What is Marketing Research?

Basically, marketing research is understanding your potential and actual customers. Find out what catches customers' attention by observing their actions and drawing conclusions from what you see. To put it more formally, in the words of the American Marketing Association, marketing research is "the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services."



Marketing research is an organized way of finding objective answers to questions every business must answer to succeed. Every business owner-manager must ask:

• Who are my customers and potential customers?
• What kind of people are they?
• Can and will they buy?
• Am I offering the kinds of goods or services they want - at the best place, at the best time, and in the right amounts?
• Are my prices consistent with what buyers view as the products' values?
• Are my promotional programs working?
• What do customers think of my business?
• How does my business compare with my competitors?

Marketing research is not a perfect science; it deals with people and their constantly changing likes and dislikes which can be affected by hundreds of influences, many of which simply can't be identified. Marketing research does, however, try to learn about markets scientifically. That simply, is to gather facts in an orderly, objective way; to find out how things are, not how you think they are or would like them to be; what people want to buy, not just what you want to sell them.

Why Do It?

It's tough - impossible - to sell people what they don't want. (Remember the Nehru jacket?) That's pretty obvious. Just as obvious is the fact that nothing could be simpler than selling people what they do want. Big business has to do market research to find that out. The same reason holds for small business.



Business owners often have a "feel" for their customers - their markets - that comes from years of experience. Experience can be a two-edged sword, though, since it comprises a tremendous mass of facts acquired at random over a number of years. Information about markets gained from long experience may no longer be timely enough to base selling decisions on. In addition, some "facts" may be vague, misleading impressions or folk tales of the "everybody knows that..." variety.



Marketing research focuses and organized marketing information. It ensures that such information is timely. It provides what you need to:

• Reduce business risks,
• Spot problems and potential problems in your current market,
• Identify and profit from sales opportunities,
• Get basic facts about your market to help you make better decisions and set up plans of action.

Advertising and Selling mix depends on Channels

It is axiomatic that as channels lengthen, the need for advertising to the end user increases and personal selling effort declines. Thus, long channels and heavier advertising effort are inseparable. Or, it may be said that since product sales effort (or quality of communication) decreases as the channel lengthens, the firm's need for direct communication with the end user increases accordingly, for the personal sales effort is diluted by local and personal economic interests and distractions.



Decisions regarding channels, sales talents required, and advertising effort are dependent on the requirements and demands of the purchaser for technical information, display and merchandising aid, and the amount of money involved in the typical transaction. The results are these, simply stated: highly complex and big ticket items are sold (and serviced) directly by a sales engineer while standard low priced goods purchased in small quantities go through longer channels and are "sold" by a good-will builder, an order-taker. The selling is actually "preselling" which is done by advertising.



Planning the Persuasion System-The Sales Promotion Mix

The sales promotion mix should be based on the following considerations:



Be realistic in terms of purposes to be achieved.

Respect the effectiveness of advertising, selling, and display separately and in coordination.

Respect all parties of interest, including middlemen and salesmen.

Involve all marketing management personnel, permitting early participation.

Permit a general plan which can be tentatively approved before final details and cost are determined.

Permit individual and group judgment to be employed in conjunction with quantitative techniques.



The following steps are needed to create a sales promotional distribution effort. This pattern can be based as much on judgment as experience will permit and can utilize modern models and systems methods as desired.



1. Analyze and determine customer attitudes, company and product "image." Consider company age, stage of product life cycle, channels of distribution.



2. Review customer buying motives, desires of middlemen, salesmen, all parties involved, as customer-users or participants.



3. Establish resulting objectives, purposes of "persuasion system," and parties to be influenced, including middlemen.



4. Summarize attitudes to be developed or created by the program or system (with no indication at this point as to which promotional medium is expected to achieve each purpose).



5. Rate the product as to its technical complexity and amount of typical sale; determine approximate balance of advertising, selling, and display required.



6. Outline the purposes of advertising (and possibly display) in terms of objectives to be achieved by each medium for each participant or group.



7. Outline the purposes of personal selling in terms of objectives to be achieved by each salesman (or type of salesman).



8. Draw up general recommendations, including probable effectiveness of advertising, selling, display.



9. Develop reasonably reliable estimates of costs of advertising, by types, media, time period, purpose.



10. Same, personal selling. Define the salesman's job.



11. Same, display.



12. Review marketing department organization, in terms of its appropriateness for general plan.



13. Review general program with participants and with parties influencing budget.



14. Draw up program in detail, present it for final general approval.



During the training period, it would be an excellent idea to see that all salesmen are grounded in the details and objectives of the marketing plan. Additionally, the role of the salesman in making the plan work should be emphasized

Appraising Market Potential and Planning for a Product

1. Performance of the product. What will it do? With what result? What particular features, advantages does it have? Appraising Market Potential and Planning for a Product should be done every six months in todays business environment.

2. Uses. In what situations can it be used? Applications? What problems will it solve? In other words, how can this performance be utilized?

3. Users. Who has those situations and problems? What kinds of firms, products (and who are their users)? Are they our present customers? Many or few users?

4. Buying motives. What is user buying? Low cost? Employee safety? Fast production? Dependability? Flexibility? Convenience? Personal self-expression?

5. History. Has a product like this been attempted? If any failures, what were the reasons for them? Do those reasons still exist?

6. Buying habits. How often would users buy this product? In what quantities would they buy? Is it a seasonal item?

7. Price. Can we make it and sell it at a profit? Are material costs reasonable, competitive, in quantities necessary? Can we afford the marketing costs?

8. Location. Where are the people who could use the product? Are they concentrated or scattered?

9. Numbers. How many possible users are there? How are they sorted by types of users?

10. Channels. How do we get the product to these people? Are our present channels adequate? How about discount schedule for any middleman? Can it be attractive?

11. Sales facilities. Can our present salesmen sell this item? Is our present sales organization suitable? Would special training be necessary for our salesmen? Dealers?

12. Advertising. Can it be advertised along with our present lines? How much "education" would be necessary? (Consumer acceptance of the idea as well as the product.)

13. Packaging, transportation. Is there any packaging and shipping problem, in terms of breakage, spoilage, storage, freight rates?

14. Outlets. Would our present dealers accept it? Could their salesmen sell it? How much missionary work necessary? Exclusive dealerships? Any credit problems?

15. Service. Will service facilities be required? What channels of handling such service are necessary? Can our outlets handle such service?

16. Competition. What quality, performance, price shall we produce? What similar products are now on the market? How are they selling? What new items, substitutes are on the way? How about patents, other legal restrictions?

17. Long-run considerations. Will this be an item with a long future vs. hit-and-run? Will it give us prestige and good will? Could we add related items to advantage?

Management Needs Answers to plan

Management Needs Answers to plan

Assignment, delegation, and responsibility are created as plans are made. As the plan progresses, "questions will be asked." These should be answerable if a sound control method has been built into the program:



1. Who are the profitable customers, where are they? If this is known, then how unprofitable are the losers, and why?



2. Which kinds of jobs are the profitable ones - by process, customer type, purpose? Which are the unprofitable and why?



3. How are our prices as compared with our competitors? What kinds of jobs have we been low bidders on, what kinds have we lost?



4. How many of our customers are in declining industries? How are sales to "old reliable" holding up? Are there any likely newcomers we ought to see more of?



5. How well are our salesmen covering the line? Are any of them becoming product specialists at our expense? Are they calling on all customers?



6. our salesmen seeing the right people when they call? Who are the right people? Do we have this information on record?



7. Have we any group of customers who appear to give us only their low-profit business? Can we do anything about this?



8. Are our customers classified as to (a) importance to us (b) potential volume (c) profitability? Are we playing the winners in salesmen's call frequencies?



9. Are we providing any services that our customers particularly like? Are we providing any that are unnecessary, costly but not desirable?



10. How effective is our advertising and public relations program? What kind of corporate image do we have? What kinds of work does the public associate us with?



11. How do salesmen rank as to profitability of business brought in? Have we any unprofitable salesmen? Let's see what our most profitable man is selling, and to whom.



12. How can we save salesmen's time? What kinds of detail can we relieve them of, profitably? What kinds of selling can be done by phone or mail?

Creating the Marketing Mix

Every business problem has alternative solutions else decisions would be unnecessary. The criteria for such decisions must be based on objectives - aspects affecting volume, profits, service and growth. Every business decision including creating the marketing mix must be based on whatever facts are available or can be assembled - the more the better so long as manageable.

Questions may be developed to organize facts to cover marketing decisions. Such questions, when answered properly, would create the most logical "marketing mix." Thus all of the functions of marketing would be performed in maximum coordination as the modern concept of marketing management demands. The implementation of these components into an operable mechanism is a matter of delegation, management, and administration.

To emphasize the need for review and check-off of all marketing functions, and to insure full coverage in the marketing program, 17 questions are presented which a manufacturer might well ask his staff when reviewing in detail prospects for a product, particularly a new one. While many will call for clearly factual, even statistical data, others can be answered readily from observation and experience.

Most failures in marketing can be attributed to executive oversight, neglect, or lack of facts with respect to answering these questions. Hence, their importance cannot be overemphasized.

A marketing plan consists of a total volume goal broken down (at least) by products, customer types, areas, and time periods. That is, how much of each product is to be sold to each type of customer in each territory over each month or quarter? How much profit is each to produce?

The results of such planning create the salesman's budget or quota, his responsibilities over the time period selected, and a basis for his appraisal and control and for his compensation. It is essential to the salesman's performance that he understand these procedures and provisions. Therefore, they must be included in his training.

In summary, good business organization calls for management to:

•Establish the business goal
•Analyze the market potential
•Plan a marketing program to get the job done
•Organize manpower, equipment, capital
•Train people to execute assignments
•Execute-administrate the program
•Control it - goals, budgets, performance as planned

Thus the "marketing mix" is developed and the selling and sales promotion job defined. Only then can we question and measure the performance of those responsible.

Marketing as a Profit Center

Marketing as a Profit Center

 

Marketing involves many activities including selling; but it is many things more than selling. Transportation, storage, credit, packaging, and even buying are marketing activities. Sound marketing management consists of seeing to it that all marketing activities (transportation and warehousing as well as selling and advertising) are also effectively and efficiently performed, in harmony toward the common goal of profit.

 

Historically, we have produced in order to be able to sell. Now, we market - have a marketing organization - in order that we may justify production. When the typical (or average) consumer product (food, clothing, autos, appliances) is purchased, more than half of its price pays for its marketing, only half or less goes to production, manufacturing.

 

Until recently, our methods of production were generally more efficient than our methods of marketing. Currently, greater strides are taking place in marketing than manufacturing. Yet there is still more room for improvement in marketing than in manufacturing.

 

Today, the production costs of different firms are more likely to be competitive than their marketing costs. Assuming that the firm's production costs are competitive, the question of profit lies in efficient marketing. No firm can succeed if (1) its production costs are excessive or (2) its marketing program is less efficient than that of its competitors.

 

Production should thus provide marketing with a product that is cost-competitive and can be priced and sold at a profit. It is then up to marketing to bring about these sales with maximum efficiency. Thus, marketing management becomes a center responsible for the production of profit.

 

"Profit" does not accrue until the goods are sold, delivered, and paid for. Hence, if production costs tend to be almost identical and the price competition is keen, the question of profit lies almost entirely in relative marketing efficiency as between producers. If "marketing" encompasses all activities beyond production and if profit losses can occur in any phase of distribution, then it is marketing efficiency that makes or breaks profits.

SPECIALTY ADVERTISING

SPECIALTY ADVERTISING
"Giveaways" -- the pencils, pens, buttons, calendars and refrigerator magnets you see everyday -- are called "Specialty Advertising" in the advertising business.
Chances are, you have some specialty advertising items right at your desk.  Businesses imprint their name on items and give them away (or sometimes sell them at very low cost) in order that:
You notice their name enough times on the item to build "top-of-the-mind" awareness.  So when you need a restaurant, for instance, you think of their name first.
You appreciate the goodwill of the company giving you the item and eventually return the favor by giving them some business.
These are both long-term advertising investments that can take months or years to turn into actual sales.
First, select the best item that would tell your story most effectively.  While an accountant can give away an inexpensive calculator, the same item may not be ideal for a hairdresser.  A comb or brush might be more appropriate in that case.
Second, decide what you are going to say on the item.  A company slogan?  Address directions?  Since you have a relatively small area, you must be very concise and direct.
Third, figure out your method of distribution.  Are you going to send them to each customer through the mail?  If so, how much will that cost?  Will you have them in a big bowl that says "take one"?  Distribution is just as important to consider as buying the item.
Just as there are many reputable specialty advertising professionals in your area, the industry is notorious with a lot of high-pressure telephone and mail solicitors who often give specialty advertising a bad name.  Don't buy specialty advertising through the mail without checking the quality and prices with trusted local representatives first.  And, buying specialty advertising over the telephone is not recommended at all.
Specialty advertising is a unique way to generate goodwill and put your name on items that people remember.  But don't do it unless you have an item and distribution plan that will benefit your business.