaction to the change was poor; there were several protests and boycotts. A psychiatrist Coke hired to listen on phone calls to the company hotlines stated that people seemed as if they were discussing the death of a family member. Market researchers were criticised for failing to consider the public’s attachment to the idea of what Coke’s old formula represented and according to Keller (2006) for failing to realise that consumer’s attachment to brands are one the most valuable intangible assets that firms have. Branding strategies are a major part of product decision making. Further the new formula was marketed on the basis of “sip tests,” meaning that drinkers were given small samples to test. It is argued that what people say in these tests may not reflect how they feel if they were actually to take the drink home and drink it over a week or so demonstrating the importance of intense and thorough research. After three months Coke returned to its old formula. Marketing researchers immediately responded to the strong feedback being received in order to keep their customers satisfied and maintain a long term relationship with their valued consumers.
Conclusion
Regardless of the evidence to show the usefulness and validity of market research, many organisations continue to view marketing research as too complex a process to be worth the effort, very costly and time consuming: and as an activity cannot make a significant contribution to the firm’s sales, profits and growth of the firm. To realise incremental profit, the research process must be properly managed and executed. Marketing researchers must become masters of the research techniques in which those principles are embodied and executed. Indeed, much of the criticism directed to marketing research is rooted in poorly done research, not in the superiority of no research.
There are several real-life examples of the values of marketing research to a business, indeed when research methods are employed properly in business decision making, incremental profits are realised.