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TYBMS Prof. Hemant Kombrabail
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MEANING OF MARKETING RESEARCH
The term "Marketing Research" is composed of two words -"Marketing" and "Research".
Marketing
Marketing basically consists of spotting the needs of customers and meeting them in the best
possible manner through appropriate production and distribution activities.
The term marketing refers to buying and selling activities. Exchange/transfer of ownership is the
essence of marketing.
Research
Research means detailed/systematic/comprehensive study of a problem. .
Research is a process involving a series of steps to collect and analyze the information needed for
decision-making in the desired / specific field of inquiry. The term research can be applied to any
field of human activity.
Research means “studious enquiry" or "thorough, honest and impartial study conducted by trained
men using scientific methods". It means detailed study relating to a particular subject.
The term MR is used extensively in modern marketing management. It acts as a tool for accurate
decision making in marketing of goods and services. It is also useful for studying and solving
different marketing problems faced by business units. . Here, the details (information and data) of
the marketing problem are collected and studied, conclusions are drawn and
suggestions/recommendations are made to solve the problem quickly, correctly and
systematically. In MR/ marketing problem is studied in depth by collecting and analyzing all
relevant information and solutions are suggested to solve the problem relating to consumers,
product, market competition, sales promotion and so on.
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to guide marketing decision viz., market mix. It acts as a support system to marketing
management.
(a) Marketing research is concerned with systematic gathering, recording and analyzing of
information: In MR, information that is relevant to the marketing problem is collected in a
systematic manner from all available sources. Thereafter, the same is tabulated and recorded for
systematic scrutiny. Such scrutiny will offer certain specific conclusions useful for solving the
marketing problem.
(c) Marketing research is a tool for solving marketing problems: MR is a means and not the end
in itself. It is a tool in the hands of management for identifying and analyzing marketing
problems. The purpose is to solve them correctly.
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(1) Systematic and continuous process: MR is a continuous process. This is natural as new
marketing problems are bound to come from time to time in the course of marketing of
goods and services. One type of research is not adequate to resolve all marketing
problems. Similarly, new research projects will have to be undertaken to solve new
marketing problems and challenges. A marketing company faces new marketing problems
from time to time. For facing these problems marketing research activities need to be
conducted on a regular basis. A marketing company has to conduct MR regularly for its
survival & growth in the present dynamic marketing environment.
(2) Wide/comprehensive in scope and application: MR is wide in scope as it deals with all
aspects of marketing of goods and services. It is more than just collecting data on
marketing. Introduction of new products, identification of potential markets, selection of
appropriate selling techniques, study of market competition and consumer preferences,
introduction of suitable advertising strategy and sales promotion measures, are some areas
covered by MR. It plays a role in all the three phases of the management process in
marketing: planning, implementation and evaluation.
(3) Emphasizes on accurate data collection and critical analysis: In MR, required data
should be collected objectively and accurately. The data collected must be reliable. It
should be analyzed in a systematic manner. This will provide comprehensive picture of the
situation and possible solutions.
(4) Offers benefits to sponsoring company and consumers: MR is useful to the sponsoring
company. It raises the turnover and profit of the company. It also raises the competitive
capacity and creates goodwill in the market. It enables a company to introduce consumer-
oriented marketing policies. Consumers also get agreeable goods and more satisfaction
due to MR activities.
(5) Commercial equivalent of military intelligence: MR is the commercial intelligence
activity. It is similar to military intelligence where systematic study is made before taking
any military action. MR acts as the intelligence tool of marketing management.
(6) Tool for managerial decisions: MR acts as a tool in the hands of management for
identifying and analyzing marketing problems and finding out solutions to them. It is an
aid to decision-making. It suggests possible solutions for the consideration and selection
by managers. MR is an aid to judgment and never a substitute for it.
(7) Applied type of research: MR is applied knowledge. It is also called 'decisional research
as it provides specific alternative solutions to deal with a specific marketing problem. It
studies specific marketing problem and suggests alternative solutions and possible
outcome of each alternative. In addition, it is both science and an art. MR is also becoming
highly professional activity.
(8) Reduces the gap between the producers and consumers: MR is an essential supplement
of modern competitive marketing. It is useful for understanding the needs and expectations
of consumers. It reduces the gap between producers and consumers and adjusts the
marketing activities to suit the needs of consumers.
(9) Not an exact science: MR is both science and an art. It collects information and studies
marketing problem in a scientific manner. The information collected is also applied to real
lire problem. However, MR is not an exact science. It only suggests possible solutions and
not the exact solution to marketing manager for consideration and selection. At present,
MR is treated as a professional activity. We have professional agencies (MR agencies or
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advertising agencies) dealing with the marketing problems of their clients on commission
basis.
(10) Use of different methods: MR can be conducted by using different methods. Data can be
collected through survey or by other methods like observation method or experimentation
method. Even computers and internet are used for data collection. The researcher has to
decide the method that is suitable for the conduct of research project. This selection is
important as the use of unsuitable methods affect the quality of research work.
(11) Dynamic character: MR is dynamic in nature. Its scope is fast expanding along with the
new developments in the field of marketing. This is natural as MR is essentially for
dealing with new problems and challenges in the field of marketing. In addition,
developments in other subjects such as economics, statistics, computer science, sociology,
psychology, cultural anthropology and behavioral sciences also bring corresponding
changes in the field of MR. New methods, new techniques, etc., are used while conducting
the research activities. This suggests that MR is a dynamic and progressive subject with
new developments taking place regularly.
(12) Closely connected with marketing information system: Both the concepts are
interrelated. In fact, MR is one component of MIS. Both are useful for solving marketing
problems and for accurate and quick decision-making in the field of marketing.
(13) Phenomenal growth: MR has made a phenomenal growth since its inception. It has
become an important tool in the hands of management (to solve marketing problems)
along with the advent of consumer-oriented philosophy in modern business. The
increasing research budgets of companies are the indicators of its tremendous growth in
recent years.
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(11) To know the company's expected share of the market.
(12) To determine the dimensions of the marketing problems, facilitate evaluation of the alternative
solutions of different problems and help in the selection of a right course of action.
(13) To define the probable market for a specialized product and to report on general market
conditions and tendencies, buying habits, etc.
The two terms “market research" and "marketing research" are used interchangeably though there
is difference in the meaning and scope of the two terms. "Market research" is used as a popular
synonym for "marketing research". Market is a part of marketing and market research is only a
part of marketing research. It covers only a few aspects of marketing. According to Philip Kotler,
the term "market research" is accurate for describing research into the market, its size,
geographical distribution, income and so on. However, it fails to cover the idea of research into
the effects of marketing efforts on the market for which the term "marketing research" is more
accurate. MR is increasingly coming into favor as the term that describes both ideas. Marketing
research need not be treated as pure academic research. It is a type of applied research with
scientific orientation.
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Marketing research has received attention and importance along with the growth of highly
competitive consumer-oriented marketing philosophy. Research activities in different aspects of
marketing are necessary and useful in such competitive and flexible marketing environment.
Large companies marketing consumer items noted the growing need of MR activities in the
marketing decision-making process. They naturally took initiative in conducting research
activities within the organization itself. This was followed by the formation of specialized
marketing research agencies and advertising agencies for this purpose. This is how professional
orientation was given to MR. Many marketing research departments and agencies were
established after World War II.
MR activity (as we understand today) is comparatively new in the field of marketing. This activity
probably began around 1950s (Modern era of marketing research) and attracted the attention of
companies interested in marketing their products in the national and global markets. However, the
concept of MR got firm roots in the marketing activity after 1910. First time the marketing
research techniques were used by newspapers to predict the election results. However, during the
second decade of 20th century, marketing research emerged as a valuable management tool to
solve marketing problems. In the developed countries, marketing research activity is conducted on
scientific lines. Even in India, large manufacturing companies treat marketing research as an
essential supplement of planning and decision-making in the marketing field. It is treated as an
indispensable tool for profitable and consumer-oriented marketing. The popularity of MR
increased after 1960 due to the introduction of computers in data collection and analysis. In the
early period, marketing research activities were confined to market studies only but in 1950s
research relating to marketing activities was broadened to include all managerial aspects-price,
produce place and promotion. In late 1950's motivational and psychological techniques were
introduced to generate more information on consumers.
Several factors have contributed to the growing importance of marketing research. For example,
due to large-scale production, producers could not have direct contact with the consumers. This
created many problems before producers. For solving all such problems developed due to the gap
between producers and consumer and marketing research activities prove to be useful.
Secondly, the shifting from sellers’ market to buyers' market made it necessary to have better
understanding about consumer net-expectations. For this, marketing research proved to be useful.
Thirdly, the introduction of computers has contributed to the growth of marketing research
activity.
Finally, the scope of marketing has widened due to population growth and development of rural
markets. MR proved to be useful for dealing with the problems created by national and global
markets. In brief, growing importance of marketing research in the present marketing system is
the net result of various factors and forces available in the present marketing system. At present,
MR activities are undertaken by marketing companies on their own. In addition, marketing
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research consultants and agencies provide expert advice to companies on general and specific
marketing problems of their clients.
The business world is fast moving towards globalization in which all countries participate. Every
country has to face competition in the domestic as well as in export marketing. Survival in the
global business is possible through quality improvement, cost reduction and by attracting
consumers through various sales promotion techniques. Here, MR offers helping hand to
companies. It offers suggestions for survival under global competitive environment. In brief, the
importance/relevance of MR is fast growing along with the globalization of business. It is a must
for survival and growth under globalization. Current marketing scenario is different as compared
to traditional one. There is a new trend towards liberalization and globalization. Markets
(domestic as well as foreign) are becoming highly competition. New companies and new products
are entering in the markets. Survival is difficult under the present marketing environment. Here,
MR offers various services. It is, now, a professional activity with new developments in regard to
scope/coverage and techniques. In brief, MR has great relevance in the current marketing scenario
in India as well as in all countries- developed and developing of the world. MR has enormous
capacity to help and guide marketing companies in regard to their marketing problems and
challenges.
MR performs five basic functions. These are: Description, evaluation, explanation, prediction and
finally aid in decision-making. These functions are related to the research project undertaken.
Usually, every research study performs all the five functions explained below:
(1) Description: MR provides data and gives information/description of customers who buy the
product. This includes information about their age/sex, education, income and the amount of
money that they are willing to spend on the product. Description of the customers is useful in
order to draw certain conclusions about the customers and their buying behavior. Even
marketing strategies can be decided as per the information available.
(2) Evaluation: MR is useful for understanding the views/reactions of the buyers. This includes
views of consumers on packaging/ advertising/sales promotion measures used. A
manufacturer gets these details as well as the information about his product in comparison
with the products of his competitors. This facilitates evaluation of the marketing policies. For
example, how far the packaging of the product is attractive to consumers or superior as
compared to packaging by competitors and so on.
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willing to purchase a specific product. Such explanation is important as it enables a
manufacturer to adjust his marketing policies in order to rectify the prevailing unfavorable
situation.
(4) Prediction: MR conducts prediction function. Such predictions may be related to consumers,
market environment/market competition, possible socio-economic changes and so on. This
prediction function enables a manufacturer to understand how much people will spend on the
specific product in the next year or the fashions that consumers may prefer in the next year.
In addition, prediction about the possible turnover in the years to come is also possible
through suitable marketing research studies. In brief, marketing research is useful for
understanding the marketing environment likely to develop in future. This facilitates proper
adjustment in the marketing policies for the future period. In this sense, the prediction
function is important even when all predictions made through research studies may not prove
to be fully correct. However, the trend indicated can be used for appropriate policy decisions.
(5) Aid in Decision-making: One more function of MR is to facilitate the process of decision-
making in the marketing field. MR guides the manufacturer as regards the manner in which
he can make effective advertising appeal or create incentive among his salesmen/distributors.
It also gives him guidance as regards price fixation and sales promotion techniques that will
be useful for the future period. This function of marketing research is closely related to other
functions that it performs. These functions facilitate reasonably correct decision-making by
marketing managers.
MR functions provide feedback (information and guidance) to marketing managers and improve
the quality of their decision-making. This practice is certainly safer as compared to decision-
making on the basis of past experience or intuition. When reality is complex and many facts are
not detectable, intuition is not adequate for decision-making. Similarly, experience is useful but
decisions on experience alone may not be accurate.
Large companies and professional executives prefer to resort to marketing research than
depending on experience. This is because information available is based on real data and is more
reliable/ dependable. This facilitates correct decision-making. Thus, marketing executives should
prefer decisions on the basis of information supplied through marketing research. Such decisions
are likely to be more accurate as they are based on actual market situation.
The different functions of marketing research are supplementary in character. These functions
enable a manufacturer to keep close touch with the marketing situation and enable him to make
suitable changes in his marketing policies and programmers. They also suggest the role marketing
research activity in modern competitive and consumer oriented marketing. Marketing research
functions certainly improve the quality of decision-making by marketing managers.
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14. Creates progressive outlook: MR generates a progressive and dynamic outlook throughout
the business organization. It promotes systematic thinking and a sense of professionalization
within the company. It also creates enthusiasm among marketing executives. This brings
success and stability to the whole business unit
15. Has wider social significance: MR is of paramount importance from the social angle. It is the
means by which the ultimate consumer literally becomes king of the market place, with his
desires/ prejudices and every whim transmitted to the producer and distributor. In brief, MR
has wider social significance. It is useful to all parties involved in the process of marketing.
Marketing research need not be treated as a fad. It is one of those fundamental tools that today’s
marketing manager needs to keep sharpened all the time so that he might be-m a position to
minimize the business or marketing risk.
(1) Marketing research offers suggestions and not decisions: Marketing research is not a
substitute for decision-making process. It only offers possible suggestions/solutions to
marketing problems. It actually acts as a tool that facilitates decision-making process. It
guides marketing managers in taking balanced, result-oriented and rational decisions. The
suggestions offered by marketing researchers are usually possible/probable solutions but not
the exact solutions.
MR offers predictions but they are not necessarily accurate or perfect. Such predictions should
be taken in the right spirit by the management. It offers information and guidance to
marketing managers but not the final decisions, which are to be taken by managers
themselves.
MR does not provide readymade solutions to marketing problems. It only provides indicators.
It may not provide conclusive information on marketing problems. The marketing managers
have to use available information properly and take appropriate marketing decisions.
The effectiveness of MR depends on the skill of the decision-maker. For this/ various
marketing forces need careful consideration. However all such forces are not covered by
research project undertaken. MR aids managerial decision-making but it cannot replace
judgment and experience of marketing executives/managers.
(2) Marketing research cannot predict accurately: In MR, efforts are being made to estimate
or predict the possible future situation. For this/ certain research studies are undertaken.
However, the results/ conclusions arrived at may not be complete, perfect or accurate. They
predict possible tendencies but not certainties. Future is always uncertain and exact prediction
about the future is just not possible through marketing research. This is because market
environment is ever changing consumer behavior is difficult to estimate correctly and reliable
data for research purpose may not be available. As a result, the decisions taken and policies
framed on the basis of such research studies may not be accurate and useful for solving
current marketing problems.
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Marketing research gives guidance to marketing managers through information and
conclusions drawn but such guidance may not be accurate as it is based on the predictions
about future situation. The guidance offered through research activities may prove to be out-
dated at the time of taking current marketing decisions.
(3) MR conclusions are not always dependable: There are many who are skeptics of MR. Their
criticism is that MR conclusions are not dependable. There are examples where the research
failed to deliver desired results or a product failed even when the research had shown
promising market demand and consumer support. The classical example is that of Coke. Its
MR showed that 68% customers in US liked the taste of the new formula developed by the
Coca-Cola Corporation. However, the New Coke failed and in less than six months of its
launch, the Coke management had to re-launch old Coke under the brand name Coke Classic.
However, this failure of MR was mainly due to conventional approach of researchers.
(4) Not an exact science: Since marketing research plates to consumers, it cannot be accepted as
an exact science. Both quantifiable and non-quantifiable factors have to be assessed with the
help of various techniques available to formulate marketing policies that will help to achieve
maximum sales. The technical part of marketing research comes into operation particularly
while collecting, analyzing, interpreting facts and figures. No amount of sophistication makes
the subject an exact science. Because, as stated earlier, it concerns primarily the consumer as a
human being Study of human behavior precludes absolute mathematical accuracy Probable
trends, at the most can be indicated within predetermined limits. This sets a basic limitation to
marketing research. At the same time, it necessitates a creative and skilled approach to the
conduct of research. In this way, marketing research can contribute immensely to decision-
making in a dynamic market. For accurate judgment, the marketer must be fully aware of the
nature of limitations of marketing research.
(5) Time lag in presentation and implementation: There are other constraints as well that make
for qualified utility of marketing research in decision-making. For example, there is the
limitation of time. Collection of data, their checking as to accuracy and analysis and
presentation often involve considerable time. The formulation of policies and their
implementation as also their subsequent evaluation, which are a necessary follow-up, also take
time. People's tastes and preferences are subject to frequent changes. It is, therefore necessary,
keeping in mind the scope and nature of marketing research, that the projects should be
completed in time to ensure their utility. In this process, at times, as a compromise some
accuracy may have to be sacrificed, but the degree of it can be decided in relation to the
specific circumstances.
(6) Limitations of personnel: Another constraint that is experienced pertains to personnel and its
quality. Trained, well-equipped and well-directed research personnel can improve the quality
and utility of marketing research. In the absence of this, research is likely to be costly and
unreliable. Correct and complete information has to be collected from the respondents
tactfully. The interviewer has to be reasonably aware of the psychological make-up of the
persons that are being interviewed and should be able to analyze their thoughts and reactions.
Apart from this, interviewers may have their own failings and weaknesses. Hence the
training interviewers and investigators is a must. These limitations and constraints can be
overcome or at least their impact can be minimized. To the extent a market researcher is
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successful in his task, the value of the findings can be improved. What is most important is
that reliable data should be available on the basis of which production and marketing plans
and programmers can be formulated with a fair degree of accuracy. It is better to be certain
about 50 percent reliable information than do a guesswork, which has more chances of going
wrong.
(7) Difficult to ascribe results: It is also difficult to ascribe results as a direct consequence of
market research. The rupee value received by a firm from marketing research, therefore,
cannot be measured accurately and completely. This has contributed to an element of
hesitation on the part of organizations to undertake marketing research in many cases,
especially in the developing countries.
(9) Marketing research cannot study all marketing problems: Marketing research is rather
very wide in scope. However, it cannot study all marketing problems particularly where it is
difficult to collect relevant data. Similarly, research study is not possible where value
judgments are involved. Even it is not useful for dealing with urgent marketing problems
where quick decisions and follow-up actions are necessary. Thus, all marketing problems are
not researchable and all research problems are not answerable.
MR cannot provide answer to each and every marketing problem. A problem like Profitability
Vs. Consumer satisfaction is difficult to answer with complete accuracy. The present
marketing research techniques have certain limitations. MR fails to offer guidance to
managers while dealing with specific problems. Thus, marketing research cannot study all
marketing problems and do not offer ready-made solutions to all marketing problems faced by
a business unit. It is also argued that very many times, marketing research tends to be
fragmentary in its approach. As a result, it becomes difficult to have an overall perspective in
which a marketing problem is to be viewed and studied.
(10) Resistance by marketing executives: Researchers study marketing problems and offer
information and guidance to marketing executives in their decision-making process. However,
some executives are reluctant to use the solutions suggested by the researchers. They feel that
such extensive use will act as a threat to their personal status. Findings of the research work
may bring them in difficulties if the policy-decisions taken accordingly prove to be wrong.
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Marketing executives may also feel that researchers suggest solutions that are academic in
character and lack practical utility. They use guidance and suggestions given by the
researched only when they are compelled to do so. There is absence of meaningful dialogue
between the marketing managers and the marketing research team. As a result/ marketing
researchers get divorced from the main stream of marketing. Such attitude of indifference on
the part of researchers and marketing executives makes marketing research meaningless.
MR is not useful for dealing with urgent marketing problems. Moreover, research work cannot
be conducted overnight and marketing decisions cannot be postponed till the research work is
completed. Thus, urgent/pressing marketing decisions arc usually taken without the support of
research work. In brief, lengthy and time consuming aspect of marketing research reduces its
practical utility and is rightly treated as one limitation of marketing research technique.
(12) Non-availability of qualified staff: For scientific MR, professional marketing researchers
with proper qualifications, training and experience are necessary. Research work is likely to
be incomplete/ unreliable in the absence of such expert staff. Companies find it difficult to
have the services of such expert staff. They find it difficult to pay high salary to professional
consultants. Research activities are conducted in limited areas due to non-availability of
properly qualified staff. Such staff includes statisticians, psychologists, sociologists,
economists and computer experts.
(13) Complexity of the subject: Marketing research fails to give complete and full proof solutions
to management. This is because marketing research itself is not an exact science. It is
concerned with the study of human beings and human behavior is always difficult to predict,
errors in drawing conclusions are possible due to this human element in marketing research
activities. Errors in the research studies are also possible due to uncertainty of human behavior
and also because of non-availability of reliable data.
(14) Changing behavior of consumers: Consumer is the focal point in marketing research.
However, his buying motives are difficult to judge precisely and accurately. This brings some
sort of uncertainty in the conclusions drawn from the research activity. The findings of the
research work (particularly in the case of consumer research) may not prove to be accurate.
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(15) Limited practical utility: MR is regarded as an academic exercise. It is often been delinked
from the business strategy. As a result many research reports become "academic" in nature
and are 'filed'. Researchers take more interest in conducting research work rather than in
supplying information and guidance to marketing managers in the decision-making process.
Many research reports are rather bulky and unintelligible due to the use of technical language
and unnecessary details. Such reports are rejected or are not used meaningfully b) marketing
managers. This brings down the practical utility of MR.
(16) Passive nature: MR is passive by its nature. Sometimes, it becomes too superficial and faulty
in business management. Man) conclusions drawn from the marketing research activities may
be imaginary or not based on realities. Its use and effectiveness largely depend on the ability
of marketing executives to get the most promising results out of it. Marketing research by
itself may not give any benefit. It only shows the way to executives in the decision-making
process.
(18) Absence of effective communication: The research activity will be useful and result-oriented
only when there is meaningful dialogue between the marketing management and marketing
research team. However, such dialogue is ineffective in many organizations. This make'
research activity ineffective.
Inspite of the limitations noted above, MR is necessary and useful in marketing management.
Marketing research is a subject with wide scope. Broadly speaking, it is concerned with the
marketing activities of an enterprise. All activities of a seller-to market his products to consumers
are covered by such research. Marketing research is primarily concerned with "4 Ps" of
marketing mix. These are: Product, Price, Place and Promotion. The scope of marketing
research is comprehensive and is actually widening in recent years. Products research, sales
research, pricing research, brand and package research, promotion research and customer research
arc the usual areas covered by MR. In addition, specialized research activities such as motivation
research, consumer satisfaction research, etc. are also undertaken to meet the specific needs of a
business unit. Additional areas and new methods of conducting research activities are regularly
added within the scope of MR.
In 1973, the American Marketing Association noted that marketing research activities were
undertaken on 36 different topics of 1322 companies interviewed. Even in India, large companies
conduct research activities on many marketing problems. Finally, it may be pointed out that
marketing research is essentially for solving the marketing problems of a business unit. Naturally,
research activities will be adjusted accordingly. This suggests that there is no limit to the areas
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covered by marketing research. Everything connected with marketing comes within the scope of
MR.. The branches of MR are as explained below:
1. Product Research:
Product research relates to products that are to be marketed to consumers. It is useful for
introducing new product that will be agreeable to consumers. Product research relates to
various aspects such as design, development and introduction of new products, testing of
existing products, product modification studies and so on.
2. Packaging Research:
Packaging research is a part of product research and is important for making the products
attractive and agreeable to consumers. Packaging is now treated as a tool for sales promotion.
It attracts the attention of consumers and induces them to purchase products. Constant changes
in the package design are-required for sales promotion. For innovation in the package design/
packaging research is necessary. Packaging research is now treated as an independent branch
of marketing research. Such research is conducted in order to know the impact of packaging.
Branding and packaging normally go together and hence brand research is treated as a part
and parcel of packaging research.
3. Pricing Research:
Pricing research relates to pricing of the product It relates to analysis of pricing policies and
strategies, studies market price trends, fixation of market prices, studies relating to prices
charged by competitors, studies relating to future price trends, price incentives for sales
promotion and provision of price discount and other price concessions to dealers and
consumers.
4. Market Research:
Market research proper relates to analysis of consumer markets, assessment of market trends,
forecasting of business conditions, setting of sales territories and sales quota, sale potentials
studies, studies of wholesale marketing, demography descriptions of customers, market
competition studies, sale-forecasting, estimating demand for new products, analyzing relative
profitability of sales territories and monitoring competitive-marketing activities.
5. Sales Research:
Sales research relates to studies of sales outlets, sales territories and their revision, trends in
sales, sales forecasting, effectiveness of sales force, sales policies and sales performance and
so on.
7. Consumer Research:
It relates to finding out consumers' needs and preference, consumers' purchasing intentions,
consumers' choice of brands, trends in consumer preferences and purchasing patterns
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8. Policy Research:
Policy research activity is connected with the evaluation of effectiveness of marketing
policies, sales policies, distribution policies, pricing policies, inventory policies and so on.
Necessary changes in such policies are possible through intensive policy research studies.
9. Advertising Research:
It relates to evaluation of advertising effectiveness, analyzing competitive advertising and
selection of appropriate advertising media.
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a. Concept generation
There are two types of concept generation research. They are:
1. Need identification. The emphasis In need research is on identifying unfilled needs in the
market. Marketing research can identify needs in various ways. Some are qualitative and others,
such as segmentation studies can be quantitative. Following are some examples:
i. Perceptual maps, in which products are positioned along the dimensions by which users
perceive and evaluate, can suggest gaps into which new products might fit.
Multidimensional scaling is used to generate these perception gaps.
ii. Social and environment trends can be analyzed.
iii. An approach termed benefit structure analysis has product users identify the benefits desired
and the extent to which the product delivers those benefits, for specific applications. The
result is an identification of benefits sought that current product do not deliver.
iv. Lead user analysis the approach in which instead of just asking users what they have done,
their solutions are collected more formally. Lead users are positioned to benefit
significantly by solving problems associated with these needs. Once a lead user is
identified, the concepts that company or person generates are tested.
2. Concept identification. During the new product development process there is usually a point
where a concept is formed but there is no tangible usable product that can be tested. The concept
should be defined well enough so that it is communicable. There may be simply a verbal
description, or there may be rough ideas for a name, a package, or an advertisement approach.
The role of marketing research at this stage is to determine if the concept warrants further
development and to provide guidance on how it might be improved and refined
b. Product Evaluation and Development
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Product evaluation and development, or product testing, is very similar to concept testing, in
terms of both the objectives and the techniques. The aim is still to predict market response to
determine whether or not the product should be carried forward.
1 Use testing - The simplest form of use testing gives users the product and after a reasonable
amount of time asks their reactions their intentions to buy it.
2. Predicting trial -Trial levels (the percentage of a sample of consumers who had purchased the
product at least once within 12 months after launch) were predicted on the basis of three
variables:
à Product class penetration (PCP)
à Promotional expenditure
à Distribution of the product
3. Pretest marketing - Two approaches are used to predict the new brand's market share.
C The first one is based on preference judgments. The preference data are used to predict the
proportion of purchases of the new brand that respondents will make given that the new brand
is in their response set.
C The second approach involves estimating trial and repeat purchase levels based on the
respondent's purchase decisions and intentions-to-buy judgments.
c. Test marketing
Test marketing allows the researcher to test the impact of the total marketing program, with all its
Interdependencies, in a market context as opposed to the artificial, context associated with the
concept and product tests that have been discussed. Test marketing has two primary functions.
l The first is to gain information and experience with the marketing program before making a
total commitment to it.
l The second is to predict the program's outcome when it is applied to the total
market There are really two types of test markets:
1. Sell-in test markets are cities in which the product is sold just as it would be in a national
launch. In particular the product has to gain distribution space.
2. Controlled distribution scanner markets are cities for which distribution is prearranged and the
purchase of a panel of customers are monitored using scanner data.
Early stages of the product life cycle are sacrificed in the expectation that higher volumes in later
periods will generate sufficiently greater prompts to result in overall profit for the product over its
life
III. DISTRIBUTION RESEARCH
Traditionally, the distribution decisions in marketing strategy involve the number and location of
sales persons, retail outlets, warehouses and the size of discount to be offered The discount to be
offered to the members in the channel of distribution usually is determined by what is being
offered by existing or similar products and also whether the firm wants to follow; a "push1 or a
"pull” strategy Marketing research, however, plays an important role in the number and location
in decisions about numbers and locations
a. Warehouse and Retail Location Research
The essential questions to be answered before a location decision is made are "What costs and
delivery times would result if we choose one location over another?"
Simulation of scenarios is used to answer these questions. The simulation can be relatively simple
paper-and-pencil exercise for the location of 3 single warehouse in a limited geographic area. or it
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can be a complex, computerized simulation of a warehousing system for a regional or national
market
i. Center of gravity simulation - The center for gravity method of simulation is used to locate a
single warehouse or retail site In this method, the approximate location that will minimize the
distance to customers, weighted by the quantities purchased is determined The more
symmetry there is in customer locations and weights the more nearly the initial calculation
approximates the optimal location The location indicated by the first calculation can be
checked to be determine if it is optimal (or near optimal) by using a "confirming” procedure.
If it is not optimal, successive calculations can be made as necessary to “home in" on the best
location
ii. Computerized simulation models - The concept involved m simulations for this purpose is
quite simple Data that describes the customer characteristics (location of plants, potential
warehouse and retail sites) and distribution costs (costs per mile by volume shipped, fixed and
variable costs of operating each warehouse the effect of shipping delays on and variable costs
of operating each warehouse, the effect of shipping delays on customer demand) are generated
and input into the computer The computer is programmed to simulate various combinations of
numbers and locations of warehouses and to indicate which one(s) gives the lowest total
operating cost Effective results have been achieved by using computer simulations to design
distribution systems
iii. Trade area analysis - Formal models have been developed that can be used to predict the
trading area of a given shopping center or retail outlet based on relative size travel time and
image A variety of other techniques can be used to establish trading areas. An analysis of the
addresses of the credit card customers or license plates of the cars (by plotting the addresses of
the car owners) can provide a useful estimate of the trading area. Check-clearance data can be
used to supplement this information. The best, but also the most expensive way of establishing
trading area bound Aries is to conduct surveys to determine them
iv. Outlet location research. - Individual companies and, more commonly, chains, financial
institutions with multiple outlets, and franchise operations must decide on the physical
location of their outlets). Three general methods involves plotting the area surrounding the
potential site in terms of residential neighborhood, income levels, and competitive stores.
Regression models have been used for location studies for a variety of retail outlets, including
banks, grocery stores, liquor stores, chain stores and hotels. Data for building the model and
for evaluating new potential locations are obtained through secondary data analysis and
surveys.
b. Number and location of Sales Representatives
How many sales representatives should be in a given territory? There are three general research
methods for answering this question.
l The first, the sales effort approach, is applicable when the product line is first introduced and
there is no operating history to provide sales data.
l The second involves the statistical analysis of sales data and can be used after the sales
program is under way.
l The third involves a field experiment and is also applicable only after the sales program has
begun.
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It focuses on the decision that is commonly made when designing a promotion strategy. The
decision for the promotion part of a marketing strategy can be divided in to (1) Advertising and
(2) Sales promotion. Sales promotion affects the company in the short term, whereas advertising
decisions have long-term effects. Companies spend more time and resources on advertising
research than on sales promotion research because of the greater risk and uncertainty In
advertising research.
1. Advertising research
Most companies concentrate on advertising because advertising decisions arc more costly and
risky than sales promotion decisions. Advertising research typically, involves generating
information for making decisions In the awareness, recognition, preference and purchasing stages.
What separates an effective advertisement from a dud? The criteria will depend, on the brand
involved and its advertising objective. However, following basic categories of responses are used
in advertising research in general and copy testing in particular
a) Advertisement recognition
b) Recall of the commercial and its contents
c) The measure of commercial persuasion and the impact on purchase behavior.
• Purchase behavior
- Coupon stimulating purchasing
- Split-cables tests. Information Resources Inc's (IRI) Behavior Scan is one of several split-cable
testing operations. Behavior Scan monitors the purchases of panel members as well as in-store
information such s special prices, features and displays.
• Tracking studies
When a campaign is running, its impact often is monitored via a tracking study Periodic sampling
of the target audience provide a time trend of measures of interest. The purpose is to evaluate and
reassess the advertising campaign, and perhaps also to understand why it is or is networking.
Among the measures that often are traced are advertisement awareness, awareness of elements of
the advertisement, brand awareness, beliefs about brand attributes, brand image, occasions of use,
and brand preference. Of particular interest is, knowing how the campaign is affecting the brand,
as opposed to how the advertisement is communicating the message.
• Diagnostics testing
A whole category of advertising research methods is designed primarily not to test the impact of a
total ad but rather to help creative people understand how the parts of the ad contribute to its
impact. Which are weak and how do they interact? Most of these approaches can be applied to
mock-ups of proposed ads as well as finished ads.
• Copy test validity
This test refers to the ability to predict advertising response.
* Budget decision
Arriving at analytical research-based judgments as to the optima! advertising budget Is
surprisingly difficult. However, there are research inputs that can be helpful. Tracking studies that
show advertising is either surpassing or failing to reach communication objectives can suggest
that the budget should be either reduced or increased.
• Media research
In evaluating a particular media alternative, it is necessary to know how many advertising
exposures it will deliver and what will be the characteristics of the audience. A first cut of the
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vehicle's value is the cost per thousand (circulation), the advertisement insertion cost divided by
the size of the audience.
2. Brand Equity.
Brand equity is defined as a set of assets and liabilities linked to a brand that add to or subtract
from the value of a product or service to a company and/ or its customers. The assets or liabilities
that underlie brand equity must be linked to the name and/or symbol of the brand. The assets and
liabilities on which brand equity is based will differ from context to context. However, they can
be usefully grouped into five categories:
a) Brand loyalty
b) Name awareness
c) Perceived quality
d) Brand association
e) Other proprietary brand assets: patents, trademarks, channel relationships etc.
3. Customer satisfaction.
The measurement of customer satisfaction and its link to product/service attributes is the vehicle
for developing a market-driven quality approach This approach requires a sequential research
design that uses the results from each research phase to build and enhance the value of subsequent
efforts. During this process, it is imperative to study customers who were lost, to determine why
they left This issue must be addressed early in the system design The steps involved in customer
satisfaction is
a) Define goals and how information will be used
b) Discover what is really important to customers and employees
c) Measure critical needs
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d) Act on the information
e) Measure performance overtime
f) Issues in questionnaire design and scaling in satisfaction research
1. Database marketing
A database is a customer list to which has been added information about the characteristics and
the transactions of these customers. Businesses use it to cultivate customers - as they seek new
customers.
Need
A database provides the means for research to support decisions. It enables profiling of customers
by searching for prospects who are similar to existing customers. It provides the means for
implementation of profitable programs of repeat business and cross-selling. It assists in marketing
planning and forecasting. Further a database can:
• Match products or services to customers' wants and needs
• Help select new lists or use new media that ft the profile of existing customers.
• Maximize personalization of all offers to each customer.
• Provide for on going interaction with customers and prospects.
• Pinpoint ideal timing and frequently for promotions
• Measure response and be accountable for results
• Help create the offers most likely to elicit responses from customers
• Help achieve a unique selling proposition (USP), targeted to appeal to your customers
• Integrate direct-response communication with other forms of advertising
• Demonstrate that customers are valuable assets.
Types of database
1. Active customers
2. Inactive customers
3. Inquiries
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b) Determine their "Lifetime Value”. Building a lasting relationship becomes the obvious way to a
prosperous and profitable future.
c) Developing relationships with customers. Understanding your customers' tastes and preferences
on an individual basis is the foundation for relationship marketing. Relationship marketing
combines elements of general advertising. sales promotion, public relations and direct
marketing to create more effective and more effective ways of reaching consumers. It centers
on developing a continuous relation ship with consumers across a family of related products
and services.
2. Relationship marketing
The relationship marketing process incorporates three key elements.
1. Identifying and building a database of current and potential consumers, which records and
cross-references a wide range of demographic, lifestyle and purchase information,
2. Delivering differential messages to these people through established and new media channels
based on the consumers' characteristics and preferences
3. Tracking each relationship to monitor the cost of acquiring the consumer and the lifetime value
of his other purchases.
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attitudes and so on. This situation affects the behavior of the consumer and the findings of the
research work. The researcher has to conduct his study openly and has no control over the
external factors. As a result, the findings of marketing researcher are bound to be less
scientific.
(6) Dearth of reliable information: Information serves as the base of MR. The quality of
research work depends on the reliability of information collected. The information collected
in MR may not be accurate or complete. It is possible to draw only rough estimates/
conclusions from such information/data. This makes research conclusions less accurate and
reliable. Sometimes, even the attitude and approach of researchers, investigators, etc. may
make the research work less scientific.
This consumer orientation to MR is the result of modern concept of marketing, which is basically
different from the traditional concept of marketing. It is consumer-oriented and service-oriented.
It is societal in character. As a result, in the marketing research activities, special attention is now
given to consumers. All research activities are for making marketing useful, agreeable and
acceptable to consumers. This is what is described as consumer orientation of MR. Research
activities are now made pro-consumer rather than pro manufacturer or trader. Even research
techniques and methodologies are adjusted according.
The importance of consumer is now accepted not only in MR but also in all aspects of business
management. In fact, consumer is the most important person in business. He is the king and
should be treated accordingly. All production and marketing activities are for meeting his needs
and also for raising his satisfaction and welfare. He is the cause and purpose of all business
activities. Finally, modern business is not profit-oriented but consumer oriented or service
oriented. All these arguments are equally applicable to MR. In other words, MR activities move
around the consumer and his satisfaction. He is the focus point in all research projects as MR is
essentially for adjusting the marketing activities as per the expectations of consumers. This clearly
suggests the importance of consumers in all MR activities.
Marketing research helps the management to be consumer-oriented in its policies and decisions.
The benefits of MR will not be available if consumer and his needs, conveniences, expectations,
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etc. are not given due attention. This suggests that neglect of consumers in any type of research
activity is undesirable and even dangerous. The benefits of marketing research will be available
only when research activities are conducted after due regard to consumer who acts as the center of
all marketing activities. Information available from consumer research can be used as a
foundation for many important marketing decisions.
Finally, it may be noted that there is nothing wrong in making MR activities pro-consumer. In
fact, this trend exists since the early growth of marketing research activities. Consumer is
important in all marketing activities and the same rule is applicable to MR activities. Research
activities without due consideration to consumers may not give expected results. In fact, the
purpose of MR is to find out precisely what the consumer wants and how to make
marketing activities agreeable to consumers in all respects such as product, price, packaging,
promotion j and so on. In brief, MR as a subject has consumer-orientation in all its| aspects.
Consumer/Customer is the cause and purpose of all marketing research activities. How to make
consumers happy and satisfied is the| basic issue before the researchers. At present, all
manufacturing/, marketing companies spend huge money on marketing research. The purpose is
to make marketing activities consumer oriented.
This situation creates new problems before the manufacturers, which can be faced effectively
through MR as it acts as a feedback mechanism to ascertain first hand information, reactions,
etc. of consumers and middlemen. Marketing activities can be adjusted accordingly.
2. Wide gap between producers and consumers: Market research is needed as there is a wide
gap between producers and consumers in the present marketing system. Due to mass sc
production and distribution, direct (personal) contact between product and consumers is
practically lost. This creates information gap between producers and consumers. The
middlemen dominate the market] scene. Producers do not get dependable information as
regards nee expectations and reactions of consumers. They are unable to adjust the products,
packaging, prices, etc. as per the needs and requirements consumers.
The problems created due to information gap can be solved Q] through MR as it is possible to
establish contact with consumers a collect first hand information about their needs,
expectations, likes & dislikes, preferences and special features of their behavior. Thus
marketing research enables a manufacturer to make his marketing policies pro-consumers.
Effective communication with consumers is a possible through MR activities. Thus, MR is
needed for removing wide communication gap between producers and consumers.
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urban areas. There have been considerable changes in the consumption and expenditure
patterns of consumers in India. The incomes of people, in general, are rising. This brings
corresponding increase in the purchasing capacity and buying needs and habits. The rising
prices affecting the lower and middle class consumers and their purchasing power and
purchasing priorities. Similarly, there are considerable changes in the purchasing pattern of
clothing and other consumer items. The demand for consumer durables is fast increasing. The
markets now flooded with consumer durables like TV sets and so on.
Manufacturers are expected to know such qualitative & quantitative changes in the consumer
preferences and their consumption pattern. For achieving this objective, MR activities are
necessary and useful. It is possible to adjust production and marketing operations as per the
information supplied from consumer surveys and market surveys conducted under various MR
projects. In brief, MR is needed for the study of changes in the pattern of consumption and
corresponding adjustment in the marketing planning, policies and strategies.
Marketing research particularly consumer research gives valuable data relating to consumers. It
is possible to use such data fruitfully while framing marketing policies. Thus, marketing
decisions can be made pro-consumer through marketing research activities
.
5. Shift of competition from price to non-price factors: Cutthroat competition is unavoidable in
the present marketing field. Such competition may be due to various factors such as price,
quality, packaging, advertising and sales promotion techniques. Entry of new competitors
creates new problems in the marketing of goods and services. In addition, market competition
is no more restricted to price factor alone. There are other non-price factors such as packaging,
branding, after-sale service and advertising which create severe market competition. Every
producer has to find out the extent of such non-price competition and the manner in which he
can face it with confidence.
MR is needed as it offers guidance in this regard. A manufacturer can face market competition
even by using certain non-price factors. The shifting of competition from price to non-price
factors has made marketing of consumer goods more complicated and challenging. This
challenge can be faced with confidence by using certain measures suggested through marketing
research.
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executives need reliable data and up-to-date market information. Here, MR comes to the rescue
of marketing managers. Problems in marketing are located, defined analyzed and solved
through MR technique. This suggests its need as tool for decision-making. MR is needed as a
tool for reasonably accurate decision-making in the present highly competitive marketing
system.
7. Problems in the distribution system: Modern distribution system is complex and costly. How
to market goods efficiently and economically is a basic issue in the present marketing system.
Modern production is now possible because of the use of advanced technology. However
efficient distribution is rather difficult. For this, it is necessary to identify new markets, new
consumers, new channels of distribute and new sales promotion techniques. For such
identification, MR needed.
The cost of marketing is fast increasing in modern marketing. The burden of rising marketing
cost is normally passed on to consumers. This creates adverse effects on marketing activities.
In brief, obstacles large scale distribution and rising distribution costs are two problems in the
present marketing system. These problems can be studied & solved through MR activities
relating to products, distribution channel consumers and so on. This suggests the growing need
of MR.
8. Recent developments in science and technology: Science and technology are making rapid
progress. In fact, the impact of such progress touches all aspects of commercial and industrial
activities. Me products are manufactured and brought in the market. Articles with good
demand become old and out-dated within a short period Consumers prefer new/novel articles
in place of old ones. Produce and distributors find it difficult to take decisions due to lack
knowledge about future market trends. Here, marketing research useful as it provides
information about future trends in the markets field and enables marketing managers to take
quick and corn marketing decisions. This suggests the need of marketing research.
9. Existence of large size enterprises: Modern manufacturing enterprises are large in size. Such
enterprises can work as viable units and make progress only when their products are made
popular with the consumers. Large-scale enterprises need distribution of their products on a
massive scale. Here, MR is useful. It helps the enterprises explore, identify and locate new
consumer markets. It suggests the ways and means for large-scale distribution of goods at the
national/global level. In brief, MR is needed as an essential element of large scale
manufacturing and marketing.
The factors noted above clearly suggest the growing need of MR in | the present consumer-
oriented marketing system. It is needed in order to reduce the risks and uncertainties in the
marketing activity. It supports 1 marketing managers while dealing with the marketing
problems. Marketing research is needed as it acts as a key factor in successful marketing of
goods and services.
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key areas of marketing. It is an integral part of scientific marketing management. This is natural
as marketing research deals with the different marketing problems of a company and offers
guidelines to marketing managers in solving such problems. In brief, marketing research acts as
one useful and reliable tool for framing marketing policies and decision-making in regard to
different aspects of marketing. It plays an important role in marketing management.
MR collects and provides information to marketing managers for decision-making. It studies
certain marketing problems and offers suggestions for solving them. It also acts as the intelligence
wing of marketing management.
Marketing management and marketing research are inter-related activities. In fact, marketing
research cannot exist as a watertight compartment nor has it any existence independent of
marketing management. It must be a part and parcel of the problem-solving process of marketing
management. MR activities in any organization must be directly related to the marketing
problems faced by that organization. This is natural as MR cannot be effective, if it is assigned
some portions of a marketing problem for exploration in a piecemeal manner. It must be supplied
with the full background required to study the whole problem in depth. This will enable the
researcher to provide reasonably accurate solution to the problems faced by the marketing
managers. Similarly, MR will be effective/purposeful, if the research activities are conducted in a
regular and continuous manner and also as per the specific needs of the marketing management.
This suggests that there should be effective integration in between marketing management and
marketing research. Both these activities should be effectively co-ordinated. This will ensure
efficient management of marketing activities of a company. There is no scope for any conflict in
between the two as such conflict is undesirable to the company itself. However, on many
occasions, differences of opinion and discord between research department and management are
visible Keane, John G has spelt out the conflicting points of view of the to management and
marketing researchers in the areas of research responsibility, research personnel, budget,
assignments, problem definition, research reporting and use of research.
MR will be effective/purposeful only when there is close c ordination between research and actual
management. Research activities must be necessarily relevant to the marketing problems. Both
(researchers and top-level management) should have a clear understanding and appreciation of
each other's position and role. However, in practice, conflicts are noticed between the top-level
management and the researchers. Such conflicts should be avoided.
(iii) Responsibility of top management for effective integration: The top management should
accept honestly that the researchers have a capacity to study marketing problems and offer
valuable suggestions for solving the marketing problems. In addition, adequate budget provision
and all necessary facilities should be provided to the researcher to investigate marketing problems
minutely and make suitable recommendations. The top management should keep meaningful
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communication with the marketing researchers in a continuous manner. The bias attitude towards
them is certainly undesirable. Finally management should avoid too many layers of
communication between top management and researchers. It is also desirable to discuss the
recommendations of researchers with open mind. Such liberal outlook will make MR activities
useful to the marketing management.
The researchers should also adopt open and constructive approach towards the top-level
management. In the research project, attention should be given to the plans and priorities decided
by the top-level management. The researchers should continuously improve the research
methodology and see that their reports and recommendations are easily acceptable to the
management. Delay in the research work should be avoided as top-level management can
consider the recommendations if received in time as the nature of marketing problem changes in
the course of time.
0n some occasions, the management is not convinced about the utility of marketing research. This
may be due to past experience in regard to research activity undertaken. The other reasons for
unfavorable opinions about marketing research include delay in the completion of research work,
heavy expenditure involved, bulky and confusing report and finally recommendations made are
not convincing and practical. The result is that the management forms negative impression about
the very concept of marketing research. The company management fails to understand the
practical utility of research work. It feels that MR is an unnecessary activity and funds should not
be spent on the same. It is as good as waste of money as positive benefits may not available. Such
negative opinion formation is the result of previous experience of the firm. It is a type of criticism
of the researchers who failed to submit promising, result-oriented and practical research report. It
need not be treated as the criticism of marketing research activity itself. The adverse opinions of
companies on marketing research are undesirable and even dangerous to the future growth of MR
activity. Here the responsibility lies on the researchers. They have to conduct research work
honestly and also by taking keen interest in the proposed research project. As a result, the research
report and recommendations 11 be promising and easily acceptable by the management. The
marcher should prepare the outline of research project properly and place it before the
management in a convincing manner. As a result, the management will be convinced about the
utility of marketing research project and will be willing to spend money on the same. "Many a
times, management is not convinced about the utility of marketing research and discards it as an
unnecessary activity over which no funds should be spent." is possible when the research project
is not prepared and placed properly before the management for consideration and approval.
(iv) Responsibility of researchers for effective integration: The researchers should use their
skills, experience and knowledge while conducting the research activities. Finally, they should
maintain persuasive communication as inadequate/poor communication creates bias attitude on
the part of top-level management. As a result, the recommendations are rejected or not used in
actual practice. In addition, the superiority of the top-level management in the decision-making
process should also be honored. The approach should be to help the management in all possible
ways. Such positive/constructive approach on the part of researchers will enable them to make
purposeful contribution in the field of marketing management.
(v) Present Position: MR is now given more creative role as compared to the conventional role
where it was used just for studying buyer behavior or for the feasibility studies for new products
to be introduced in the market. MR until the mid-1980s, was considered a luxury, which only
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multinationals could afford. However, all companies now feel the need of MR due to growing
competition and liberalization. Realizing the contribution that MR makes, more and more
companies in India are now turning to MR.
Marketing research is a useful tool available at the disposal of management. At all stages of
marketing cycle it can be used. On the other hand in certain quarters misunderstandings have
cropped in about each other. Many organizations feel that marketing research is not at all needed.
On the other hand, marketing researchers point out the lack of appreciation for their work by the
organization.
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11. Helps determine the advertising methods that should be used and the angle that should be
employed in the advertising copy.
12. Furnishes facts to convince dealers of the selling possibilities of given articles and to help them
to increase their sales.
13. Predicts the trend of business conditions in given industries and furnishes a basis for promotion
programs.
14. Ascertains the consumer's likes and dislikes.
15. Reports the methods used by the dealers, display, advertising and selling
16. Measures the stock in the dealer's hands.
17. Finds the dealer's reactions to given policies.
18. Furnishes data for fixing dealer's territories and quota.
19. Finds out and tabulates statistics in which the concern is particularly interested.
20. Keeps one informed about the developments in other industries, which may affect the business
of the firm.
21. Measures the purchasing capacity of a given territory.
22. Discovers new uses for the product.
23. Analyzes the cost data that are available in published form.
24. Studies the organization of the concern with a view to suggesting changes or improvements
The top-level management needs feedback on current marketing environment and the MR
department can provide this quickly. The feedback required in this regard can be provided in a
continuous manner by the research department which studies marketing problems of the company
in a regular and continuous manner. The research department is supposed to supply information to
the top-level management on the following aspects of marketing:
(1) Current business environment (more particularly marketing environment) faced by the
company and the changes likely to take place in the near future.
(2) Trends in consumer behavior, demographic information and consumer needs/expectations.
(3) Changes in consumer purchasing power and data on demand and supply position in the
market.
(4) Trends about market competition and marketing policies of major competitors of the company
and their marketing strategies.
(5) Availability of better/cheaper raw materials and technology for manufacturing superior quality
goods at lower costs.
(6) Feedback on the marketing performance of the company and the challenges that it is facing.
(7) Sales force requirement, recruitment and development.
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(8) Marketing opportunities available (domestic and foreign) and the marketing challenges likely
to develop in the near future.
(9) Any other information that the top management is expected to know for correct marketing
decision-making and policy framing.
The top-level management can take reasonably correct decisions in the following marketing areas
with the help of updated feedback available from the marketing research department:
1. Deciding the long term marketing objectives and setting marketing plans, policies and
strategies to achieve marketing objectives.
2. Designing of product or modifications in the existing products.
3. Determining the product line and adjusting the products as per the needs and expectations of
consumers and allocation of resources among various products and marketing activities.
4. Improving the brand or package design, color, etc.
5. Fixing fair pricing of the product.
6. Fixing marketing strategies in order to face the competitors’ ever-changing market
environment.
7. Selecting suitable channels of distribution for large scale an economical marketing of
company's products.
8. Estimating sales i.e. sales forecasting for adjusting production and marketing activities of the
company.
9. Designing internal mechanism to monitor and evaluate performance of marketing department
and introduction of remedial measures, if required.
In brief, MR is the crucial analytical tool and provides management with vital strategic and
tactical information for decision-making. It guides management in the decision-making process.
However, the final decision is to be taken by the top management. The feedback of Marketing
department certainly plays a positive role in the correct decision making This suggests the
importance and benefits of marketing research to top level management of the company.
In India population census, (census survey) crop surveys, surveys of industrial production,
wholesale and retail prices, cost of living index, estimates of imports and exports etc. for the
future period are conducted regularly. In addition, needs of various sectors of the economy are
estimated. Information collected through these sources is used while deciding government
policies, budgets, funds allocation, etc. This suggests how research activities are given adequate
importance attention at the government level. The data collected through census and other surveys
are used while framing economic policies, long term development plans, allocation of resources
and so on.
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(1) Planning and controlling national economy: For planned economic development,
available resources must be allocated in different sectors of the economy in a rational
manner. Nation priorities must be decided clearly. The future needs of the economy must
be estimated properly and arrangements need to be made meet them properly.
Misdirection of resources must be controlled effectively. For such planned economic
development, data on important aspects of the economy need to be collected. For this,
research activities should be undertaken at different levels.
(2) Control on production, distribution and other marketing activities: Government
conducts various marketing activities on a large scale. It conducts production, looks after
distribution and even restricts consumption of certain commodities through its marketing
operations. The government has to bring equitable distribution of goods particularly
essential commodities. Reasonable prices need to be maintained for social good.
Production needs to be adjusted as per the needs of the entire economy. All such
objectives can be achieved through appropriate policies. For the introduction of such
policies, marketing research activities in the form of surveys, estimates and collection of
data are useful. Research studies are also useful for the calculation of needs of the people,
production required, consumption patterns of people and so on.
(3) Control on exports and imports: Exports and imports are usually regulated by the
government through suitable Exim policy. Exports must be adjusted as per the needs of
the economy and also as per the surplus production available. Imports must be allowed to
supplement the internal production. Large-scale imports are also necessary for export
promotion. Proper policy decisions in this regard are necessary and are also visible in the
Exim policy of the government. For framing such policy, adequate data must be available.
This is possible through research activities. Surveys conducted are useful for estimating
surplus production for exports, domestic consumption and imports required to be made. In
brief, appropriate decisions as regards exports and imports can be taken with the help of
data available through MR activities conducted at the government level.
(4) Use of MR in Miscellaneous areas: Marketing research is useful to the government in
many other areas of national economy. Such areas are: production plans (targets) in regard
to consumer goods and industrial goods, foreign exchange requirement for the future
period, regulation of production and prices, equitable distribution of goods and services,
resource allocation and allocation of funds to social service at reasonable prices and so on.
Census reports arc useful to the government for policy framing and decision-making on
various social services such as facilities of primary education, and allotment of funds for
primary education, provision for sports and recreation facilities, provision for medical
facilities and provision for family planning and welfare facilities.
In brief, marketing research is useful to the government in bringing economic stability and
economic growth. The government can take correct decisions about various aspects of national
economy with the help of the feedback provided by marketing research activities. Finally, it can
solve economic problems and difficulties with the help research activities undertaken at the
government level. This suggests the importance of marketing research at the government level.
Advertising agencies are specialized professional service agencies that offer different services to
their clients as regards advertising and publicity through different media including press, TV and
radio. Such agency performs various functions and offers varied services to its clients by charging
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necessary fees. Such services include booking space and time for advertising, preparation of
advertising copy, organizing advertising campaigns of clients, offering guidance to the clients as
regards packaging, branding, product modification and so on. Selection of suitable media for
advertising, copy writing, testing effectiveness of advertising, advertising planning of the clients
are some more functions/services offered by advertising agencies. Some agencies even conduct
marketing research activities on behalf of their clients.
In order to conduct its activities efficiently, an advertising agency needs adequate information and
latest trends as regards advertising and marketing. Such information includes product details,
readership details, details of different advertising media, media rates and so on. Such information
is available from different sources such as data published by newspapers, TV, radio, advertising
magazines and so on.
An advertising agency also needs information as regards new trends and techniques used in
advertising, legal and other restrictions on advertising and publicity in India, details of different
advertising media (i.e./ rates, coverage, audience, popularity of the media, etc.). Information about
market competition, new products available in the markets, advertising campaigns of competitors
of its clients, etc. is also required by an advertising agency. For this, the agency has to conduct
research activities in the field of advertising and marketing.
An advertising agency has to collect and maintain all such information in an orderly manner for
quick reference. It has to collect all useful data from different sources. Data already published on
advertising and allied subjects need to be stored by the agency for ready reference. In addition, the
agency has to conduct research activities in order to collect necessary information useful for the
conduct of its functions. A well-maintained reference library is also necessary in the case of an
advertising agency. Such activities will provide suitable feedback to the agency and the agency
will be able to offer efficient services to its clients. This suggests the importance of MR and MIS
in the case of advertising agencies.
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(2) Selection of sales territory: Every wholesaler has to select promising area for his business.
This selection is important as turnover and profit are related to the sales territory selected. For
such selection, the features of product to be distributed, market demand of different areas,
purchasing capacity of customers, possible increase in demand in future, possible benefits of sales
promotion measures, etc. need to be taken into consideration. Researchers undertake surveys of
different trading areas and suggest the best trading area to the wholesaler.
(3) Reduction of distribution/marketing cost: Every wholesaler will like to reduce the cost of
distribution as his net profit is closely linked with the cost of distribution. This cost includes
expenditure on advertising, services to retailers, discount and credit facilities offered, arrangement
for delivery of goods to retailers and so on. Such distribution cost needs periodical review in order
to check wastage and liberal expenditure on distribution. Reducing distribution cost is difficult
due to market competition but efforts should be made in this regard with the help of experts i.e.
researchers. They suggest ways and means to bring down the cost of distribution without any
adverse effect on total sales.
(4) Decision on number of commodities for distribution: Every wholesaler has to decide the
number of product lines he can handle efficiently. He has to decide the number of items that he
can distribute effectively. Sometimes, marketing of limited items with good demand may be
profitable. Similarly, stocking of different items may prove to be costly. In addition, every
wholesaler has to consider his financial position, manpower available and storage facilities
available while deciding the number of items for the business. Marketing researcher can study all
relevant facts and offer suitable guidance to the wholesaler in this regard.
(5) Storage and handling of goods: Every wholesaler has to maintain adequate stocks for
smooth and regular supply of goods to retailers. Naturally, he has to give attention to storage,
handling and transportation of goods. He has to conduct these activities economically. The
wholesaler can undertake studies in these areas in order to find out ways and means for handling
these activities speedily and economically. For this, research studies are useful.
Consumers do not conduct MR activities on their own. However, the benefits to all research
activities are available to consumers. In fact, the purpose of MR is to study/understand the needs,
expectations, problems, etc. of consumers and to give maximum possible convenience and
satisfaction to them. This suggests that consumers secure the maximum benefits of research
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activities indirectly as all research activities are basically for the benefit and convenience of
consumers.
The benefits of MR to consumers are as noted below:
1. Supply of goods and services as per the needs and expectations of consumers. MR provides
wide choice to consumers. Consumers get wide variety of goods at fair prices due to MR
activities.
2. Suitable adjustments in the products (as per the requirements of consumers) through
product planning, product innovation and product modification.
3. Supply of goods at right place, time and also at the right price.
4. Better return (in terms of convenience, satisfaction and welfare) of the price paid for goods
and services.
5. Protection of the rights of consumers and prompt redressal of complaints relating to price/
quality, use, etc.
6. Availability of new / innovative products as per current socio-economic-cultural needs.
7. Provision of wide variety of goods for the convenience of consumers.
8. Better quality after-sales services.
9. Fair treatment and prevention of exploitation of consumers.
10. Production as per the expectations of consumers.
11. Provision of wide choice to consumers.
A small businessman may not be able to maintain separate research department for the conduct of
research activities. However, he can collect necessary information from census reports, other
financial and marketing reports, etc. published by different agencies. He can even refer to market
reports and other reports on current economic issues and adjust his business policies accordingly.
This is how marketing research is useful to small businessmen in the conduct of all their business
activities properly and with foresight, imagination and vision.
Small businessmen have to adjust their business policies and activities as per the need of the
situation. Here, they use the research techniques (knowingly or unknowingly). This suggests that
marketing research is useful to large business houses as well as small businessmen. In the case of
small businessmen, the use of MR may not be extensive as in the case of large business houses.
However, small businessmen study market situation as per their business needs, use available
information on market competition, consumer needs, etc. and adjust their business plans, policies
and operations according. This is precisely the manner in which they use marketing research for
their benefit.
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1. There is resistance on the part of the business executives to use research, because they think
that research is a threat to their personal status. They also think that marketing research may
expose them adversely.
2. Sometimes, the executives develop their own objectives, which are in conflict with the
organization, and they want research to support their views rather than the views of the
organization.
3. The executives are unable to use specialists effectively. Marketing research presently draws on
a variety of specialists from such disciplines as mathematics, statistics, economics, psychology,
sociology, general semantics, anthropology, etc.
4. Marketing research department is often isolated from key departments.
The duty of marketing research is to solve the problems of the organization relating to its sales
and related marketing issues. As such it is considered to be a primary tool by several
managements and as a secondary tool by many managements. In spite of its drawback of arriving
at exact results with complete accuracy, corporate world has accepted its relevance. One such
drawback posed against marketing research is its cost-effectiveness. If the tools used are crisp and
less costlier its service could be welcomed by all. For such recognition marketing research must
possess certain characteristics, which are mentioned by Philip Kotler as follows:
1. Scientific method: Competent marketing research is characterized by an attempt to follow the
scientific method, careful observation, formulation of hypotheses, prediction and testing.
2. Research creativity: At its best, marketing research develops innovative ways to solve a
problem.
3. Multiple methods: Competent marketing researchers keep away from over reliance on any one
method, preferring to adopt the method to the problem rather than the other way round. They
also recognize the desirability of the simultaneous gathering of information in different ways to
give greater confidence than any one method would provide.
4. Interdependence of models and data: Competent marketing researchers recognize that the
facts do not speak for themselves but rather derive their meaning from models of the problem.
They attempt to guide their search for information on the basis of causal decision model to help
the executive.
5. Value and cost of information: Competent marketing researchers show concern for measuring
the value of information against its cost. Value/cost is a consideration when the Marketing
Research Department chooses which research projects to conduct, which research designs to
use and whether to gather more information.
Research can be divided into two classes viz., basic research and applied research.
(1) Basic Research
Often basic research is called 'theoretical’ 'pure' or 'fundamental' research. It is not directly
concerned with solving marketing problems. Primarily it aims at improving academic knowledge
about the subject matter. Basic research does not deal with commercial problems but it relates to
fundamental questions concerning the business and allied subjects. Basic research may address
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itself to issues like economic and political changes in a country or reasons for changes in lifestyles
in youth.
(2) Applied Research
Applied research directly deals with commercial problems. It tackles the business problems and
attempts to find alternative solutions to the problems. Applied research may relate to locating
reasons for fall in sales or to introduce a new brand of product.
Applied research can be of two types (a) problem-solving research and (b) problem-oriented
research. As the name indicates problem-solving research relates to a specific problem. This
research can be conducted either by the marketing research department of the firm or by an
outside research agency. By contrast problem-oriented research deals with problems that may be
of interest to many firms. This type of research puts into practice the knowledge obtained through
basic research.
The methods of conducting marketing research are broadly classified into the following four
categories:
(1) Desk Research: In desk research, the required information for research work is collected from
published and other written sources of information available. Desk research is useful for the
collection of secondary data. Secondary data are already collected for some other purpose but
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can be used conveniently by borrowing the same. Desk research is a type of in-house
research.
(2) Field Research/Investigation: In field investigation/survey method, the required information
is collected from the consumers, dealers and others connected with marketing. In addition,
consumers surveys are also conducted for this purpose. The data collected from such field
investigation are called primary data.
(3) Observation Method: In observation method, the required information is collected through
actual physical observation of one or more phenomena under study. This method is also
useful for the collection of primary data.
(4) Experimentation Method: In experimentation method/ the required information is collected
through a small scale experiment under controlled conditions. This method is used for
primary data collection.
The methods of data collection noted above have their special features, advantages and
limitations. The researcher has to select any method convenient to him. Collection of reliable and
authentic data is more important than the specific method used for data collection.
DESK RESEARCH
MEANING AND FEATURES OF DESK RESEARCH:
Desk research means research activity conducted with the help of established information (data)
by different agencies and also by using the information available from the internal sources of the
company. The information published in trade journals, commercial press and data internally
generated by the company are used for the desk research. Thus it is a critical study of published
information (data). Such research is usually conducted within the marketing research department
of the company by the research staff appointed.
Desk research is simple and economical in nature. It saves time and money on research work to a
considerable extent as field investigation for data collection is avoided. However, companies
generally do not depend fully on desk research. They prefer to supplement desk research with
field investigation. Desk research does not involve field work/survey work of any type. Naturally,
desk research is rather easy and quick. It is actually finding out the required information from
published journals, etc. and using it for the study of marketing research problem.
(1) Easy and quick: Desk research is easy and quick as required information is available from
different agencies and sources -internal and external. Time in data collection is reduced in
desk research as available data are used for research purpose.
(2) Economical: Desk research is economical as information can be collected easily through
libraries or by paying subscriptions. This reduces the expenditure on research activity.
(3) Reliable data available: The data available in published form are generally reliable as they
are collected by responsible agencies and institutions. This brings accuracy to the conclusions
drawn through desk research.
(4) Absence of interviewee’s bias: The published data are factual and away from interviewee's
bias. Naturally, the information available is more reliable/dependable.
(5) Convenience: Desk research is convenient as it relieves from the botheration of field
investigation, tabulation, analysis and so on.
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(6) Suitable to small firms: Desk research is convenient in the case of small firms and non-profit
organisations.
(1) May not be exactly as per needs: The published data may not be always reliable and exactly
as per the needs of survey work undertaken. The researcher has to make proper scrutiny
before using published data.
(2) Needs modification: Secondary data need suitable modification before actual use for research
purpose. This is necessary in order to adjust data as per the need of the research work
undertaken.
(3) Testing required: Published data need proper testing through field investigation for
verification of validity and reliability.
(4) Too much dependence undesirable: Too much dependence on published data is undesirable
and even dangerous. The conclusions drawn from such data may not be dependable. Desk
research is not always dependable.
(5) Secondary method: Desk research is a secondary method of MR. The data used in the desk
research are secondary and may not be exactly as per the need of research study.
(6) Lacks practical-orientation: Desk research is like library research work and lacks practical-
orientation.
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maintain reference libraries for the benefit of their members and researchers where Indian as
well as foreign journals are made available for reference purpose.
(5) Publications of Management and Economic Consultants: Management consultancy
companies collect information on business matters and give publicity to the same. This
information is useful for research purposes. Even the research reports prepared by MR
organisations can be used in the desk research
(6) Publications of Banks and Financial Institutions: Banks, financial institutions, investment
trusts and stock exchanges publish information on financial matters through their annual
reports and other publications. In India, RBI publishes information on all aspects of Indian
economy regularly. Such publications provide reliable statistical information to researchers.
(7) Company Reports: Public limited companies publish their annual reports and financial
statements which contain information about their activities and also about general economic
situation in the country. Such reports can be used for desk research purpose
(8) Specialised Libraries: In cities like Mumbai and Delhi, specialised libraries are available.
They provide whatever information is required by researchers. Even the libraries of foreign
embassies are useful for data collection on commercial matters
(9) Government Publications and Publications of International Organisations: Government
departments, public corporations and other government agencies publish information of varied
nature through their publications. Census reports are also published by the government. Such
reports provide valuable information to researchers. Along with this, international agencies
like IMF, WTO, FAO and other agencies of United Nations publish useful information on
trade, finance and other economic matters. Such information can be used for desk research.
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Use of information Information available from Information available from
internal sources can be used external sources cannot be
directly for research purpose. used directly as it is.
Modifications are not required Modifications as per the
nature of research work are
required.
Examples Purchase records, sales Trade journals, annual
records, periodical sales reports of companies,
reports and annual reports are surveys conducted by press,
the examples of internal census reports etc. are
sources of data collection examples of external sources
of data collection.
Coverage Limited coverage as they Wide coverage as they are
relate to company only. varied in character
Reliability Internal sources are more External sources may not
reliable as they supply supply accurate data.
accurate data. Verification of Naturally, a verification of
data is not required data before actual use is
necessary
Availability Internal sources are easily External sources are not
available and that too without easily available Money is
any extra cost. required to be spent on
them.
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Evaluation of Secondary Data
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ADVANTAGES/MERITS OF PUBLISHED DATA:
(1) Easy and economical availability: Published data are available easily, quickly and
economically.
(2) Extensive availability: Published data are available extensively on all aspects of marketing
and can be used by referring to different sources This enables the researcher to make his
primary data collection more specific and relevant to his study.
(3) Supplementary role: Published data can be used as a good supplement to data collected
through field investigation It supports and fill in the gaps in the primary data used Moreover,
the researcher gets additional information about the problem under study His understanding of
the marketing problem improves.
(4) Facilitates completion of research work: Completion of research project without using
published data is difficult as such data are needed when adequate primary data are not
available Published data bring completeness to the research project.
(5) Facilitates comparison: Secondary data can be used as a basis for comparison with the
primary data collected by the researcher
(1) Published data has certain limitations and should be used in the research work only when
absolutely essential or when available as per the requirement of the research project.
(2) Data published by a reputed and reliable agency should be used for research purpose.
(3) Too much dependence on published data for research purpose should be avoided.
(4) Old and outdated published data should not be used.
(5) To the extent possible verification of published data should be made before actual use in the
research project. Such evaluation avoids the use of unsuitable/unreliable data in the research
work.
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FIELD INVESTIGATION/SURVEY METHOD
MEANING OF FIELD INVESTIGATION/FIELD SURVEY:
In addition to desk research, marketing research can be conducted through field investigation. For
this, field surveys are conducted. They are used for primary data collection in MR. Survey means
a planned attempt to collect required information from a representative sample of the relevant
population. Field investigation means collecting first hand information by actually visiting
markets or meeting consumers and dealers who are directly connected with the marketing
activities. Data collected for the first time through field survey are called primary data. Here, the
data are collected through suitable questionnaire and interviewing a limited number of people (a
sample) selected from a/large group. Customers, traders and suppliers are the major sources
supplying primary data.
The primary data collected are superior to secondary data. Researchers turn to the primary data in
order to overcome the limitations of secondary data which include incompatibility, obsolescence
and bias. Primary data are also necessary when the secondary data are incomplete. Researchers
prefer to use both primary and secondary data for research purpose as depending fully on
secondary data is not fair. Primary data need to be collected from different sources such as
surveys, observation and experimentation.
The primary data are reliable. However, the problem in primary data is its cost, both in terms of
money and time required for collection. In addition, researcher's bias also creeps in. Even with
such limitations, the primary data are important and useful in MR.
Primary data are of two types: (a) Census, and (b) Sample, Census refers to collection of data
from the entire population. In India, population census is taken after every ten years, (the latest
census was taken in 2001). It is a lengthy and costly method. As a substitute to census, sampling
method of data collection is used.
Sample refers to a pie taken from the population. Sample is a small representative of the whole
universe. If the sample size is fair, the conclusions drawn are applicable to the entire universe.
Random sampling is a popular method used for data collection.
Sampling is an integral part of data collected through surveys. Sampling is used to collect primary
data when the sources of data are too many to be exhaustively handled. A sample is only a
representative portion of the universe/population. The sample needs to be decided clearly before
starting the survey work.
Field surveys are conducted extensively for the collection of primary data. Personal interview and
telephone interviews are arranged for field surveys. A survey consists of gathering data by
interviewing limited people. Such survey relates to consumers and other marketing activities.
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DESK RESEARCH V/S FIELD RESEARCH:
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METHODS OF FIELD INVESTIGATION/MARKET SURVEY:
Survey methods are useful for the collection of primary data through interviewing. Field work
calls for a lot of managerial and administrative skills on the part of the research agency. It should
be properly planned and also supervised. The time schedule of field work must be strictly
followed and the responses must be recorded accurately and honestly. Every survey method has
its special features, advantages and limitations. A researcher should select suitable survey method
for his research project and use it in a systematic manner. It is not possible to treat specific survey
method as the best. The researcher has to consider the nature of research project, the type of
information required, funds and time available, etc. and select one or two suitable survey
methods. The use of survey method is essential for the collection of primary data on a marketing
problem under investigation.
Field investigation is one of the most widely used MR methods. Field investigation methods are
important, as they are more accurate and reliable. Here, direct communication is established with
the consumers and information is collected by asking relevant questions. Naturally, the
information collected is accurate, first hand and factual. The conclusions drawn from such data
are more accurate/ reliable.
The rate of response to field investigation is generally positive. Investigators can even collect
additional information through personal interviews. It is not possible to study market situation and
consumer needs by reading published information. In this sense, field research is superior to desk
research.
All companies give special importance to field investigation and use it as a good supplement to
desk research. Market survey/field investigation is normally used if the required data are not
available from the company's internal records or from external published sources. MR will not be
comprehensive, complete and reliable unless field investigation is conducted extensively. In fact,
the quality of research work and its practical utility in decision-making depend on the extent to
which field investigation is carried out. This clearly suggests the importance of field investigation
in MR.
There are four important methods used in field investigation/survey. These survey methods are:
(a) Mail surveys
(b) Telephone surveys
(c) Personal interviews
(d) Panel Research.
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readers are asked to supply information. In addition, copies of questionnaire are supplied to
retailers with a request to collect completed questionnaires from the customers. Even the
questionnaire may be supplied to consumers along with product's package with a request to
supply information. These methods are not used extensively due to poor response from the
consumers. Normally, the questionnaire is posted to the address of the consumer and he is
requested to supply information by answering the questions asked.
Mail/post office is used as a medium for the conduct of survey and hence it is rightly called mail
survey. This method of survey is a complete antithesis of the personal interview. Here, the
interviewers are not involved and naturally away from interviewer's bias. Wide area can be
covered as postal facility exists in the whole country.
National surveys can be conducted through mail survey as contact with large number of
respondents is possible with the medium of post office. Mail survey needs to be planned properly
for positive response from the respondents. Similarly, questionnaire prepared for the collection of
information should be ideal/promising.
Mail survey is economical as compared to personal interview. The respondents are given full
explanation of the purpose of the survey with a request to give necessary co-operation by
supplying required information in the space provided in the questionnaire itself. Stamped
envelopes (reply paid envelopes) are also sent along with the questionnaire for quick response
from the respondents. Care is also taken to see that the respondent remains anonymous. In the
questionnaire, alternate replies are suggested and the respondent has to make tick marks on the
questionnaire itself. This gives convenience in the tabulation work as the use of computers for
tabulation is possible.
Sometimes, small gift is also offered to respondents in order to have positive response from them.
The respondent can study the questionnaire leisurely and give replies independently as per his
desire. Naturally, the replies are given carefully and without pressure/tension. It is possible to
contact respondents from different parts of the country by preparing a comprehensive mailing list.
Mail survey method is now extensively used for marketing research.
Lengthy questionnaire should also be avoided in mail survey as respondents may not like to
answer a long questionnaire. Questionnaire should contain "control" questions which indicate the
reliability of the respondent. Finally, questions of personal nature should be avoided. In mail
survey, the response from the respondents largely depends on the quality of questionnaire
prepared and hence special attention should be given to this aspect. In fact, the success of mail
survey mainly depends on the manner in which the questionnaire is drafted.
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(2) Wide coverage: In mail survey, wide geographical area can be covered by survey as postal
facilities are available all over the country. Information can be collected from large number of
respondents spread over the whole country by preparing a comprehensive mailing list.
Information can also be collected from those with whom face to face interview is not possible.
(3) Speed in data collection: Mail survey method has a speed. Large number of respondents can
be contacted within a short period and information can be collected from them within a
reasonable time. It is possible to send hundreds of questionnaire within a week and
information will be available from many of them.
(4) Avoids interviewee’s bias: In mail survey method, interviewees bias and errors are
eliminated. Guidance/hints are not given to the respondents. As a result, first hand reliable
information is available for survey purpose. This improves the quality of research work and
the conclusions drawn.
(5) Convenience to respondents: Respondents can answer the questionnaire at their own
convenience. They can supply information even while remaining anonymous. Respondents
are likely to be more thoughtful as they have not to give answers on the spur of the moment.
Thus convenience to respondents is one major advantage of mail survey technique.
(6) More information available: It is possible to collect more information by using both open
ended and close ended questions in the mail survey questionnaire.
(7) Investigators not required: The services of investigators can be dispensed with as personal
contact with the respondents is not required in the case of mail surveys. Expenditure on staff
training and supervision on survey work is also eliminated.
(8) Simple and direct method: Mail survey method of data collection is extremely simple, clear
and direct as only questionnaires are to be sent as per the mailing list prepared. If necessary,
reminder may be sent to the respondents but this expenditure will be limited.
(9) Centralized control: Mail surveys are often conducted from a single office and this brings
centralized control on the whole survey work.
(10) Convenient to medium/small companies: Mail survey method is convenient to small and
medium sized companies. It can be used conveniently for collecting information from
consumers spread over a wide geographical area.
(11) Views of family members available: In mail survey, views of respondents as well as of their
family members are collected as they participate while giving replies. Moreover, as
respondents remain anonymous, they are likely to give honest replies.
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LIMITATIONS OF MAIL SURVEY:
(1) Problem of "No replies": "No replies" is one major disadvantage of mail survey.
Respondents do not take interest in the survey work and do not send the replies. Very few give
positive response to the questionnaire. Others send replies only when reminder is sent. Many
others do not send replies at all. Some others give incomplete response by not answering all
questions asked. Thus, poor response to mail questionnaire (High non-response rate) is one
important disadvantage of mail survey.
(2) Updated mailing list required: For mail survey, up-to-date and comprehensive mailing list
covering cross section of the society is necessary. The researcher may not have such accurate
list of respondents at the state or national level. This affects the area covered by the survey.
(3) Poor response, if questionnaire is defective: Questionnaire acts as a base of mail survey.
The response will be limited if the questionnaire is too lengthy or if it contains difficult and
confusing questions. Sometimes, busy persons ask their assistants to give replies. This affects
the quality of mail survey conducted.
(4) Lacks accuracy of information: In mail survey method the researcher cannot verify the
accuracy of the information given by the respondents as he has no control on the respondents.
There may be inconsistency/ambiguity in the answers given. The researcher has to accept or
reject the information supplied.
(5) Limited use: Mail survey method is of limited use in qualitative study or in causative
research.. For probing psychological motivation, mail survey method is not suitable.
(6) Effects of ambiguous questions: There is a possibility that some questions may not be
understand by large majority of respondents. This may be due to ambiguity in the questions
asked. As a result, the respondents may not give answer or may give answer which may not be
correct or relevant. This affects the final outcome of the survey.
(7) Changes in questions not possible: It is rather impossible to amend the approach or questions
or their wordings once the questionnaire is issued to the respondents. This brings rigidity in
the survey work. Required information about certain aspects of the survey may not be
available if the questions asked are confusing.
(8) Not suitable when quick information is required: Mail survey is not convenient when the
researcher needs information quickly i.e. within two or three days. Mail survey is normally a
time consuming activity. In addition, postal delays are quite common.
(9) Non-verbal responses are not noted: It is not possible to gather non-verbal responses in the
case of mail survey. The benefit of personal observation by the interviewer is also not
available.
(10) Not suitable for spontaneous answers: Mail survey is not suitable when the researcher is
interested in the spontaneous answers from the respondents.
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(b) TELEPHONE SURVEY
Telephone survey is a quick and economical method of survey as response is immediate and wide
area can be covered without actual travelling to different places and parties. Telephone survey is
similar to personal interview but personal contact with the respondents is absent. It is used as a
substitute for personal interview. Originally the use of telephone was restricted to monitoring
audiences for radio and TV programmes. Now, telephone is used for collecting information on
marketing problems. Industrial surveys and trade surveys are also conducted by using this
method. Computer-Assisted Telephone Interviewing (CATI) and Direct Computer Interviewing
(DCI) are new developments in the field of telephone surveys.
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LIMITATIONS OF TELEPHONE SURVEY:
(1) Brief questionnaire required: In telephone interview, the questionnaire must be brief
because lengthy interview with the respondent is not possible. As a result, telephone interview
is useful for collecting limited information on specific points as the length of telephone
interview is always very short. A respondent can close the conversation quickly as per his
desire.
(2) Limited / Brief information available: In telephone interview, the replies given by
respondents are always brief and limited information is given. The communication with the
respondents is oral/verbal. Detailed discussion is not possible. Interview length is limited. This
narrows down the scope of survey. There is time limit for telephone interview. Even visual
aids cannot be used in telephone survey.
(3) Difficult to contact large number of respondents: It is difficult to contact large number of
respondents, as many persons do not have telephone facility. As a result, the coverage of
survey is limited. Similarly, many people may not be willing to talk over telephone. This
restricts the scope of telephone survey.
(4) Non-verbal responses are not available: In this method, observation of respondents is not
possible. As a result, non-verbal responses cannot be seen and noted.
(5) Non-availability of proper sample: In telephone survey, it is difficult to get a representative
sample. It is only the list of telephone subscribers which can used for selecting samples.
(6) Limited coverage of sample: Respondents from remote places cannot be contacted by this
method. Even poorer sections of the society are not covered by telephone survey.
(7) Limited questions: Questions of very personal nature or questions requiring lengthy answers
cannot be asked in telephone interview. This makes the interview incomplete. Bias on the part
of respondent is also possible.
(8) Interviewer’s bias: There is a possibility of interviewer's bias in this survey method.
(9) Difficulty in checking validity of information: It is difficult to check the validity of
information supplied on phone. Even the person on telephone may not be the real respondent.
The backbone of personal interview is the questionnaire prepared for specific survey. The
interviewer uses this questionnaire as a base and collects the required information from the
respondents.
For effective and purposeful personal interview, the interviewer needs proper education and
training. He must ask the questions properly and encourage the respondent to supply maximum
possible information. He should also note the additional information, if any, supplied by the
respondent. The interviewer should be aware of the purpose for which the survey is being
conducted.
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The outcome of personal interview largely depends on the ability, maturity and sincerity of the
interviewer. The response from the respondent largely depends on the interest and initiative of the
interviewer and the manner in which the interview is being conducted by the interviewer.
Personal interview method is certainly superior as compared to mail / telephone survey methods
of data collection. There is direct communication in personal interview and the interviewer is in a
position to collect additional information about the subject matter of research project and also
about the respondent. This method is costly and time-consuming but is treated as an ideal method
as it provides maximum possible information from the respondents. As a result, personal
interviewing retains its long held dominance across a wide spectrum of surveys - market, social,
political.
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freely about certain topics in an informal manner. The term depth interview is used as the
interviewer desires to discover underlying motives/desires of the respondents. Such interviews
are usually undirected and require maturity, skill and experience on the part of the interviewer.
In addition, it is a time consuming interview. Depth interviews are costly and are used for the
group interviews rather than for individual interviews.
In depth interview, the respondent is allowed to say what he knows or feels about the product
or subject matter of discussion. The respondent is assessed (his behaviour or thinking process)
through supplementary questions. Prepared questionnaire is not used by the interviewer but he
is given a list of issues to be covered in the interview.
The questions asked in the depth interview are not identical. Here/ the data collected is
qualitative and not the quantitative one. In depth interview, the respondent is encouraged to
talk freely and the interviewer takes the position of a good listener. He has to find out inner
motives and feelings of the respondents.
(B) Group interviewing consists of inviting a group people together for interview purpose. Group
interview is also called group discussion. Information is collected jointly from them by a
trained moderator. Group interview is a faster technique of interviewing as compared to
individual interview In group interview, a group of 8 to 12 respondents is formed and
information is collected collectively from the whole group It is a non-structured and informal
type of group interviewing and is useful for data collection on human behaviour and
motivation Here, the assumption is that people talk more freely/openly when in groups
Focused Group Interview/Discussion: In the focus group interview the attention of group
members is focused/concentrated on some particular problem/ product/topic and the group
discussion is directly and closely related to the topic/product/problem The group leader
(moderator) has to use his skills etc and see that the discussion do not move away from the
main problem and that necessary information is available from the group The group
discussion is tape recorded or video-taped The required information is collected from the tapes
and conclusions are drawn The group selected for interview/discussion is called focus group
and information is collected from the group as a whole. Though the term focus group
interview is used here, the interviews of group members are not taken as per the usual style.
The whole group is treated as one unit and a specific problem/topic is discussed by the group
as a whole. In this sense, the terms focus group interview and focus group discussion need to
be treated as identical.
Focused interview (discussion) is a type of free interview in which a greater degree of control
is applied to the course of the interview. Here, the interviewer puts a number of related
questions to the respondents and tries to get information on all points at one time. The
attention of the respondent is focused on limited number of inter-related questions. The
respondent is given an opportunity to express his views freely but on limited number of
questions/points. Unnecessary and unwanted discussion during the interview is avoided. The
information and views expressed by the respondent are noted clearly and correctly by the
interviewer. Focused interview is more precise, clear-cut and to the point. It reduces the time
of interview but the information on important points is collected from the respondent.
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Focused interview is superior to free interview as unnecessary questions, conversation and
irrelevant information are avoided. Along with this, adequate scope is provided for discussion
on important matters on which the attention of the respondent is to be diverted.
ADVANTAGES/MERITS OF PERSONAL INTERVIEW:
(1) Flexibility: In personal interview, the interviewer can bring flexibility in his data collection
process. There is closer interaction between the respondent and the interviewer. Questions
can be adjusted as per his need and maximum possible information can be collected. This
makes the survey work purposeful.
(2) Better co-operation from respondents: In personal interview, the interviewer gets better co-
operation from the respondent due to face-to-face communication. Additional questions can
be asked for securing more information. The respondent also speaks freely about his
opinions/views.
(3) Benefit of longer duration interview: Personal interview is usually of a longer duration. The
purpose of survey can be explained and detailed questions are asked thereafter. In the case of
very positive response, supplementary questions can be asked. The information collected is
also reliable as it is first hand information. Even the interviewer can note the family
information such as home atmosphere, education and age of the respondent, through personal
observation during the course of personal interview.
(4) Availability of reliable and detailed information: In personal interview, the information
collected is usually detailed and reliable. Detailed information is also collected through
personal interview as the respondent has enough time to supply the necessary information. It
is possible to seek clarifications on any point on the spot.
(5) Better quality response: In personal interview, the quality of response is always high as
compared to mail survey. Meeting with the respondent is possible on a holiday or with
previous appointment. Once the interview starts, the respondent takes interest and gives
answers to questions placed before him.
(6) Personal questions can be asked: In personal interview, personal questions can be asked
tactfully. Similarly, questions of lengthy answers can also be asked during the interview. This
facilitates collection of adequate information.
(7) Products can be shown/demonstrated before recording response: In personal interview,
products, advertisements, etc. can be shown or demonstrated to the respondents in order to
collect required information. Even visuals aids can be used during the interview.
(8) Suitable when information from limited respondents is to be collected: Personal interview
method is convenient when detailed data need to be collected from a relatively small number
of people. The respondents can be selected properly.
(9) Improves quality of research work: The conclusions drawn from the1 data collected through
personal interview are more accurate. The delta collected can be checked properly.
Moreover, the reactions and attitude of the respondents can also be noted correctly.
(10) Non-verbal responses are observed: Personal interview serves as an opportunity available to
the interviewer to observe respondents non-verbal responses. Facial expressions, body
movements, gestures and voice modulation are clearly visible in personal interview and can
be noted on the interview sheets. Even the spontaneous reactions of respondents can be
noted.
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within one day by an interviewer. Supervisors are required to be appointed on the interviewers
for effective control. Thus, it is a costly method.
(2) Time consuming: Personal interview method of data collection is time-consuming. The
interview time may be of 15 to 30 minutes but the interviewer has to spend time on travelling,
etc. Naturally the survey work takes a longer duration.
(3) Information supplied may not be accurate: The information supplied by the respondents
may not necessarily be accurate as they have to supply information on the spot. The answers
given by the respondents may not be fully supported by facts. The respondent may give
inadequate information due to personal reasons. This is likely to affect the final outcome of
the survey.
(4) Long-term planning required: Personal interview needs long term planning and fixing of
prior appointments with the respondents. The complicated scheduling must be followed
strictly.
(5) Effective supervision on interviewers required: Effective supervision on large number of
interviewers appointed may not be possible due to large geographical area covered by the
survey work. The investigators may not work sincerely if supervision on them is
inadequate/ineffective. Insincere interviewers can produce high level of spoiled work.
(6) Danger of personal bias: There is a danger of personal bias when the interview is conducted
personally. This may be due to wrong selection of samples. It may also arise if the
investigators are dishonest and try to suggest possible answers to the respondents. In brief,
there is a possibility of interviewer bias or respondent bias in the personal interview method.
(7) Possibility of rush interviews: There is a possibility of rush interviews by the interviewers.
This is possible when they are given heavy interview target per day. This is also possible if the
interviewers are paid in proportion to the interviews completed per day. Finally, rush
interviews are possible if the questionnaire is too lengthy. However, this affects the quality of
survey work.
(8) Respondents from cross section of the society may not be available: For personal
interview/people from all sections may not be available. Busy executives, industrialists and
professionals are not easily available as samples for the survey work.
(9) Information supplied may not be recorded properly: Sometimes, information supplied by
the respondents is not recorded properly. The interviewers may record the information after
completing the interview. Mistakes in recording actual replies is possible. This leads to wrong
conclusions in the final research report.
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(2) Depth interviews can be conducted properly only by skilled, experienced and matured
interviewers.
(3) Findings of depth interviews cannot be quantified.
(4) The attitudes, motives and desires expressed under research conditions may change in actual
buying situations. Thus, depth interviews may not give correct answers to all MR problems.
(5) The art of depth interviewing is difficult/complicated and needs proper background of
knowledge and training.
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which are easy should be asked first. This creates proper atmosphere for the interview and
encourages the respondent to give positive response to the questions asked. The respondent
should be encouraged to speak freely and frankly.
(4) Proper recording of replies: The information supplied by the respondent should be recorded
in full. Additional information supplied should also be recorded properly. The remarks based
on the observations by the interviewer should also be noted by the interviewer at suitable
places.
(5) Trained interviewers should be appointed: The interviewer should be properly educated
and well trained in the art of interviewing. Adequate and reliable information is available only
when the interview is conducted in an orderly manner.
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(9) Ability to record: An interviewer has to record the information supplied by respondents
precisely, correctly, fully, promptly and without colour or bias Thus, he needs ability to
record information supplied with precision
(10) Ability to communicate: An interviewer should be a good communicator He needs oral
communication skills so that the respondent can easily understand what he (interviewer)
wants Ability to communicate properly brings positive response from the respondent This
suggests that an interviewer needs the ability to communicate the right information in the
right manner He also needs knowledge of local/regional language for easy communication
with the respondents
(11) Knowledge of business world: An interviewer needs atleast working knowledge of business,
sales, advertising, market competition and so on He should be clear in his mind as regards the
nature and purpose of his survey Marketing research relates to marketing and allied problems
and an interviewer certainly needs adequate knowledge of such problems.
Panel research offers certain benefits. For example the buying behaviour of selected consumers
can be studied through panel. The changes in the behaviour can be analysed through panel
research. However, panel research will be effective only when the panel members are co-
operative and provide reliable information when requested. Members of the panel may not find it
convenient to give information again and again. They may treat this as botheration and may not
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supply timely and reliable feedback.In spite or such limitations, panel research method is used in
many marketing research projects
The selection of panel members is usually made on the basis of age/ economic status, likes and
dislikes, etc, of consumers and is used for data collection regularly over a long period. It is a
permanent sample of respondents for research work and may include individuals, housewives,
households, dealers or firms from whom information is collected periodically. The panel members
also agree to co-operate by providing their views on different topics from time to time
The other term used for consumer panel is Omnibus Panel It means a fixed sample of respondents
who are interviewed (for information collection) on different variables over a period of time The
information is collected from the respondents on certain matters such as purchases made, price
paid, reactions on the products purchased, shopping behaviour, etc Suitable conclusions are drawn
on the basis of information collected
According to Ronald M. Weiers, "Panels consist of persons, households or business firms who
report their purchasing activities at periodic intervals over time and who are typically selected
based on a combination of their willingness and representativeness". A consumer panel may be
defined as "a group of consumers who voluntarily agreed to be interviewed on the same topic or
on different topics from time to time for data collection regularly and continuously".
Panel method can be used effectively in order to study consumer behaviour under different
situations. It also facilitates continuous study of behaviour of consumers over a particular period
The reactions of consumers to the product, its quality, packaging, advertising, pricing, etc can be
studied continuously through consumer panel method Consumer expectations can be studied with
reasonable accuracy through such panels
Consumer panel method gives reliable information for policy decisions on marketing There is
close communication with the respondents This facilitates a continuous check on the record of
consumer behaviour over a specific period The reactions of consumers are regularly recorded for
policy decisions Some manufacturers supply samples of new products to panel members for
testing. The reactions of members are collected through personal interviews Sometimes, cash
prizes/gifts are given to panel members as incentive and thereby they are induced to give better
co-operation in the survey work For better results, the panel members should be selected with
proper care.
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Panel members are expected to keep correct record of their purchases in the diaries specially
provided to them The diaries of consumers are collected periodically for review and for studying
information regarding the items purchased with details like prices, quantities, preferences and so
on This provides information regarding the pattern of purchases and expenditure incurred on
different items In addition to the study of diaries, personal contact is also kept with the panel
members for the collection of additional information from them
The consumers selected for purchase panel are usually housewives and they are asked to write
down every day what they actually buy and to send the diaries periodically for review purpose
The diaries provided are carefully designed for the convenience of panel members
Purchase panels are used by manufacturers, marketing research firms and government
departments Such panels may be formed in the case of consumer items which consumers purchase
frequently and also in large quantities
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The popularity of programmes or the reactions of viewers can be judged with the help of such
panels Even the effectiveness of radio and TV advertising can be judged through such audience
panels The most famous media audience panel is one which is operated by the A. C. Nielson
Company (USA). In European countries, such audience panels are used extensively to study the
expectations of radio and TV audiences
In India, advertising agencies are using the technique of audience panels for the benefit of their
clients Such panels are used in the case of radio and TV advertising
Dealer panels are also useful for collecting data regarding retail sales, inventories and prices. The
total sales of products and the share of a particular brand, etc., are also available from such dealer
panels. Dealer panels offer valuable guidelines for the selection of suitable outlets for efficient
marketing of products. Dealer panels are formed by manufacturers and information is collected
from the dealers through diaries and also through personal interview. Dealer panels are useful for
framing marketing policies for large-scale distribution of goods/services.
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(ORG), Baroda conducts retail audit on an extensive scale. It is useful to producers of food items,
drugs, pharmaceuticals and confectionery.
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characteristics is not easy. The new members selected may be different and this affects the
quality and accuracy of the whole project.
(5) Panel members behave like experts: The members of the panel become sophisticated and
also consider themselves as experts or professional testers. This harms the quality of research
work.
(6) Costly/expensive: Consumer panel research is rather expensive. It requires continuous efforts
to build up and maintain the panel. Giving product for testing or a small gift to large number
of panel members is costly. In India, only large companies like Hindustan Lever Limited do
have consumer panels.
(f) AUDITS
Audits involve the physical inspection of inventories, sales receipts, shelf facings, prices, and
other aspects of the marketing mix to determine sales market share, relative price, distribution, or
other relevant information
1. Store Audits
The simple accounting arithmetic of
Opening Inventory + Net Purchases (receipts - transfers out / “returned inventory”) - Closing
Inventory_______________ _____________________________________
Sales
is the basis for the audit of retail store sales. The most widely used store audit service is the
Nielsen Retail Index, it is based on audits every 30 or 60 days of a large national sample of food,
drug, and mass merchandise stores. The index provides sales data on all the major packaged
goods product lines carried by these stores-foods, pharmaceuticals, drug sundries, tobacco,
beverages, and the like (but not soft goods or durables). Nielsen contracts with the stores to allow
their auditors to conduct the audits and pays for that right by providing them with their own data
plus cash
The clients receive reports on the sales of their own brand and of competitors' brands, the
resulting market shares, prices, shelf facings, in-store promotional activity, stock outs, retailer
inventory and stock turn-around, and local advertising These data are provided for the entire
nation - by region, by size classes of stores, and by chains-versus independents. The data are
available to subscribers on-line via computer as well as in printed reports
2. Product Audits
Product audits, such as Audits and Surveys' National Total Market Index, are similar to store
audits but focus on products rather than store samples. Whereas product audits provide
information similar to that provided by store audits, product audits attempt to cover all the types
of retail outlets that handle a product category. Thus, a product audit for automotive wax would
include grocery stores, mass merchandisers, and drugstores (in this way it is similar to the Nielsen
store audits) In addition, it would include automotive supply houses, filling stations, hardware
stores, and other potential outlets for automotive wax.
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shelf facings, and other relevant data for selected product categories. NRTI (Erhandt-Babic) and
BOS (Burgoyne Inc.) are the suppliers of this type of data.
.
OBSERVATION METHOD
MEANING OF OBSERVATION METHOD:
Observation method (observational research) is one extensively used method of primary data
collection. Observation research means gathering of primary data by observing relevant people,
actions and situations. According to Oxford Dictionary, observation means "accurate watching
and noting of phenomena as they occur in nature with regard to cause and effect or mutual
relation". It is the classical method of investigation widely practiced by scientists and social
investigators. Here, consumer behaviour is observed directly and conclusions are drawn. As a
result, the defects inherent in direct questioning are avoided.
Observation method is more objective as it is based on accurate watching and noting the details of
behaviour of consumers. It eliminates subjective element encountered with questionnaire method.
Observation means "an act of recognizing and noting/acts a/occurrences." Personal behaviour of
respondents can be observed with the help of observation. A consumer packaged goods marketer
for example, may send his representative to supermarkets and observe shoppers as they look at the
product, examine the packages and make actual buying decisions.
Observation involves recording of events/actions as they take place in the environment. Here, data
are collected by observing consumers involved in an activity in their natural environment.
Consumers are not aware that they are being observed / watched by the observer stationed in the
shop for this purpose. He records his observations about the behaviour of customers without their
knowledge. Naturally, the data collected are accurate and dependable. A consumer may be
observed while purchasing soap or toothpaste at a retail shop.
Observation is also possible while selecting a specific product or brand. Here, the behaviour of the
consumer at a market place is studied in detail. Naturally, co-operation of respondents is not
necessary. It is the observer who takes the notes of things as they happen. In the observation
method, the researcher records "what is happening rather than what has happened or what is
going to happen."
Observation method can be used to study customer movement, customer responses in retail shops,
stock audit in retail stores and sales technique. However, interview may be used as a follow-up to
get additional information. In fact, observation acts as a good supplement to other methods used
for data collection. For instance, customers are observed buying toothpaste or soap in small
packets instead of large packages. They may be asked why they prefer small packages rather than
large packages.
Observation is a process of noting people, objects and occurrences rather than directly asking for
information. For example, instead of asking consumers what brand they buy, the researcher
arranges to observe their behaviour at the sales counter and the way in which they select a
particular brand. In addition, hidden video cameras, one-way mirrors, assessment of wear and tear
of flooring in display areas are some more methods used in mechanical observation. Closed video
monitoring is a common technique used in the observation method of primary data collection.
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Scientific observation is always purposeful, economical and immensely useful to researcher. The
observers appointed should be skilled, properly trained and instructed. Such observation of
consumers is possible in the retail shops, co-operative stores and also in the departmental stores
where large number of consumers come frequently.
In the observation method, more stress is on noting, watching and understanding and not on
asking questions. Observation is possible through individual observers (live observation) or
through mechanical devices like audiometer. In personal observation, the researcher poses as a
customer and observes others. In mechanical observation, eye cameras or scanners are used.
METHODS OF OBSERVATION:
Methods/Types of observation (as per techniques used, place and purpose) are as explained
below:
(1) Simple Direct Observation: Here, the observer looks and acts like a shopper. The other
regular shoppers do not realise that they are being observed. Thus, the observer studies the
purchase procedure and the behaviour of the customers while they purchase goods. It is a
simple, easy and direct method of observation. The behaviour of a person/customer is
observed as it occurs.
(2) Indirect Observation: Indirect observation is meant to study the past behaviour. This is
possible with the help of past records, films, photographs, etc. Films are frequently used to
study past behaviour of shoppers, etc. In indirect observation, some record of past behaviour
is observed. Here, the behaviour itself is not observed, but its effects are observed. In indirect
observation, the observer looks for physical traces of behaviour or occurrence of an event.
For example, in order to find out liquor consumption in a household, an observer would like
study the empty liquor bottles in the garbage. The success of indirect observation depends on
how best the observer is able to identify physical traces of the problem under study. Direct
observation is very common than indirect observation.
(3) Structured Observation: Here, the purpose of observation is clearly defined and the observer
knows what to observe as regards the consumers who are busy in their shopping work. The
observations to be made are clear to the observer and the observations will be completed
accordingly.
(4) Unstructured Observation: Here, the observer observes whatever he thinks pertinent It is
similar to unstructured questioning The observer is clear about his objectives and he conducts
observation activity accordingly
(5) Mechanical Observation: Here, observation is made with the aid of electro-mechanical
devices. Such observation may be recorded or live A number of mechanical devices for
making observation have been developed Audiometer, eye camera, pupilometric camera,
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tape-recorder, VCR, psycho-galvanometer are some such devices used in mechanical
observation Mechanical observation is economical and more accurate as compared to human
observation
(6) Manual / Human Observation: Human observation is done manually Here, human beings
are appointed to observe and record the data It is a simple type of observation by a specially
appointed observer He does observation without the use of electromechanical devices The
human observations are carried out as per the guidelines provided to the investigator
Mechanical observation provides more accuracy However, some special/extra information
can be provided only by a human observer and not by a mechanical device
(7) Disguised Observation (also called Covert Observation): In disguised observation, the
subjects do not know that they are being observed by some specially appointed observer For
example, disguised observation may be made by the observer by posing himself as one of the
shoppers who are being observed This type of observation is preferred as people (shoppers)
may behave differently when they know that they are being observed Here, the purpose of
observation is not disclosed to the respondents They are also not aware of the fact that they
are being observed for some specific purpose Disguised observation method may be used by
the researcher when he feels that his presence may affect consumer behaviour or may spoil
the whole data collection process An observer, for example, may enter the shop as a regular
customer and may interact with fellow consumers without disclosing ins identity and purpose
of interaction In undisguised observation, the purpose of observation is brought to the notice
of respondents before the commencement of observation
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(2) Human errors possible: Observational methods are used by observers who are human beings
and are subject to errors and mistakes. Even highly experienced observers are likely to make
mistakes while observing their respondents.
(3) Purpose is defeated, if secrecy is not maintained: In some observational studies, the
respondent gets the idea that he is participating in a test. He knows that he is being observed.
Such situation will defeat the every purpose of observation.
(4) Costly method under certain situations: Observational method is economical when used for
observing events occurring rapidly. It proves to be costly when the events to be observed do
not occur at rapid intervals. In addition, properly trained observers are required to be
appointed. This makes survey work expensive.
(5) Observer's bias: Field observers bias may creep in and thereby making the observations
faulty. Even faulty observation by the observer may prove to be dangerous.
(6) Limited application: Observation method has limited application. It tells about what actually
happened but it cannot tell as to why it so happened
(7) Needs support of personal interview: Observation method needs the support of personal
interview in order to understand the motives, attitudes and opinions of individuals/consumers
It is useful as a supplement of personal interview method
EXPERIMENTATION METHOD
MEANING AND FEATURES OF EXPERIMENTATION METHOD:
In scientific inquiry, research is primarily centered on controlled experiments. Experiments are a
special form of survey and/or observation method where respondents are asked questions about
some controlled conditions or their reactions to some controlled conditions are observed In
experiments, the researcher alters the environment and measures the effect of these
alterations/manipulations Experimentation may be defined as "a process where events occur in a
setting at the discretion/option of the researcher and controls are used to identify the sources of
variation in respondent's response " Experimental research is best suited for gathering casual
information It tries to explain cause-and-effect relationships Experimentation method is used
extensively in scientific research and also used in marketing research It is now used in order to
remove one primary weakness of observational method which relates to the influence of
uncontrolled factors Experimentation method is useful for the collection of data which cannot be
collected by survey method or observation method The scope for experimentation is limited in
MR as the ideal experimental conditions of laboratory testing are virtually impossible in the field
of marketing. Marketing relates to human behaviour which is difficult to predict precisely
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ii. Package design
iii. Pricing policies
iv. Distribution policies
v. Promotion policies.
Experimentation method of MR can be applied most suitably to certain problems like training and
remuneration of salesmen, shelf display arrangements, package designs and advertising copy.
Experimental marketing (test marketing) can be used to study the effect of certain sales promotion
techniques such as premium, brand, package design and colour combination. The use of lengthy
experimental methods is limited in India. This is due to heavy cost involved in them. Many
companies now select smaller towns like Pune or Indore for test marketing. Certain techniques,
such as split-run for evaluating alternative advertising copy are also used to a considerable extent
in India.
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As regards experimentation there is an attempt to measure the effect of one or more variables by
changing the level of some variables and measuring the effects e g / post-testing effectiveness of
an advertising campaign In order to know how well brand of the product is recorded in the mind
of consumers, it is possible to measure brand awareness among a sample of target respondents
This effort would be called experimentation
Experimental Design
Experimental design involves obtaining the proper information within an acceptable accuracy
range for a cost that does not exceed the value of the information. It ensures that each
experimental treatment is used within each classification of test units and each classification of
extraneous forces is applied equally to all test units
Experimental design originated in the field of agricultural research R. A. Fisher made significant
contribution by stating that the practices prevalent for the measurement of output from plots of
land could not provide unbiased and unambiguous findings Now experimental design is used in
all areas of business
2. Precision
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A good experiment should have maximum precision. The indicator of precision is the magnitude
of standard error, which should be sufficiently small.
3. Range of Validity
To the extent possible, an experiment should be valid in a wide range of conditions so that the
researcher can have a high degree of confidence in its results. An experimental technique that
gives encouraging results in a certain setting may not give favourable results when conditions are
different.
4. Simplicity
If an experiment is a complicated one, it will be difficult to carry it out properly without the help
of trained and qualified personnel. It is, therefore, desirable for the experiment to have a simple
design, particularly when it is to be performed by relatively unskilled people. Also. it is desirable
to use relatively simple methods in the analysis of data.
(2) Type of primary data required: One important factor influencing the selection of method is
the type of primary data required for example, qualitative interview is very convenient
method for collecting information on personal motives while telephone survey is convenient
for collecting facts about radio or TV listening by people. Published data can be used if
population data at the national level are required for research purpose.
(3) Cost consideration of research project: MR is always subject to financial support available
to the project. The method which is suitable to the funds available needs to be selected. For
example, desk research is least expensive, but field investigation is expensive. Similarly,
observation methods are more expensive then the experimental methods. In short, the budget
provision need special consideration while selecting the method of research work.
(4) Time consideration of the project: Some methods of MR or data collection are quick while
others are time-consuming. This factor needs attention while selecting a research method.
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Field investigation is time-consuming and should be used when sufficient time is available
for the completion of research project. Thus time available for research work is one major
factor which needs careful consideration while selecting the method for data collection.
(5) Physical resources available: Such resources include personnel and administrative
machinery available with the researcher. For example, if there is shortage of skilled
interviewers, the postal survey method is preferable. Similarly, field investigation method
should be used when a researcher with knowledge of statistics is available. Observation and
experimental methods can be used only when skilled and technically qualified persons are
available.
(6) Approach of the company: The approach of the company behind conducting research work
is one important factor which needs consideration while selecting the research method. For
example, a company conducting consumer-oriented marketing research should try to go as
near to the consumers as possible. For this, personal interviews are suitable. For collecting
general information from the consumers, mail order survey is adequate.
(7) Availability of machinery for processing information: The data collected need to be
processed properly. An organisation with suitable facilities for processing the information
collected should use field investigation methods. In the absence of such facilities, desk
research is convenient.
(8) Type of sponsoring organisation: A big organisation with independent marketing research
department and well-trained staff can select any direct method for research work. In the
absence of such department, the research work should be given to an outside expert agency
like advertising agency.
(9) Coverage of research project: Some research projects have wide coverage. In other cases/
the samples to be examined may be less but detailed information is required to be collected.
The method needs to be selected accordingly. For example^ if the sample is large and the
information to be obtained is simple/ a postal questionnaire is convenient. Personal interview
is suitable when detailed information is required to be collected from limited respondents.
(10) Research facilities available: The marketing research department can conduct research
work independently only when it has a competent machinery to analyse and interpret the data
for drawing conclusions. In the absence of such machinery, the research project should be
handed over to a competent professional agency.
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RESEARCH DESIGNS
The next step after stating the management problem, research purpose, and research hypotheses
and questions, is to formulate a research design. The starting point for the research design is, in
fact, the research questions and hypotheses that have been so carefully developed. In essence, the
research design answers the question: How are we going to get answers to these research
questions and test these hypotheses? The research design is a plan of action indicating the specific
steps that are necessary to provide answers to those questions, test the hypotheses, and thereby
achieve the research purpose that helps choose among the decision alternatives to solve the
management problem or capitalize on the market opportunity
The second definition includes three important terms - plan, structure and strategy. The plan is the
outline of the research scheme on which the researcher is to work. The structure of the research
work is a more specific scheme and the strategy suggests how the research will be carried out i.e.
methods to be used for the collection and analysis of data. In brief, research design is the blueprint
of research. It is the specification of methods and procedures for acquiring the information needed
for solving the problem. Questionnaires, forms and samples for investigation are decided while
framing research design. Finally, the research design enables the researcher to arrive at certain
meaningful conclusions at the end of proposed study.
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The cost calculation is a complicated job as expenditure on different heads will have to be
estimated accurately. The cost of the project also needs to be viewed from the viewpoint of its
utility in solving the marketing problem. A comprehensive research study for solving
comparatively minor marketing problem will be uneconomical.
Preparing time schedule is not adequate in research design. In addition, all operations involved in
the research work should be carried out strictly as per time schedule already prepared. If
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necessary remedial measures should be adopted in order to avoid any deviation in the time
schedule. This brings certainty as regards the completion of the whole research project in time.
After deciding the details of the steps noted above, the background for research design will be
ready. Thereafter, the researcher has to prepare the research design of the whole project. He has to
present the project design to the sponsoring agency or higher authorities for detailed consideration
and approval. The researcher can start the research project (as per design) after securing the
necessary approval to the research design prepared.
Choice of design type is not determined by the nature of the strategic decision faced by the
manager such that we would use research design A whenever we need to evaluate the extent of a
new product opportunity, or design B when deciding on which of two advertising programs to
run. Rather, choice of research design is influenced by a number of variables such as the decision
maker's attitude toward risk, the types of decisions being faced, the size of the research budget,
the decision-making time frame, the nature of the research objectives, and other subtle and not-so-
subtle factors. Much of the choice, however, will depend upon the fundamental objective implied
by the research question:
• To conduct a general exploration of the issue, gain some broad insights into the phenomenon,
and achieve a better "feel" for the subject under investigation (e.g.. What do customers mean by
"good value"?).
• To describe a population, event, or phenomenon in a precise manner where we can attach
numbers to represent the extent to which something occurs or determine the degree two or more
variables covary (e.g., determine the relationship between age and consumption rate).
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• To attribute cause and effect relationships among two or more variables so that we can better
understand and predict the outcome of one variable (e.g., sales) when varying another (e.g.,
advertising).
RESEARCH DESIGN
CONCLUSIVE EXPLORATORY
RESEARCH DESIGN RESEARCH DESIGN
CROSS-SECTIONAL LONGITUDINAL
DESIGN DESIGN
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This classification is frequently used and is quite popular. Before we discuss each of these design
types, a cautionary note is in order. Some might think that the research design decision suggests a
choice among the design types. Although there are research situations in which all the research
questions might be answered by doing only one of these types (e.g., a causal research experiment
to determine which of three prices results in the greatest profits), it is more often the case that the
research design might involve more than one of these types performed in some sequence. The
overall research design is intended to indicate exactly how the different design types will be
utilized to get answers to the research questions or test the hypothesis.
A further cautionary note is needed to warn the reader that while it may appear that if sequencing
is done the sequence would be exploratory, descriptive, then causal, that is not always the case.
For example, some companies may do an annual survey of consumers to determine the frequency
with which certain behaviors are performed (e.g., washing dishes by hand) followed by
exploratory research that probes to gain an in-depth understanding of the circumstances
surrounding that behavior (i.e., descriptive then exploratory rather than exploratory then
descriptive). It is not hard to imagine a research design that might sequence as exploratory, then
descriptive, then exploratory again; or causal, then descriptive. It is important to remember that
because a research design is a plan of action to obtain answers to the research questions, it is those
questions that suggest which design types are necessary and the sequence of conducting those
design types, if a sequence is needed. An example later in this chapter will be used to illustrate
this point. With these cautions in mind we will now discuss the design types in greater detail.
1. Exploratory Research:
A marketing research study may be either exploratory or full scale. Exploratory research is
conducted when the researcher does not know how and why certain phenomenon occurs. Here,
the hypothetical solutions or actions are explored and evaluated by the decision-maker, e.g.
evaluation of quality of service of a bank/hotel/airline. Here, the quality cannot be assessed
directly as tangible features are not available.
The purpose of exploratory research is to know the unknown. Exploratory research determines
fruitful alternatives that the executive would not have perceived. This also narrows down the
scope of the investigation. Exploratory research is undertaken to get the answer to the following
question. "What alternative courses of action might solve the problem and thereby reach the final
objective?" This research is unstructured in character. Exploratory studies are important. They
may provide adequate information on a decision situation or may greatly facilitate the design of
formal research studies.
To explore means to find out or discover. Exploratory research is conducted in order to find out
causes/reasons behind a specific marketing problem. It is the starting point in all types of research
projects. The purpose of exploratory research is to define the marketing problem precisely, collect
required information/data relating to the problem and identify alternative courses of action in
order to deal with the marketing problem. For example, advertising campaign of a company may
not give positive results in terms of sales. The failure of campaign may be due to many possible
causes relating to advertising copy, media selected, faulty pre-testing, faulty illustration give,
wrong timing of ad. campaign or finally inadequate follow-up measures to the ad. campaign. In
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the exploratory research, the possible causes will be identified, the most appropriate causes will
be selected, hypothesis will be developed and research activity will be conducted accordingly.
Survey of consumers, retailers, sales executives and sales-force will be useful for exploratory
research. On some occasions, small scale sales survey may provide useful data for exploratory
research.
In exploratory research, the stress/focus is on the discovery of ideas/causes. For example, sales
may be declining for the last six months. Quick study may be conducted to find out the
causes/factors responsible. Such causes will be listed. Here, an exploratory study/research may be
conducted in order to find out the most likely cause so as to introduce suitable remedial measures.
Once a hypothesis is formulated, research is used to determine if the hypothesis was correct.
Hypothesis is tentative answers to questions that serve as guides for most research projects
Exploratory research may also be involved when the perceived problem is much less general; it is
used to develop the most promising hypotheses. The findings of exploratory research should be
regarded as tentative or as an input to further research. Typically, such research is followed by
further exploratory or conclusive research. The analysis of primary data is qualitative.
In general, exploratory research is meaningful in any situation in which the researcher does not
have enough understanding to proceed with the research project.
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research is to answer the "who, what, when, where and how" of the subject under
study/investigation.
Descriptive studies are normally factual and simple. However, such studies can be complex,
demanding scientific skill on the part of researcher.
Descriptive studies are well structured. It tends to be rigid and its approach cannot be changed
often and again. In descriptive studies, the researcher has to give adequate thought to framing
research questions and deciding the data to be collected and the procedure to be used for this
purpose. Data collected may prove to be inadequate if the researcher is not careful in the initial
stages of data collection.
Descriptive research designs are used for some definite purpose. Descriptive research cannot
identify cause and effect relationship.
Descriptive research is designed to describe the present situation or the features of a group or
users of a product. In marketing, such research is undertaken to know the characteristics of certain
groups or users of a product such as age, sex education, income etc. Such research studies are
based on secondary data or survey research.
The major objective or descriptive research is to describe something - usually market
characteristics or functions
A major difference between exploratory and descriptive research is that descriptive research is
characterized by the prior formulation of the hypotheses. Thus, the information needed is clearly
defined. As a result, descriptive research is preplanned and structured. It is typically based on
large representative samples A formal research design specifies the methods for selecting these
sources of information and for collecting data from those sources.
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9. To discover the relationship between certain variables, e.g. sale of toothpaste among rural
population and urban population or rate of savings among low, middle and higher income
groups.
Field studies are conducted is the life situations such as schools, factories, institutions, etc. Here,
the inter-relations among variables are studied under real setting. The cross-sectional analysis
involves counting the simultaneous occurrence of the variables of interest. Field studies have
certain merits and limitations. The important merit is that such studies are close to real life and
cannot be criticised on the ground that they are away from real settings or are artificial. Filed
studies are also socially significant. However such studies are scientifically inferior to laboratory
and field experiments. There is also lack of precision in the measurement of variables.
Cross-sectional study is possible through survey. Survey research is wide in scope. Detailed
information can be collected from a sample of large population. This method is also economical
as more information can be collected per unit of cost. The time required for sample survey is also
less than a census-inquiry. However, in survey research, more importance is given to information
collection and not to in-depth analysis. Secondly, survey research needs more time and money
when conducted on a large scale.
There are certain limitations of panel data. For example/ panels used for data collection may not
be representative samples. Panel members may not be co-operative or may leave the panel
membership. As a result, the representative character of the original sample may be adversely
affected. Secondly, panel members may report wrong data. Their interest may reduce gradually
and they may supply information in a casual manner. Their sense of participation/responsibility
may reduce. This will affect the quality of data and also of findings.
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Casual research design is the third type of research design. As the name indicates, casual design
investigates the cause and effect relationship between two or more variables. This design
measures the extent of relationship between the variables. Casual research designs attempt to
specify the nature of functional relationship between two or more variables.
Casual research is useful to show the impact of one variable on the other. For example, price and
market demand relationship or relationship between market competition and sales performance.
Even the positive/negative effect of advertising on sales can be studied through casual research.
The relationship between the casual factors can be studied through casual research. In addition,
the variables which create effect on other variables can be studied in depth through casual
research.
Data for casual research can be collected through field survey with the help of a questionnaire or
by conducting laboratory experiments / controlled experiments. Laboratory experiments are
possible in the case of testing of new products or package design.
The casual research design is based on reasoning. The designs for casual research can be divided
into three categories:
(a) Historical
(b) Survey
(c) Experimental.
Research design avoids possible errors as regards research problem, information requirement and
so on. It gives practical orientation to the whole research work and make it relevant to the
marketing problems faced by the sponsoring organisation. Finally, it makes the whole research
process compact and result-oriented. A researcher should not go ahead with his research project
unless the research design is planned properly.
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TESTING OF HYPOTHESES
(Parametric or Standard Tests of Hypotheses)
Hypothesis is usually considered as the principal instrument in research. Its main function is to
suggest new experiments and observations. In fact, many experiments arc carried out with the
deliberate object of testing hypotheses. Decision-makers often face situations wherein they are
interested in testing hypotheses on the basis of available information and then take decisions on
the basis of such testing. In social science, where direct knowledge of population parameter(s) is
rare, hypothesis testing is the often-used strategy for deciding whether a sample data offer such
support for a hypothesis that generalization can be made. Thus, hypothesis testing enables us to
make probability statements about population parameters). The hypothesis may not be proved
absolutely, but in practice it is accepted if it has withstood a critical testing. Before we explain
how hypotheses arc tested through different tests meant for the purpose, it will be appropriate to
explain clearly the meaning of a hypothesis and the related concepts for better understanding of
the hypothesis testing techniques.
MEANING OF HYPOTHESIS
Ordinarily, when one talks about hypothesis, one simply means a mere assumption or some
supposition to be proved or disproved. But for a researcher hypothesis is a formal question that he
intends to resolve. Thus a hypothesis may be defined as “a proposition or a set of propositions set
forth as an explanation for the occurrence of some specified group of phenomena either asserted
merely as a provisional conjecture to guide some investigation or accepted as highly probable in
the light of established facts”. Quite often a research hypothesis is a predictive statement, capable
of being tested by scientific methods, that relates an independent variable to some dependent
variable. For example, consider statements like the following ones:
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"Students who receive counseling will show a greater increase in creativity than students not
receiving counseling" or "the automobile A is performing as well as automobile B”.
These are hypotheses capable of being objectively verified and tested. Thus, we may conclude
that a hypothesis states what we are looking for and it is a proposition that can be put to a test to
determine its validity.
CHARACTERISTICS OF HYPOTHESIS
A hypothesis must possess the following characteristics:
(i) Hypothesis should be clear and precise. If the hypothesis is not clear and precise, the
inferences drawn on its basis cannot be taken as reliable.
(ii) Hypothesis should be capable of being tested. In a swamp of un-testable hypotheses, many a
time the research programs have bogged down. Researcher may do some prior study in
order to make hypothesis a testable one. A hypothesis "is testable if other deductions can be
made from it which, in turn, can be confirmed or disproved by observation."
(iii) Hypothesis should state relationship between variables, if it happens to be a relational
hypothesis
(iv) Hypothesis should be limited in scope and must be specific. A researcher must remember
that narrower hypotheses are generally more testable and he should develop such
hypotheses.
(v) Researchers should state hypothesis as far as possible in most simple terms so that the same
is easily understandable by all concerned. But one must remember that simplicity of
hypothesis has nothing to do with its significance
(vi) Hypothesis should be consistent with most known facts i e., it must be consistent with a
substantial body of established facts. In other words, it should be one which judges accept as
being the most likely
(vii) Hypothesis should be amenable to testing within a reasonable time. One should not use even
an excellent hypothesis, if the same cannot be tested in reasonable time for one cannot spend
a life-time collecting data to test it
(viii) Hypothesis must explain the facts that gave rise to the need for explanation. This means that
by using the hypothesis plus other known and accepted generalizations, one should be able
to deduce the original problem condition. Thus hypothesis must actually explain what it
claims to explain; it should have empirical reference.
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H0: µ =µH0 = 100
If our sample results do not support this null hypothesis, we should conclude that something else
is true. What we conclude rejecting the null hypothesis is known as alternative hypothesis. In
other words, the set of alternatives to the null hypothesis is referred to as the alternative
hypothesis. If we accept H0, then we are rejecting Ha and if we reject H0, then we are accepting
Ha. For H0: µ =µH0 =100, we may consider three possible alternative hypotheses as follows:
The null hypothesis and the alternative hypothesis are chosen before the sample is drawn (the
researcher must avoid the error of deriving hypotheses from the data that he collects and then
testing the hypotheses from the same data).
In the choice of null hypothesis, the following considerations are usually kept in view:
(1) Alternative hypothesis is usually the one which one wishes to prove and the null hypothesis is
the one which one wishes to disprove. Thus, a null hypothesis represents the hypothesis we
are trying to reject, and 'alternative hypothesis represents all other possibilities.
(2) If the rejection of a certain hypothesis when it is actually true involves great risk, it is taken as
null hypothesis because then the probability of rejecting it when it is true is α (the level of
significance) which is chosen very small.
(3) Null hypothesis should always be specific hypothesis i.e., it should not state about or
approximately a certain value.
Generally, in hypothesis testing we proceed on the basis of null hypothesis, keeping the
alternative hypothesis in view. Why so? The answer is that on the assumption that null hypothesis
is true, one can assign the probabilities to different possible sample results, but this cannot be
done if we proceed with the alternative hypothesis. Hence the use of null hypothesis (at times also
known as statistical hypothesis) is quite frequent.
(b) The level of significance: This is a very important concept in the context of hypothesis
testing. It’s always some percentage (usually 5%), which should be chosen, with great care,
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thought and reason. In case we take the significance level at 5 per cent, then this implies that H0
will be rejected when the sampling result (i.e., observed evidence) has a less than 0.05 probability
of occurring if H0 is true. In other words, the 5 per cent level of significance means that researcher
is willing to take as much as a 5 per cent risk of rejecting the null hypothesis when it (Ho) happens
to be true. Thus the significance level is the maximum value of the probability of rejecting H0
when it is true and is usually determined in advance before testing the hypothesis.
(c) Decision rule or test of hypothesis: Given a hypothesis Ho and an alternative hypothesis Ha,
we make a rule which is known as decision rule according to which we accept H0 (i.e., reject Ha)
or reject Ho (i.e., accept Ha). For instance, if H0 is that a certain lot is good (there are very few
defective items in it) against Ha that the lot is not good (there are too many defective items in it);
then we must decide the number of items to be tested and the criterion for accepting or rejecting
the hypothesis. We might test 10 items in the lot and plan our decision saying that if there are
none or only 1 defective item among the 10, we will accept Ho otherwise we will reject Ho (or
accept Ha). This sort of basis is known as decision rule.
(d) Type I and Type II errors: In the context of testing of hypotheses, there are basically two
types of errors we can make. We may reject H0 when H0 is true and we may accept H0 when in
fact H0 is not true. The former is known as Type I error and the latter as Type II error. In other
words, Type I error means rejection of hypothesis that should have been accepted and Type II
error means accepting the hypothesis, which should have been rejected. Type I error is denoted by
α(alpha) known as a error, also called the level of significance of test; and Type II error-is
denoted by β(beta) known as β-error. In a tabular form the said two errors can be presented as
follows:
The probability of Type I error is usually determined in advance and is understood as the level of
significance of testing the hypothesis. If type I error is fixed at 5 percent, it means that there are
about 5 chances in 100 that we will reject H0 when H0 is true. We can control Type I error just by
fixing it at a lower level. For instance, if we fix it at 1 per cent, we will say that the maximum
probability of committing Type I error would only be 0.01.
But with a fixed sample size, n, when we try to reduce Type I error, the probability of committing
Type II error increases. Both types of errors cannot be reduced simultaneously. There is a trade-
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off between these two types of errors, which means that the probability of making one type of
error can only be reduced if we are willing to increase the probability of making the other type of
error. To deal with this trade-off in business situations, decision-makers decide the appropriate
level of Type I error by examining the costs or penalties attached to both types of errors. If Type I
error involves the time and trouble of reworking a batch of chemicals that should have been
accepted, whereas Type II error means taking a chance that an entire group of users of this
chemical compound will be poisoned, then in such a situation one should prefer a Type I error to a
Type II error. As a result one must set very high level for Type I error in one's testing technique of
a given hypothesis. Hence, in the testing of hypothesis, one must make all possible effort to strike
an adequate balance between Type I and Type II errors.
(e) Two tailed and One-tailed tests: In the context of hypothesis testing, these two terms are
quite important and must be clearly understood. A two-tailed test rejects the null hypothesis if,
say, the sample mean is significantly higher or lower than the hypothesized value of the mean of
the population. Such a test is appropriate when the null hypothesis is some specified value and the
alternative hypothesis is a value not equal to the specified value of the null hypothesis.
Symbolically, the two-tailed test is appropriate when we have H0: µ = µH0 and Ha: µ ≠ µH0 which
may mean µ < µH0 or µ > µH0. Thus, in a two-tailed test, there are two rejection regions (also
known as critical regions), one on each tail of the curve which can be illustrated in Figure a:
If the significance level is 5 per cent and the two-tailed test is to be applied, the probability of the
rejection area will be 0.05 (equally split on both tails of the curve as 0.025) and that of the accept-
ance region will be 0.95 as shown in the curve in Fig. a. If we take µ = 100 and if our sample
mean deviates significantly from 100 in either direction, then we shall reject the null hypothesis;
but if the sample mean does not deviate significantly from µ, in that case we shall accept the null
hypothesis.
But there are situations when only one-tailed test is considered appropriate. A one-tailed test
would be used when we are to test, say, whether the population mean is cither lower than or
higher than some hypothesized value. For instance, if our H0: µ = µH0 and Ha: µ < µH0, Then we
are interested in what is known as left-tailed test (wherein there is one rejection region only on the
left tail) which can be illustrated as in Figure b:
Figure a
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Figure b
If our µ = 100 and if our sample mean deviates significantly from 100 in the lower direction, we
shall reject H0, otherwise we shall accept H0 at a certain level of significance. If the significance
level in the given case is kept at 5%, then the rejection region will be equal to 0.05 of area in the
left tail as has been shown in the above curve.
In case our H0: µ = µH0 and Ha: µ > µH0 we are then interested in what is known as one-tailed test
(right tail) and the rejection region will be on the right tail of the curve as shown below:
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If our µ = 100 and if our sample mean deviates significantly from 100 in the upward direction, we
shall reject H0 otherwise we shall accept the same If in the given case the significance level is
kept at 5% then the rejection region will be equal to 0 05 of area in the right-tail as has been
shown in the above curve
It should always be remembered that accepting H0 on the basis of sample information does not
constitute the proof that H0 is true. We only mean that there is no statistical evidence to reject it,
but we are certainly not saying that H0 is true (although we behave as if H0 is true)
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PROCEDURE FOR HYPOTHESIS TESTING
To test a hypothesis means to tell (on the basis of the data the researcher has collected) whether or
not the hypothesis seems to be valid. In hypothesis testing the main question is: whether to accept
the null hypothesis or not to accept the null hypothesis? Procedure for hypothesis testing refers to
all those steps that we undertake for making a choice between the two actions i.e., rejection and
acceptance of a null hypothesis
Take another example The average score in an aptitude test administered at the national level
is 80 To evaluate a state's education system, the average score of 100 of the state's students
selected on random basis was 75. The state wants to know if there is a significant difference
between the local scores and the national scores. In such a situation the hypotheses may be
stated as under
Null Hypothesis H0: µ = 80
Alternative Hypothesis Ha: µ ≠ 80
The formulation of hypotheses is an important step, which must be accomplished with due
care in accordance with the object and nature of the problem under consideration It also
indicates whether we should use a one-tailed test or a two-tailed test. If Ha is of the type
greater than (or of the type lesser than), we use a one-tailed test, but when Ha is of the type
"whether greater or smaller", then we use a two-tailed test
(ii) Selecting a significance level: The hypotheses are tested on a pre-determined level of
significance and as such the same should be specified Generally, in practice, either 5% level
or 1% level is adopted for the purpose The factors that affect the level of significance are
(a)the magnitude of the difference between sample means
(b) the size of the samples
(c)the variability of measurements within samples
(d) whether the hypothesis is directional or non-directional (A directional hypothesis is one
which predicts the direction of the difference between, say, means). In brief, the level of
significance must be adequate in the context of the purpose and nature of enquiry.
(iii) Deciding the distribution to use: After deciding the level of significance, the next step in
hypothesis testing is to determine the appropriate sampling distribution The choice generally
remains between normal distribution and the t-distribution. The rules for selecting the correct
distribution are similar to those that we have stated earlier in the context of estimation.
(iv) Selecting a random sample and computing an appropriate value: Another step is to select
a random sample(s) and compute an appropriate value from the sample data concerning the
test statistic utilizing the relevant distribution. In other words, draw a sample to furnish
empirical data.
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(v) Calculation of the probability: One has then to calculate the probability that the sample
result would diverge as widely as it has from expectations, if the null hypothesis were in fact
true
(vi) Comparing the Probability: Yet another step consists in comparing the probability thus
calculated with the specified value for α, the significance level If the calculated probability is
equal to or smaller than the α value in case of one-tailed test (and α/2 in case of two-tailed
test), then reject the null hypothesis (i e, accept the alternative hypothesis), but if the
calculated probability is greater, then accept the null hypothesis. In case we reject H0, We run
a risk of (at most the level of significance) committing an error of Type I, but if we accept
H0, then we run some risk (the size of which cannot be specified as long as the H0 happens to
be vague rather than specific) of committing an error of Type II.
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Tests of Hypotheses
Hypothesis testing helps to decide on the basis of a sample data, whether a hypothesis about the
population is likely to be true or false. Statisticians have developed several tests of hypotheses
(also known as the tests of significance) for the purpose of testing of hypotheses which can be
classified as:
(a) Parametric tests or standard tests of hypotheses
(b) Non-parametric tests or distribution-free test of hypotheses.
Parametric tests usually assume certain properties of the parent population from which we draw
samples. Assumptions like observations come from a normal population, sample size is large,
assumptions about the population parameters like mean, variance, etc., must hold good before
parametric tests can be used. But there are situations when the researcher cannot or does not want
to make such assumptions. In such situations we use statistical methods for testing hypotheses,
which are called non-parametric tests because such tests do not depend on any assumption about
the parameters of the parent population. Besides, most non-parametric tests assume only nominal
or ordinal data, whereas parametric tests require measurement equivalent to at least an interval
scale. As a result, non-parametric tests need more observations than parametric tests to achieve
the same size of Type I and Type II errors.
Important Parametric Tests
The important parametric tests are:
(1) z-test
z-test is based on the normal probability distribution and is used for judging the significance of
several statistical measures, particularly the mean. The relevant test statistic, z, is worked out and
compared with its probable value (to be read from table showing area under normal curve) at a
specified level of significance for judging the significance of the measure concerned. This is a
most frequently used test in research studies. This test is used even when binomial distribution or
t-distribution is applicable on the presumption that such a distribution tends to approximate
normal distribution as ‘n’ becomes larger z-test is generally used for comparing the mean of a
sample to some hypothesized mean for the population in case of large sample, or when population
variance is known. z-test is also used for judging the significance of difference between means of
two-independent samples in case of large samples, or when population variance is known. z-test is
also used for comparing the sample proportion to a theoretical value of population proportion or
for judging the difference in proportions of two independent samples when ‘n’ happens to be
large. Besides, this test may be used for judging the significance of median, mode, coefficient of
correlation and several other measures.
(2) t-test
t-test is based on t-distribution and is considered an appropriate test for judging the significance of
a sample mean or for judging the significance of difference between the means of two samples in
case of small sample(s) when population variance is not known (in which case we use variance of
the sample as an estimate of the population variance) In case two samples are related, we use
paired t-test (or what is known as difference test) for judging the significance of the mean of
difference between the two related samples. It can also be used for judging the significance of the
coefficients of simple and partial correlations The relevant test statistic, t, is calculated from the
sample data and then compared with its probable value based on t-distribution (to be read from
the table that gives probable values of t for different levels of significance for different degrees of
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freedom) at a specified level of significance for concerning degrees of freedom for accepting or
rejecting the null hypothesis. It may be noted that t-test applies only in case of small sample(s)
when population variance is unknown.
(4) F-test.
F-test is based on F-distribution and is used to compare the variance of the two independent
samples. This test is also used in the context of analysis of variance (ANOVA) for judging the
significance of more than two sample means at one and the same time. It is also used for judging
the significance of multiple correlation coefficients. Test statistic, F, is calculated and compared
with its probable value (to be seen in the F-ratio tables for different degrees of freedom for greater
and smaller variances at a specified level of significance) for accepting or rejecting the null
hypothesis.
All these tests are based on the assumption of normality i.e., the source of data is considered to be
normally distributed. In some cases the population may not be normally distributed, yet the tests
will be applicable on account of the fact that we mostly deal with samples and the sampling
distributions closely approach normal distributions.
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SAMPLING
SOME BASIC TERMS
1. Population – In statistical usage the term population is applied to any finite or infinite
collection of individuals. It has displaced the older term universe, which is derived from the
universe of discourse of logic. It is practically synonymous with aggregate and does not
necessarily refer to a collection of living organisms.
2. Census - The complete enumeration of a population or groups at a point in time with respect to
well-defined characteristics such as population, production, traffic on particular roads. In some
connection the term is associated with the data collected rather than the extent of the collection
so that the term Sample Census has a distinct meaning. The partial enumeration resulting from
a failure to cover the whole population, as distinct from a designed sample enquiry, may be
referred to as an 'incomplete census’.
3. Sample - A part of a population, or a subset from a set of units, which is provided by some
process or other, usually by deliberate selection with the object of investigating the properties
of the parent population or set.
4. Sample survey – A survey, which is carried out using a sampling method i.e. in which a
portion only, and not the whole population, is surveyed.
5. Sampling unit - One of the units into which an aggregate is divided or regarded as divided for
the purposes of sampling, each unit being regarded as individual and indivisible when the
selection is made. The definition of unit may be made on some natural basis, for example,
households, persons, units of product, tickets, etc. 01 on some arbitrary basis, e.g. areas defined
by grid coordinates on a map. In the case of multi-stage sampling the units are different at
different stages of sampling, being 'large' at the first stage and growing progressively smaller
with each stage in the process of selection. The term sample unit is sometimes used in a
synonymous sense.
6. Sampling Frame - A list, map or other specification of the units, which constitute the
available information relating to the population designated for a particular sampling scheme.
There is a frame corresponding to each state of sampling in a multi-stage sampling scheme.
The frame may or may not contain information about the size or other supplementary
information of the units, but it should have enough details so that a unit, if included in the
sample, may be located and taken up for inquiry. The nature of the frame exerts a considerable
influence over the structure of a sample survey. It is rarely perfect, and may be inaccurate,
incomplete, inadequately described, out of date or subject to some degree of duplication.
Reasonable reliability in the frame is a desirable condition for the reliability of a sample survey
based on it. In multi-stage sampling it is sometimes possible to construct the frame at higher
stages during the progress of the sample survey itself For example, certain first stage units may
be selected in the first instance, and then more detailed lists or maps be constructed by
compilation of available information or by direct observation only of the first-stage units
actually selected
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7. Sampling design - A. sample design is a definite plan for obtaining a sample from the
sampling frame. It refers to the technique or the procedure the researcher would adopt in
selecting some sampling units from which inferences about the population is drawn. Sampling
design is determined before any data are collected.
9. Sampling error - That part of the difference between a population value and an estimate
thereof, derived from a random sample, which is due to the fact that only a sample of values is
observed, as distinct from errors due to imperfect selection, bias in response or estimation,
errors of observation and recording, etc The totality of sampling errors in all possible samples
of the same size generates the sampling distribution of the statistic which is being used to
estimate the parent value
10. Precision - Precision is the range within which the population average (or other parameter)
will lie in accordance with the reliability specified in the confidence level as a percentage of
the estimate ± or as a numerical quantity. For instance, if the estimate is Rs. 4000 and the
precision desired is ± 4%, then the true value will be no less than Rs. 3840 and no more than
Rs. 4160. This is the range (Rs 3840 to Rs. 4160) within which the true answer should lie. But
if we desire that the estimate should not deviate from the actual value by more than Rs. 200 in
either direction, in that case the range would be Rs. 3800 to Rs. 4200.
11. Confidence level and Significance level - The confidence level or reliability is the expected
percentage of times that the actual value will fall within the stated precision limits. Thus, if we
take a confidence level of 95%, then we mean that there arc 95 chances in 100 (or .95 in 1) that
the sample results represent the true condition of the population within a specified precision
range against 5 chances in 100 (or .05 in 1) that it does not. Precision is the range within which
the answer may vary and still be acceptable; confidence level indicates the likelihood that the
answer will fall within that range, and the significance level indicates the likelihood that the
answer will fall outside that range. We can always remember that if the confidence level is
95%, then the significance level will be (100 — 95) i.e., 5%:, if the confidence level is 99%,
the significance level is (100 — 99) i.e., 1%, and so on. We should also remember that the area
of normal curve within precision limits for the specified confidence level constitutes the
acceptance region and the area of the curve outside these limits in either direction constitutes
the rejection regions.
12. Sampling distribution - We are often concerned with sampling distribution in sampling
analysis. If we take certain number of samples and for each sample compute various statistical
measures such as mean, standard deviation, etc., then we can find that each sample may give its
own value for the statistic under consideration. All such values of a particular statistic, say
mean, together with their relative frequencies will constitute the sampling distribution of the
particular statistic, say mean. Accordingly, we can have sampling distribution of mean, or the
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sampling distribution of standard deviation or the sampling distribution of any other statistical
measure. It may be noted that each item in a sampling distribution is a particular statistic of a
sample. The sampling distribution tends quite closer to the normal distribution if the number of
samples is large. The significance of sampling distribution follows from the fact that the mean
of a sampling distribution is the same as the mean of the universe. Thus, the mean of the
sampling distribution can be taken as the mean of the universe.
14. Biased sample - A sample obtained by a biased sampling process, that is to say, a process
which incorporates a systematic component of error, as distinct from random error which
balances out on the average Non-random sampling is often, though not inevitably, subject to
bias, particularly when entrusted to subjective judgment on the part of human beings
Census survey means survey or complete enumeration of population with certain objectives. The
government in India after every ten years conducts such census survey. The entire geographical
area and entire population is covered in census survey. The data collected are tabulated and
published as census report. Such census data are used for different purposes including economic
planning and policy decisions. Census survey is a costly and time-consuming activity and also
needs huge organization and manpower for its orderly conduct. In commercial research, such
census survey is not conducted due to various constraints particularly relating to funds, time and
manpower.
Census implies collection of information from each element of the group or population of interest,
(e.g. Survey of industrial consumers). In many cases, complete enumeration is not possible and
the only alternative available is sampling.
Sample survey is the survey of a small representative part of the population taken up for detailed
scrutiny and study purpose. A sample is a small representative of the whole and conclusions
drawn from such sample are equally applicable to the entire population. Sample survey gives the
benefits of census survey but with less time, expenditure and manpower. It is a better substitute to
census survey. Sample surveys are commonly conducted in marketing research projects and gives
promising results.
A survey which is carried out using a sampling method i.e. using a representative portion of the
whole population is called sample survey which is a short cut alternative to census survey but
gives similar benefits.
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REASONS FOR IMPRACTICALITY OF CENSUS
There are certain reasons that make census impractical or even impossible. The reasons are as
follows:
1. Cost: Cost is an obvious constraint on the determination of whether a census should be taken.
If information is desired on grocery purchase and use behavior (frequencies and amounts of
purchase of each product category, average amount kept at home and the like) and the
population of interest is all households in a country, the cost will preclude a census being
taken. Thus a sample is the only logical way of obtaining new data from a population of this
size.
2. Time: The kind of cost we have just considered is an outlay cost. The time involved in
obtaining information from either a census or a sample involves the possibility of also
incurring an opportunity cost. That is, the decision until information is obtained may result in
smaller gain or a larger loss than would have been the case from making the same decision
earlier. The opportunity to make more (or save more. as the case may be) is, therefore,
foregone.
3- Accuracy: A study using a census, by definition, contains no sampling error. A study using a
sample may involve sampling error in addition to other types of error. Other things being
equal, a census will provide more accurate data than a sample. However it has been argued
that a more accurate estimate of the population of a country could be made from a sample than
from a census. Taking a census of a population on a "mail out - mail back" basis requires that
the names and addresses of almost all households be obtained, census questionnaires mailed,
and interviews conducted of those not responding. The questionnaires are sent to a population
of which only about half have completed high school. The potential for errors in a returned
questionnaire is therefore high.
4. Destructive nature of the measurement: Measurements are sometimes destructive in nature.
When they are, it is apparent that taking a census would usually defeat the purpose of a
measurement. If one were producing firecrackers, electrical fuses, or gas seed, performing a
functional use test on a all products for quality control purposes would not be considered from
an economic standpoint. A sample is then the only practical choice. On the other hand, if the
light bulbs, bicycles, or electrical appliances are to be tested, a 100% sample (census) may be
entirely reasonable.
According to Crisp R. D., the fundamental idea of sampling is that a small number of items or
parts (called a sample) are chosen at random from a large number of items or a whole (called a
universe or population) the sample will tend to have the same characteristics and in
approximately the same proportion as the universe.
FEATURES OF SAMPLING
(1) Sampling is a small representative of the whole. It is an effective alternative to the census
survey.
(2) Sampling reduces the time, efforts and money of the researcher on data collection without any
adverse effect on its quality.
(3) The sampling technique is based on the assumption that random selection of sample from the
universe do possesses the same features and characteristics as that of the universe.
(4) The findings of sample survey are accurate and reliable. The larger sample is better as the
results available are more accurate.
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(5) Sampling is used in data collection as well as for different purposes in our daily life.
(6) The concept of sampling is quite common and popular in marketing research as it helps
researchers to finalize their findings and recommendations within a short period.
In brief, a good sample should be truly representative in character. It should be selected at random
and should be adequately proportional. These, in fact, are the attributes of a good sample.
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(2) Findings may not be reliable: The findings may not be reliable if the sample selected is too
small or is not adequately representative in character. In such cases the conclusions drawn
may be misleading and this may affect the quality of research work.
(3) Difficulties in the selection of representative sample: There are many practical difficulties
in the selection of representative sample. This may defeat the very purpose of sampling..
(4) Data collection difficult in the case of large sample: Data collection becomes difficult when
large size sample is decided. This also leads to more time and money for data collection.
A sample survey is a better alternative to the census or complete investigation, which is lengthy
and also costly. For example, census reports are published by the Government two or three years
after the collection of data. However, survey reports (based on samples) can be prepared and
published within a few months. Thus, sampling is widely used methodology in MR. It is one vital
element of research design.
If we were to conduct a survey on the consumption of tea in Gujarat, then these specifications
might be as follows
(i) Element: Housewives
(ii) Sampling units: Households, then housewives
(iii) Extent Gujarat State
(iv) Time January 1-10, 1999
If we were to monitor the sales of a product recently introduced by us, the population might be
(i) Element Our product
(ii) Sampling units Retail outlets, super markets, then our product
(iii) Extent Delhi and New Delhi
(iv) Time January 7-14, 1999
It may be emphasized that all these four specifications must be contained in the designated
population Omission of any of them would render the definition of population incomplete
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Identifying the sampling frame, which could be a telephone directory, a list of blocks and
localities of a city, a map or any other list consisting of all the sampling units. It may be pointed
out that if the frame is incomplete or otherwise defective, sampling will not be able to overcome
these shortcomings
The question is—How to ensure that the frame is perfect and free from any defect Leslie Kish has
observed that a perfect frame is one where "every element appears on the list separately, once
only once, and nothing else appears on the list" This type of perfect frame would indicate one-to-
one correspondence between frame units and sampling units But such perfect frames are rather
rare Accordingly, one has to use frames with one deficiency or another, but one should ensure that
the frame is not too deficient so as to be given up altogether
This raises a pertinent question -What are the criteria for a suitable frame? In order to examine the
suitability or otherwise of a sampling frame, a number of questions need be asked. These are
1 Does it adequately cover the population to be surveyed?
2 How complete is the frame? Is every unit that should be included represented?
3 Is it accurate? Is the information about each individual unit correct? Does the frame as a whole
contain units, which no longer exist?
4 Is there any duplication? If so, then the probability of selection is disturbed as a unit can enter
the sample more than once
5 Is the frame up-to-date? It could have met all the criteria when compiled but could well be
deficient when it came to be used This could well be true of all frames involving the human
population as change is taking place continuously
6 How convenient is it to use? Is it readily accessible? Is it arranged in a way suitable for
sampling? Can it easily be re-arranged so as to enable us to introduce stratification and to
undertake multi-stage sampling?
These are demanding criteria and it is most unlikely that any frame would meet them all
Nevertheless, they are the factors to be borne in mind whenever we undertake random sampling
In marketing research most of the frames are from census reports, electoral registers, lists of
member units of trade and industry associations, lists of members of professional bodies, lists of
dwelling units maintained by local bodies, returns from an earlier survey and large scale maps.
As mentioned in the preceding step, the sampling frame should be complete and accurate
otherwise the selection of the sampling unit might be defective. It is necessary to get a further
specification of the sampling unit both in personal interviews and in telephone interviews. Thus,
in personal interviews, a pertinent question is—of the several persons in a household, who should
be interviewed? If interviews were held during office timings when the heads of families and
other employed persons are away, interviewing would under-represent employed persons and
over-represent elderly persons, housewives and the unemployed. In view of these considerations,
it is necessary to have a random process of selection of the adult residents of each household. One
method that could be used for this purpose is to list all the eligible persons living at a particular
address and then select one of them.
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In case of a probability sample, the probability or chance of every unit in the population being in
the sample is known. Further, the selection of specific units in the sample depends entirely on
chance. No substitution of one unit for another is permissible. This means that no human
judgment is involved in the selection of a sample. In contrast, in a non-probability sample, the
probability of inclusion of any unit in the population in the sample is not known. In addition, the
selection of units within a sample involves human judgment rather than pure chance.
In case of a probability sample, it is possible to measure the sampling error and thereby determine
the degree of precision in the estimates with the help of the theory of probability. This theory also
enables us to consider, from amongst the various possible sample designs, the one that will give
the maximum information per rupee. This is not possible when a non-probability sample is used.
Probability sampling enables us to choose representative sample designs. It also enables us to
estimate the extent to which the results based on such a sample are likely to be different from
what we would have obtained had we covered the population in our study. Conversely, the use of
probability sampling enables us to determine the sample size for a given degree of precision,
indicating that our sample results do not differ by more than a specified amount from those
yielded by a study covering entire population.
Although non-probability sampling does not yield these benefits, on account of its convenience
and economy, it is often preferred to probability sampling. If the researcher is convinced that the
risks involved in the use of a non-probability sample are more than offset by its being relatively
cheap and convenient, his choice should be in favor of non-probability sampling.
There are various types of sample designs that can be covered under the two broad groups,
random or probability samples and non-random or non-probability samples.
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Replicated
Sampling
Stratified Sampling Area Sampling
Sequential
Sampling
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as the representative. The fact that any item can be selected is known. The selection of sampling
item is impartial and independent of the person making the study. There is no scope for any
biased selection of sample units.
Probability sampling methods include random sampling, stratified, cluster, sampling, etc. Such
methods are used extensively in marketing research. These methods provide unbiased
information. The probability sampling methods are objectively designed. However, these methods
are time consuming and also costly for use. Greater statistical competence and time are required
to plan and use probability sampling methods.
Non-probability sampling methods are also used in marketing research along with probability
methods. Such methods are sometimes preferred because they cost less per observation, require
less time and need relatively little statistical sophistication in planning the sample design and in
the selection the respondents. Probability sampling methods are more scientific and capable of
yielding more representative samples than non-probability sampling methods. However, there is
no sampling method (probability or non-profitability) that can be considered to be best in all
situations. Any suitable method may be selected and used properly for promising results.
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random
Benefit It helps to select a truly The sample selected may or may
representative sample Here, the not be a true representative of the
selection of sample items is whole population as it is selected
independent of the person as per the convenience of the
making the study (researcher) researcher
Nature of process It is a mechanical and It is a mental
mathematical process process/exercise of the
researcher
(A) PROBABILITY SAMPLING METHODS
(1) SIMPLE RANDOM SAMPLING
Random sampling is one popular and extensively used sampling method In this method, each and
every unit of the population has an equal chance of being selected or included in the sample
Random selection does not mean haphazard selection It is one type of selection in which every
item in the universe has an equal chance of being selected alone with all other items In random
sampling, the complete list of the universe is taken but the selection is made 'at random' from this
list However, some uniform system is used for the selection of sample Random sampling is useful
for the conduct of telephone or mail survey It is an ideal method in the surveys of specialized
nature
The process of randomness does not mean that it is 'haphazard', as a layman may be inclined to
think. What it means is that the process of selecting a sample is independent of human judgment.
To ensure this, there are two methods that are followed when drawing a random sample. These
are: (i) the lottery method and (ii) the use of random numbers.
In the lottery method, each unit of the population is numbered and shown on a chit of paper or
disc. The chits are folded and put in a box from which a sample of the requisite size is to be
drawn. In case discs are used, these are well mixed up before a draw is made so that no particular
unit can be identified before it gets selected. The sample is drawn in the same manner as winning
numbers in a lottery are drawn
In the second method, the tables of random numbers are used. The members of the population
are numbered from 1 to N from which n members are selected. This process is explained below
with the help of an illustration.
Suppose a sample of size 50 is to be selected from a population of 500. First, number the 500
units from 1 to 500, the order being quite immaterial. While numbering the units, ensure that each
unit in the population has uniform digits, in this case, three. Thus, 1st unit would have a three-
digit number 001, 2nd unit 002, 10th unit 010, 11th unit O11, and so on. After the units have been
given three-digit numbers, the table of random numbers is to be used. One may start from the left-
hand top corner of the table of random numbers and proceed systematically down sets of three-
digit columns, rejecting numbers over 500 and those that have occurred earlier.
Using the first thousand numbers from the table of random numbers (an excerpt from the table is
given below), a sample of 50 out of 500 will thus be chosen.
231 055 148 389 117 433 495 367 070 313
092 259 113 455 126 426 062 401 100 488
434 325 211 207 398 225 485 035 171 047
318 263 239 108 379 420 122 441 493 310
032 194 144 337 224 006 068 043 500 222
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Stratified sampling is also called proportional random sampling. In this sampling, the population
is first subdivided into certain mutually exclusive groups or strata Such groups may be formed on
the basis of geographical area / size of the household or income After stratification, a random
sample of a given size is selected from each stratum of the total population This is how an attempt
is being made to make the sample more representative in character Here, each of the strata is
represented in the sample in relation to its importance
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In the above example, the population consists of 15,000 households, divided into five strata on the
basis of monthly income. Column (3) of the table shows the sample, i.e., number of households
selected from each stratum. The sample constitutes one per cent of the population. A sample of
this type, where each stratum has a uniform sampling fraction, is called a proportionate stratified
sampling. If, on the contrary, the strata have variable sampling fractions, the sample is called a
disproportionate stratified sample. The figures given in column (4) of the above table show a
disproportionate stratified sample. It will be seen that the sampling fraction varies from one
stratum to another. Thus, for example, it is 0.015 for the monthly income Rs 0-500 and 0.01 for
the stratum, Rs 3001+.
It may he noted that a stratified random sample with a uniform sample fraction results in greater
precision than a simple random sample. But, this is possible only when the selection within strata
is made on a random basis. Further, a stratified proportionate sample is generally convenient on
account of practical considerations,
There are some other considerations in favor of the stratified random sample. The researcher may
be interested in the results for separate strata rather than for the entire population. A simple
random sample will not show results by strata as it presents only an aggregative picture. Another
consideration is that it may be administratively expedient to split the population into strata. Yet
another consideration is that one can use different procedures for selecting samples from various
strata. If the data are more variable in any particular strata, a larger sampling fraction should be
taken in that stratum. This would result in greater overall precision
This method reduces the sampling error and it is a more accurate and representative sampling
method Naturally, it is treated as an improvement over simple random sampling. It provides
information about different components of the total population Use of stratified sampling also
leads to administrative conveniences In order to use a stratified sample, some information
regarding the population and its strata should be available to the researcher
The process of stratified random sampling differs from simple random sampling In simple random
sampling, sample items are chosen at random from the entire universe while in stratified random
sampling, a separate random sample is chosen from each stratum Stratified random sampling is
used in order to increase the precision of sampling estimates.
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For example, if a survey is to be undertaken in a city to collect data from individual households,
then, selection of households from all over the city would involve a considerable amount of
fieldwork and consequently, would cost more. Instead, a few localities are first chosen. Then, all
the households in these localities are covered in the sample. Apart from reduction in cost, such a
cluster sample would be desirable in the absence of a suitable sampling frame for the whole
population. If, on the other hand, a sample of individual households from the entire city is to be
chosen, it will be necessary to first undertake the listing of all households. In view of the non-
availability of a satisfactory sampling frame, in the case of cluster sampling, such a listing could
be confined to only a few localities that are to be entirely covered in the sample.
A few points regarding cluster sampling may be noted here. First, "whether or not a particular
aggregate of units should be called a cluster" will depend on the circumstances of each case. In
foregoing example, localities were taken as clusters and households as individual units. In another
case, the households may be taken as a cluster and the members of the households as individual
units. Second, it is not necessary that clusters should always be natural aggregates such as locality
constituencies, schools or classes. Artificial clusters may be formed, as is generally done in area
sampling where grids may be determined on the maps. Third, several levels of clusters may be
used in any one sample design. Thus, in a city survey, localities or wards, streets and households
may be selected in which case localities or wards are the clusters at the first level and streets at the
second level and households would be the units.
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In sampling the blocks, stratification and sampling with probability proportional to a measure of
size are commonly employed. However, stratification in area sampling is based on geographical
considerations Thus, when blocks are identified and numbered on the map, they can be grouped
into some meaningful strata representing the different neighborhoods of the town. The point to
emphasize is that these blocks must be identifiable without any difficulty
On the basis of the blocks thus identified, numbered and assigned to strata, a stratified sample of
dwellings can be selected This can be done in either of two ways First, a sample of dwellings may
be drawn from all the dwellings included in a selected block Second, blocks may be divided into
segments of a more or less equal size, and a sample of these segments can be chosen and finally
all the dwellings from the selected segments may be taken in the sample It will thus be seen that
the second method introduces another stage of sampling, namely, segments
Although the above discussion relates to area sampling with respect to a city or town, the same
approach is applicable to a large area, say, a state or a country, the only difference being that one
or more additional stages of sampling may have to be introduced
Finally, it may be pointed out that area sampling is perhaps the only possibility if a suitable
sampling frame is not available
An illustration would make the concept of multi-stage sampling clear. Suppose a sample of 5000
urban households from all over the country is to be selected. In such a case, the first stage sample
may involve the selection of districts. Suppose 25 districts out of say 500 districts are selected.
The second stage may involve the selection of cities, say four from each district. Finally, 50
households from each selected city may be chosen. Thus, one would have a sample of 5000 urban
households, arrived at in three stages. It is obvious that the final sampling unit is the household.
In the absence of multi-stage sampling of this type, the process of the selection of 5000 urban
households from all over the country would be extremely difficult. Besides, such a sample would
be very thinly spread over the entire country and if personal interviews are to be conducted for
collecting information, it would be an extremely costly affair. In view of these considerations a
sampling from a widely spread population is generally based on multi-stage.
The number of stages in a multi-stage sampling varies depending on convenience and the
availability of suitable sampling frames at different stages. Often, one or more stages can be
further included in order to reduce cost. Thus, in our earlier example, the final stage of sampling
comprised 50 households from each of the four selected cities. Since this would involve the
selection of households all over the city, it would turn out to be quite expensive and time
consuming if personal interviews are to be conducted. In such a case, it may be advisable to select
two wards or localities in each of the four selected cities and then to select 25 households from
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each of the 2 selected wards or localities. Thus, the cost of interviewing as also the time in
carrying out the survey could be reduced considerably.
It will be seen that an additional stage comprising wards or localities has been introduced here.
Thus the sample has become a four-stage sample –
1st stage – districts
2nd stage – cities
3rd stage – localities
4th stage – households
From the preceding discussion it should be clear that a multi-stage sample results in the
concentration of fieldwork. This in turn, leads to saving time, labor and money. There is another
advantage in its use. Where a suitable sampling frame covering the entire population is not
available, a multi-stage sample can be used.
(7) MULTI-PHASE SAMPLING
A multi phase sample should not be confused with a multi-stage sample The former involves a
design where some information is collected from the entire sample and additional information is
collected from only a part of the original sample Suppose a survey is undertaken to determine the
nature and extent of health facilities available in a city and the general opinion of the people. In
the first phase a general questionnaire can be sent out to ascertain who amongst the respondents
had at one time or other used the hospital services. Then, in the second stage, a comprehensive
questionnaire may be sent to only these respondents to ascertain what they feel about the medical
facilities in the hospitals. This is a two-phase or double sampling.
The main point of distinction between a multi-stage and a multi-phase sampling is that in the
former each successive stage has a different unit of sample whereas in the latter the unit of sample
remains unchanged though additional information is obtained from a sub-sample.
The main advantage of a multi-phase sampling is that it effects economy in time, money and
effort. In our earlier example, if a detailed questionnaire is sent out to a large sample comprising
individuals, they would not be able to provide the necessary information. Second, more time will
be required. Finally, it will be far more expensive to carry out the survey, especially when
personal interviews are involved.
In replicated sampling, several random sub-samples are selected from the population instead of
one full sample. All the sub-samples have the same design and each one of them is a self-
contained sample of the population. For example, take the case of a random sample of 10
households. This sample may be divided into, say, 10 equal sub-samples to be assigned to 10
interviewers. Thus, each interviewer may be required to collect information from 10 households.
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becomes too laborious. Selecting a replicated sample design can considerably reduce this
difficulty. However, in modem times when computers are being increasingly used, the ease in
calculating standard error has made it somewhat less important. Apart from this advantage, there
are certain other advantages of replicated sampling. First, if the size of a sample is too large, it
may be advisable to split it up into two or more sub-samples. One sub-sample may be used to get
the advanced results of the survey. Second, replicated sampling can indicate the non-sampling
errors.
However, replicated sampling would not be helpful in undertaking a detailed investigation of bias
as the numbers in the separate sub-samples tend to be small Further, such samples do not reveal
any systematic errors that may be more or less common to all interviewers and the compensating
errors which cancel each other out over an interviewer's assignment.
Apart from the above limitations, replicated samples have other disadvantages If personal
interviews are to be conducted, replicated samples turn out to be costlier Likewise, tabulation
costs would be higher than in the case of a single large sample Finally, replicated samples are
more complex to administer.
A sequential sampling is resorted mainly to bring down the cost and hence the smallest possible
sample is used The desired statistics from first sample, ni, are computed and evaluated If these
statistics do not satisfy the criteria laid down, a second sample is drawn The results of the first and
second samples are added and the statistics are recomputed This process is continued until the
specified criteria are satisfied The criteria are usually a minimum significance level, a minimum
cluster size, or a minimum confidence interval
The main advantage of sequential sampling is that it obviates the need for determining a fixed
sample size before the commencement of the survey
Suppose a firm is to decide whether a new product is to be introduced in the market or not It feels
that if it is able to acquire 15 per cent market share in a country within a year, it should introduce
the new product Further, it feels that if a market share of 10 per cent in a few test markets is
achieved, it would be possible to acquire a 15 per cent market share in the country, say, within a
period of six months Now, when the firm has undertaken test marketing, it actually achieved far
more than 10 per cent, say, 20 per cent, of the market share and that too within three months of
test marketing The firm may be sure to achieve the 15 per cent national market share within one
year even though it may not be possible for it to accurately forecast the test market share at the
end of four months
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A sample of 2000 households has been chosen, subject to the condition that 1200 of these should
be from rural areas and 800 from the urban areas of the territory Likewise, of the 2000
households, the rich households should number 150, the middle class ones 650 and the remaining
1200 should be
Independent Controls
Rural 1200 Rich 150
Urban 800 Middle class 650
Poor 1200
Total 2000 Total 2000
Inter-related Controls
Rural Urban Total
Rich 100 50 150
Middle class 400 250 650
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Poor 700 500 1200
Total 1200 800 2000
from the poor class These are independent quota controls The second table shows the inter-related
quota controls As can be seen, inter-related quota controls allow less freedom of selection of the
units than that available in the case of independent controls
There are certain advantages in both the schemes Independent controls are much simpler,
especially from the viewpoint of interviewers They are also likely to be cheaper as interviewers
may cover their quotas within a small geographical area In view of this, independent controls may
affect the representativeness of the quota sampling Interrelated quota controls are more
representative though such controls may involve more time and effort on the part of interviewers
Also, they may be costlier than independent quota controls
In view of the non-random element of quota sampling, it has been severely criticized especially
by statisticians, who consider it theoretically weak and unsound There are points both in favor of
and against quota sampling These are given below
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judgment of the expert The quota sample, discussed earlier, is in a way a judgment sample where
the actual selection of units within the earlier fixed quota depends on the interviewer
It may be noted that when a small sample of a few units is to be selected, a judgment sample may
be more suitable as the errors of judgment are likely to be less than the random errors of a
probability sample 16 However, when a large sample is to be selected, the element of bias in the
selection could be quite large m the case of a judgment sample Further, it may be costlier than the
random sampling
(4) MASTER SAMPLES
A master sample is one from which repeated sub-samples can be taken as and when required from
the same area or population This was first used in the United States when the US Master sample
of agriculture was taken In this sampling, the rural area of over 3000 US counties was divided
into segments of about four farms each "After selecting a systematic sample of 1/8 of the
segments, the materials were duplicated and made available, with instruction, at low cost" The
crucial point to note in respect of master samples is that "the actual sample for each new survey is
not selected directly from the entire population but from a frame of segments and dwellings that
was selected earlier from the entire population "
The utility of the samples is limited to a relatively short period for there may be changes in the
population which would distort the representative character of the master samples In view of this,
master samples should be relatively permanent, say, dwellings rather than individuals or
household which frequently undergo changes on account of births, deaths and migration The main
advantage of master samples is that they can be expeditiously selected on account of their
simplicity Another advantage is that they are economical, because the same master frame is used
for drawing samples for several surveys, as a result of which the cost incurred on the preparation
of the master frame is spread over these surveys. Further, on account of this economy in each
survey, one can initially spend more to create a good master frame. Thus, economy may lead to
improved quality in the listing.
(5) PANEL SAMPLES
Panel samples are frequently used in marketing research. In panel samples, the same units or
elements are measured on subsequent occasions. To give an example: Suppose that one is
interested in knowing the change in the consumption pattern of households. A sample of
households is drawn. These households are contacted to gather information on the pattern of
consumption, subsequently, say after a period of six months, the same households are approached
once again and the necessary information on their consumption is obtained. A comparison of the
results of the two sets of data would indicate whether there has been any change, and, if so, to
what extent. In fact, the information is collected on a more or less continuous basis with the help
of panel samples.
Panel samples are extremely convenient and economical and the cost of drawing a second sample
is not incurred. But the main limitation of such samples is that it may be difficult to sustain the
interest of individuals included in the panel for a long period. Many respondents on the panel may
refuse to be interviewed twice or may give poor answers. In either case the quality of the survey
will suffer. Another limiting factor in panel samples is that there may be bias on account of the
continued participation in the panel. It is felt that the individual is conditioned to some extent by
the fact that data on purchases are reported. In such a case the purchase behavior of panel
members may become different from others not covered by the panel. Furthermore, panel samples
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may turn out to be more expensive while locating the same sample of respondents after a lapse of,
say, a year, when some of them might have migrated to other areas. This would involve travel
costs in addition to being difficult.
Goal orientation
This suggests that a sample design "should be oriented to the research objectives, tailored to the
survey design, and fitted to the survey conditions" If this is done, it should influence the choice of
the population, the measurement as also the procedure of choosing a sample
Measurability
A sample design should enable the computation of valid estimates of its sampling variability
Normally, this variability is expressed in the form of standard errors in surveys However, this is
possible only in the case of probability sampling In non-probability samples, such as a quota
sample, it is not possible to know the degree of precision of the survey results
Practicality
This implies that the sample design can be followed properly in the survey, as envisaged earlier It
is necessary that complete, correct, practical and clear instructions should be given to the
interviewer so that no mistakes are made in the selection of sampling units and the final selection
in the field is not different from the original sample design Practicality also refers to simplicity of
the design, i.e. it should be capable of being understood and followed in actual operation of the
field work
Economy
Finally, economy implies that the objectives of the survey should be achieved with minimum cost
and effort Survey objectives are generally spelt out in terms of precision, i.e. the inverse of the
variance of survey estimates For a given degree of precision, the sample design should give the
minimum cost Alternatively, for a given per unit cost, the sample design should achieve
maximum precision (minimum variance)
It may be pointed out that these four criteria come into conflict with each other in most of the
cases, and the researcher should carefully balance the conflicting criteria so that he is able to
select a really good sample design As there is no unique method or procedure by which one can
select a good sample, one has to compare several sample designs that can be used in a survey This
means that one has to weigh the pros and cons, the strong and weak points of various sample
designs in respect of these four criteria, before selecting the best possible one
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remainder of the budget is allocated to sampling Dividing this remaining amount by the
estimated cost per sampling gives the sample size
This method concentrates on the cost of the information and is not concerned about its value
Although cost always has to be considered in any systematic approach to sample size
determination, one also needs to give consideration to how much the information provided by
the sample will be worth. This approach produces sample sizes that are larger than required as
well as sizes that are smaller than optimal
3. Required Size Per Cell - This method of determining sample size can be housed on simple
random, stratified random, purposive and quota samples For example, In a study of attitudes
with respect to fast food establishments in a local marketing area it was decided that
information was desired for two occupational groups and for each of the four age groups This
resulted in 2x4 =-8 sample cells. A sample size of 30 was needed per cell for the types of
statistical analyses that were to be conducted. The overall sample size was therefore 8 x 30 =
240.
4 Use of Bayesian Statistical Model - The Bayesian model involves finding the difference
between the expected value of the information to be provided by the sample size and cost of
sample. This difference is known as expected net gain from sampling (ENG) The sample size
with the largest positive ENG is chosen.
The procedure for finding the optimal value of ‘n’ or the size of sample under this approach is
as under:
01. Find the expected value of the sample information (EVSI) for every possible n
02. Also workout reasonably approximated cost of taking a sample of every possible n,
03. Compare the EVSI and the cost of the sample for every possible n. In other words,
workout the expected net gain (ENG) for every possible n as stated below:
For a given sample size (n): (EVSI) - (Cost of sample) = (ENG)
04. From above step the optimal sample size, that value of n, which maximizes the difference
between the EVSI and the cost of the sample, can be determined
The computation of EVSI for every possible n and then comparing the same with the respective
cost is often a very cumbersome task and is generally feasible with mechanized or computer
help. Hence, this approach although being theoretically optimal is rarely used in practice.
5. Use of Traditional Statistical Model - The formula for traditional statistical model depends
upon the type of sample to be taken and it always incorporates three common variables
à an estimate of the variance in the population from which the sample is to be drawn
à the error from sampling that the researcher will allow
à the desired level of confidence that the actual sampling error will be within the allowable
limits
The statistical models for simple random sampling include estimation of means and estimation of
proportion
SAMPLING ERRORS
Whatever kind of sample is taken and whatever the sample size there will always be error arising
from the sampling process. The extent of such error may be defined as the difference between a
sample result, and the result that would have been achieved by undertaking a complete census.
Such errors arise because particular types of cases are under-represented or over-represented in
the sample compared with the population as a whole. If, for example, the cases are individual
consumers, then the under- or over- representation of the sexes, ages or social classes will affect
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the measurement (and, more importantly, the estimates made from them) of a large number of
variables. Lack of representation in the appropriate quantities may be a product of two factors:
systematic error (or bias) and random error (or variance).
Systematic error
Bias arises when the sampling procedures used bring about over- or under- representation of types
of cases in the sample, which is mostly in the same direction. This may happen because:
• the selection procedures are not random,
• the selection is made from a list that does not cover the population, or uses a procedure that
excludes certain groups,
• non-respondents are not a cross-section of the population.
If the selection procedures are not random then it means that human judgement has entered into
the selection process. For example, interviewers may be asked to choose respondents at some
geographical location or to select households in specified streets. The result is likely to be that
certain kinds of people or households or organizations are excluded from the sample. Thus
choosing respondents in a shopping centre will miss out people who seldom or never go shopping;
the selection of households by an interviewer may result in the omission of flats at the tops of
stairs.
If the Electoral Register is used to select adults aged 16 or over, then, as indicated earlier, 16 and
17 year-olds and many of the 18 year-olds will be missing from the list and will be under-
represented in the final sample. The use of telephone directories will under represent certain social
groups less likely to be in the telephone book (or those who are ex-directory). Duplication in lists,
for example in the Yellow Pages, may result in some over-representation. If we try to estimate
sales of soap from a sample of private households, then all users in institutions of various kinds
will be excluded.
Non-response is a problem for both censuses and samples. For censuses it means that the
enumeration will be incomplete. If large numbers are missing, it would be inappropriate to treat
those successfully contacted as a representative sample'. For samples, it means that estimates
made from the sample will he biased if non-respondents are not themselves representative of the
population. If they are representative, then non-response is not so much of a problem; but it may
still mean that analyses are made on the basis of too small a sample.
Whatever the reason for the systematic error, the effect will be that all samples that could be
drawn from a population will tend to result in the same direction of over- or under-representation.
The average of all these samples will then not be the same as the real population average or
proportion. Thus if we took lots of samples using a procedure that tended to omit working
mothers with young children, then all the samples will manifest such under-representation rather
than some over-representing them and some under-representing them so that the average of all
samples was very close to the real population proportion.
Systematic errors cannot be reduced simply by increasing the sample size. If certain kinds of
people are not being selected, cannot be contacted or are not responding, it will not be 'solved' by
taking a bigger sample. Indeed, some kinds of errors -will increase with more interviewers, more
questionnaires and greater data-processing requirements. All the researcher can do is minimize the
likelihood of bias by using appropriate sample designs. Biases for some variables can be checked,
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for example against Census data or data from other sources. Sometimes attempts are made to
discover the characteristics of non-responders, for example by sending out interviewers to non-
respondents to a postal survey, taking 'late' responders as typical of non-responders, or gaining
demographic data from the results of another survey that the non-responders have taken part in.
Random error
If we took a number of random, unbiased samples from the same population there will almost
certainly be a degree of fluctuation from one sample to another. Over a large number of samples
such errors will tend to cancel out, so that the average of such samples will be close to the real
population value However, we usually take only one sample, and even a sample that has used
unbiased selection procedures will seldom be exactly representative of the population from which
it was drawn. Each sample will, in short, exhibit a degree of error. Such error is often called
'sampling error', 'hut it would he clearer to think of it as 'random sampling error' to distinguish it
from bias (which some statisticians and some textbooks, confusingly, categorize as 'non-sampling'
error).
Unlike bias, which affects the general sample composition and relates to each variable being
measured in unknown ways, random sampling error will differ from variable to variable. The
reason for this is that the extent of such error will depend on two factors:
• the size of the sample - the bigger the sample, the less the random sampling error (but by a
declining amount),
• the variability in the population for that particular variable - a sample used to estimate a
variable that varies widely in the population will show more random sampling error than for a
variable that does not.
These two factors are used as a basis for calculating the likely degree of variability in a sample of
a given size for a particular variable. This, in turn, is used as an input for establishing with a
specified probability the range of accuracy of sample estimates, or that sample findings are only
random sampling fluctuations from a population of cases in which the findings are untrue.
NON-SAMPLING ERRORS
Not all errors in a piece of research are a result of the sampling process Certain kinds of error may
arise even if a complete census is taken. There are four main categories of such error:
• response errors,
• interviewer errors,
• non-response errors,
• processing errors.
Where research is based on asking people questions then response errors may arise where, for one
reason or another, respondents give wrong answers. This may be through dishonesty,
forgetfulness, faulty memories. unwillingness or misunderstanding of the questions being asked.
Many of these errors arise as a result of poor or inadequate questionnaire design putting it the
other way round, the potential for such errors to arise can be minimized by careful design of
question-wording, question formulation and questionnaire layout. In interview surveys, whether
face-to-face or by telephone, interviewers may themselves misunderstand questions or the
instructions for filling them in. they may be dishonest, inaccurate, make mistakes or ask questions
in a non-standard fashion. Interviewer training, along with field supervision and control can, to a
large extent, remove the likelihood of such errors, but they will never be entirely eliminated, and
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there is always the potential for systematic differences between the results obtained by different
interviewers.
In nearly all research there will be missing cases, but in survey research there will always be a
degree of non-response because some people will refuse to he interviewed or to complete a
questionnaire, some will be ineligible because they turn out not to be part of the survey
population, some will terminate the interview or refuse to answer some of the questions, and some
will be non-contactable, for example, because they have moved away, died, or are on holiday at
the time of the survey. Even where a census is attempted, it will often remain incomplete. The
extent of non-response will vary considerably according to the type of research, the topic of the
research, and, where based on face-to-face interviews, on the experience and training of the inter-
viewers. Calculating the amount of non-response can be confusing since some researchers will,
for example, take the proportion of refusals in the sample drawn, others will take refusals and
non-contacts as a proportion of those found eligible, and so on.
Processing errors can arise back at the office, particularly at the stage of entering answers to
questions onto a computerized database via a keyboard and screen. Agencies sometimes validate
these entries by, in effect, entering them twice, and the computer checks to see if the two entries
are identical. Alternatively, some agencies check samples of the entries. It is possible, in addition,
to apply range checks and logical checks.
There are, then, a number of sources of non-sampling error, and it is important to bear these in
mind when interpreting survey results, whether based on a sample or not. The crucial point is that
such errors can arise even if a census is taken.
Errors of various kinds can always be reduced by spending more money, for example, on more
interviewer training and supervision, on random sampling techniques, on pilot testing or on
getting a higher response rate. However, the reduction in error has to be traded off against the
extra cost involved. Furthermore errors are often interrelated so that attempts to reduce one kind
of error may actually increase another, for example, minimizing the non-response errors by
persuading more reluctant respondents may well increase response error Non-sampling errors tend
to be pervasive, not well-behaved and do not decrease - indeed may increase - with the size of the
sample. It is sometimes even difficult to see whether they cause under- or over-estimation of
population characteristics. There is, in addition, the paradox that the more efficient the sample
design is in controlling random sampling fluctuations, the more important in proportion become
bias and non-sampling error.
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CONTROLLING NON-SAMPLING ERRORS
In practice, market research agencies make all reasonable attempts, within the limits imposed by
cost and time constraints, to minimize or at least measure the impact or make some estimate of
non-sampling errors and of bias in the sampling procedure. Thus, as far as response errors are
concerned, agencies may:
• pilot-test questionnaires in order to check for misunderstandings of questions,
• analyse tendencies to overclaim or underclaim for certain kinds of consumer behaviour, for
example, the tendency to underclaim the consumption of alcohol, or to overclaim television
watching,
• use aided-recall techniques (prompted lists) to help respondents remember products that they
may have purchased and forgotten about, or radio programs that they forgot they had listened
to,
• use questioning techniques that minimize the effort respondents need to make.
To minimize errors resulting from non-response, agencies do one or more- of several things:
• for interview surveys interviewers may be asked to make a specified number of callbacks if the
respondent was not at home on the first call Three or four such callbacks may be made, ideally
at different times and days of the week
• interviewers may make an appointment by telephone with the respondent.
• self-completing questionnaires may be left where no contact has been made
• monetary incentives or gifts may sometimes help to improve the response rate,
• interviewers may get a 'foot-in-the-door' by having respondents comply with some small request
before presenting them with the larger survey,
• non-respondents to a postal survey may be sent interviewers to persuade respondents to
complete the questionnaire, or they may be sent further reminders.
Processing errors will be minimized by careful editing and checking of the questionnaires in
addition to the use of data entry validation procedures.
Market research agencies will try to minimize bias by using carefully constructed sample designs
that use random procedures wherever possible, or by imposing restrictions on interviewer choices
where it is not. These sample designs were described earlier. Biases will still remain, however,
and sometimes these are known. Thus it may be known that there are too many women in the
sample, or too few men aged 20-24, compared with known population proportions. Many
agencies will make corrections to the data to adjust for these biases by 'weighting' them.
In the real world of market research agencies and their clients it is unfortunately true that many
clients do not understand or lack interest in the basics of sampling. In consequence many clients
do not ask for estimates of bias or calculations of random sampling error. At the same time the
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agencies feel that to produce calculations, for example of confidence intervals for a large number
of variables will only add confusion and perhaps distrust of the data. In consequence, sampling
errors are often quietly ignored, and the estimates given are taken to be the 'truth'. Agencies will
instead try to assure their clients that the occurrence and impact of non-sampling errors have been
minimized by:
• demonstrating that the procedures for the collection, analysis and reporting of the results are
'respectable', meticulous and thorough,
• showing that the research design features are such as to minimize sources of error within the
parameters set by time and cost,
• emphasizing the extent of quality control checks that will uncover, correct and minimize the
occurrence of 'mistakes',
• making corrections to the resulting data so that known biases are adjusted for.
Beyond these assurances, clients are sometimes given some indication of the extent of random
sampling error that remains. Clients may be given 'read-off tables for groups of products or types
of variable, based on the 'average' variability for that group or type, given a particular sample size.
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px - p
z = where px is the sample proportion of successes, can be used for testing of
p´ q
n
hypotheses.
3. Student's t-distribution: When population standard deviation (σν) is not known and the sample
is of a small size (i.e., n ≤ 30), we use t distribution for the sampling distribution of mean and
workout t variable as:
n
å ( X i - X )2
X- m
t= where i = 1 i.e., the sample standard deviation, t-distribution is also
ss n- 1
n
symmetrical and is very close to the distribution of standard normal variate, z, except for small
values of n. The variable t differs from z in the sense that we use sample standard deviation (σs)
in the calculation of t, whereas we use standard deviation of population (σν,) in the calculation
of z. There is a different t distribution for every possible sample size i.e., for different degrees
of freedom. The degrees of freedom for a sample of size n is n - 1. As the sample size gets
larger, the shape of the t distribution becomes approximately equal to the normal distribution.
In fact for sample sizes of more than 30, the t distribution is so close to the normal distribution
that we can use the normal to approximate the t-distribution. But when n is small, the t-
distribution is far from normal but when n ® ¥ , t-distribution is identical with normal
distribution. The t-distribution tables are available which give the values of t for different
degrees of freedom at various levels of significance. The table value of t for given degrees of
freedom at a certain level of significance is compared with the calculated value of t from the
sample data, and if the latter exceeds, we infer that the null hypothesis cannot be accepted.
4. F distribution: If (σs1)2 and (σs2)2 are the variances of two independent samples of size n1 and n 2
respectively taken from two independent normal populations, having the same variance,
2
2 2 2 2 2 (X 1i - X 1)
(s n 1) = (s n 2) , the ratio F= (σs1) /(σs2) , where (s s1) = å n1 - 1
and
2
2 (X 2i - X 2)
(s s 2 ) = å n2 - 1
has an F distribution with n1 — 1 and n2 — 1 degrees of
freedom. F ratio is computed in a way that the larger variance is always in the numerator.
Tables have been prepared for F distribution that give value of F for various values of degrees
of freedom for larger as well as smaller variances. The calculated value of F from the sample
data is compared with the corresponding table value of F and if the former exceeds the latter,
then we infer that the null hypothesis of the variances being equal cannot be accepted.
5. Chi-square (γ2) distribution: Chi-square distribution is encountered when we deal with
collections of values that involve adding up squares. Variances of samples require us to add a
collection of squared quantities and thus have distributions that are related to chi-square
distribution. If we take each one of a collection of sample variances, divide them by the known
population variance and multiply these quotients by (n — 1), where n means the number of
items in the sample, we shall obtain a chi-square distribution. Thus, ( )´ (n - 1) would have
s s2
s 2p
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significance of difference between observed and expected frequencies and also as a test of
goodness of fit. The generalized shape of γ2 distribution depends upon the degree of freedom
and the γ2 value is worked out as under:
2
2
k
(Oi - Ei )
g = å
i= 1 Ei
Tables are there that give the value of γ2 for given degree of freedom which may be used with
calculated value of γ2 for relevant degree of freedom at a desired level of significance for testing
hypotheses.
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Companies in India and across the world have been forced recognize and acknowledge - the rising
power of customers (across all classes) and the emerging new generation of competitors. This rise
in customer power has gained prominence especially in the post-liberalization scenario, which is
triggered by the extensive deregulation and the general import duty reduction, leading to cutthroat
competition. Given this scenario, it is no wonder that firms are faced with the task of building up
a database of customers (existing and potential), enhance their product/service offerings
continuously, understand their customers' perceptions of its product and services vis - a - vis that
of their competitors and also to innovate (product and service mix) regularly so as to be able to set
them apart from the rest of the pack. This is no easy job because data may be available in plenty
but it has to be sorted and resorted so to ensure that this data reaches the people who need the
information for decision-making.
Thus has begun the age of information explosion with marketing decision makers and also the
other managers having learned that they need certain kinds of information during regular intervals
of time in order to deal with recurring decisions.
Marketing information system (MIS) is of recent origin and supports marketing decision-making
and marketing planning. It facilitates quick marketing decision-making and thereby raises
marketing excellence. However, MIS is not a substitute for, but an aid to rational decision-
making. Even after collecting all required information, the decisions are to be made by marketing
executives. Information is those cues that make managerial decisions scientific. In brief, MIS is an
essential support system for developing marketing decisions, plans and strategies.
Marketing information includes all facts, estimates, opinions and other data used in marketing
decision-making. A lot of information is generated regularly from within the organization and also
from external sources. Such information can be collected purposefully for planning business
activities and for decision-making. Information is useful to top and middle level management for
planning and control of marketing activities. The marketing manager takes marketing decisions in
the light of the information supplied through MIS. He is like a pilot on the flight desk controlling
aircraft as per the information available through instrument panels. Such information system
provides updated and varied type of information in an uninterrupted manner to a business
organization. In fact, information is the glue that holds organization together. Every organization
needs efficient MIS to effectively manage the information collected. In business organizations,
marketing information managers are appointed and are responsible for creation and dissemination
of marketing information throughout the organization.
The meaning of MIS can be made clear with the help of a simple example of a pilot of an aircraft.
When a pilot is at the controls of his aircraft, he is constantly monitoring its (aircraft's)
performance in relation to air speed/ light and altitude, engine revolutions so that the, flight can
continue safely towards a destination. The task of piloting the plane centers on his receiving
information through the instrument panels on his flight deck. He takes decisions and sees that the
plane moves towards the destination quickly and safely. In many ways managing business or
marketing activity is like piloting an aircraft. In order to achieve marketing objective, correct
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decisions must be taken and correct decision-making is possible only when reliable, up-to-date
and adequate information is made available regularly and promptly. This suggests the meaning
and significance (importance) of MIS.
It may also be noted that information has no value until managers use the information collected to
make better marketing decisions. For this the information gathered through MIS/marketing
intelligence/ marketing research should be distributed promptly to the right marketing managers at
the right time. Developments in information technology have brought a revolution in information
distribution. In many companies, marketing managers have direct access to the information
network at any time and from virtually any location. This is due to advances in computers,
software and telecommunication.
For the purpose of decision-making, marketers generally require three types of information
• Information for the Purpose of Control: In order to ensure effective control, marketers are
interested in having access to weekly sales reports (on sales territories, product-wise etc.), sales-
expense ratios, warehouse inventory reports, etc. Such information will enable the marketer to
know what is happening, what has happened in the past or what changes may be required to be
taken in the future.
• Information for Planning Purpose: This will include economic and sales forecasts,
understanding demographic profiles, estimating social and political shifts
• Information for an ad-hoc Study: This could be information being sought for one-time
decisions or study like - whether a proposed new product is to be introduced? What sort of an
advertisement should for used for a national campaign and so on.
The latter two types of information involve research. If the reports are not fed into the formal
information system and is basically in the possession of the person who was originally seeking the
information, then this may lead to another problem, i.e. another group or department may be
seeking this type of information but in the absence of a formal filing of the research report, may
be unaware that such a study has already been conducted.
This reiterates the fact that an effective Marketing Information System must be such that it is able
to identify, manage and disperse all the above-mentioned three types of information. Moreover,
the information systems will also have an impact on the location and methods of Marketing
Research.
It is to be noted that the Marketing Information System is spoken to be as the same u&
Management Information System. This is because the systems are quite similar with the only
distinction that the former system applies to a system dedicated to the marketing branch of
management, while the latter refers to the whole spectrum of management. As mentioned earlier
MIS can also be termed as an extension of the scope of Marketing Research. A more limited
meaning of a MIS is that of a computerized network which stores and supplies management
information. This means that the co-ordinated efforts of MIS and Marketing Research will enable
the management to take better decisions by supplying data and analytical operation facilities to
the Marketing Research and thereby relieving the latter from routine data and reports.
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CHARACTERISTICS OF MIS:
(1) Continuously operated process: Information is a skilled human accomplishment MIS is a
consciously developed technique for the flow of information to the company. It operates
continuously. Regular inflow of information acts as a feedback in decision-making. It is an
ongoing process as new information is added to the old one in a continuous manner. The
information supplied by the MIS should be relevant and pertinent.
(2) Operates with speed and accuracy. Electronically operated data processing technique can be
used to collect and process new information. Computers are now used for raising the
efficiency of MIS. This brings speed and accuracy in the MIS and indirectly in the decision-
making process.
(3) Needs cooperation of departments and executives: Close cooperation and understanding
among functional departments, executives and specialists (computer expert programmer and
system analyst) are essential for purposeful collection and utilization of the market
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information. Information collection is important but its actual use in the decision-making
process is more important. For this, cooperation of departments and executives is essential.
(4) Facilitates prompt and correct decision-making: MIS provides updated information on
various aspects of marketing to managers/ executives. As a result, managers are aware of new
marketing developments taking place. They are also in a position to take prompt decisions
from time to time due to the feedback provided by MIS. It acts as a data bank for the benefit
of marketing managers. MIS stands between the marketing environment and marketing
decision maker. Marketing data flow from the environment to the MIS. The data is processed
and converted into marketing information flow, which goes to the marketer for decision-
making.
(5) Future-oriented: MIS provides information about possible future problems and their
solutions through appropriate marketing decisions. It acts as a preventive mechanism in
marketing management and offers guidance to marketing executives.
(6) Provides continuous information on marketing developments: MIS collects and provides
information on marketing to concerned executives. It goes to right people at the right time. In
other words, it provides right information at the right time to right people for decision-making.
As a result, decision-making process becomes reasonably accurate and quick. MIS usually
provides three types of information to marketing managers. The information could be
recurrent (information supplied on a periodic basis), monitoring (information obtained from
regular scanning of certain sources) and requested (information sought by a marketing
manager
(7) Acts as a link between external environment and internal resources: It provides updated
information about external marketing situation and facilitates suitable adjustment in the
internal resources to face the overall situation effectively.
(8) Operates in a systematic manner: MIS operates in a rational and systematic manner. This is
necessary for quick reference to required information. Proper system in the collection and
storing of information is necessary as varied type of information is now easily available. Such
information needs to be stored after due classification, etc. In brief, MIS needs well-prepared
operational system for raising its utility and efficiency.
(9) Uses modern technologies: Revolutionary changes are taking place in information
technology. New techniques and machines are available for collection, processing and storage
of information. Required information is made available to marketing executives promptly.
MIS is now becoming costly and also needs the services of technically qualified staff
(software experts). MIS is now based on advanced technology. It is a computer-based method
of data collection, processing and storage. Due to the use of computers updated information is
provided to executives easily and quickly.
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her marketing information requirements; thereby identifying the information outputs that the
marketing information system should provide him or her. The composite of the marketing
information requirements for entire organization thus identifies the variety and nature of specific
information output that the marketing information system should provide.'
2. Supply Needed Information: It is not dumping information that is not needed or irrelevant. It
is to supply needed information 'Each executive wants complete and accurate information
received on a timely basis yet not provided (routinely) in overwhelmingly and confusingly large
quantities. It is ironic that while organizations generate increasingly massive volumes of data,
many executives continue to voice complaints that available information is too incomplete and not
sufficiently relevant or timely to use as a basis for marketing decisions. The marketing
information system should have the built-in capability of extracting from the data bank timely
items of information relevant for each executive's use in decision-making.
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5. Growing market competition: Marketing is, now/ highly competitive with different varieties
of products. Competition may be due to price, quality and sales promotion techniques. A
marketing manager needs accurate and updated information about market competition and
policies of competitors. It is through MIS that information regarding market competition can
be collected, analyzed and used while taking marketing decisions.
6. Information explosion: There is information explosion in the business world due to the use
of new techniques of information collection and dissemination. A firm may not require all
information available from different sources. It is necessary to find out precisely the
information needs of the enterprise and sources that can supply such information.
Accordingly, MIS should be organized.
7. Rapid developments in information technology: Fast changes are taking place in the field
of information technology. Computers, internet, e-commerce, fax, e-mail and other
instruments are used extensively for managing huge information easily, quickly and
economically. A business firm needs efficient MIS in order to use latest information in
marketing management. In short, information serves as the lifeblood of modem marketing
management. Lower level management needs operational information for taking operational
decisions while top-level management needs strategic information for taking strategic policy
decisions. There is a flood of information (information explosion) knocking at the door of the
management and management has to use such information for its survival, stability and
growth. Marketing executives need market information (feedback) for correct decision-
making. Even marketing activities are now becoming complex and broader in scope. These
activities can be conducted in an orderly manner with the support of good MIS. In brief, MIS
is needed for dealing with new marketing problems and challenges effectively.
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necessary facilities, infrastructure and expert staff should be established. The department has
to collect and store the information systematically in computers, files, etc. This will enable the
MIS department to supply information to other departments when required.
(5) Processing of information: The next step is data processing in which data are arranged
properly for quick analysis by departments. The updating of data is also necessary in order to
supply latest information to concerned departments. This facilitates reasonably accurate
decision-making by departments.
(6) Creation of information/data bank: With the completion of the steps noted above, there will
be an information bank within the organization. It will have information required by all
departments. The information will be properly processed, arranged and stored for ready
reference. MIS department will maintain effective communication with all other departments
so that information will be supplied to them quickly as per their need for decision-making.
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(6) Promotes marketing excellence: MIS leads to marketing excellence. It is rightly said that to
manage a business well is to manage its future and to manage the future is to manage
information. Marketing decisions will be prompt and reasonably accurate when they are based
on dependable information. Thus/ MIS gives the benefit in the form of marketing excellence.
(7) Facilitates tapping of marketing opportunities: MIS facilitates tapping of promising
marketing opportunities and effective defense against marketing problems and threats likely to
develop in the near future. Both benefits bring stability and prosperity to business.
(8) Provides market intelligence: MIS acts as marketing intelligence wing of a marketing firm.
It provides information about new marketing trends likely to develop in future. Such trends
may be related to price trends, consumer expectations, extent of market competition, new
products likely to enter the market and so on. This information is useful for long term
marketing planning.
The advantages (noted above) suggest the importance of MIS. No marketing organization can
function effectively without the support of appropriate information system. The information
system should cover every aspect of marketing - the consumer, the market, the competition and
the environment. The marketing excellence of a firm has a direct ^ relationship with the MIS
operated by it. Marketing excellence is the net result of correct marketing decisions and correct
decisions are possible only when updated and reliable information is supplied promptly by the
information system created within the organization. This briefly suggests the importance of MIS
in business/marketing management.
(1) Internal Marketing Information: This component of MIS provides information from within
the organization itself i.e., through the accounting system on sales, inventories, cost, cash flows,
accounts receivable etc. and old records. Data on sales, turnover, costs, cash flows, accounts
receivable and payable, etc. provide information required for marketing decision making. All such
records are available within the firm and hence these sources are rightly called internal sources of
marketing information. Reference to any old information is possible quickly if the available
information is already stored systematically through computer techniques.
Marketing managers use this internal source fully as the information is available easily and
quickly. Even current marketing information is easily available. For easy availability of internal
information, filing and record keeping system must be efficient.
(2) Marketing Intelligence: The second component of MIS is the marketing intelligence. This
component provides information on external marketing environment. Here, information is
collected from external sources. This component of MIS provides information regarding current
marketing environment and changing conditions in the market. Such information is easily
available through census data, weekly and monthly reports on markets and market news published
in magazines and trade journals, commercial press, reports of trade associations and chambers of
commerce, annual reports of companies and so on. Even reports of salesmen are useful to study
current market trend.
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Professional market research agencies publish information on various aspects of marketing and
market trends. Information available from these sources may not be useful in the present form. It
is necessary to evaluate and arrange the information in a proper order. This enables the marketing
executives to draw conclusions and frame marketing policies accordingly. Market intelligence
acts as a mirror of marketing environment and facilitates appropriate decision-making on
marketing.
(3) Marketing Research: Marketing research is one more component of MIS. In this component,
specific marketing problem of the firm is selected for investigation. Data regarding the problem
are collected, tabulated, analyzed and conclusions are drawn. In addition, suitable policy measures
are recommended in order to solve the problem. Marketing research as a component of MIS
provides information but such information is specific and useful for one specific purpose. MR and
MIS are closely related functions. Both provide updated information for decision-making by
marketing executives. However, MIS and MR are not substitutes of each other.
Marian Harper Jr. has rightly suggested the importance of MIS. According to him "To manage a
business well is to manage its future, and to manage future is to manage information".
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Thus, information management (collection, processing, tabulation, storage and easy reference) is
an integral aspect of total business management. Policies, plans and decisions for .the future
period can be designed accurately with the help of MIS. This suggests the role of information
system in modern business. Correct understanding of total marketing environment is necessary for
success, progress and prosperity of business. This is possible through MIS. Business can be made
competitive as well as consumer-oriented by using the available market information in an
intelligent manner. In brief, information serves as the life & blood of modern business. MIS plays
a positive role in modern dynamic, competitive and global business.
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have to maintain their own MIS. The MIS should be intelligible to the people who have to use
the system frequently. After all. MIS is a means and not the end in self. In brief, the
management should set up a MIS that will cater to the needs of an organization and also offer
operational convenience.
(7) MIS should provide updated Information: It is necessary to use new techniques for speed
and accuracy in the MIS. Computers, microfilms, etc. should be used for raising the efficiency
of MIS. Communication technology is making rapid progress in recent years. It is desirable to
improve the MIS by using the latest available techniques. Such updating of MIS is useful for
future marketing planning and also for quick, correct and relevant marketing decisions. Thus,
in-built updating arrangement should be incorporated in a good MIS.
(8) MIS should be Flexible: The MIS introduced in an organization should be elastic or
adjustable. It should not be rigid. When the system is flexible, new changes can be
incorporated easily, quickly and smoothly. Moreover, modern techniques can be introduced
for raising the efficiency and accuracy of the system. In brief, flexibility is one essential
requisite of a good MIS.
(9) MIS should use New Techniques: Along with information explosion, information
technology is also making rapid progress. New machines, methods and techniques are being
introduced in the collection, processing and storage of information. New techniques bring
speed, updating and accuracy in the MIS. Managers can use the MIS to the fullest extent only
when the latest techniques such as computer technology and internet service are used in MIS
itself.
(10) MIS should be Future-oriented: The MIS should be forward looking. It should be future
oriented. It should consider the future information needs of the firm and adjust/readjust its
management accordingly. The decisions are to be taken for the future period. For this, the MIS
should be future oriented and not the past oriented.
Analytic
Database
System
Marketing
Mix Models
The model is inclusive of a facilitator, a database along with analytic software and the capability
to incorporate both continuous (internal and external) as well as one time or ad-hoc data apart
from providing computerized information searches.
"MIS facilitator" is the person(s) or the equipment through which the desired information can be
obtained. This could be a microcomputer or personal computer or a librarian located in the
decision maker’s office.
The "database" refers to the actual database accessible through the MIS. This will be inclusive of
the usual or routine internal data of the firm as well as the external data regularly flowing into the
firm. The database is also able to provide computerized searches through both government
agencies as well as commercial firms.
The "analytic system" refers to the general software packages that can be used to adjust or
supplement to the basic data. These may comprise of statistical tools like the regression and
analysis of variance models and also marketing mix models. The latter could involve procedures
for separating sales data into different criteria based on the requirement of different decision
makers such as sales - customerwise / territorywise / productwise etc. The MIS should be able to
acknowledge the existence as well as locate where or in which departments / units of the firm
have made use of ad-hoc studies.
A very important element in a MIS is that the system must allow for the timely disbursement of
the desired information to the decision makers.
The "database" refers to the actual database accessible through the MIS. This will be inclusive of
the usual or routine internal data of the firm as well as the external data regularly flowing into the
firm. The database is also able to provide computerized searches through both government
agencies as well as commercial firms.
The "analytic system" refers to the general software packages that can be used to adjust or
supplement to the basic data. These may comprise of statistical tools like the regression and
analysis of variance models and also marketing mix models. The latter could involve procedures
for separating sales data into different criteria based on the requirement of different decision
makers such as sales - customerwise / territorywise / productwise etc. The MIS should be able to
acknowledge the existence as well as locate where or in which departments / units of the firm
have made use of ad-hoc studies.
A very important element in a MIS is that the system must allow for the timely disbursement of
the desired information to the decision makers.
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Marketing information system is closely connected with marketing research. In fact, it is one of
the sub-systems included within the scope of MIS. Thus, marketing research is one component of
MIS. MR conducts studies on specific marketing problems and reports its findings to marketing
management. Such studies are undertaken by qualified persons within the company or by an
outside agency. Marketing ' research offers information and guidance to marketing managers
while dealing with specific marketing problems and difficulties.
Marketing research needs detailed information from different internal sources, which can be used
easily and conveniently through the MIS. Problems relating to consumer behavior, product or
brand preferences, advertising awareness, sales promotion, etc. can be studied with the help of
information available through MIS. In brief, MIS provides data required for different marketing
research projects.
The basic objectives of MIS and MR are identical. Both offer information to marketing executives
and enable them to take quick and correct marketing decisions. Both are interrelated. Large-scale
manufacturing/marketing companies maintain up-to-date MIS and also maintain independent
marketing research department. In addition, both supply ready reference regarding marketing
activities and facilitate correct decision-making in the marketing field.
MR and MIS are closely related functions. The basic purpose of both is to collect relevant
information in order to facilitate marketing ^decisions quickly and correctly. Both these functions
offer guidance to marketing managers in the conduct of their marketing activities. However, MR
generates information but MIS concentrates on the storage and flow of information to marketing
managers for decision-making. Both the functions are interrelated as both the functions aim at
making marketing decisions more effective. In this sense, it is said that MIS is a computer-based
extension of MR.
MR is one vital component of MIS. It provides properly processed information on a specific
marketing problem and guides the marketing manager in finalizing plan to deal with such
problem. The information supplied by the MIS is of a general nature and needs to be analyzed
properly for drawing conclusions and for using the information for taking decisions regarding
marketing activities. This purpose is achieved through MR. Similarly, both functions are treated
as important functions for promoting sales, for promoting consumer satisfaction and finally for
effective planning and decision-making in the field of marketing. Thus MIS and MR are closely
interrelated and complementary concepts. MR is some sort of marketing information system
without any responsibility of decision-making.
MR and MIS are supporting functions as both deal with the management of information. In
addition, they offer guidance to marketing managers in the conduct of their marketing activities.
Along with this, there are some basic points, which indicate the difference between MR and MIS.
For example, the job of MIS is to supply marketing information whereas MR is concerned with
problem analysis. MR uses marketing information but its purpose is problem solving through
appropriate marketing decisions. These points of difference between MR and MIS are as noted
below:
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is one of the components of MIS purpose is to collect information
on all aspects of business
Information MR provides precise and MIS provides information on
provided properly analyzed information various aspects of marketing in
regarding a specific marketing order to frame marketing
problem with a view to solving policies and marketing
that problem decisions.
Purpose The purpose of M.R. is to study The purpose of MIS is to
a specific marketing problem in provide relevant and reliable
depth and to solve it quickly and information to all departments
also in a satisfactory manner and facilitate quick and
reasonably correct decision-
making
Coverage MR collects information relating MIS collects information on
to specific marketing problem various aspects of marketing
under investigation such as products, consumer
needs, market competition and
sales
Operational MR is conducted on problem by MIS is a continuous system and
method problem or project by project information is collected,
basis with each project having a analyzed used and also stored in
starting and ending point a regular and continuous
manner.
Use of computer It is a non-computer based MIS is a computer based process
system. However, computers as computer technology is
may be used while tabulating extensively used while
data or while analyzing the collecting, analyzing and
information collected. storing the information
collected
Type of MR is more past-oriented MIS is more future-oriented
orientation
Organizational Every company may or may not Companies must always make
structure maintain MR department arrangements for the collection
and storage of information
through MIS
Frequency of In M.R. data collection is not In MIS data are collected
data collection continuous but only as per the regularly on different marketing
research projects undertaken. aspects in which the firm
interested.
Sources of data In MR external sources such as In MIS external as well as
used surveys and census reports are internal sources (past records,
used for data collection documents, etc.) are used for
data collection.
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marketing data. The difference between MIS and MDSS is that whereas the former is centralized,
the latter is decentralized and allows marketing managers to interact directly with the database.
The systems are generally computerized with one or more models built in.
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ATTITUDE MEASUREMENT
MEANING OF ATTITUDE
Attitude means "settled behaviour indicating opinion." Attitude is a subjective and personal
matter. Opinion of a person is the verbal expression of attitude. Attitude is also readiness to
response. Many researchers admit that attitude involves some acceptance or rejection of an issue
or subject matter under study. When an individual responds to a social or business issue, it
indicates an attempt to provide evaluation, which may be in favour or against.
DEFINITION OF ATTITUDE
Attitude has been defined by Gene F. Summers as a predisposition to respond to an idea or object.
In marketing, this refers to the consumers’ predisposition about the product or . If it is favorable,
then the consumer is likely to purchase the product or service
Attitudes about products or services are composed of three elements
C Beliefs such as the products strength or the economy of the product or service
C Emotional feelings such as likes or dislikes
C Readiness to respond to the product or service i.e. to buy it
These three elements combine together to form an image of the product or service in the mind of
the consumer. When the car manufacturer, the movie producer or the insurance company refers to
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the company's image, they are referring to some genera! averages of many individuals’ attitudes
towards the company
MEANING OF MEASUREMENT
Measurement is "the assignment of numbers to characteristics of objects, persons, states or
events, according to rules." What is measured is not the object, person, state or event but some
characteristic of it. People are not measured, only their age, height, weight, etc. are measured. The
term number given in the definition of measurement are used as symbols to represent certain
characteristics of the object and it does not mean addition, subtraction, division or multiplication.
One important aspect of measurement is the creation of the rules. These rules specify how the
numbers are to be assigned to the characteristics to be measured e.g., "Bata increased its market
share by three percentage points during the last year" is understood by those who know the
measurement rule that is being applied. Those who are not familiar with the rule will not
understand what has been measured. The market share can be based on units sold or sales
turnover in rupees or any other rules.
Measurement in physical sciences like physics, chemistry and biology is easy because they have
physical reality to measure. Behavioural scientists like marketing researchers cannot see or feel
attitudes, perceptions, brand loyalty etc. Hence they must attach numbers in the measurement
process. A chemist can exactly know the chemical content in an antibiotic capsule whereas the
market researcher can only obtain a good measure of intention to purchase.
PROCESS OF MEASUREMENT
(1) Determine the constructs of interest: Constructs refer to constructions. Constructs do not
have tangible reality e.g. we cannot see consumer satisfaction but we can indirectly observe it
asking a series of questions. Other constructs are: brand loyalty, heavy users, competition etc.
(2) Establish the constructs areas: A construct must identify its conceptual boundaries e.g.,
marketing orientation identifies and satisfies customer needs. It concentrates on the means by
which an organisation can achieve its goals while satisfying those needs.
(3) Setting operational definitions: An operational definition indicates what observable
attributes of the construct will be measured and the process that will be used to attach
numbers to those attributes. An example of operational definitions in a bank can be
constructed as: customer satisfaction, operational efficiency, marketing information systems,
marketing efforts etc.
(4) Collect data to test measures: At this stage data is collected from the target population.
Collecting relevant and dependable data will ensure that the researcher is on the right track
with operational measures.
(5) Retain relevant data: Having collected the data the researcher has to decide which data to
keep and which one to reject. It is a relative exercise. Data thus retained will be of use only
now. If any delay is caused, data can become obsolete.
(6) Establish validity of data: An important exercise for the researcher would be to determine
validity of data. Marketing research is a financial proposition. In order to succeed in correctly
measuring attitude it is important that the data are valid and reliable.
(7) Prepare research report: When the researcher has successfully developed measures that are
reliable and valid, he is now ready to prepare research report which will help to achieve the
objectives of research study. The researcher has to check cause and effect relationship, test
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hypothesis, answer research questions and describe the extent to which a population behaves
in a specific manner. In this way the research report will highlight the results of the research.
ATTITUDE MEASUREMENT
Attitude measurement is also commonly referred to as scaling. The measurement techniques can
be divided into
1. Non-Disguised, Non-Structured Techniques
2. Non-Disguised, Structured Techniques
3. Disguised, Non-Structured Techniques
4. Disguised, Structured Techniques
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The following diagram will illustrate the different methods and techniques of measuring attitude
Attitude Measurement
Focused Nominal
Word
Group Scale
Association
Discussion
Ordinal
Story
Scale Completion
Interval Sentence
Depth Scale
Completion
Interview
Ratio Scale
Thematic
Appreciation
Constant Tests
Sum
Scale Cartoon /
Bubble
Mini- Method
groups
Thurstone
Scale Third Person
Techniques
Likert Scale
Fantasy
Scenario
Semantic
Differential
Scale Personification
Multi-
dimensional
Scale Role-playing
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Qualitative Research
The most common method of obtaining information about the behavior, attitudes and other
characteristics of people is to ask them. However it is not always possible or desirable to use
direct questioning to obtain information. People may be either unwilling or unable to give answers
to questions they consider to be an invasion of their privacy, that adversely affect their self-
perception or prestige, that are embarrassing that concern motivations that they do not fully
understand or cannot verbalize, or for other reasons. Therefore additional approaches to obtaining
such information may be necessary,
Marketing researchers frequently use depth interviews, Focused Group Interviews, Mini-group
Interviews and Projective techniques when direct questioning is impractical, more costly, or less
accurate. These techniques generally referred to as Qualitative research.
A. Depth interviews
Individual depth interviews typically require 30-45 minutes. The interviewer does not have a
specific set of pre-specified questions that must be asked according to the order imposed by a
questionnaire. Instead, there is freedom to create questions, to probe those responses that appear
relevant and generally to try to develop the best set of data in any way practical. However the
interviewer must follow one rule; one must not consciously try to affect the content of the answers
given by the respondents. The respondent. The respondent must feel free to reply to the various
questions, probes, and other, subtler, ways of encouraging responses in the manner deemed most
appropriate.
à Subject of interest is discussed in detail.
à There is no fixed pattern for eliciting information from the respondents.
à Generally conducted by highly trained interviewers. They must be thorough in probing the
respondents.
à The interviewee is asked about the subject of his choice, coffee, for example. and an attempt is
made to explore the respondents' attitudes in depth by probing extensively into any other areas
which may come up.
à Interviewers have a general series of topics that they will introduce - perhaps such topics as
coffee or sleep, and will introduce them from time to time if the respondent does not bring
them up.
à Tone of the interview is permissive and the respondent's allowed to talk as much as he likes.
à The interviewer must not influence the answers of the respondent.
à The interpretation of the answers is very subjective and knowledge of human behavior is
required to analyze the information received.
Individual depth interviews uses three questioning techniques namely:
1. Laddering involves having respondents identify attributes that distinguish brands by asking
questions. Each distinguishing attribute is then probed to determine why it is important or
meaningful. These reasons are then probed to determine why it is important, and so forth. The
purpose is to uncover the “network of meanings” associated with the product, brand, or
concept.
2. Hidden-issue questioning focuses on individual respondents feelings about sensitive issues.
Analysis on focus on common underlying themes across respondents. These themes can then
be used to guide advertising development
3. Symbolic questioning requires respondents to describe the opposites of the product / activity
of interest or a specific attribute of the product / activity.
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Individual depth interviews have been found to generate more and higher quality ideas on a per
respondent basis than either focus or mini-groups. They are particularly appropriate when:
1. Detailed probes of an individual's behavior, attitude or needs is required;
2. The subject matter under discussion is likely to be of a highly confidential nature (e. g. personal
investment)
3. The subject matter is of an emotionally charged or embarrassing nature
4. Certain strong, socially acceptable norms exist (e.g. baby feeding) and the need to conform in a
group discussion may influence responses
5. Where highly detailed understanding of complicated behavior or decision-making pattern (e.g.
planning the family holiday) are required or the interviews are with professional people or with
people on the subject of their jobs (e.g. finance directors)
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6. A final major advantage of focus groups is that executives often observe the interview (from
behind mirrors) or watch films of the interview.
Disadvantages
1. Since focus group interviews last 1.5 to 3 hours and take place at a central location, securing
cooperation from a random sample is difficult.
2. Those who attend group interviews and actively participate in them are likely to be different in
many respects from those who do not.
3. There are chances that participants may go along with the popular opinion (group think) instead
of expressing their own which may be contrary to the popular opinions
4. The presence of a one-way mirror and / or an observer has been found to distort participant's
responses.
5. The moderator can introduce serious biases in the interview by shifting topics too rapidly
verbally or nonverbally encouraging certain answers, failing to cover specific areas and so
forth
6. Focus groups are expensive on a per respondent basis.
C. Mini-groups
Mini-groups consist of a moderator and 4 - 5 respondents rather than the 8 to 12 used in most
focus groups. They are used when the issue being investigated requires more extensive probing
than is possible in a larger group. Mini-groups do not allow the collection of a confidential or
highly sensitive data as might be possible in an individual depth interview. However, they do
allow the researcher to obtain substantially depth of response on the topics that are covered.
Further the intimacy of the small group often allows discussion of quite sensitive issues.
The advantages and disadvantages of mini-groups are similar to those of standard focus groups,
but on a smaller scale
v In principle these interviews are the same as the previous ones, excepting that they are
conducted in groups rather than for individuals
v This method is therefore less expensive and less time consuming than the depth interviews
v This method is advantageous because it gives excellent leads to consumer attitudes that no
other method can give
v Another advantage of this method is that each respondent receives stimulation for responding
from his / her group members and so the interviewer need not prompt the interviewee to
answer
v The disadvantage here is that one or two members could dominate in the group and others
might not get a chance to answer This would again make it an individual effort
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These tests are not difficult to administer because they are like games played with the respondents
Generally, respondents seem to enjoy the exercise
Projective Techniques
Projective technique is based on the theory that the description of vague objects requires
interpretation and this can only be based on the individuals own background, attitudes, and values
The more vague or ambiguous the object to be described the more one must reveal of oneself in
order to complete the description
The following general categories of projective techniques are described - association, completion,
construction and expression
I. Word Association Techniques
Association techniques require the subject to respond to the presentation of a stimulus with the
first things that come to mind. The word association technique requires the respondent to give the
first word or thought that comes to mind after researcher presents a word or phrase. In free
association only the first word or thought is required. In successive word association, the
respondent is asked to give a series of words or thoughts that occur after hearing a given word
The respondent is generally read a number of relatively neutral terms to establish the technique
Then the words of interest to the researcher are presented, each separated by several neutral terms
The order of presentation of the key words is randomized to prevent any position or order bias
from affecting the results The most common approach to analyzing the resulting data is to analyze
the frequency with a particular word or category of words given in the response to the word of
interest to the researcher.
Word association techniques are used in testing potential brand names and occasionally for
measuring attitudes about particular products, product attributes, brands, packages or
advertisements.
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This technique requires the respondent to complete an incomplete stimulus. Two types of
completion are of interest to marketing researchers- sentence completion and story completion.
A. Sentence Completion as the name implies, requires the respondent to complete a sentence In
most sentence completion tests the respondents are asked to complete the sentence with a phrase.
Generally they are told to use the first thought that comes to their mind or "anything that makes
sense". Because the individual is not required directly to associate himself or herself with the
answer conscious or subconscious defenses are more likely to be relaxed and allow a more
revealing answer.
l The respondent is given a number of incomplete sentences and asked to complete them.
l The rule here too, is that respondent must fill in the first thought that comes to mind.
l Responses are timed.
l Here the interviewer gets more information than the word association technique.
l However, it is difficult to disguise the motive of the study from the respondent who is usually
able to diagnose the investigators purpose of study
l For example “ A man who reads Sportstar is ____________”
l The sentence can be worded in first or third person. No evidence suggests that one of these
approaches could be better than the other.
B. Story Completion is an expanded form of sentence completion. As the name suggests part of a
story is told and the respondent is asked to complete it.
v Respondents are given a half completed story. This is enough to draw their attention to a
particular issue, but the ending is left vague, so that responses can be varied.
v This technique is very versatile and has numerous applications to marketing problems.
v The findings about products/services give companies inputs to determine advertising and
promotional themes and product characteristics
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C. Thematic Appreciation Test Another useful construction technique, involves using pictures
to elicit stories. These pictures are usually relatively vague so that the respondent must use his or
her imagination to describe what is occurring in the situation.
C Here the respondent is shown about 20-30 ambiguous pictures and he is asked to spin stones
about them.
C The interviewer may ask questions to help the respondent to think For example "what is
happening here?” makes the answer focused towards an action Or which one is the aggressor
makes the respondent think about the picture as one of aggression The reason that respondents
must be asked such prompting questions is that the pictures are very abstract and general and
as such are open to very broad and irreverent interpretations So some amount of focus is
needed to channel respondents thinking.
C Each subject in the picture is a medium through which the respondent projects his/her
feelings, ideas, emotions and attitudes The respondent attributes these feelings to the
characters because he sees in the picture something related to himself.
C Responses differ widely and analysis depends upon the ambiguity of the picture, the extent to
which the respondent is able to guess the conclusions and the vagueness of the support
questions asked by the interviewer
D. Fantasy Scenario It requires the respondent to make up a fantasy about the products or brands
E. Personification The respondent is asked to create a personality for the brands or the products
Limitations
C As projective techniques generally require personal interviews with highly trained
interviewers and interpreters to evaluate the responses, they tend to be very expensive.
C Small sample sizes can increase the probability of substantial sampling error. The reliance on
small samples often has been accompanied by non-profitability selection procedures.
C Some of the projective techniques require the respondents to engage in behavior that may well
be strange to them; this is particularly true for techniques such as role-plays. Thus there is
reason enough to believe that there might be an error in the findings.
C Measurement is also a serious issue with respect to projective techniques. The possibility of
interpreter bias is obvious.
Benfits
à They can uncover information not available through direct questioning or observation.
à They are particularly useful in the exploratory stages of research
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à They can generate hypotheses for further testing and provide attribute lists and terms for more
structured techniques such as the semantic differential.
à The results of projective techniques can be used directly for decision- making
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C You can count and order but not measure ordinal data.
C The categories for an ordinal set of data have a natural order. Suppose a group of people were
asked to taste varieties of biscuits and classify them on a rating scale of 1 to 5 where 1 would
correspond to strongly dislike and 5 would be strongly like. A rating 3 indicates more
enjoyment than 2. Such data is ordinal.
C However the distinction between neighboring points on the scale is not necessarily the same.
For instance, the difference in enjoyment expressed by giving a rating of 2 rather than 1 may
be much less than the difference in enjoyment expressed by giving a rating of 4 rather than 3.
C Ordinal scale is ranking scale. It possesses the characteristics of numerical scale and also
indicates the order e.g., there are five executives who are to be ranked as per their annual
income such as.
If the executive with the highest income is given No. 1 and the next to it as No. 2 and so on, the
following order will be determined
The above example is numerical that dealt with the annual income of executives. Ordinal scale
can also be used to find out attributes of a certain product e.g., coffee. Respondents can be asked
questions on attributes like color, flavor, aroma, appearance etc. on a five-point scale:
By asking respondents about their level of acceptability, it is possible to give ranks. Individual
rankings can be combined in order to get collective ranking of the group.
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called interval scale. It is possible to compute average rating given by all the respondents and also
standard deviation.
Ø They separate individuals or items by rank order but measure the distance between rank
positions in equal units.
Ø Such a scale permits the researcher to say that the position 4 is above position 3 on the scale,
and also the distance from position 5 to 4 is same as from 4 to 3.
Ø Such a scale however does not permit conclusions that position 6 is twice as strong as position 3
because no zero position has been established
An interval scale is a scale of measurement where the distance between any two adjacent units of
measurement (or intervals) is the same but the zero point is arbitrary. Scores on an interval scale
can be added or subtracted but cannot be meaningfully multiplied or divided e.g. the time interval
between the starts of years 2001 and 2002 is the same as that between 2003 and 2004, namely 365
days The zero point year 1 AD, is arbitrary as time did not begin then. Other examples of Interval
series include the heights of tides, and the measurement of longitude.
When rank order / ordinal data is used the researcher has no way of knowing the characteristic
which is of overwhelming importance or of knowing a characteristic which is not of much
importance compared to other characteristic. This can be explained with the following example:
Suppose a sample of respondents from the target market is requested to rank order several
automobile characteristics with 1 being more important. Assume the individual ranks are similar
and produce the following median ranks for each attribute:
Price 1
Economy 2
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Dependability 3
Safety 4
Comfort 5
Style 6
A constant sum measure of the importance of the same attributes could be obtained from the
following procedure - Divide 100 points among the characteristics listed so that the division will
reflect how important each characteristic is to your selection of a new automobile.
Price
Economy
Dependability
Safety
Comfort
Style
Total 100
All the responses to the constant sum scale would be consistent with the rank order results just
described.
A disadvantage could be that occassionally individuals may misassign poibts such that the total is
more than or less than 100. This can be adhusted by dividing each point allocation by the actual
taotal and multiplying it by 100.
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3. Study the frequency distribution of the ratings for each statement and eliminate those
statements that the different judges have assigned to a number of different piles.
4. Determine the scale value of each of the remaining statements – that is the number of the pile
in which the median of the distribution lies.
5. Select one or two statements from each of the eleven piles for the final scale.
6. Separate cards are given to the respondents who are asked to sort these statements into a
number of intervals. Each respondent is given 11 cards, the first card having letter A, the
second B and so on. The first card with letter ‘A’ represents most unfavourable attitude and the
last card with letter ‘K’ represents most favourable attitude. The middle card with letter ‘F’ is
neutral neither representing favourable nor unfavourable attitude about the subject or event as
shown below:
The advantage of this method is that it is easier to identify the neutral position since there are odd
number pf parameters.
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o The unique dharateristic of semantic differential scale is the use of bipolar scales to rate any
product company or concept of interest.
o Facilitates comaprison of competitive items
o Each scale consists of two opposing adjectives separated by a continuum of seven segments, as
seen above
o Respondents are given a group of these scales and asked to check the segment that represents
the degree of their opinion of the subject in question
o It is best used for image descriptive purposes and is not recommended for overall attitude
studies
o The method is easy and fast to administer, but it is also sensitive to small differences in
attitude, highly versatile, reliable and generally valid
o The advantage of this method is its simplicity while producing results comparable with those of
the more complex scaling methods
Consider for instance that a student seeking admission in medicine offered by some universities
has to consider two dimensions viz., prestigious course and practical content, which can be shown
as:
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The student has compared the medical course in ten different universities A to J. Vertical
dimension shows practical content of the medical course whereas horizontal dimension indicates
relative prestige of the course. The points that are close to one another show similarity and the
points that are wide apart indicate that the student has seen medical courses offered by various
universities differently on the basis of two dimensions viz./ prestigious course and practical
content.
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