Market Research as Tool Ensuring Business Success

Introduction

Over the years, there has been significant development around the globe that has resulted in the growth in competition among the firms and increased the risk associated with each business venture. Experts in the field of marketing have commented that currently businesses are facing the issue of shortage of customer rather than issues of meeting the demand of the products and services (Khan, 2013). In 2003, Kotler concluded that marketing can be the solution to the growing issues for finding customers so that business expansion can take place. 

Marketing research can be described as the process, which involves gathering, analysing, presenting and reporting the information so that specific marketing problems can be solved. The information acquired from market research have proved to be effective in supporting organisations in their decisions. The research of Ewah (2013) stated that marketing research can be identified as a process for evaluating market potential, which assures an entrepreneur of the possible returns that he might expect from his investment. This paper critically arguments against the statement “Marketing Research, as both a profession and a field of research, has little to offer businesses that are seeking to increase performance levels”. 

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Marketing Research and Its Importance

The terms marketing research encompasses a wide range of elements especially when it comes to explanation of the current market phenomena. Researchers have taken various routes to explain different aspects of marketing research. Krasnikov and Jayachandran (2008) defined market research as a tool for efficient decision-making in relation to developing and marketing different products and services as per the preference of the customers. Market research not only includes the information related to the customers’ preferences but also the competitive techniques that are employed by the competitors while catering to the market demands. Align to this thought Cateora and Graham (2005) have explained marketing research as a systematic method of collecting, analysing and documenting data in order to provide useful information in decision-making in context to marketing products and services. 

The above definitions depicts that market research as an important tool helps a business to attain success. The data collected from the market in relation to customers, competitors, substitutes and the existing market demand can significantly help in designing a new product, enter a new market, expand product portfolio or make an entirely different product line. The information collected by the market researchers can significantly help in the development market strategies on the potential customers it is trying to approach with their products (Urbonavičius and Dikčius, 2008). However, there are researchers that have not acknowledged the importance of market research as an efficient tool in realising business success. Meho (2006) in his research argued that market research is not the solution to the business problems but provides the necessary information to develop an efficient decision in favour of the business. It is the implementation of the information that helps in securing successful business outcomes.  Despite the disparity in opinion, it is easier for small businesses to research their markets against the large multinational companies (MNCs) that have to cater to a wider customer divided by culture, language and preferences. The availability of the change in the price level, introduction of new substitutes and clear knowledge of the strategies that are adopted by the rival firms, points out the business risks that an organisation is supposed to face while making new investments. It also provided them with the necessary time required to develop appropriate strategies to retain its market position and if possible, expand its market share (Al-Shatanawi, Osman and Ab Halim, 2014). 

Market Research Techniques

There are different market research techniques that can be broadly classified into primary and secondary. In case of the primary market research, the researcher collects the data that can be used by the organisation in order to improve its existing operation and products and services. For instance, a company that wishes to enter into a new market, it is beneficial for the company to have a clear idea in relation to the existing consumer preferences and the social and cultural knowledge (Hair, Bush and Ortinau, 2008). This will directly help in designing the features of the product.  The advantages of primary market research are that the collected data addresses the issues of the market problem and it is regarded as the most reliable form of data since researcher or the representative of the company undertakes the research. On the other hand, primary research is considered to be very time consuming and requires specific skills on part of the researchers to undertake such extensive surveys making it an expensive process.  

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In the research of Al-Shatanawi, Osman and Ab Halim (2014), it has been clearly mentioned that primary research can be conducted through qualitative and quantitative methods. Qualitative research methods are designed to collect the response from a relatively small group of participants where observational and case analysis are commonly used to reach an insightful conclusion. It is also referred to as market survey where the researcher is more interested in collecting the information related to attitudes, preferences, opinions and intentions. Creswell (2013) in his book has mentioned that qualitative research can be useful in revealing information related to customers’ purchasing behaviour, their perception towards a particular brand or their expectations from a new product. However, owing to its expensive and time-consuming nature, it might not be suitable small business start-ups. The most common techniques of collecting data through qualitative research method is focus group survey and the use of interview method. 

The other method of collecting information in relation to primary research is the use of quantitative research method. Quantitative method is more common when the researcher or the firm seeks information related to the entire market and the analysis involves statistical methods to arrive at a definite result. Under quantitative market research method, questionnaire surveys are used with the intention of surveying a wider sample size. Hair, Bush and Ortinau (2008) stated that the researchers can use telephonic surveys and internet based surveys to reach greater number of people so that a clear pattern in the data can be observed. Often market researchers have been found to place greater importance to quantitative research method owing to the analysis of numerical data to reflect on the pattern of the data with greater precision but such analysis requires special skill set and the knowledge of statistical tools since quantitative analysis involves complex procedures of sampling, weighing and analysing responses from the participants (Beall, 2010). In some cases, researchers have been found to employ a mixed technique to come up with an extensive research in relation to market problems that involves both interviews and questionnaire surveys.  Hornbæk (2006) stated that often researchers apply a combination of quantitative and qualitative research method. With the help of this method the researcher will be able to represent both subjective and objective characteristics for example, the opinions of the customers along with the statistical analysis illustrating the market trends can be analysed together. 

Secondary market research is the other market research technique that is used by the researchers for collecting data and information from varied sources in order to reach a meaningful conclusion. Secondary market research can be conducted with the help of either internal or external data sources. Nykiel (2007) stated that internal secondary information can be collected from within the normal operation of the organisation such as the sales report of a product prior to making an investment towards an expansion of the concerned product line. Furthermore, the company can also check with its inventory management, changes in the production cost which can be derived from the existing production process. However, the business decisions do not depend only internal data but they are the most cost-effective sources of data that explains the next phase of data collection. On the other hand, external secondary, as the name suggests are collected from outside the organisation such as, from government archives, agencies, academic institutions and other independent organisations (Wrenn, Stevens and Loudon, 2007). Companies like, Nielsen and Dataquest specialises in collecting market data that can be used by the firms in developing their operation and marketing strategies (Nykiel 2007). The external secondary market research can be helpful in collecting large amount of data that can be used for understanding current market statistics but the researcher(s) has to be cautious in choosing the sources owing to the variety of sources available.   

Impact of Market Research on Business Performance

As a result of global integration with the notion of trade liberalisation and the advancement made by internet and telecommunication, the customers around the world have developed a specific set of expectations and similar preferences in the aspiration of improving their standard of living. Thus, market research is necessary for exploring new market and increasing the consumer base and understand the inter-dependability of the economies (Anastasiou, 2012). Entrepreneurship is one of the central issues associated with performance of the businesses. Styles and Seymour (2006) explained that research in the marketing domain allowed to contribute towards increasing the efficiency of the entrepreneurs specifically for the small firms wishing to cross the national boundaries. The research of Hooley and Lynch in 1985 presented evidences depicting the positive relationship between market research and effectiveness of the companies. 

In 1985, Dolinger illustrated in his research that small companies can significantly benefit from market research (Hart and Tzokas, 1999). The research of Aina and Ayuba (2015) explained that for any business, the development of strong customer relationship plays an important role ensuring its success in retaining a sustainable market position. In case of companies operating for profit maximisation, they need effective marketing strategies for earning profits and the non-profit organisation work for raising donations. The authors have illustrated some of the applications of market research are described below.

Pricing strategy: There are many companies that follow competitive pricing policies, which requires the knowledge of the prices followed by the rival companies operating in the same industry. 

Product research: In order to design new products or expand the existing product line, the companies need specific knowledge pertaining to customers’ preferences and opinions related to their products and the customisations that they expect from new products. 

Branding and advertising research: In order to develop a strong brand, the companies need to undertake research in identifying the market segment and the mode of advertisement. 

Figure 1: The impact of market research on firm performance

(Source: Urbonavičius and Dikčius, 2008)

Saxena (2011) in his research explained the importance of using statistical analysis for identifying and solving market problems. The statistical tools can also be used in undertaking marketing and sales research where the research parameters are based on quantitative data collected that can positively help in the formulation of business strategies. The marketing research concentrated on collecting feedback of the customers helps in correcting any issues associated with the products and consequently the sales improve. Saxena (2011) states that test of hypothesis, estimation theory and probability theories are essentially in better utilization of data collected through market research. The research of Chui and Fleming (2011) revealed that marketing research based on internet survey can act as competitive advantage to the businesses facilitating their growth. According to Chui and Fleming (2011), information acquired from reliable research can effectively support marketing activities as it assists the managers in making more accurate and realistic choices. Karayanni and Avlonitis (2005) had conducted a study pertaining to verify the business usage of internet in assimilating information acquired through market research. The results depicted that those data proved to contribute towards competitive advantage of the firm allowing it to undertake business expansion activities. 

Researchers have also concluded that market research plays an important role in developing strategic foresight and scenario planning. The use of strategic foresight is associated with the research pertaining to predicting future trends in the industry so that business organisations can simultaneously change their plans and actions leading to expected results. Hart and Diamantopoulos (1993) in their research accepted that market research is an effective way of generating market intelligence. The market research helps the entrepreneurs in directing companies towards market needs providing a chance to achieve growth. The authors have stated that in order to get close to the customers, creative market research proves beneficial in accomplishing successful market research. However, the research undertaken by them depicted that only market research is not sufficient but the quality of research is more important for ensuring company performance. Hart and Diamantopoulos (1993), in order to establish their point highlighted that managers and senior executives were interested in investing in the technical research but they were not convinced with the payoff from market research. 

Bulut (2013) in his studies have presented that companies undertake research in order to achieve better understanding of their immediate business environment which makes them improve their decision-making. He also cited some of the research carried out by eminent scholars reflecting that the chances of successincrease for those firms that have invested in market research. However, there are certain issues that cannot be ignored while undertaking market research. The researchers often face the issues of data collection and in the absence of authentic and reliable data companies will not be able to achieve growth since the implementation of the research will not have the desired effect. The companies might end up investing in risky capital venture with limited scope of return. The researcher undertaking primary research might select inappropriate research technique or mistake in interpreting the results. These incidents might lead to selection of wrong techniques deteriorating their performance. The other issues that were highlighted by the researchers that they often face issues regarding the selection of sources from where they could collect data (Van Doorn, et al., 2010). The preferences and opinion of the customers are found to be shifting everyday making it difficult for the companies to keep a track of the current market situation so that they can be prepared in order to change their production and inventory level. 

Conclusion

The stagnation in the market is the most important factor that affects not only the present market conditions but also the future possibility of investment and marketing research can become an effective way gathering necessary information to achieve business goals. The process of market research involves gathering information and developing deeper understanding of the current market conditions that can help entrepreneurs in adopting accurate business decisions. Market researchers have been found to be undertaking specific tools that are directed towards using information related to market problems. In this regard, market research is an important solution more importantly an effective means to reach the outcome. In this paper, the researcher has presented an account of the literary works that depict market research can be identified as an important tool for acquiring information from varied sources. Studying the existing literature proved that marketing research can be relied an instrument in ensuring competitive advantage that can positively influence the performance level. The identification of market research techniques will help the researchers in selecting appropriate method in collecting data and analysing them for the benefit of business organisations. 

The research in topic has also highlighted that researchers face a number of issues that can deter the efficiency arising out of the market research. In order to address the issues of mistakes in calculation and the fear of misinterpretation, the researchers are required to be trained in identifying the sources and interpret statistical calculations. The company can hire people or agencies like Nielsen that specialises in gathering and analysing market information. This paper not only brings out the strengths of market research as an efficient tool but also points out the areas that can deter business performance.