Many businesses are product orientated. A product-orientated business is a business, which develops a product with little or no market research and which it hopes will prove successful in the market. A business can also be market orientated. A market-orientated business is a business, which develops products, which have been researched and designed to meet the needs of consumers. Product orientation businesses often risk spending a large amount of resources to launch a product, which proves to be a failure.
Businesses are market orientated because it helps to reduce this risk. When a carefully researched product is launched, it has less chance of failing. Market research attempts to find the answers to questions that a business might have about its market. A segment of the market which it could sell to needs to be identified The market researcher needs to decide what information might help answer these questions. This information could be on the existing patterns of sales, how the market is changing or what consumers would like to see in the market. The market researcher then needs to decide how to collect this information. The information is then collected and analysed. Finally, the business needs to decide what to do with the in formation gained.
Desk research involves the use of secondary data. This is information, which is already available, both within and outside the business. Information within the business – Businesses collect information routinely, e.g. invoices will tell them how much they sell and who they are selling to. Information from outside the business – There are several sources to collect information from outside the business. Field research involves the collection of primary data. This is information, which has been gathered for a specific purpose through direct investigation such as observation, surveys and through experiment.
Observation is all about looking at and recording what people do and how they behave. This can be important. Observation makes it possible to identify the root of the problem however observation cannot always tell us why. A survey usually involves asking questions of respondents. A respondent is a person or organisation answering questions in a survey. There are several ways of conducting a survey. Postal surveys or newspaper surveys are cheap, however only a fraction of customers are likely to respond.
Telephone surveys, personal interviews and consumers’ panels are more expensive for the reason that an interviewer has to be employed to interview customers. The interviewer can help the respondents understand what questions mean and how they should be answered. Interviewing people allows products and packaging to be shown so that reactions can be recorded. A much larger proportion of those approached will take part in telephone and personal interviews.
A consumer panel is where a group of people meet together, this allows researchers to see how people react in a group situation to different products. Surveys can only be useful if the questions asked are appropriate. Closed questions are important to ask, these are questions, which have definite answers. If the market researcher wants to find out about people’s opinions, open questions are more appropriate. A survey can only ask a sample; a small group out of a total population which is selected to take part in a survey, but to be useful, the group chosen must be representative of all consumers. A random survey means that every potential respondent has an equal chance of being chosen. This can be done by picking a random number of respondents or by ‘picking people out of a hat’.
A truly random sample is often difficult to construct. It is cheaper and quicker to use a systematic sample, this is where for example every 100th or 1000th person on a list like a telephone directory is chosen, this is not truly random so the results may be less reliable. In a quota sample, the sample is broken down. A problem with a quota sample is that any people who fit the description can be asked to complete the survey. A stratified random sample can solve this problem. It is the same as a quota sample except that all the respondents are chosen at random i.e. through pure chance. Market researchers can use experimental techniques. Launching a new product can be very expensive. Manufacturers often test their products during their development to ensure that they are likely to succeed.
The aim of market researching is to assist businesses to come to a decision. I have chosen to research my product by carrying out a survey containing a questionnaire to find out peoples buying habits and what they would like to see in the market. I will distribute the questionnaires in the city where I will be likely to come across the market segment aimed at my product, which are middle class people aged 20 to 30 years. By referring to the Appendices, you can see a sample questionnaire, completed questionnaires and the results obtained.
Analysis of results The questionnaire used for this research was carried out in Central London. An equal amount of 5 people for both genders were questioned to see which gender, if was drawn towards the product the most. Half of the people who filled out the questionnaires were aged between 26-29 years. The other half ranged between 21-25 and 30+. There was no particular reason for people to be at these age groups, the people who were questioned were picked at random. The majority of people questioned received an income between 30,000. The people questioned were either middle classed or upper middle classed.
Although ethnic, cultural and religious groupings were not of importance to marketing my product, questions 5,6 and 7 were still asked to have an overview of the types of people that would be interested in my product. The results show me that the questionnaires were mostly completed by people following the Christian or Muslim faith. The people were spread out over south, east, west and central London. Out of all the replies, every person owned an alarm clock and less than half owned a personal organiser. Half of the alarm clocks were purchased for an amount between12 and 14. The other half ranged between 11. Most of the personal organisers were bought for 15 or above, apart from one which was bought for an amount between 14.
All the alarm clocks and most of the personal organisers were made up of plastic, apart from one, which was made from metal. The majority of the alarm clocks were operated by battery. All of the personal organisers were also operated by battery; battery and mains operated one. The majority of the alarm clocks and all of the personal organisers were black. Most of the alarm clocks and all the personal organisers were aged between 1 and 2 years.
Out of the ten replies, eight people said that they would like to see my product in the market. They would be willing to pay 15+ for the product. All of the people would like to see the product in black plastic and would like to see it operate by battery and mains. Five out of the eight people would like to see the product to be able to connect to a personal computer. Half of the people would like to see the with an anniversary/birthday reminder. I will be adding these features to my product. The people that I originally asked seemed to link to my market segment. The people linked to my market segment seemed to want the additional features.
The product life cycle The product life cycle shows the stages through which a product passes over time from its development stage to being withdrawn from sale. The graph below illustrates a normal product life cycle: – The beginning of the product’s life is at the development stage. This stage requires a lot of time, money and market research. The next step is to launch the product. At this stage, the product is likely to have been advertised. The growth phase of the cycle is where sales and profits start to rise.
The maturity stage is where the product reaches its peak in terms of sales. The product is now profitable enough to finance and develop new products. The maturity stage is where manufacturers want to stay in as long as possible. So businesses try to use extension strategies, this is where the product is slightly changed to give it fresh appeal to its target market. These extension strategies can also draw new segments to the product. The saturation point comes towards the end of the maturity stage. Competitors often introduce products to take sales away. All products eventually go into decline. But how long it will take is the factor that people do not know. I have realised that my product will have to be developed and launched, this is going to cost a lot of money. My product will eventually reach saturation and go into decline.